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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-8647322
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page No.
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Item 1.
|
|
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||
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Item 2.
|
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Item 3.
|
||
Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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ITEM 1.
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FINANCIAL STATEMENTS
|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
|
||||||||||||
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2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
900,663
|
|
|
$
|
845,242
|
|
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$
|
1,816,016
|
|
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$
|
1,704,785
|
|
Cost of revenue
|
643,067
|
|
|
556,317
|
|
|
1,250,653
|
|
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1,110,582
|
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||||
Selling, general and administrative
|
146,856
|
|
|
146,886
|
|
|
291,297
|
|
|
280,742
|
|
||||
Impairment and related charges
|
92,022
|
|
|
—
|
|
|
92,022
|
|
|
—
|
|
||||
Operating income
|
18,718
|
|
|
142,039
|
|
|
182,044
|
|
|
313,461
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(38,097
|
)
|
|
(37,210
|
)
|
|
(77,658
|
)
|
|
(78,412
|
)
|
||||
Joint venture equity income
|
513
|
|
|
763
|
|
|
1,411
|
|
|
1,526
|
|
||||
Other, net
|
(752
|
)
|
|
876
|
|
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(15,986
|
)
|
|
4,236
|
|
||||
Total other expense, net
|
(38,336
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)
|
|
(35,571
|
)
|
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(92,233
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)
|
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(72,650
|
)
|
||||
(Loss) income from continuing operations before income taxes
|
(19,618
|
)
|
|
106,468
|
|
|
89,811
|
|
|
240,811
|
|
||||
(Benefit) Provision for income taxes
|
(15,466
|
)
|
|
31,273
|
|
|
16,241
|
|
|
72,697
|
|
||||
(Loss) income from continuing operations
|
(4,152
|
)
|
|
75,195
|
|
|
73,570
|
|
|
168,114
|
|
||||
(Loss) income from discontinued operations, net of tax
|
(1,222
|
)
|
|
(2,098
|
)
|
|
(1,699
|
)
|
|
11,252
|
|
||||
Net (loss) income
|
(5,374
|
)
|
|
73,097
|
|
|
71,871
|
|
|
179,366
|
|
||||
Net income attributable to noncontrolling interests
|
1,113
|
|
|
1,078
|
|
|
2,419
|
|
|
2,180
|
|
||||
Net (loss) income attributable to common stockholders
|
$
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(6,487
|
)
|
|
$
|
72,019
|
|
|
$
|
69,452
|
|
|
$
|
177,186
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net (loss) income per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(0.02
|
)
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
0.60
|
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(Loss) income from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
0.04
|
|
||||
Net (loss) income per common share
|
$
|
(0.02
|
)
|
|
$
|
0.26
|
|
|
$
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0.25
|
|
|
$
|
0.64
|
|
Diluted net (loss) income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(0.02
|
)
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
$
|
0.59
|
|
(Loss) income from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
0.04
|
|
||||
Net (loss) income per common share
|
$
|
(0.02
|
)
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.63
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
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||||||
Basic
|
278,441
|
|
|
277,392
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|
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277,900
|
|
|
276,480
|
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||||
Diluted
|
278,441
|
|
|
283,001
|
|
|
279,919
|
|
|
282,648
|
|
||||
|
|
|
|
|
|
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||||||||
Dividends per common share
|
$
|
0.14
|
|
|
$
|
0.13
|
|
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$
|
0.28
|
|
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$
|
0.26
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
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2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income
|
$
|
(5,374
|
)
|
|
$
|
73,097
|
|
|
$
|
71,871
|
|
|
$
|
179,366
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments ("CTA"), net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign CTA gains
|
8,483
|
|
|
1,909
|
|
|
7,669
|
|
|
1,539
|
|
||||
Reclassification adjustment for realized gains on foreign CTA, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
||||
Net change in foreign CTA losses, net of tax
|
8,483
|
|
|
1,909
|
|
|
7,669
|
|
|
1,341
|
|
||||
Retirement-related benefit plans:
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service credits, net of taxes of $259, $130, $259 and $259
|
(99
|
)
|
|
(228
|
)
|
|
(457
|
)
|
|
(457
|
)
|
||||
Amortization of actuarial losses, net of taxes of $(1,355), $(516), $(1,355) and $(1,031)
|
520
|
|
|
909
|
|
|
2,395
|
|
|
1,819
|
|
||||
Total retirement-related benefit plans
|
421
|
|
|
681
|
|
|
1,938
|
|
|
1,362
|
|
||||
Derivatives and available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Unrealized losses, net of taxes of $(804), $1,062, $(1,648) and $2,321
|
2,345
|
|
|
777
|
|
|
7,000
|
|
|
285
|
|
||||
Reclassification adjustment for realized losses, net of taxes of $(683), $(55), $(1,598) and $(340)
|
806
|
|
|
93
|
|
|
3,677
|
|
|
1,012
|
|
||||
Net change in derivatives and available-for-sale securities, net of tax
|
3,151
|
|
|
870
|
|
|
10,677
|
|
|
1,297
|
|
||||
Share of other comprehensive income of joint venture
|
118
|
|
|
—
|
|
|
50
|
|
|
—
|
|
||||
Other comprehensive income
|
12,173
|
|
|
3,460
|
|
|
20,334
|
|
|
4,000
|
|
||||
Comprehensive income
|
6,799
|
|
|
76,557
|
|
|
92,205
|
|
|
183,366
|
|
||||
Less: Comprehensive income attributable to noncontrolling interests
|
(1,113
|
)
|
|
(1,078
|
)
|
|
(2,419
|
)
|
|
(2,180
|
)
|
||||
Comprehensive income attributable to Sabre Corporation
|
$
|
5,686
|
|
|
$
|
75,479
|
|
|
$
|
89,786
|
|
|
$
|
181,186
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
306,696
|
|
|
$
|
364,114
|
|
Accounts receivable, net
|
512,167
|
|
|
400,667
|
|
||
Prepaid expenses and other current assets
|
108,215
|
|
|
88,600
|
|
||
Total current assets
|
927,078
|
|
|
853,381
|
|
||
Property and equipment, net of accumulated depreciation of $1,109,669 and $986,890
|
791,735
|
|
|
753,279
|
|
||
Investments in joint ventures
|
26,146
|
|
|
25,582
|
|
||
Goodwill
|
2,551,448
|
|
|
2,548,447
|
|
||
Acquired customer relationships, net of accumulated amortization of $674,440 and $646,850
|
362,152
|
|
|
387,632
|
|
||
Other intangible assets, net of accumulated amortization of $566,263 and $538,380
|
359,922
|
|
|
387,805
|
|
||
Deferred income taxes
|
111,902
|
|
|
95,285
|
|
||
Other assets, net
|
559,495
|
|
|
673,159
|
|
||
Total assets
|
$
|
5,689,878
|
|
|
$
|
5,724,570
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
152,485
|
|
|
$
|
168,576
|
|
Accrued compensation and related benefits
|
109,420
|
|
|
102,037
|
|
||
Accrued subscriber incentives
|
266,438
|
|
|
216,011
|
|
||
Deferred revenues
|
176,335
|
|
|
187,108
|
|
||
Other accrued liabilities
|
237,583
|
|
|
222,879
|
|
||
Current portion of debt
|
60,050
|
|
|
169,246
|
|
||
Tax Receivable Agreement
|
74,977
|
|
|
100,501
|
|
||
Total current liabilities
|
1,077,288
|
|
|
1,166,358
|
|
||
Deferred income taxes
|
96,842
|
|
|
88,957
|
|
||
Other noncurrent liabilities
|
439,966
|
|
|
567,359
|
|
||
Long-term debt
|
3,425,949
|
|
|
3,276,281
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
|
|
||
Common Stock: $0.01 par value; 450,000,000 authorized shares; 288,618,730 and 285,461,125 shares issued, 278,628,948 and 276,949,802 shares outstanding at June 30, 2017 and December 31, 2016, respectively
|
2,886
|
|
|
2,854
|
|
||
Additional paid-in capital
|
2,148,148
|
|
|
2,105,843
|
|
||
Treasury Stock, at cost, 9,989,782 and 8,511,323 shares at June 30, 2017 and December 31, 2016, respectively
|
(254,156
|
)
|
|
(221,746
|
)
|
||
Retained deficit
|
(1,149,598
|
)
|
|
(1,141,116
|
)
|
||
Accumulated other comprehensive loss
|
(102,465
|
)
|
|
(122,799
|
)
|
||
Noncontrolling interest
|
5,018
|
|
|
2,579
|
|
||
Total stockholders’ equity
|
649,833
|
|
|
625,615
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,689,878
|
|
|
$
|
5,724,570
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
71,871
|
|
|
$
|
179,366
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
198,687
|
|
|
194,726
|
|
||
Amortization of upfront incentive consideration
|
32,293
|
|
|
26,233
|
|
||
Litigation-related credits
|
—
|
|
|
(25,527
|
)
|
||
Stock-based compensation expense
|
22,758
|
|
|
23,099
|
|
||
Allowance for doubtful accounts
|
5,356
|
|
|
6,131
|
|
||
Impairment and related charges
|
92,022
|
|
|
—
|
|
||
Deferred income taxes
|
(16,121
|
)
|
|
59,315
|
|
||
Joint venture equity income
|
(1,411
|
)
|
|
(1,526
|
)
|
||
Dividends received from joint venture investments
|
896
|
|
|
—
|
|
||
Amortization of debt issuance costs
|
3,640
|
|
|
3,892
|
|
||
Loss on modification of debt
|
11,730
|
|
|
—
|
|
||
Other
|
7,135
|
|
|
3,030
|
|
||
Loss (income) from discontinued operations
|
1,699
|
|
|
(11,252
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts and other receivables
|
(125,913
|
)
|
|
(83,551
|
)
|
||
Prepaid expenses and other current assets
|
(1,434
|
)
|
|
(15,354
|
)
|
||
Capitalized implementation costs
|
(31,444
|
)
|
|
(43,268
|
)
|
||
Upfront incentive consideration
|
(37,260
|
)
|
|
(47,228
|
)
|
||
Other assets
|
(31,207
|
)
|
|
(13,639
|
)
|
||
Accrued compensation and related benefits
|
7,170
|
|
|
(25,663
|
)
|
||
Accounts payable and other accrued liabilities
|
41,702
|
|
|
12,963
|
|
||
Deferred revenue including upfront solution fees
|
25,707
|
|
|
22,037
|
|
||
Cash provided by operating activities
|
277,876
|
|
|
263,784
|
|
||
Investing Activities
|
|
|
|
|
|
||
Additions to property and equipment
|
(167,410
|
)
|
|
(164,593
|
)
|
||
Acquisition, net of cash acquired
|
—
|
|
|
(164,977
|
)
|
||
Cash used in investing activities
|
(167,410
|
)
|
|
(329,570
|
)
|
||
Financing Activities
|
|
|
|
|
|
||
Proceeds of borrowings from lenders
|
1,897,625
|
|
|
378,000
|
|
||
Payments on borrowings from lenders
|
(1,856,803
|
)
|
|
(485,796
|
)
|
||
Payments on Tax Receivable Agreement
|
(99,241
|
)
|
|
—
|
|
||
Debt issuance and modification costs
|
(12,380
|
)
|
|
—
|
|
||
Net proceeds on the settlement of equity-based awards
|
9,383
|
|
|
4,808
|
|
||
Cash dividends paid to common stockholders
|
(77,934
|
)
|
|
(72,060
|
)
|
||
Repurchase of common stock
|
(22,213
|
)
|
|
—
|
|
||
Other financing activities
|
(749
|
)
|
|
714
|
|
||
Cash used in financing activities
|
(162,312
|
)
|
|
(174,334
|
)
|
||
Cash Flows from Discontinued Operations
|
|
|
|
|
|
||
Cash used in operating activities
|
(2,780
|
)
|
|
(12,407
|
)
|
||
Cash provided by investing activities
|
—
|
|
|
—
|
|
||
Cash used in discontinued operations
|
(2,780
|
)
|
|
(12,407
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(2,792
|
)
|
|
(293
|
)
|
||
Decrease in cash and cash equivalents
|
(57,418
|
)
|
|
(252,820
|
)
|
||
Cash and cash equivalents at beginning of period
|
364,114
|
|
|
321,132
|
|
||
Cash and cash equivalents at end of period
|
$
|
306,696
|
|
|
$
|
68,312
|
|
•
|
allocation of contract revenues among various products and solutions, and the timing of when those revenues are recognized, will be impacted primarily due to accounting for variable consideration within the standard, for a subset of our Airline Solutions business,
|
•
|
a term license will be considered a distinct performance obligation with revenue recognition occurring once control is transferred to the customer, resulting in acceleration of revenue recognition, while maintenance services will continue to be recognized over the term of the contract, particularly for our Airline Solutions business, and
|
•
|
deferral of incremental costs to obtain a contract, and recognition of them over the contract period or expected customer life will result in the recognition of a deferred charge on our balance sheet and will impact our Airline and Hospitality Solutions segment.
|
Cash and cash equivalents
|
$
|
4,209
|
|
Accounts receivable
|
10,564
|
|
|
Other current assets
|
917
|
|
|
Goodwill
|
98,930
|
|
|
Intangible assets:
|
|
||
Customer relationships
|
52,292
|
|
|
Purchased technology
|
23,362
|
|
|
Trademarks and brand names
|
2,183
|
|
|
Property and equipment, net
|
1,556
|
|
|
Current liabilities
|
(11,091
|
)
|
|
Deferred income taxes
|
(22,548
|
)
|
|
Total acquisition price
|
$
|
160,374
|
|
Cash and cash equivalents
|
$
|
65,641
|
|
Accounts receivable, net
|
49,099
|
|
|
Other current assets
|
12,522
|
|
|
Intangible assets:
|
|
||
Customer relationships
|
319,000
|
|
|
Reacquired rights
(1)
|
113,500
|
|
|
Purchased technology
|
14,000
|
|
|
Supplier agreements
|
13,000
|
|
|
Trademarks and brand names
|
4,000
|
|
|
Property and equipment, net
|
6,402
|
|
|
Other assets
|
66,423
|
|
|
Current liabilities
|
(123,307
|
)
|
|
Noncurrent liabilities
|
(44,245
|
)
|
|
Noncurrent deferred income taxes
|
(78,054
|
)
|
|
Goodwill
|
292,267
|
|
|
|
710,248
|
|
|
Fair value of Sabre Corporation's previously held equity investment in AIPL
|
(200,000
|
)
|
|
Fair value of AIPL's previously held equity investment in NMCs
|
(1,880
|
)
|
|
Total acquisition price
|
$
|
508,368
|
|
|
Rate
|
|
Maturity
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Senior secured credit facilities:
|
|
|
|
|
|
|
|
|
|
||
Term Loan A
|
L + 2.50%
|
|
July 2021
|
|
$
|
570,000
|
|
|
$
|
585,000
|
|
Term Loan B
|
L + 2.75%
|
|
February 2024
|
|
1,890,500
|
|
|
—
|
|
||
Prior Term Loan B
(1)
|
L + 3.00%
|
|
February 2019
|
|
—
|
|
|
1,420,896
|
|
||
Incremental Term Loan Facility
(1)
|
L + 3.50%
|
|
February 2019
|
|
—
|
|
|
282,354
|
|
||
Term Loan C
(1)
|
L + 3.00%
|
|
December 2017
|
|
—
|
|
|
49,313
|
|
||
Revolver, $400 million
|
L + 2.50%
|
|
July 2021
|
|
—
|
|
|
—
|
|
||
5.375% senior secured notes due 2023
|
5.375%
|
|
April 2023
|
|
530,000
|
|
|
530,000
|
|
||
5.25% senior secured notes due 2023
|
5.25%
|
|
November 2023
|
|
500,000
|
|
|
500,000
|
|
||
Mortgage facility
(2)
|
5.80%
|
|
April 2017
|
|
—
|
|
|
79,741
|
|
||
Capital lease obligations
|
|
|
|
|
27,844
|
|
|
31,190
|
|
||
Face value of total debt outstanding
|
|
|
|
|
3,518,344
|
|
|
3,478,494
|
|
||
Less current portion of debt outstanding
|
|
|
|
|
(60,050
|
)
|
|
(169,246
|
)
|
||
Face value of long-term debt outstanding
|
|
|
|
|
$
|
3,458,294
|
|
|
$
|
3,309,248
|
|
(1)
|
Refinanced on February 22, 2017 by the Term Loan B.
|
(2)
|
Extinguished on March 31, 2017 using proceeds from the Term Loan B.
|
(1)
|
Subject to a
1%
floor.
|
(2)
|
Subject to a
0%
floor.
|
(3)
|
As of February 22, 2017.
|
|
|
Derivative Assets (Liabilities)
|
||||||||
|
|
|
|
Fair Value as of
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Consolidated Balance Sheet Location
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Foreign exchange contracts
|
|
Other accrued liabilities
|
|
$
|
—
|
|
|
$
|
(7,360
|
)
|
Foreign exchange contracts
|
|
Prepaid expenses and other
|
|
5,522
|
|
|
—
|
|
||
Interest rate swaps
|
|
Other accrued liabilities
|
|
(281
|
)
|
|
(8,345
|
)
|
||
Interest rate swaps
|
|
Other noncurrent liabilities
|
|
(2,303
|
)
|
|
(7,339
|
)
|
||
|
|
|
|
$
|
2,938
|
|
|
$
|
(23,044
|
)
|
|
|
Derivative Assets (Liabilities)
|
||||||||
|
|
|
|
Fair Value as of
|
||||||
Derivatives Not Designated as Hedging Instruments
|
|
Consolidated Balance Sheet Location
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Interest rate swaps
|
|
Prepaid expenses and other
|
|
$
|
421
|
|
|
$
|
—
|
|
Interest rate swaps
|
|
Other assets, net
|
|
199
|
|
|
—
|
|
||
Interest rate swaps
|
|
Other accrued liabilities
|
|
(7,775
|
)
|
|
—
|
|
||
Interest rate swaps
|
|
Other noncurrent liabilities
|
|
(3,742
|
)
|
|
—
|
|
||
|
|
|
|
$
|
(10,897
|
)
|
|
$
|
—
|
|
|
|
|
|
Amount of Net Losses (Gains) Reclassified from Accumulated OCI into Income (Effective Portion)
|
||||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
|
Income Statement Location
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||
Foreign exchange contracts
|
|
Cost of revenue
|
|
$
|
(636
|
)
|
|
$
|
93
|
|
|
$
|
884
|
|
|
$
|
1,012
|
|
Interest rate swaps
|
|
Interest Expense
|
|
1,443
|
|
|
582
|
|
|
2,794
|
|
|
1,164
|
|
||||
Total
|
|
|
|
$
|
807
|
|
|
$
|
675
|
|
|
$
|
3,678
|
|
|
$
|
2,176
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
June 30, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Derivatives
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
5,522
|
|
|
$
|
—
|
|
|
$
|
5,522
|
|
|
$
|
—
|
|
Interest rate swap contracts
|
(13,481
|
)
|
|
—
|
|
|
(13,481
|
)
|
|
—
|
|
||||
Total
|
$
|
(7,959
|
)
|
|
$
|
—
|
|
|
$
|
(7,959
|
)
|
|
$
|
—
|
|
|
|
|
Fair Value at Reporting Date Using
|
|||||||||||||
|
December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Derivatives
|
|
|
|
|
|
|
|
|||||||||
Foreign currency forward contracts
|
$
|
(7,360
|
)
|
|
$
|
—
|
|
|
$
|
(7,360
|
)
|
|
$
|
—
|
|
|
Interest rate swap contracts
|
(15,684
|
)
|
|
—
|
|
|
(15,684
|
)
|
|
—
|
|
|||||
Total
|
$
|
(23,044
|
)
|
—
|
|
$
|
—
|
|
|
$
|
(23,044
|
)
|
|
$
|
—
|
|
|
|
Fair Value at
|
|
Carrying Value at
(2)
|
||||||||||||
Financial Instrument
|
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||
Term Loan A
|
|
$
|
571,069
|
|
|
$
|
583,538
|
|
|
$
|
567,993
|
|
|
$
|
582,595
|
|
Term Loan B
|
|
1,905,860
|
|
|
—
|
|
|
1,885,272
|
|
|
—
|
|
||||
Prior Term Loan B
(1)
|
|
—
|
|
|
1,435,993
|
|
|
—
|
|
|
1,417,616
|
|
||||
Incremental Term Loan Facility
(1)
|
|
—
|
|
|
283,413
|
|
|
—
|
|
|
282,354
|
|
||||
Term Loan C
(1)
|
|
—
|
|
|
49,436
|
|
|
—
|
|
|
49,237
|
|
||||
Revolver, $400 million
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5.375% Senior secured notes due 2023
|
|
554,165
|
|
|
542,919
|
|
|
530,000
|
|
|
530,000
|
|
||||
5.25% Senior secured notes due 2023
|
|
520,780
|
|
|
515,000
|
|
|
500,000
|
|
|
500,000
|
|
(1)
|
Refinanced on February 22, 2017 by the Term Loan B.
|
(2)
|
Excludes net unamortized debt issuance costs.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Defined benefit pension and other post retirement benefit plans
|
$
|
(103,099
|
)
|
|
$
|
(105,036
|
)
|
Unrealized loss on foreign currency forward contracts, interest rate swaps, and available-for-sale securities
|
(4,821
|
)
|
|
(15,499
|
)
|
||
Unrealized foreign currency translation gain (loss)
|
5,455
|
|
|
(2,264
|
)
|
||
Total accumulated other comprehensive loss, net of tax
|
$
|
(102,465
|
)
|
|
$
|
(122,799
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations
|
$
|
(4,152
|
)
|
|
$
|
75,195
|
|
|
$
|
73,570
|
|
|
$
|
168,114
|
|
Less: Net income attributable to noncontrolling interests
|
1,113
|
|
|
1,078
|
|
|
2,419
|
|
|
2,180
|
|
||||
Net (loss) income from continuing operations available to common stockholders, basic and diluted
|
$
|
(5,265
|
)
|
|
$
|
74,117
|
|
|
$
|
71,151
|
|
|
$
|
165,934
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares outstanding
|
278,441
|
|
|
277,392
|
|
|
277,900
|
|
|
276,480
|
|
||||
Add: Dilutive effect of stock options and restricted stock awards
|
—
|
|
|
5,609
|
|
|
2,019
|
|
|
6,168
|
|
||||
Diluted weighted-average common shares outstanding
|
278,441
|
|
|
283,001
|
|
|
279,919
|
|
|
282,648
|
|
||||
Earning per share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.02
|
)
|
|
$
|
0.27
|
|
|
0.26
|
|
|
0.60
|
|
||
Diluted
|
$
|
(0.02
|
)
|
|
$
|
0.26
|
|
|
0.25
|
|
|
0.59
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
||||||
Travel Network
|
$
|
635,615
|
|
|
$
|
597,910
|
|
|
$
|
1,299,092
|
|
|
$
|
1,223,386
|
|
Airline and Hospitality Solutions
|
271,780
|
|
|
252,169
|
|
|
529,756
|
|
|
490,549
|
|
||||
Eliminations
|
(6,732
|
)
|
|
(4,837
|
)
|
|
(12,832
|
)
|
|
(9,150
|
)
|
||||
Total revenue
|
$
|
900,663
|
|
|
$
|
845,242
|
|
|
$
|
1,816,016
|
|
|
$
|
1,704,785
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Gross Profit
(a)
|
|
|
|
|
|
|
|
|
|
||||||
Travel Network
|
$
|
274,149
|
|
|
$
|
281,986
|
|
|
$
|
593,167
|
|
|
$
|
586,900
|
|
Airline and Hospitality Solutions
|
122,842
|
|
|
108,469
|
|
|
228,190
|
|
|
209,345
|
|
||||
Corporate
|
(28,413
|
)
|
|
(17,190
|
)
|
|
(52,002
|
)
|
|
(34,784
|
)
|
||||
Total
|
$
|
368,578
|
|
|
$
|
373,265
|
|
|
$
|
769,355
|
|
|
$
|
761,461
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
(b)
|
|
|
|
|
|
|
|
|
|
||||||
Travel Network
|
$
|
245,891
|
|
|
$
|
251,587
|
|
|
$
|
536,113
|
|
|
$
|
524,761
|
|
Airline and Hospitality Solutions
|
101,725
|
|
|
91,945
|
|
|
187,242
|
|
|
174,883
|
|
||||
Total segments
|
347,616
|
|
|
343,532
|
|
|
723,355
|
|
|
699,644
|
|
||||
Corporate
|
(86,199
|
)
|
|
(72,048
|
)
|
|
(164,377
|
)
|
|
(140,680
|
)
|
||||
Total
|
$
|
261,417
|
|
|
$
|
271,484
|
|
|
$
|
558,978
|
|
|
$
|
558,964
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
||||||
Travel Network
|
$
|
20,641
|
|
|
$
|
19,676
|
|
|
$
|
41,109
|
|
|
$
|
38,206
|
|
Airline and Hospitality Solutions
|
39,857
|
|
|
36,555
|
|
|
78,634
|
|
|
72,348
|
|
||||
Total segments
|
60,498
|
|
|
56,231
|
|
|
119,743
|
|
|
110,554
|
|
||||
Corporate
|
32,519
|
|
|
42,212
|
|
|
78,944
|
|
|
84,172
|
|
||||
Total
|
$
|
93,017
|
|
|
$
|
98,443
|
|
|
$
|
198,687
|
|
|
$
|
194,726
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Capital Expenditures
(c)
|
|
|
|
|
|
|
|
|
|
||||||
Travel Network
|
$
|
22,983
|
|
|
$
|
24,185
|
|
|
$
|
49,256
|
|
|
$
|
47,155
|
|
Airline and Hospitality Solutions
|
56,227
|
|
|
71,045
|
|
|
118,389
|
|
|
131,465
|
|
||||
Total segments
|
79,210
|
|
|
95,230
|
|
|
167,645
|
|
|
178,620
|
|
||||
Corporate
|
14,230
|
|
|
17,202
|
|
|
31,209
|
|
|
29,241
|
|
||||
Total
|
$
|
93,440
|
|
|
$
|
112,432
|
|
|
$
|
198,854
|
|
|
$
|
207,861
|
|
(a)
|
The following table sets forth the reconciliation of Adjusted Gross Profit to operating income in our statement of operations (in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Adjusted Gross Profit
|
$
|
368,578
|
|
|
$
|
373,265
|
|
|
$
|
769,355
|
|
|
$
|
761,461
|
|
Less adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
146,856
|
|
|
146,886
|
|
|
291,297
|
|
|
280,742
|
|
||||
Impairment and related charges
(7)
|
92,022
|
|
|
—
|
|
|
92,022
|
|
|
—
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
(1)
|
76,015
|
|
|
65,372
|
|
|
149,712
|
|
|
131,879
|
|
||||
Restructuring and other costs
(4)
|
12,976
|
|
|
—
|
|
|
12,976
|
|
|
—
|
|
||||
Amortization of upfront incentive consideration
(2)
|
16,161
|
|
|
13,896
|
|
|
32,293
|
|
|
26,233
|
|
||||
Stock-based compensation
|
5,830
|
|
|
5,072
|
|
|
9,011
|
|
|
9,146
|
|
||||
Operating income
|
$
|
18,718
|
|
|
$
|
142,039
|
|
|
$
|
182,044
|
|
|
$
|
313,461
|
|
(b)
|
The following table sets forth the reconciliation of Adjusted EBITDA to income from continuing operations in our statement of operations (in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Adjusted EBITDA
|
$
|
261,417
|
|
|
$
|
271,484
|
|
|
$
|
558,978
|
|
|
$
|
558,964
|
|
Less adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization of property and equipment
(1a)
|
63,810
|
|
|
56,214
|
|
|
125,110
|
|
|
109,879
|
|
||||
Amortization of capitalized implementation costs
(1b)
|
8,948
|
|
|
8,211
|
|
|
18,137
|
|
|
16,699
|
|
||||
Acquisition-related amortization
(1c)
|
20,259
|
|
|
34,018
|
|
|
55,440
|
|
|
68,148
|
|
||||
Amortization of upfront incentive consideration
(2)
|
16,161
|
|
|
13,896
|
|
|
32,293
|
|
|
26,233
|
|
||||
Impairment and related charges
(7)
|
92,022
|
|
|
—
|
|
|
92,022
|
|
|
—
|
|
||||
Interest expense, net
|
38,097
|
|
|
37,210
|
|
|
77,658
|
|
|
78,412
|
|
||||
Other, net
(3)
|
752
|
|
|
(876
|
)
|
|
15,986
|
|
|
(4,236
|
)
|
||||
Restructuring and other costs
(4)
|
25,304
|
|
|
1,116
|
|
|
25,304
|
|
|
1,240
|
|
||||
Acquisition-related costs
(5)
|
—
|
|
|
516
|
|
|
—
|
|
|
624
|
|
||||
Litigation costs (reimbursements), net
(6)
|
958
|
|
|
1,901
|
|
|
4,459
|
|
|
(1,945
|
)
|
||||
Stock-based compensation
|
14,724
|
|
|
12,810
|
|
|
22,758
|
|
|
23,099
|
|
||||
Provision for income taxes
|
(15,466
|
)
|
|
31,273
|
|
|
16,241
|
|
|
72,697
|
|
||||
(Loss) income from continuing operations
|
$
|
(4,152
|
)
|
|
$
|
75,195
|
|
|
$
|
73,570
|
|
|
$
|
168,114
|
|
(1)
|
Depreciation and amortization expenses:
|
a.
|
Depreciation and amortization of property and equipment includes software developed for internal use.
|
b.
|
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
|
c.
|
Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures.
|
(2)
|
Our Travel Network business at times makes upfront cash payments or other consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized over an average expected life of the service contract, generally over
three years
to
five years
. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided up front. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.
|
(3)
|
In the first quarter of 2017, we recognized a
$12 million
loss related to debt modification costs associated with our debt refinancing. In the first quarter of 2016, we recognized a gain of
$6 million
associated with the receipt of an earn-out payment from the sale of a business in 2013. In addition, other, net includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
|
(4)
|
Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs. In the second quarter of 2017, we recorded a
$25 million
charge associated with an announced action to reduce our workforce. This reduction aligns our operations with business needs and implements an ongoing cost and organizational structure consistent with our expected growth needs and opportunities.
|
(5)
|
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of the Trust Group and Airpas Aviation (see Note 2, Acquisitions).
|
(6)
|
Litigation costs (reimbursements), net represent charges and legal fee reimbursements associated with antitrust litigation (see Note 11, Contingencies).
|
(7)
|
In the three months ended June 30, 2017, we recorded an impairment charge of
$92 million
associated with net capitalized contract costs related to an Airline Solutions' customer based on our analysis of the recoverability of such amounts. A formal contract dispute resolution
|
(c)
|
Includes capital expenditures and capitalized implementation costs as summarized below (in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Additions to property and equipment
|
$
|
79,092
|
|
|
$
|
89,121
|
|
|
$
|
167,410
|
|
|
$
|
164,593
|
|
Capitalized implementation costs
|
14,348
|
|
|
23,311
|
|
|
31,444
|
|
|
43,268
|
|
||||
Adjusted Capital Expenditures
|
$
|
93,440
|
|
|
$
|
112,432
|
|
|
$
|
198,854
|
|
|
$
|
207,861
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||
Travel Network
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Direct Billable Bookings - Air
|
114,855
|
|
|
111,902
|
|
|
2.6%
|
|
242,219
|
|
|
231,768
|
|
|
4.5%
|
Direct Billable Bookings - Non-Air
|
16,056
|
|
|
15,892
|
|
|
1.0%
|
|
31,394
|
|
|
30,913
|
|
|
1.6%
|
Total Direct Billable Bookings
|
130,911
|
|
|
127,794
|
|
|
2.4%
|
|
273,613
|
|
|
262,681
|
|
|
4.2%
|
Airline Solutions Passengers Boarded
|
215,867
|
|
|
199,788
|
|
|
8.0%
|
|
412,210
|
|
|
383,180
|
|
|
7.6%
|
•
|
these non-GAAP financial measures exclude certain recurring, non-cash charges such as stock-based compensation expense and amortization of acquired intangible assets;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Profit and Adjusted EBITDA do not reflect cash requirements for such replacements;
|
•
|
Adjusted Net Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
|
•
|
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
|
•
|
Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted Gross Profit, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, or Free Cash Flow differently, which reduces their usefulness as comparative measures.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income attributable to common stockholders
|
$
|
(6,487
|
)
|
|
$
|
72,019
|
|
|
$
|
69,452
|
|
|
$
|
177,186
|
|
Loss (income) from discontinued operations, net of tax
|
1,222
|
|
|
2,098
|
|
|
1,699
|
|
|
(11,252
|
)
|
||||
Net income attributable to noncontrolling interests
(1)
|
1,113
|
|
|
1,078
|
|
|
2,419
|
|
|
2,180
|
|
||||
(Loss) Income from continuing operations
|
(4,152
|
)
|
|
75,195
|
|
|
73,570
|
|
|
168,114
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition-related amortization
(2a)
|
20,259
|
|
|
34,018
|
|
|
55,440
|
|
|
68,148
|
|
||||
Impairment and related charges
(8)
|
92,022
|
|
|
—
|
|
|
92,022
|
|
|
—
|
|
||||
Other, net
(4)
|
752
|
|
|
(876
|
)
|
|
15,986
|
|
|
(4,236
|
)
|
||||
Restructuring and other costs
(5)
|
25,304
|
|
|
1,116
|
|
|
25,304
|
|
|
1,240
|
|
||||
Acquisition-related costs
(6)
|
—
|
|
|
516
|
|
|
—
|
|
|
624
|
|
||||
Litigation costs (reimbursements), net
(7)
|
958
|
|
|
1,901
|
|
|
4,459
|
|
|
(1,945
|
)
|
||||
Stock-based compensation
|
14,724
|
|
|
12,810
|
|
|
22,758
|
|
|
23,099
|
|
||||
Tax impact of net income adjustments
|
(52,735
|
)
|
|
(20,633
|
)
|
|
(74,303
|
)
|
|
(36,349
|
)
|
||||
Adjusted Net Income from continuing operations
|
$
|
97,132
|
|
|
$
|
104,047
|
|
|
$
|
215,236
|
|
|
$
|
218,695
|
|
Adjusted Net Income from continuing operations per share
|
$
|
0.35
|
|
|
$
|
0.37
|
|
|
$
|
0.77
|
|
|
$
|
0.77
|
|
Diluted weighted-average common shares outstanding
(9)
|
279,833
|
|
|
283,001
|
|
|
279,919
|
|
|
282,648
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income from continuing operations
|
$
|
97,132
|
|
|
$
|
104,047
|
|
|
$
|
215,236
|
|
|
$
|
218,695
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization of property and equipment
(2b)
|
63,810
|
|
|
56,214
|
|
|
125,110
|
|
|
109,879
|
|
||||
Amortization of capitalized implementation costs
(2c)
|
8,948
|
|
|
8,211
|
|
|
18,137
|
|
|
16,699
|
|
||||
Amortization of upfront incentive consideration
(3)
|
16,161
|
|
|
13,896
|
|
|
32,293
|
|
|
26,233
|
|
||||
Interest expense, net
|
38,097
|
|
|
37,210
|
|
|
77,658
|
|
|
78,412
|
|
||||
Remaining provision for income taxes
|
37,269
|
|
|
51,906
|
|
|
90,544
|
|
|
109,046
|
|
||||
Adjusted EBITDA
|
$
|
261,417
|
|
|
$
|
271,484
|
|
|
$
|
558,978
|
|
|
$
|
558,964
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
208,576
|
|
|
$
|
61,868
|
|
|
$
|
(251,726
|
)
|
|
$
|
18,718
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
30,099
|
|
|
21,995
|
|
|
94,762
|
|
|
146,856
|
|
||||
Impairment and related charges
(8)
|
—
|
|
|
—
|
|
|
92,022
|
|
|
92,022
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
19,313
|
|
|
38,979
|
|
|
17,723
|
|
|
76,015
|
|
||||
Restructuring and other costs
(5)
|
—
|
|
|
—
|
|
|
12,976
|
|
|
12,976
|
|
||||
Amortization of upfront incentive consideration
(3)
|
16,161
|
|
|
—
|
|
|
—
|
|
|
16,161
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
5,830
|
|
|
5,830
|
|
||||
Adjusted Gross Profit
|
274,149
|
|
|
122,842
|
|
|
(28,413
|
)
|
|
368,578
|
|
||||
Selling, general and administrative
|
(30,099
|
)
|
|
(21,995
|
)
|
|
(94,762
|
)
|
|
(146,856
|
)
|
||||
Joint venture equity income
|
513
|
|
|
—
|
|
|
—
|
|
|
513
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
1,328
|
|
|
878
|
|
|
14,796
|
|
|
17,002
|
|
||||
Restructuring and other costs
(5)
|
—
|
|
|
—
|
|
|
12,328
|
|
|
12,328
|
|
||||
Litigation costs, net
(7)
|
—
|
|
|
—
|
|
|
958
|
|
|
958
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
8,894
|
|
|
8,894
|
|
||||
Adjusted EBITDA
|
$
|
245,891
|
|
|
$
|
101,725
|
|
|
$
|
(86,199
|
)
|
|
$
|
261,417
|
|
|
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, net
(7)
|
—
|
|
|
—
|
|
|
1,901
|
|
|
1,901
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
7,738
|
|
|
7,738
|
|
||||
Adjusted EBITDA
|
$
|
251,587
|
|
|
$
|
91,945
|
|
|
$
|
(72,048
|
)
|
|
$
|
271,484
|
|
|
Six Months Ended June 30, 2017
|
|||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
|||||||||
Operating income (loss)
|
$
|
461,300
|
|
|
$
|
108,608
|
|
|
$
|
(387,864
|
)
|
|
$
|
182,044
|
|
|
Add back:
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative
|
61,182
|
|
|
42,579
|
|
—
|
|
187,536
|
|
|
291,297
|
|
||||
Impairment and related charges
(8)
|
—
|
|
|
—
|
|
|
92,022
|
|
|
92,022
|
|
|||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization
(2)
|
38,392
|
|
|
77,003
|
|
|
34,317
|
|
|
149,712
|
|
|||||
Restructuring and other costs
(5)
|
—
|
|
|
—
|
|
|
12,976
|
|
|
12,976
|
|
|||||
Amortization of upfront incentive consideration
(3)
|
32,293
|
|
|
—
|
|
|
—
|
|
|
32,293
|
|
|||||
Stock-based compensat
ion
|
—
|
|
|
—
|
|
|
9,011
|
|
|
9,011
|
|
|||||
Adjusted Gross Profit
|
593,167
|
|
|
228,190
|
|
|
(52,002
|
)
|
|
769,355
|
|
|||||
Selling, general and administrative
|
(61,182
|
)
|
|
(42,579
|
)
|
|
(187,536
|
)
|
|
(291,297
|
)
|
|||||
Joint venture equity income
|
1,411
|
|
|
—
|
|
|
—
|
|
|
1,411
|
|
|||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization
(2)
|
2,717
|
|
|
1,631
|
|
|
44,627
|
|
|
48,975
|
|
|||||
Restructuring and other costs
(5)
|
—
|
|
|
—
|
|
|
12,328
|
|
|
12,328
|
|
|||||
Litigation costs, net
(7)
|
—
|
|
|
—
|
|
|
4,459
|
|
|
4,459
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
13,747
|
|
|
13,747
|
|
|||||
Adjusted EBITDA
|
$
|
536,113
|
|
|
$
|
187,242
|
|
|
$
|
(164,377
|
)
|
|
$
|
558,978
|
|
|
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 compensat
ion
|
—
|
|
|
—
|
|
|
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
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Additions to property and equipment
|
$
|
79,092
|
|
|
$
|
89,121
|
|
|
$
|
167,410
|
|
|
$
|
164,593
|
|
Capitalized implementation costs
|
14,348
|
|
|
23,311
|
|
|
31,444
|
|
|
43,268
|
|
||||
Adjusted Capital Expenditures
|
$
|
93,440
|
|
|
$
|
112,432
|
|
|
$
|
198,854
|
|
|
$
|
207,861
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash provided by operating activities
|
$
|
277,876
|
|
|
$
|
263,784
|
|
Cash used in investing activities
|
(167,410
|
)
|
|
(329,570
|
)
|
||
Cash used in financing activities
|
(162,312
|
)
|
|
(174,334
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash provided by operating activities
|
$
|
277,876
|
|
|
$
|
263,784
|
|
Additions to property and equipment
|
(167,410
|
)
|
|
(164,593
|
)
|
||
Free Cash Flow
|
$
|
110,466
|
|
|
$
|
99,191
|
|
(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%.
|
(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 2017, we recognized a $12 million loss related to debt modification costs associated with our debt refinancing. In the first quarter of 2016, we recognized a gain of
$6 million
associated with the receipt of an earn-out payment from the sale of a business in 2013. In addition, other, net includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
|
(5)
|
Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs. In the second quarter of 2017, we recorded $25 million charge associated with an announced action to reduce our workforce. This reduction aligns our operations with business needs and implements an ongoing cost and organizational structure consistent with our expected growth needs and opportunities.
|
(6)
|
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of the Trust Group and Airpas Aviation.
|
(7)
|
Litigation costs (reimbursements), net represent charges and legal fee reimbursements associated with antitrust litigation.
|
(8)
|
In the three months ended June 30, 2017, we recorded an impairment charge of
$92 million
associated with net capitalized contract costs related to an Airline Solutions' customer based on our analysis of the recoverability of such amounts. A formal contract dispute resolution process has commenced, and due to the uncertainty of the ultimate outcome, we have recorded this estimated charge. See "—Recent Developments Affecting our Results of Operations."
|
(9)
|
The diluted weighted-average common shares outstanding presented for the
three months ended June 30, 2017
differs from GAAP and assumes the inclusion of 1,392,438 common stock equivalents associated with stock options and restricted stock awards. Because we recognized a loss from continuing operations during the
three months ended June 30, 2017
, the basic weighted-average shares outstanding and the diluted-weighted average shares outstanding are otherwise the same under GAAP, as described in Note 10, Earnings Per Share, to our consolidated financial statements.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||
|
2017
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Amounts in thousands)
|
|||||||||||||
Revenue
|
$
|
900,663
|
|
$
|
845,242
|
|
|
$
|
1,816,016
|
|
|
$
|
1,704,785
|
|
Cost of revenue
|
643,067
|
|
556,317
|
|
|
1,250,653
|
|
|
1,110,582
|
|
||||
Selling, general and administrative
|
146,856
|
|
146,886
|
|
|
291,297
|
|
|
280,742
|
|
||||
Impairment and related charges
|
92,022
|
|
—
|
|
|
92,022
|
|
|
—
|
|
||||
Operating income
|
18,718
|
|
142,039
|
|
|
182,044
|
|
|
313,461
|
|
||||
Interest expense, net
|
(38,097
|
)
|
(37,210
|
)
|
|
(77,658
|
)
|
|
(78,412
|
)
|
||||
Joint venture equity income
|
513
|
|
763
|
|
|
1,411
|
|
|
1,526
|
|
||||
Other (expense) income, net
|
(752
|
)
|
876
|
|
|
(15,986
|
)
|
|
4,236
|
|
||||
(Loss) income from continuing operations before income taxes
|
(19,618
|
)
|
106,468
|
|
|
89,811
|
|
|
240,811
|
|
||||
Provision for income taxes
|
(15,466
|
)
|
31,273
|
|
|
16,241
|
|
|
72,697
|
|
||||
(Loss) income from continuing operations
|
$
|
(4,152
|
)
|
$
|
75,195
|
|
|
$
|
73,570
|
|
|
$
|
168,114
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
635,615
|
|
|
$
|
597,910
|
|
|
$
|
37,705
|
|
|
6
|
%
|
Airline and Hospitality Solutions
|
271,780
|
|
|
252,169
|
|
|
19,611
|
|
|
8
|
%
|
|||
Total segment revenue
|
907,395
|
|
|
850,079
|
|
|
57,316
|
|
|
7
|
%
|
|||
Eliminations
|
(6,732
|
)
|
|
(4,837
|
)
|
|
(1,895
|
)
|
|
(39
|
)%
|
|||
Total revenue
|
$
|
900,663
|
|
|
$
|
845,242
|
|
|
$
|
55,421
|
|
|
7
|
%
|
•
|
a $14 million increase in Airline Solutions’ SabreSonic Customer Sales and Service (“SabreSonic CSS”) revenue for the
three months ended June 30, 2017
compared to the same period in the prior year. Passengers Boarded increased by
8%
to
216 million
for the
three months ended June 30, 2017
driven by the cut-over of Alitalia Airlines to SabreSonic CSS in the fourth quarter of 2016 and growth from existing customers;
|
•
|
a $5 million increase in Airline Solutions’ commercial and operations solutions revenue driven by growth in multiple products across our portfolio;
|
•
|
a $5 million increase in Hospitality Solutions revenue for the
three months ended June 30, 2017
compared to the same period in the prior year, driven primarily by an increase in Central Reservation System (“CRS”) revenue from new and existing customers; and
|
•
|
a $4 million decrease in discrete professional service fees revenue, as a result of reduced sales compared to the prior period.
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
361,465
|
|
|
$
|
315,924
|
|
|
$
|
45,541
|
|
|
14
|
%
|
Airline and Hospitality Solutions
|
148,938
|
|
|
143,700
|
|
|
5,238
|
|
|
4
|
%
|
|||
Eliminations
|
(6,703
|
)
|
|
(4,837
|
)
|
|
(1,866
|
)
|
|
(39
|
)%
|
|||
Total segment cost of revenue
|
503,700
|
|
|
454,787
|
|
|
48,913
|
|
|
11
|
%
|
|||
Corporate
|
47,191
|
|
|
22,262
|
|
|
24,929
|
|
|
112
|
%
|
|||
Depreciation and amortization
|
76,015
|
|
|
65,372
|
|
|
10,643
|
|
|
16
|
%
|
|||
Amortization of upfront incentive consideration
|
16,161
|
|
|
13,896
|
|
|
2,265
|
|
|
16
|
%
|
|||
Total cost of revenue
|
$
|
643,067
|
|
|
$
|
556,317
|
|
|
$
|
86,750
|
|
|
16
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative
|
$
|
146,856
|
|
|
$
|
146,886
|
|
|
$
|
(30
|
)
|
|
—
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Impairment and related charges
|
$
|
92,022
|
|
|
$
|
—
|
|
|
$
|
92,022
|
|
|
100
|
%
|
|
Three Months Ended June 30,
|
|
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
(15,466
|
)
|
|
$
|
31,273
|
|
|
$
|
(46,739
|
)
|
|
(149
|
)%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
1,299,092
|
|
|
$
|
1,223,386
|
|
|
$
|
75,706
|
|
|
6
|
%
|
Airline and Hospitality Solutions
|
529,756
|
|
|
490,549
|
|
|
39,207
|
|
|
8
|
%
|
|||
Total segment revenue
|
1,828,848
|
|
|
1,713,935
|
|
|
114,913
|
|
|
7
|
%
|
|||
Eliminations
|
(12,832
|
)
|
|
(9,150
|
)
|
|
(3,682
|
)
|
|
(40
|
)%
|
|||
Total revenue
|
$
|
1,816,016
|
|
|
$
|
1,704,785
|
|
|
$
|
111,231
|
|
|
7
|
%
|
•
|
an $18 million increase in Airline Solutions’ SabreSonic CSS revenue for the
six months ended June 30, 2017
compared to the same period in the prior year. Passengers Boarded increased by
8%
to
412 million
for the
six months ended June 30, 2017
, driven by the cutover of Alitalia Airlines to SabreSonic CSS in the fourth quarter of 2016 and also by existing customers;
|
•
|
an $8 million increase in Airline Solutions’ commercial and operations solutions revenue driven by growth in multiple products across our portfolio;
|
•
|
an $18 million increase in Hospitality Solutions revenue for the
six months ended June 30, 2017
compared to the same period in the prior year driven primarily by an increase in CRS revenue from new and existing customers; and
|
•
|
a $4 million decrease in discrete professional service fees revenue, as a result of reduced sales compared to the prior period.
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
705,924
|
|
|
$
|
636,486
|
|
|
$
|
69,438
|
|
|
11
|
%
|
Airline and Hospitality Solutions
|
301,566
|
|
|
281,204
|
|
|
20,362
|
|
|
7
|
%
|
|||
Eliminations
|
(12,783
|
)
|
|
(9,063
|
)
|
|
(3,720
|
)
|
|
(41
|
)%
|
|||
Total segment cost of revenue
|
994,707
|
|
|
908,627
|
|
|
86,080
|
|
|
9
|
%
|
|||
Corporate
|
73,941
|
|
|
43,843
|
|
|
30,098
|
|
|
69
|
%
|
|||
Depreciation and amortization
|
149,712
|
|
|
131,879
|
|
|
17,833
|
|
|
14
|
%
|
|||
Amortization of upfront incentive consideration
|
32,293
|
|
|
26,233
|
|
|
6,060
|
|
|
23
|
%
|
|||
Total cost of revenue
|
$
|
1,250,653
|
|
|
$
|
1,110,582
|
|
|
$
|
140,071
|
|
|
13
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative
|
$
|
291,297
|
|
|
$
|
280,742
|
|
|
$
|
10,555
|
|
|
4
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Impairment and related charges
|
$
|
92,022
|
|
|
$
|
—
|
|
|
$
|
92,022
|
|
|
100
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Other income (expense), net
|
$
|
(15,986
|
)
|
|
$
|
4,236
|
|
|
$
|
(20,222
|
)
|
|
(477
|
)%
|
|
Six Months Ended June 30,
|
|
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
16,241
|
|
|
$
|
72,697
|
|
|
$
|
(56,456
|
)
|
|
(78
|
)%
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Cash and cash equivalents
|
$
|
306,696
|
|
|
$
|
364,114
|
|
Available balance under the Revolver
|
377,806
|
|
|
365,006
|
|
||
Reductions to the Revolver:
|
|
|
|
||||
Revolver outstanding balance
|
—
|
|
|
—
|
|
||
Outstanding letters of credit
|
22,194
|
|
|
34,994
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(Amounts in thousands)
|
||||||
Cash provided by operating activities
|
$
|
277,876
|
|
|
$
|
263,784
|
|
Cash used in investing activities
|
(167,410
|
)
|
|
(329,570
|
)
|
||
Cash used in financing activities
|
(162,312
|
)
|
|
(174,334
|
)
|
||
Cash used in discontinued operations
|
(2,780
|
)
|
|
(12,407
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(2,792
|
)
|
|
(293
|
)
|
||
Decrease in cash and cash equivalents
|
$
|
(57,418
|
)
|
|
$
|
(252,820
|
)
|
•
|
we received proceeds of $1,898 million (net of $2 million discount) from the Term Loan B, which were used to pay off approximately $1,765 million of all existing classes of outstanding term loans (other than the Term Loan A) and $12 million in debt issuance costs. The remaining proceeds were used for purposes of repaying approximately $80 million of Sabre's outstanding mortgage on its corporate headquarters, and for other general corporate purposes;
|
•
|
we made quarterly payments totaling $12 million on the principal outstanding on our term loans;
|
•
|
we made our first annual payment on the TRA liability for $99 million, excluding interest;
|
•
|
we paid
$78 million
in dividends on our common stock;
|
•
|
we repurchased 1,015,558 shares of our common stock outstanding totaling $22 million; and
|
•
|
we received proceeds of $20 million from the settlement of employee stock-option awards and paid $10 million in income tax withholdings associated with the settlement of employee restricted-stock awards
.
|
•
|
we paid the remaining principal of $165 million on our senior secured notes due 2016, which matured in March 2016;
|
•
|
we made draws on our Prior Revolver totaling $378 million and payments totaling $308 million resulting in an outstanding balance of $70 million as of June 30, 2016;
|
•
|
we made payments totaling $11 million on the principal outstanding on our term loans and mortgage;
|
•
|
we paid $72 million in dividends on our common stock; and
|
•
|
we received proceeds of $15 million from the settlement of employee stock-option awards and paid $11 million in income tax withholdings associated with the settlement of employee restricted-stock awards
.
|
•
|
allocation of contract revenues among various products and solutions, and the timing of when those revenues are recognized, will be impacted primarily due to accounting for variable consideration within the standard, for a subset of our Airline Solutions business,
|
•
|
a term license will be considered a distinct performance obligation with revenue recognition occurring once control is transferred to the customer, resulting in acceleration of revenue recognition, while maintenance services will continue to be recognized over the term of the contract, particularly for our Airline Solutions business, and
|
•
|
deferral of incremental costs to obtain a contract, and recognition of them over the contract period or expected customer life will result in the recognition of a deferred charge on our balance sheet and will impact our Airline and Hospitality Solutions segment.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
general and local economic conditions;
|
•
|
financial instability of travel suppliers and the impact of any fundamental corporate changes to such travel suppliers, such as airline bankruptcies or consolidations, on the cost and availability of travel content;
|
•
|
factors that affect demand for travel such as outbreaks of contagious diseases, including Zika, Ebola and the MERS virus, increases in fuel prices, changing attitudes towards the environmental costs of travel and safety concerns;
|
•
|
political events like acts or threats of terrorism, hostilities, and war;
|
•
|
inclement weather, natural or man-made disasters; and
|
•
|
factors that affect supply of travel such as travel restrictions or changes to regulations governing airlines and the travel industry, like government sanctions that do or would prohibit doing business with certain state-owned travel suppliers, work stoppages or labor unrest at any of the major airlines, hotels or airports.
|
•
|
the features of the implemented software may not meet the expectations or fit the business model of the customer;
|
•
|
our limited pool of trained experts for implementations cannot quickly and easily be augmented for complex implementation projects, such that resources issues, if not planned and managed effectively, could lead to costly project delays;
|
•
|
customer-specific factors, such as the stability, functionality, interconnection and scalability of the customer’s pre-existing information technology infrastructure, as well as financial or other circumstances could destabilize, delay or prevent the completion of the implementation process, which, for airline reservations systems, typically takes 12 to 18 months; and
|
•
|
customers and their partners may not fully or timely perform the actions required to be performed by them to ensure successful implementation, including measures we recommend to safeguard against technical and business risks.
|
•
|
business, political and economic instability in foreign locations, including actual or threatened terrorist activities, and military action;
|
•
|
changes in foreign currency exchange rates and financial risk arising from transactions in multiple currencies;
|
•
|
adverse laws and regulatory requirements, including more comprehensive regulation in the EU and the possible effects of the Brexit vote;
|
•
|
difficulty in developing, managing and staffing international operations because of distance, language and cultural differences;
|
•
|
disruptions to or delays in the development of communication and transportation services and infrastructure;
|
•
|
consumer attitudes, including the preference of customers for local providers;
|
•
|
increasing labor costs due to high wage inflation in foreign locations, differences in general employment conditions and regulations, and the degree of employee unionization and activism;
|
•
|
export or trade restrictions or currency controls;
|
•
|
more restrictive data privacy requirements;
|
•
|
governmental policies or actions, such as consumer, labor and trade protection measures and travel restrictions;
|
•
|
taxes, restrictions on foreign investment and limits on the repatriation of funds;
|
•
|
diminished ability to legally enforce our contractual rights; and
|
•
|
decreased protection for intellectual property.
|
•
|
Any of these providers fail to enable us to provide our customers and suppliers with reliable, real-time access to our systems. For example, in 2013, we experienced a significant outage of the Sabre platform due to a failure on the part of one of our service providers. This outage, which affected both our Travel Network business and our Airline Solutions business, lasted several hours and caused significant problems for our customers. Any such future outages could cause damage to our reputation, customer loss and require us to pay compensation to affected customers for which we may not be indemnified or compensated.
|
•
|
Our arrangements with such providers are terminated or impaired and we cannot find alternative sources of technology or systems support on commercially reasonable terms or on a timely basis. For example, our substantial dependence on DXC for many of our systems makes it difficult for us to switch vendors and makes us more sensitive to changes in DXC's pricing for its services.
|
•
|
While we take reasonable steps to protect our brands and trademarks, we may not be successful in maintaining or defending our brands or preventing third parties from adopting similar brands. If our competitors infringe our principal trademarks, our brands may become diluted or if our competitors introduce brands or products that cause confusion with our brands or products in the marketplace, the value that our consumers associate with our brands may become diminished, which could negatively impact revenue.
|
•
|
Our patent applications may not be granted, and the patents we own could be challenged, invalidated, narrowed or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Once our patents expire, or if they are invalidated, narrowed or circumvented, our competitors may be able to utilize the technology protected by our patents which may adversely affect our business.
|
•
|
Although we rely on copyright laws to protect the works of authorship created by us, we do not generally register the copyrights in our copyrightable works where such registration is permitted. Copyrights of U.S. origin must be registered before the copyright owner may bring an infringement suit in the United States. Accordingly, if one of our unregistered copyrights of U.S. origin is infringed by a third party, we will need to register the copyright before we can file an infringement suit in the United States, and our remedies in any such infringement suit may be limited.
|
•
|
We use reasonable efforts to protect our trade secrets. However, protecting trade secrets can be difficult and our efforts may provide inadequate protection to prevent unauthorized use, misappropriation, or disclosure of our trade secrets, know how, or other proprietary information.
|
•
|
We also rely on our domain names to conduct our online businesses. While we use reasonable efforts to protect and maintain our domain names, if we fail to do so the domain names may become available to others. Further, the regulatory bodies that oversee domain name registration may change their regulations in a way that adversely affects our ability to register and use certain domain names.
|
•
|
general economic and capital market conditions;
|
•
|
the availability of credit from banks or other lenders;
|
•
|
investor confidence in us; and
|
•
|
our results of operations.
|
•
|
increased vulnerability to general adverse economic and industry conditions;
|
•
|
higher interest expense if interest rates increase on our floating rate borrowings and our hedging strategies do not effectively mitigate the effects of these increases;
|
•
|
need to divert a significant portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash to fund working capital, capital expenditures, acquisitions, investments and other general corporate purposes;
|
•
|
limited ability to obtain additional financing, on terms we find acceptable, if needed, for working capital, capital expenditures, expansion plans and other investments, which may adversely affect our ability to implement our business strategy;
|
•
|
limited flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate or to take advantage of market opportunities; and
|
•
|
a competitive disadvantage compared to our competitors that have less debt.
|
•
|
re-measurement gains and losses from changes in the value of foreign denominated assets and liabilities;
|
•
|
translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars, our functional currency, upon consolidation;
|
•
|
planning risk related to changes in exchange rates between the time we prepare our annual and quarterly forecasts and when actual results occur; and
|
•
|
the impact of relative exchange rate movements on cross-border travel, principally travel between Europe and the United States.
|
•
|
incur liens on our property, assets and revenue;
|
•
|
borrow money, and guarantee or provide other support for the indebtedness of third parties;
|
•
|
pay dividends or make other distributions on, redeem or repurchase our capital stock;
|
•
|
prepay, redeem or repurchase certain of our indebtedness;
|
•
|
enter into certain change of control transactions;
|
•
|
make investments in entities that we do not control, including joint ventures;
|
•
|
enter into certain asset sale transactions, including divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries;
|
•
|
enter into certain transactions with affiliates;
|
•
|
enter into secured financing arrangements;
|
•
|
enter into sale and leaseback transactions;
|
•
|
change our fiscal year; and
|
•
|
enter into substantially different lines of business.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period 2017
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(2)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
April 1 to April 30
|
|
375,398
|
|
|
$
|
21.40
|
|
|
375,398
|
|
|
$
|
480,427,345
|
|
May 1 to May 31
|
|
107,660
|
|
|
24.54
|
|
|
107,660
|
|
|
477,785,853
|
|
||
June 1 to June 30
|
|
—
|
|
|
—
|
|
|
—
|
|
|
477,785,853
|
|
||
Total
|
|
483,058
|
|
|
|
|
|
483,058
|
|
|
|
(1)
|
Represents shares repurchased in open market transactions pursuant to the Share Repurchase Program (as defined below).
|
(2)
|
Share repurchases were made pursuant to a multi-year share repurchase program (the "Share Repurchase Program") authorized by our board of directors on February 6, 2017. This program was announced on February 7, 2017 and allows for the purchase of up to $500 million of outstanding shares of our common stock in privately negotiated transactions or in the open market, or otherwise.
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description of Exhibit
|
3.2
|
|
|
3.3
|
|
|
10.60+*
|
|
|
10.61+*
|
|
|
10.62*
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
SABRE CORPORATION
|
|
|
|
|
(Registrant)
|
Date:
|
August 1, 2017
|
By:
|
|
/s/ Richard A. Simonson
|
|
|
|
|
Richard A. Simonson
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(principal financial officer of the registrant)
|
|
EXHIBIT 10.60
|
(a)
|
You will serve as Executive Vice President of Sabre Corporation and President of Sabre Airline Solutions. You shall have all of the authority, and perform all of the functions, that are consistent with such position, as determined by the Company and generally described as the top executive responsible for overseeing all operations for Sabre Airline Solutions. You shall perform all such duties faithfully, industriously, and to the best of your experience and talent. Except as otherwise expressly provided in this Agreement, you shall abide in all material respects by all Company policies and directives applicable to you. You will report directly to the Chief Executive Officer of the Company or his designee.
|
(b)
|
During the Employment Period (as defined below), excluding any periods of vacation and sick leave to which you are entitled, you shall devote your full working time, energy and attention to the performance of your duties and responsibilities hereunder and shall faithfully and diligently endeavor to promote the business and best interests of the Company. During the Employment Period, you may not, without the prior written consent of the Company, directly or indirectly, operate, participate in the management, operations or control of, or act as an executive, officer, consultant, agent or representative of, any type of business or service (other than as an executive of the Company or any of its subsidiaries or affiliates). It shall not, however, be a violation of the foregoing provisions of this
Section 1(b)
for you to (i) subject to the approval of the Chief Executive Officer of the Company, serve as an officer or director or otherwise participate in educational, welfare, social, religious and civic organizations, (ii) subject to the approval of the Chief Executive Officer of the Company, serve as a director of a corporation that is not a Competitor (as defined in Section 8(c)), or (iii) manage your or your family’s personal, financial and legal affairs, so long as, in the case of clause (i), (ii) or (iii), any such activities do not interfere with the performance of your duties and responsibilities to the Company as provided hereunder.
|
(a)
|
You will be eligible to participate in the Company’s employee benefit plans, policies and other compensation and perquisite programs provided to other senior executives of the Company, subject to the terms, conditions and eligibility requirements of each such benefit plan, policy or other compensation program, including amendments or modifications thereto. During the Employment Period, you shall be entitled to paid vacation and sick leave in accordance with the Company’s vacation, holiday and other pay for time not worked policies as in effect from time to time; provided that you will be entitled to not less than five weeks of paid vacation per year, prorated for partial years of employment. Such benefit plans, policies or other compensation and perquisite programs may be discontinued or changed from time to time in the Company’s sole discretion.
|
(b)
|
During the Employment Period, the Company shall reimburse you for all reasonable travel and other business expenses incurred by you in the performance of your duties to the Company in accordance with the Company’s expense reimbursement policy as in effect from time to time, subject to your compliance with the terms of such policy.
|
(a)
|
Termination without Cause or by You for Good Reason
. The Company may terminate your employment at any time without Cause (as defined below) upon 60 days’ notice, or you may terminate your employment for Good Reason (as defined below), upon compliance with the notice and cure period described below. Notwithstanding anything herein to the contrary, in the event that your employment is terminated by the Company as a result of the giving of a notice of non-renewal of the Initial Term or any Additional Term by the Company, such termination shall be deemed for all purposes to be a termination by the Company without Cause at the end of the then-current Term. In the event your employment is terminated by the Company without Cause or by you for Good Reason, the Company shall pay to you: within 30 days of the Date of Termination: (A) your Base Salary through the date of your termination, (B) reimbursement for any unreimbursed business expenses incurred by you in accordance with Company policy prior to the date of your termination that are subject to reimbursement and (C) payment for vacation time accrued as of the date of your termination but unused (such amounts under clauses (A), (B) and (C) above, collectively the “
Accrued Obligations
”). In addition, on the date the annual bonuses are otherwise paid to executives who remain employed with the Company, you shall receive, in the year of your termination, an amount equal to any accrued but unpaid annual bonus for the immediately preceding year that you
would have been paid had you remained employed on the date such bonuses are paid.
|
(b)
|
Termination on Death/Disability
. In the event your employment is terminated as a result of your death or Disability, the Company will pay to you or your beneficiary the Accrued Obligations and any accrued but unpaid annual bonus for the immediately preceding year that you would have been paid had you remained employed on the date such bonuses are paid in year in which you die or become Disabled.
|
(c)
|
Voluntary Termination
. You may terminate your employment for any reason upon 60 days’ notice to the Company. If you voluntarily terminate your employment (other than for Good Reason), the Company will pay to you the Accrued Obligations within 30 days of such termination of employment.
|
(d)
|
Termination for Cause
. The Company may terminate your employment at any time for Cause. In the event your employment is terminated for Cause, the Company will pay to you the Accrued Obligations no later than 30 days of such termination of employment.
|
(a)
|
Non-solicitation of Company Customers and Suppliers
. During the Employment Period and for 18 months following any Date of Termination, you shall not, directly or indirectly, on behalf of yourself or of anyone other than the Company, solicit or hire or attempt to solicit or hire (or assist any third party in soliciting or hiring or attempting to solicit or hire) any Customer or Supplier in connection with any business activity that then competes with the Company.
|
(b)
|
Non-solicitation of Company Employees
. During the Employment Period and for 18 months following any Date of Termination, you shall not, without the prior written consent of the Chief Executive Officer of the Company, directly or indirectly, on behalf of yourself or any third party, solicit or hire or recruit or, other than in the good faith performance of your duties, induce or encourage (or assist any third party in hiring, soliciting, recruiting, inducing or encouraging) any employees of the Company or any individuals who were employees within the six month period immediately prior thereto to terminate or otherwise alter his or her employment with the Company. Notwithstanding the foregoing, the restrictions contained in this
Section 8(b)
shall not apply to (i) general solicitations that are not specifically directed to employees of the Company or (ii) serving as a reference at the request of an employee.
|
(c)
|
Non-competition with the Company
. During the Employment Period and for 18 months following any Date of Termination, you shall not, directly or indirectly, whether as an employee, director, owner, partner, shareholder (other than the passive ownership of securities in any public enterprise which represent no more than five percent (5%) of the voting power of all securities of such enterprise), consultant, agent, co-venturer, or independent contractor or otherwise, or through any “person” (which, for purposes of this subsection, shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof), perform any services for or on behalf of, any Competitor of the Company. For purposes of this
Section 8
, a Competitor of the Company shall mean (i) any entity or business (x) that competes or (y) engages in a line of business that competes, in each of (x) and (y), with the business of the Company, and (ii) any unit, division, line of business, parent, subsidiary, affiliate (as defined in Rule 144 under the Securities Act of 1933, as amended), successor or assign of Travelport, Amadeus, AMEX, Etihad Airways, American Airlines, United Airlines, Delta Airlines, Lufthansa Group, Expedia, Priceline, TripAdvisor, Alphabet, Amazon, Facebook, Concur/SAP, Oracle, Farelogix, TravelClick, Carlson Wagonlit, BCD Travel, Hewlett Packard Enterprises, Travelsky, Hogg Robinson Group Travel, Computer Sciences Corporation, SITA, Hewlett Packard, or Jeppesen, it being understood and agreed in the event that any of such entities and their respective affiliates, successors and assigns no longer engages in a line of business that competes with any business of the Company, such entity shall no longer be deemed a Competitor of the Company for purposes of this
Section 8
.
|
(d)
|
Non-disclosure of Confidential Information and Trade Secrets
. During the Employment Period and thereafter, except in the good faith performance of your duties hereunder or where required by law, statute, regulation or rule of any governmental body or agency, or pursuant to a subpoena or court order, you shall not, directly or indirectly, for your own account or for the account of any other person, firm or entity, use or disclose any Confidential Information or proprietary Trade Secrets of the Company to any third person unless such Confidential Information or Trade Secret has been previously disclosed to the public or is in the public domain (other than by reason of your breach of this paragraph).
|
(e)
|
Non-Disparagement.
You agree not to defame or disparage any of the Company or any of their respective officers, directors, members, executives or employees. You agree to reasonably cooperate with the Company (at no expense to you) in refuting any defamatory or disparaging remarks by any third party made in respect of the Company or their respective directors, members, officers, executives or employees. The Company agrees to instruct its executive officers not to, other than in connection with the good faith performance of their duties or exercise of their rights, defame or disparage you.
|
(f)
|
Enforceability of Covenants
. You acknowledge that the Company has a present and future expectation of business from and with the Customers and Suppliers. You acknowledge the reasonableness of the term, geographical territory, and scope of the covenants set forth in this
Section 8
, and you agree that you will not, in any action, suit or other proceeding, deny the reasonableness of, or assert the unreasonableness of, the premises, consideration or scope of the covenants set forth herein and you hereby waive any such defense. You further acknowledge that complying with the provisions contained in this Agreement will not preclude you from engaging in a lawful profession, trade or business, or from becoming gainfully employed. You agree that your covenants under this
Section 8
are separate and distinct obligations under this Agreement, and the failure or alleged failure of the Company or the Board to perform obligations under any other provisions of this Agreement shall not constitute a defense to the enforceability of your covenants and obligations under this
Section 8
. You and the Company each agrees that any breach of any covenant under this
Section 8
may result in irreparable damage and injury to the other party and that the other party will be entitled to seek temporary and permanent injunctive relief in any court of competent jurisdiction without the necessity of posting any bond, unless otherwise required by the court.
|
(g)
|
Certain Exceptions
. Notwithstanding anything set forth herein or in
Exhibit A
to the contrary, nothing in this Agreement shall (i) prohibit you from making reports of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934, as amended, or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of federal law or regulation, or (ii) require notification or prior approval by the Company of any such report; provided that, you are not authorized to disclose communications with counsel that were made for the purpose of receiving legal advice or that contain legal advice or that are protected by the attorney work product or similar privilege. Furthermore, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made under seal.
|
(a)
|
If, after the Effective Time, none of the Company or any of its consolidated subsidiaries are an entity whose stock is readily tradable on an established securities market (or otherwise) and a “change of control” under Regulation 1.280G of the Internal Revenue Code of 1986, as amended (the “
Code
”) occurs, you and the Company shall cooperate and use commercially reasonable best efforts to take such actions as may be necessary to avoid the imposition of the excise tax imposed by Section
|
(b)
|
If, after the Effective Time, there occurs a transaction that constitutes a “change of control” under Regulation 1.280G of the Code and, immediately prior to the consummation of such change of control, the Company or any of its consolidated subsidiaries are an entity whose equity securities are readily tradable on an established securities market (or otherwise), the following provisions will apply:
|
(1)
|
If any payments or benefits provided or to be provided by the Company or its affiliates to you or for your benefit pursuant to the terms of this Agreement or otherwise (the “
Covered Payments
”) constitute parachute payments within the meaning of Section 280G of the Code (“
Parachute Payments
”) and would, but for this Section 10(b), be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “
Excise Tax
”), then the Covered Payments shall be payable either (A) in full or (B) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing results in your receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). If required to be reduced pursuant to the foregoing, the Covered Payments shall be reduced in a manner consistent with the requirements of Section 409A of the Code, to the extent applicable, and where two or more economically equivalent amounts are subject to reduction but payable at different times, such amounts payable at the later time shall be reduced first but not below zero. If the Covered Payments are paid in full, you will be solely responsible for the payment of any Excise Tax and the Company will have no further obligations with respect thereto.
|
(2)
|
Any determinations required under this
Section 10(b)
shall be made in writing by the Company or by an accounting firm selected and paid for by the Company. You shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this
Section 10
.
|
(a)
|
Dispute Resolution
. The laws of the state of Texas will govern the construction, interpretation and enforcement of this Agreement. The parties agree that any and all claims, disputes, or controversies arising out of or related to this Agreement, or the breach of this Agreement, shall be resolved by binding arbitration, except as otherwise provided in
Section 8
of this Agreement. The parties will submit the dispute, within 30 business days following service of notice of such dispute by one party on the other, to the Judicial Arbitration and Mediation Services (J*A*M*S/Endispute) for prompt resolution in Dallas, Texas, under its rules for labor and employment disputes. There shall be a single arbitrator, chosen in accordance with such rules, who shall be currently licensed to practice law. The parties hereby agree to the J*A*M*S Optional Appeal Procedures as in effect as of the date any award by the arbitrator has become final. Subject to any such appeal, the decision of the arbitrator will be final and binding upon the parties, and judgment may be entered thereon in accordance with applicable law in any court having jurisdiction. The arbitrator shall have the authority to make an award of monetary damages and interest thereon. The arbitrator shall have no authority to award, and the parties hereby waive any right to seek or receive, specific performance or an injunction. The arbitrator will have no authority to order a modification or amendment of this Agreement. Subject to the following sentence, the Company shall pay for any administrative, hearing or arbitrator fees
|
(b)
|
Code Section 409A
. (i) If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause you to incur any additional tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder, the Company shall, after consulting with you, reform such provision to comply with Section 409A of the Code;
provided
, that the Company agrees to maintain, to the maximum extent practicable, the original intent and economic benefit to you of the applicable provision without violating the provisions of Section 409A of the Code. (ii) Notwithstanding any provision to the contrary in this Agreement, if the date of any payment or the commencement of any installment payments payable under this Agreement must be delayed for six months in order to meet the requirements of Section 409A(a)(2)(B) of the Code applicable to “specified employees”, then any such payment or payments shall not be made or provided (subject to the last sentence hereof) prior to the earlier of (A) the expiration of the six month period measured from the date of your “separation from service” (as such term is defined in Treasury Regulations issued under Code Section 409A) or (B) the date of your death (the “
Delay Period
”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this
Section 11(b)(ii)
(whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to you in a lump sum, and any remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. (iii) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” (iv) (a) All expenses or other reimbursements as provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you; (b) no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year; and (c) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit. (v) For purposes of Code Section 409A, your right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.
|
(c)
|
Clawback
. Notwithstanding anything in this Agreement to the contrary, you acknowledge that the Company may be entitled or required by law, the Executive Compensation Recovery Policy (as amended from time to time, the “
Clawback Policy
”) or the requirements of an exchange on which the Company’s shares are listed for trading, to recoup compensation paid to you pursuant to this Agreement or otherwise, and you agree to comply with any Company request or demand for repayment. You further acknowledge that the Clawback Policy may be modified from time to time in the sole discretion of the Company and without your consent, and that such modification will be deemed to amend this Agreement. You further acknowledge and agree that the Clawback Policy as in effect from time to time may apply to any and all payments of compensation and benefits (other than your base salary and benefits under any tax-qualified retirement plan or health and welfare plan) as specified in the Clawback Policy from time to time; provided that the application of the Clawback Policy with respect to any payments or benefits paid or provided to you will be subject to the limitations and restrictions set forth in the Clawback Policy.
|
(d)
|
No Violation
. You represent and warrant to, and agree with, the Company that as of the Effective Time (i) neither the execution and delivery of this Agreement nor the performance of your duties hereunder violates or will violate the provisions of any other written agreement to which you are a party or by which you are bound or become bound, (ii) there are no written agreements by which you are currently bound which would prevent you from performing your duties hereunder, and (iii) other than as disclosed in writing to the Company, there are no contracts to assign inventions or other intellectual property that are now in existence between you and any other person or entity.
|
(e)
|
Attorney’s Fees
. The Company shall pay your reasonable attorney’s fees and any disbursements reasonably incurred by you in connection with the negotiation of this Agreement.
|
(f)
|
No Mitigation
. (i) You shall not be required to seek other employment or otherwise mitigate the amount of any payments to be made by the Company pursuant to this Agreement; and (ii) the payments provided pursuant to this Agreement shall not be reduced by any compensation earned by you as the result of employment by another employer after the Date of Termination or otherwise.
|
(g)
|
Entire Agreement; Amendment
. This Agreement represents the entire understanding with respect to the subject matter contained herein. Only a writing that has been signed by both you and the Company may modify this Agreement. Any and all previous employment agreements, severance agreements and executive termination benefits agreements are cancelled as of the Effective Time and the benefits under this Agreement are in lieu of, and in full substitution for, any other severance or post-employment benefits pursuant to any other agreement, arrangement or understanding with the Company or any of its affiliates; provided, however, that any prior equity awards shall remain in full force and effect.
|
(h)
|
Successors
. This Agreement shall be binding upon and inure to the benefit of (i) the heirs, executors and legal representatives of you upon your death and (ii) any successor of the Company. Any such successor of the Company shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, “successor” shall include any person, firm, corporation, or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.
|
(i)
|
Effectiveness
. Notwithstanding anything to the contrary herein, the parties expressly acknowledge and agree that this Agreement will not become effective until each party has duly executed and delivered its respective signature hereto. Executive acknowledges and agrees that the Company’s decision to execute and deliver this Agreement will be made in its sole discretion. Nothing in this Agreement has created or will create a binding obligation of any party hereto until the due execution hereof.
|
EXECUTIVE
|
|
/s/ David Shirk
|
David Shirk
|
|
|
SABRE CORPORATION
|
|
/s/ William G. Robinson, Jr.
|
Name: William G. Robinson, Jr.
|
Title: EVP and Chief Human Resources Officer
|
EXECUTIVE
|
|
|
Name
|
|
|
SABRE CORPORATION
|
|
|
Name:
|
Title:
|
1.
|
This Agreement is independent of any other agreement (if any) you have or may have with the Company, except that the determination of whether your employment was terminated by the Company for Cause, or by you without Good Reason, shall be determined in accordance with the terms of your employment agreement, including the provisions thereof related to mandatory arbitration of issues related to termination of your employment. The existence of any claim you may have against the Company shall not serve as a defense to enforcement of this Agreement.
|
2.
|
If any provision of this Agreement is held by any court to be invalid or unenforceable, the invalid or unenforceable provision shall be fully severable, and the Agreement shall be construed as if the invalid or unenforceable provision never comprised part of this Agreement. Further, in lieu of the invalid or unenforceable provision, there shall be automatically added, a provision as similar in terms to such invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
|
3.
|
You hereby authorize the Company to deduct from your final paycheck the bonus reimbursement due the Company under this Agreement, and any other amounts due the Company when your employment terminates, whatever the reason for termination, to the extent permitted in accordance with applicable law.
|
4.
|
This Agreement shall be interpreted under, and governed by, the laws of the State of Texas and may be enforced in any state or federal court in Tarrant County, Texas.
|
5.
|
Any modifications to this Agreement must be in writing and signed by both parties.
|
EXECUTIVE
|
|
/s/ David Shirk
|
David Shirk
|
|
|
SABRE CORPORATION
|
|
/s/ William G. Robinson, Jr.
|
Name: William G. Robinson, Jr.
|
Title: EVP and Chief Human Resources Officer
|
|
EXHIBIT 10.61
|
(a)
|
You will serve as Executive Vice President of the Company, and President of Sabre Travel Network. You shall have all of the authority and perform all of the functions that are consistent with such position, as determined by the Company and generally described as the top executive responsible for overseeing all operations for Sabre Travel Network. You shall perform all such duties faithfully, industriously, and to the best of your experience and talent. Except as otherwise expressly provided in this Agreement, you shall abide in all material respects by all Company policies and directives applicable to you. You will report directly to the Chief Executive Officer of the Company or his designee.
|
(b)
|
During the Employment Period (as defined below), excluding any periods of vacation and sick leave to which you are entitled, you shall devote your full working time, energy and attention to the performance of your duties and responsibilities hereunder and shall faithfully and diligently endeavor to promote the business and best interests of the Company. During the Employment Period, you may not, without the prior written consent of the Company, directly or indirectly, operate, participate in the management, operations or control of, or act as an executive, officer, consultant, agent or representative of, any type of business or service (other than as an executive of the Company or any of its subsidiaries or affiliates). It shall not, however, be a violation of the foregoing provisions of this
Section 1(b)
for you to (i) subject to the approval of the Chief Executive Officer of the Company, serve as an officer or director or otherwise participate in educational, welfare, social, religious and civic organizations, or (ii) manage your or your family’s personal, financial and legal affairs, so long as, in the case of clause (i) or (ii), any such activities do not interfere with the performance of your duties and responsibilities to the Company as provided hereunder.
|
(a)
|
Termination without Cause or by You for Good Reason
. The Company may terminate your employment at any time without Cause (as defined below) upon 60 days’ notice, or you may terminate your employment for Good Reason (as defined below), upon compliance with the notice and cure period described below. Notwithstanding anything herein to the contrary, in the event that your employment is terminated by the Company as a result of the giving of a notice of non-renewal of the Initial Term or any Additional Term by the Company, such termination shall be deemed for all purposes to be a termination by the Company without Cause at the end of the then-current Term. In the event your employment is terminated by the Company without Cause or by you for Good Reason, the Company shall pay to you: within 30 days of the Date of Termination: (A) your Base Salary through the date of your termination, (B) reimbursement for any unreimbursed business expenses incurred by you in accordance with Company policy prior to the date of your termination that are subject to reimbursement and (C) payment for vacation time accrued as of the date of your termination but unused (such amounts under clauses (A), (B) and (C) above, collectively the “
Accrued Obligations
”). In addition, on the date the annual bonuses are otherwise paid to executives who remain employed with the Company, you shall receive, in the year of your termination, an amount equal to any accrued but unpaid annual bonus for the immediately preceding year that you
would have been paid had you remained employed on the date such bonuses are paid.
|
(b)
|
Termination on Death/Disability
. In the event your employment is terminated as a result of your death or Disability, the Company will pay to you or your beneficiary the Accrued Obligations and any accrued but unpaid annual bonus for the immediately preceding year that you would have been paid had you remained employed on the date such bonuses are paid in year in which you die or become Disabled.
|
(c)
|
Voluntary Termination
. You may terminate your employment for any reason upon 60 days’ notice to the Company. If you voluntarily terminate your employment (other than for Good Reason), the Company will pay to you the Accrued Obligations within 30 days of such termination of employment.
|
(d)
|
Termination for Cause
. The Company may terminate your employment at any time for Cause. In the event your employment is terminated for Cause, the Company will pay to you the Accrued Obligations no later than 30 days of such termination of employment.
|
(a)
|
Non-solicitation of Company Customers and Suppliers
. During the Employment Period and for 18 months following any Date of Termination, you shall not, directly or indirectly, on behalf of yourself or of anyone other than the Company, solicit or hire or attempt to solicit or hire (or assist any third party in soliciting or hiring or attempting to solicit or hire) any Customer or Supplier in connection with any business activity that then competes with the Company.
|
(b)
|
Non-solicitation of Company Employees
. During the Employment Period and for 18 months following any Date of Termination, you shall not, without the prior written consent of the Chief Executive Officer of the Company, directly or indirectly, on behalf of yourself or any third party, solicit or hire or recruit or, other than in the good faith performance of your duties, induce or encourage (or assist any third party in hiring, soliciting, recruiting, inducing or encouraging) any employees of the Company or any individuals who were employees within the six month period immediately prior thereto to terminate or otherwise alter his or her employment with the Company. Notwithstanding the foregoing, the restrictions contained in this
Section 8(b)
shall not apply to (i) general solicitations that are not specifically directed to employees of the Company or (ii) serving as a reference at the request of an employee.
|
(c)
|
Non-competition with the Company
. During the Employment Period and for 18 months following any Date of Termination, you shall not, directly or indirectly, whether as an employee, director, owner, partner, shareholder (other than the passive ownership of securities in any public enterprise which represent no more than five percent (5%) of the voting power of all securities of such enterprise), consultant, agent, co-venturer, or independent contractor or otherwise, or through any “person” (which, for purposes of this subsection, shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof), perform any services for or on behalf of, any Competitor of the Company. For purposes of this
Section 8
, a Competitor of the Company shall mean (i) any entity or business (x) that competes or (y) engages in a line of business that competes, in each of (x) and (y), with the business of the Company, and (ii) any unit, division, line of business, parent, subsidiary, affiliate (as defined in Rule 144 under the Securities Act of 1933, as amended), successor or assign of Travelport, Amadeus, AMEX, Etihad Airways, American Airlines, United Airlines, Delta Airlines, Lufthansa Group, Expedia, Priceline, TripAdvisor, Alphabet, Amazon, Facebook, Concur/SAP, Oracle, Farelogix, TravelClick, Carlson Wagonlit, BCD Travel, Hewlett Packard Enterprises, Travelsky, Hogg Robinson Group Travel, Computer Sciences Corporation, SITA, Hewlett Packard, or Jeppesen, it being understood and agreed in the event that any of such entities and their respective affiliates, successors and assigns no longer engages in a line of business that competes with any business of the Company, such entity shall no longer be deemed a Competitor of the Company for purposes of this
Section 8
.
|
(d)
|
Non-disclosure of Confidential Information and Trade Secrets
. During the Employment Period and thereafter, except in the good faith performance of your duties hereunder or where required by law, statute, regulation or rule of any governmental body or agency, or pursuant to a subpoena or court order, you shall not, directly or indirectly, for your own account or for the account of any other person, firm or entity, use or disclose any Confidential Information or proprietary Trade Secrets of the Company to any third person unless such Confidential Information or Trade Secret has been previously disclosed to the public or is in the public domain (other than by reason of your breach of this paragraph).
|
(e)
|
Non-Disparagement.
You agree not to defame or disparage any of the Company or any of their respective officers, directors, members, executives or employees. You agree to reasonably cooperate with the Company (at no expense to you) in refuting any defamatory or disparaging remarks by any third party made in respect of the Company or their respective directors, members, officers, executives or employees.
|
(f)
|
Enforceability of Covenants
. You acknowledge that the Company has a present and future expectation of business from and with the Customers and Suppliers. You acknowledge the reasonableness of the term, geographical territory, and scope of the covenants set forth in this
Section 8
, and you agree that you will not, in any action, suit or other proceeding, deny the reasonableness of, or assert the unreasonableness of, the premises, consideration or scope of the covenants set forth herein and you hereby waive any such defense. You further acknowledge that complying with the provisions contained in this Agreement will not preclude you from engaging in a lawful profession, trade or business, or from becoming gainfully employed. You agree that your covenants under this
Section 8
are separate and distinct obligations under this Agreement, and the failure or alleged failure of the Company or the Board to perform obligations under any other provisions of this Agreement shall not constitute a defense to the enforceability of your covenants and obligations under this
Section 8
. You and the Company each agrees that any breach of any covenant under this
Section 8
may result in irreparable damage and injury to the other party and that the other party will be entitled to seek temporary and permanent injunctive relief in any court of competent jurisdiction without the necessity of posting any bond, unless otherwise required by the court.
|
(g)
|
Certain Exceptions
. Notwithstanding anything set forth herein or in
Exhibit A
to the contrary, nothing in this Agreement shall (i) prohibit you from making reports of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934, as amended, or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of federal law or regulation, or (ii) require notification or prior approval by the Company of any such report; provided that, you are not authorized to disclose communications with counsel that were made for the purpose of receiving legal advice or that contain legal advice or that are protected by the attorney work product or similar privilege. Furthermore, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made under seal.
|
(a)
|
If, after the Effective Time, none of the Company or any of its consolidated subsidiaries are an entity whose stock is readily tradable on an established securities market (or otherwise) and a “change of control” under Regulation 1.280G of the Internal Revenue Code of 1986, as amended (the “
Code
”) occurs, you and the Company shall cooperate and use commercially reasonable best efforts to take such actions as may be necessary to avoid the imposition of the excise tax imposed by Section 4999 of the Code or a loss of deductibility under Section 280G of the Code, including without limitation
|
(b)
|
If, after the Effective Time, there occurs a transaction that constitutes a “change of control” under Regulation 1.280G of the Code and, immediately prior to the consummation of such change of control, the Company or any of its consolidated subsidiaries are an entity whose equity securities are readily tradable on an established securities market (or otherwise), the following provisions will apply:
|
(1)
|
If any payments or benefits provided or to be provided by the Company or its affiliates to you or for your benefit pursuant to the terms of this Agreement or otherwise (the “
Covered Payments
”) constitute parachute payments within the meaning of Section 280G of the Code (“
Parachute Payments
”) and would, but for this
Section 10(b)
, be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “
Excise Tax
”), then the Covered Payments shall be payable either (A) in full or (B) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing results in your receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). If required to be reduced pursuant to the foregoing, the Covered Payments shall be reduced in a manner consistent with the requirements of Section 409A of the Code, to the extent applicable, and where two or more economically equivalent amounts are subject to reduction but payable at different times, such amounts payable at the later time shall be reduced first but not below zero. If the Covered Payments are paid in full, you will be solely responsible for the payment of any Excise Tax and the Company will have no further obligations with respect thereto.
|
(2)
|
Any determinations required under this
Section 10(b)
shall be made in writing by the Company or by an accounting firm selected and paid for by the Company. You shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this
Section 10
.
|
(a)
|
Dispute Resolution
. The laws of the state of Texas will govern the construction, interpretation and enforcement of this Agreement. The parties agree that any and all claims, disputes, or controversies arising out of or related to this Agreement, or the breach of this Agreement, shall be resolved by binding arbitration, except as otherwise provided in
Section 8
of this Agreement. The parties will submit the dispute, within 30 business days following service of notice of such dispute by one party on the other, to the Judicial Arbitration and Mediation Services (J*A*M*S/Endispute) for prompt resolution in Dallas, Texas, under its rules for labor and employment disputes. There shall be a single arbitrator, chosen in accordance with such rules, who shall be currently licensed to practice law. The decision of the arbitrator will be final and binding upon the parties, and judgment may be entered thereon in accordance with applicable law in any court having jurisdiction. The arbitrator shall have the authority to make an award of monetary damages and interest thereon. The arbitrator shall have no authority to award, and the parties hereby waive any right to seek or receive, specific performance or an injunction, punitive or exemplary damages. The arbitrator will have no authority to order a modification or amendment of this Agreement. The arbitrator shall have the authority to award costs of arbitration, including reasonable attorney’s fees, to the prevailing party, but in the absence of such award the parties shall bear their own attorney fees, and shall bear equally the expenses of the arbitral proceedings, including without limitation the fees of the arbitrator.
|
(b)
|
Code Section 409A
. (i)If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause you to incur any additional tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder, the Company shall, after consulting with you, reform such provision to comply with Section 409A of the Code;
provided
, that the Company agrees to maintain, to the maximum extent practicable, the original intent and economic benefit to you of the applicable provision without violating the provisions of Section 409A of the Code. (ii) Notwithstanding any provision to the contrary in this Agreement, if the date of any payment or the commencement of any installment payments payable under this Agreement must be delayed for six months in order to meet the requirements of Section 409A(a)(2)(B) of the Code applicable to “specified employees”, then any such payment or payments shall not be made or provided (subject to the last sentence hereof) prior to the earlier of (A) the expiration of the six month period measured from the date of your “separation from service” (as such term is defined in Treasury Regulations issued under Code Section 409A) or (B) the date of your death (the “
Delay Period
”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this
Section 11(b)(ii)
(whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to you in a lump sum, and any remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.(iii) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” (iv) (a) All expenses or other reimbursements as provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you (b) no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year and (c) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit.(v) For purposes of Code Section 409A, your right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.
|
(c)
|
Clawback
. Notwithstanding anything in this Agreement to the contrary, you acknowledge that the Company may be entitled or required by law, the Executive Compensation Recovery Policy (as amended from time to time, the “
Clawback Policy
”) or the requirements of an exchange on which the Company’s shares are listed for trading, to recoup compensation paid to you pursuant to this Agreement or otherwise, and you agree to comply with any Company request or demand for repayment. You further acknowledge that the Clawback Policy may be modified from time to time in the sole discretion of the Company and without your consent, and that such modification will be deemed to amend this Agreement. You further acknowledge and agree that the Clawback Policy as in effect from time to time may apply to any and all payments of compensation and benefits (other than your base salary and benefits under any tax-qualified retirement plan or health and welfare plan) as specified in the Clawback Policy from time to time; provided that the application of the Clawback Policy with respect to any payments or benefits paid or provided to you will be subject to the limitations and restrictions set forth in the Clawback Policy.
|
(d)
|
No Mitigation
. (i) You shall not be required to seek other employment or otherwise mitigate the amount of any payments to be made by the Company pursuant to this Agreement; and (ii) the payments provided pursuant to this Agreement shall not be reduced by any compensation earned by you as the result of employment by another employer after the Date of Termination or otherwise.
|
(e)
|
Entire Agreement; Amendment
. This Agreement represents the entire understanding with respect to the subject matter contained herein. Only a writing that has been signed by both you and the Company may modify this Agreement. Any and all previous employment agreements, severance agreements and executive termination benefits agreements are cancelled as of the Effective Time and the benefits under this Agreement are in lieu of, and in full substitution for, any other severance or post-employment benefits pursuant to any other agreement, arrangement or understanding with the Company or any of its affiliates; provided, however, that any prior equity awards shall remain in full force and effect.
|
(f)
|
Successors
. This Agreement shall be binding upon and inure to the benefit of (i) the heirs, executors and legal representatives of you upon your death and (ii) any successor of the Company. Any such successor of the Company shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, “
successor
” shall include any person, firm, corporation, or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.
|
(g)
|
Effectiveness
. Notwithstanding anything to the contrary herein, the parties expressly acknowledge and agree that this Agreement will not become effective until each party has duly executed and delivered its respective signature hereto. Executive acknowledges and agrees that the Company’s decision to execute and deliver this Agreement will be made in its sole discretion. Nothing in this Agreement has created or will create a binding obligation of any party hereto until the due execution hereof.
|
EXECUTIVE
|
|
/s/ J. Wade Jones
|
Wade Jones
|
|
|
SABRE CORPORATION
|
|
/s/ William G. Robinson, Jr.
|
Name: William G. Robinson, Jr.
|
Title: EVP and Chief Human Resources Officer
|
EXECUTIVE
|
|
|
Name
|
|
|
SABRE CORPORATION
|
|
|
Name:
|
Title:
|
1.
|
Exhibit 3
(Account Governance) to Master Agreement is hereby deleted and replaced in its entirety with the amended and restated
Exhibit 3
(Account Governance) attached hereto as
Attachment 1
, effective as of the Amendment Two Effective Date.
|
2.
|
Attachment 7-A (Event Management Process
) to
Exhibit 7
(Information Security Requirements) to Master Agreement is hereby deleted and replaced in its entirety with the amended and restated
Attachment 7-A (Event Management Process
) to
Exhibit 7
(Information Security Requirements) attached hereto as
Attachment 2
, effective as of the Amendment Two Effective Date.
|
3.
|
Counterparts
. This Amendment may be executed in several counterparts, all of which taken together shall constitute a single agreement between the Parties.
|
4.
|
Defined terms
. Unless otherwise defined herein, the capitalized terms used in this Amendment shall have the same meaning assigned to such capitalized terms in the Agreement.
|
5.
|
Ratifications
. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement (and all prior agreements, letters, proposals, discussions and other documents) regarding the matters addressed in this Amendment
.
Except as otherwise expressly modified herein, all other terms and conditions of the Agreement shall remain in full force and effect and are ratified and confirmed as if set forth herein verbatim.
|
SABRE GLBL INC.
|
|
|
|
Signature:
|
/s/ Chris Hamro
|
|
|
Name:
|
Chris Hamro
|
|
|
Title:
|
Director - Technology Procurement
|
|
|
Date:
|
5/9/2017
|
Enterprise Services LLC
|
|
|
|
Signature:
|
/s/ Simon Branch-Evans
|
|
|
Name:
|
Simon Branch-Evans
|
|
|
Title:
|
VP and AE Sabre Account
|
|
|
Date:
|
5/9/2017
|
1.
|
INTRODUCTION
|
2.
|
DEFINITIONS
|
3.
|
GOVERNANCE PRINCIPLES
|
3.1
|
Governance Principles
|
3.2
|
Relationship
|
(i)
|
Reflect commitment at executive levels in both Parties to foster an enduring, mutually beneficial commercial relationship that enables and empowers effective decision making;
|
(ii)
|
Support a relationship between Customer and Provider that is characterized by trust and openness;
|
(iii)
|
Support and engender effective Service Levels and continuous improvement;
|
(iv)
|
Create a close working relationship at the relevant management levels that stimulates cooperation, collaboration, information sharing and trust;
|
(v)
|
Support a joint continuous improvement culture within both Parties in relation to the Services.
|
(i)
|
Flexibility. The Parties understand that the Services may need to be modified to meet Customer’s changing business environment and operating requirements.
|
(ii)
|
Transparency. Governance activities described in this
Exhibit
are intended to provide a transparent framework and process so that Customer and Provider can effectively execute.
|
(iii)
|
Traceability. Financials will be clear and allow Customer to identify the baseline and reasons for any deviations over time.
|
(iv)
|
Effective Management. Governance activities described in this
Exhibit
will strengthen Customer’s and Provider’s ability to track and control Services delivered.
|
(i)
|
HP Enterprise Services Client Advisory Board (“CAB”). The HP Enterprise Services CAB is a select group of global Chief Information Officers (“CIOs”), crossing industries and regions, whose thoughts and perspectives on the information technology services market are helping strengthen and shape the future of the industry. The mission of this exclusive executive forum and ongoing program is to advise Provider on strategies and plans for its Enterprise Services business. It provides Provider an opportunity to listen to and better understand client needs and expectations, and strengthens collaboration. Provider will invite the Customer Head of Product and Technology to participate in the CAB. Customer’s Head of Product and Technology, or equivalent position, will agree to participate for a two-year timeframe and attend at least one in-person meeting each year.
|
(ii)
|
CIO Summit. HP CIO Summit is an exclusive, invitation-only gathering of CIOs. This event is designed to bring together leading CIOs in the industry to share best practices, plans and ideas. Each year, Provider will extend an invitation to Customer’s Head of Product and Technology, or equivalent position, to attend the HP CIO Summit, and Customer’s Head of Product and Technology will use reasonable efforts to attend the Summit.
|
(iii)
|
HP Discover. HP Discover presents the absolute latest technologies, solutions, case studies, trends and strategies that will inform key investment decisions Provider is making now and in the future. Each year, Provider will extend an offer to Customer’s Head of Product and Technology and other appropriate Customer leaders to attend HP Discover.
|
4.
|
GOVERNANCE COMMITTEES
|
4.1
|
Executive Steering Committee
|
(i)
|
Customer Head of P&T;
|
(ii)
|
Customer Senior Vice President (“SVP”) of Executive Technology Operation (“ETO”);
|
(iii)
|
Customer CPO;
|
(iv)
|
Customer Technical Alliance Manager
|
(v)
|
Additional Customer representatives as necessary;
|
(vi)
|
Provider Executive Sponsor;
|
(vii)
|
Provider Operations Executive;
|
(viii)
|
Provider Industry Executive;
|
(ix)
|
Provider Contract and Commercial Executive;
|
(x)
|
Provider Client Executive; and
|
(xi)
|
Additional Provider representatives as necessary.
|
(i)
|
provide overview of Provider performance to executive leadership;
|
(ii)
|
discuss overall relationship, development agenda and strategic improvement initiatives;
|
(iii)
|
monitor current Service Levels and costs;
|
(iv)
|
review of industry and technology trends and how Customer and Provider can respond to these trends; and
|
(v)
|
review of Customer business priorities and plans.
|
(i)
|
an executive scorecard incorporating the following measures:
|
(ii)
|
issues open for resolution;
|
(iii)
|
data on industry trends; and
|
(iv)
|
development agenda and strategic improvement initiatives.
|
(a)
|
Formation
|
(b)
|
Chair
|
(c)
|
Members
|
(i)
|
Customer SVP of ETO;
|
(ii)
|
Customer Technical Alliance Manager;
|
(iii)
|
Customer Service Management Operations Manager;
|
(iv)
|
Additional Customer representatives as necessary;
|
(v)
|
Provider Technology Operation Executive;
|
(vi)
|
Provider Client Executive;
|
(vii)
|
Provider Client Service Delivery Executive; and
|
(viii)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
monitor overall Service performance and take actions for Service improvement;
|
(ii)
|
review performance on Service Levels;
|
(iii)
|
discuss additions and adjustments to Service Levels;
|
(iv)
|
review status of high priority security risks;
|
(v)
|
review improvement of Services due to technology innovation and review impacts of technology evolution on the Services;
|
(vi)
|
review outputs from and provide inputs to the project management process; and
|
(vii)
|
address escalated issues.
|
(e)
|
Materials
|
(i)
|
quality of Services (e.g., Service Level performance);
|
(ii)
|
Customer satisfaction;
|
(iii)
|
status of other projects;
|
(iv)
|
relationship indicators;
|
(v)
|
issues escalated by other committees;
|
(vi)
|
IT security incident reports;
|
(vii)
|
risk register including mitigation actions; and
|
(viii)
|
Disaster Recovery Services review.
|
(f)
|
Meeting Frequency
|
4.3.
|
Contract and Commercial Committee
|
(a)
|
Formation
|
(b)
|
Chair
|
(c)
|
Members
|
(i)
|
Customer CPO;
|
(ii)
|
Customer Technical Alliance Manager;
|
(iii)
|
Customer VP of P&T Finance;
|
(iv)
|
Additional Customer representatives as necessary;
|
(v)
|
Provider Client Executive;
|
(vi)
|
Provider Client Contract and Commercial Executive;
|
(vii)
|
Provider Client Finance Manager; and
|
(viii)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
discuss contract interpretation issues;
|
(ii)
|
review and approve monthly financial Reports;
|
(iii)
|
discuss and establish financial plans and forecasts;
|
(iv)
|
review Contract Change Requests in accordance with the Contract Change Control Procedures;
|
(v)
|
address or escalate any contractual and financial issues, including invoice and payment issues and Service Level Credits due; and
|
(vi)
|
review benchmarking and audit results and ensure that benchmarking and audit remediation is addressed and implemented.
|
(e)
|
Materials
|
(i)
|
monthly financial Reports;
|
(ii)
|
proposed Contract Change Requests;
|
(iii)
|
monthly performance reports on Service Level attainment and Service Level Credit calculations;
|
(iv)
|
financial plan and forecasts; and
|
(v)
|
benchmarking and audit results.
|
(f)
|
Meeting Frequency
|
4.4.
|
Joint Technical Steering Committee
|
(a)
|
Formation
|
(b)
|
Chair
|
(c)
|
Members
|
(i)
|
Customer Enterprise Architecture Lead;
|
(ii)
|
Customer SVP of Architecture & Technology (“A&T”);
|
(iii)
|
Customer SVP of ETO;
|
(iv)
|
Customer Technical Alliance Manager;
|
(v)
|
Customer Tower Leads;
|
(vi)
|
Additional Customer representatives as necessary;
|
(vii)
|
Provider Technology Operation Executive;
|
(viii)
|
Provider Client Executive;
|
(ix)
|
Provider Client Architecture Executive;
|
(x)
|
Provider horizontal optimization team leaders;
|
(xi)
|
Provider Client Service Delivery Executive; and
|
(xii)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
align the Long Range IT Plan (as defined in
Section 9.1
of
Attachment B-5
(Cross Functional Services Service Description)) with Customer’s IT strategy and policies;
|
(ii)
|
review and approve Provider’s recommendations for inclusion in the Long Range IT Plan;
|
(iii)
|
review Provider’s technical proposals for implementing the Long Range IT Plan;
|
(iv)
|
provide advice and guidance to the Operational Steering Committee regarding technical improvement issues affecting the technical infrastructure and Customer business operations;
|
(v)
|
align technical policies, standards and architecture with the Customer’s internal technology steering discussions and internal IT standards;
|
(vi)
|
address escalated technology architecture issues;
|
(vii)
|
monitor compliance against technology standards; and
|
(viii)
|
define priorities for architecture standardization initiatives.
|
(e)
|
Materials
|
(f)
|
Meeting Frequency
|
4.5.
|
Transition and Transformation Committee
|
(a)
|
Formation
|
(b)
|
Chair
|
(c)
|
Members
|
(i)
|
Customer VP of Transition and Transformation
|
(ii)
|
Technology Modernization Team;
|
(iii)
|
Customer Enterprise Architecture Lead;
|
(iv)
|
Customer SVP of Corporate IT;
|
(v)
|
Additional Customer representatives as necessary;
|
(vi)
|
Provider Client Transition & Transformation Executive;
|
(vii)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
monitor and review Transition and Transformation status;
|
(ii)
|
monitor and support the execution of critical deliverables from both Parties;
|
(iii)
|
identify and address Transition and Transformation issues in accordance with the Agreement; and
|
(iv)
|
identify, track and address Transition and Transformation risks.
|
(e)
|
Materials
|
(f)
|
Meeting Frequency
|
4.6.
|
Tower Service Delivery Committee (per Tower)
|
(a)
|
Formation
|
(b)
|
Chair
|
(c)
|
Members
|
(i)
|
Customer Tower Leads;
|
(ii)
|
Customer Technical Alliance Manager;
|
(iii)
|
Customer Service Planning and Assurance Manager;
|
(iv)
|
Additional Customer representatives as necessary;
|
(v)
|
Provider Client Executive;
|
(vi)
|
Provider Client Service Delivery Executive;
|
(vii)
|
Provider Client Tower Service Delivery Managers;
|
(viii)
|
Provider horizontal optimization team leaders
|
(ix)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
monitor and manage Service delivery for each tower;
|
(ii)
|
review Service Request backlog and discuss options for prioritization based on business need
|
(iii)
|
review Tower’s technology currency and status;
|
(iv)
|
monitor and review the ongoing status of third party performance as appropriate;
|
(v)
|
discuss tower capacity forecasts and technical plan to meet demand increases;
|
(vi)
|
review the following:
|
(1)
|
Service Levels;
|
(2)
|
Service Request performance and backlog;
|
(3)
|
continuous improvement and quality assurance procedures and measurements;
|
(4)
|
project portfolio and project delivery status, and project issues and opportunities;
|
(5)
|
review business and capacity demand forecasts;
|
(vii)
|
other such responsibilities as directed by the Operational Steering Committee.
|
(e)
|
Materials
|
(i)
|
Performance reports on Service Level attainment;
|
(ii)
|
Service Request backlog and performance report;
|
(iii)
|
Reports on continuous improvement and quality assurance procedures and measurements;
|
(iv)
|
project portfolio and delivery status; and
|
(v)
|
escalated issue register.
|
(f)
|
Meeting Frequency
|
4.7.
|
Security Committee
|
(a)
|
Formation
|
(b)
|
Chair
|
(c)
|
Members
|
(i)
|
Customer Chief Information Security Officer;
|
(1)
|
Customer Service Management Operations Manager;
|
(2)
|
Customer Disaster Recovery Manager;
|
(ii)
|
Additional Customer representatives as necessary;
|
(iii)
|
Provider Client Service Delivery Executive;
|
(iv)
|
Provider Client Security Manager; and
|
(v)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
monitor and review threats to the availability, integrity and confidentiality of Customer and its customers’ data at a global level;
|
(ii)
|
monitor and review the status of global security incidents and security problems (i.e., incidents and problems with an information security dimension);
|
(iii)
|
discuss security developments; and
|
(iv)
|
actively review and, as appropriate, escalate security issues which impact Customer end users and/or which involve a potential reputation damage to Customer.
|
(e)
|
Materials
|
(i)
|
report on Customer impacting or Customer reputation impacting security issues or incidents; and
|
(ii)
|
report on security developments;
|
(iii)
|
security issues and escalations.
|
(f)
|
Meeting Frequency
|
4.8.
|
Innovation Committee
|
(a)
|
Formation
|
(b)
|
Chair
|
(i)
|
Customer SVP of ETO;
|
(ii)
|
Customer SVP of A&T;
|
(iii)
|
Customer Enterprise Architecture Lead;
|
(iv)
|
Customer Tower Leads as required;
|
(v)
|
Additional Customer representatives as necessary;
|
(vi)
|
Provider Operations Executive;
|
(vii)
|
Provider Client Service Delivery Executive;
|
(viii)
|
Provider Industry Executive
|
(ix)
|
Provider horizontal optimization team leaders
|
(x)
|
Provider Client Architecture Executive; and
|
(xi)
|
Additional Provider representatives as necessary.
|
(d)
|
Key Objectives
|
(i)
|
actively seek and investigate opportunities to enable Customer to attain a leadership position in the industry through use of cutting edge technologies and business processes;
|
(ii)
|
develop innovation ideas and support implementation and rollout where appropriate;
|
(iii)
|
monitor and steer in-flight Innovation Initiatives; and
|
(iv)
|
review industry and technology trends and agree the appropriate response by Customer and Provider.
|
(i)
|
progress report on existing in-flight Innovation Initiatives;
|
(ii)
|
proposals as regards new technology and industry trends;
|
(iii)
|
opportunities for using common business processes / technology platforms; and
|
(iv)
|
Customer or Provider proposals for innovation.
|
(f)
|
Meeting Frequency
|
5.
|
ROLES AND RESPONSIBILITIES
|
5.1.
|
Customer Roles and Responsibilities
|
(a)
|
Customer Technical Alliance Manager
|
(i)
|
maintaining an effective relationship with Provider executives at all levels;
|
(ii)
|
managing the overall relationship with Provider;
|
(iii)
|
providing leadership and guidance to the Customer governance organization;
|
(iv)
|
monitoring Provider and Customer compliance with obligations of the Agreement;
|
(v)
|
monitoring Provider and Customer contractual deliverable commitments;
|
(vi)
|
working with Provider Client Executive to progress the goals and objectives of the Agreement;
|
(vii)
|
serving as an escalated point of contact for any Service delivery issues in accordance with the Dispute Resolution Procedures; and
|
(viii)
|
liaising with and providing guidance to Customer’s corporate executive leadership in regard to the strategic needs of Customer.
|
(a)
|
Provider Client Executive
|
(i)
|
managing the overall relationship between Provider and Customer;
|
(ii)
|
assuring the successful implementation of the Agreement to operational status;
|
(iii)
|
ensuring that Provider fulfills all of its obligations under the Agreement;
|
(iv)
|
working with the Customer governance team to establish, manage, and meet commitments, requirements, and expectations;
|
(v)
|
working with Customer Technical Alliance Manager to align the delivery of Services with the strategic needs of Customer;
|
(vi)
|
serving as an escalated point of contact for Service delivery issues in accordance with the Dispute Resolution Procedures; and
|
(vii)
|
informing Customer about new corporate capabilities and developments within Provider’s organization, and proposing ideas and solutions that will provide ongoing benefit to Customer.
|
(b)
|
Provider Client Service Delivery Executive
|
(i)
|
meeting all Service Levels and contractual commitments;
|
(ii)
|
ensuring that Provider’s global operating model delivers on commitments to Customer;
|
(iii)
|
staffing the Service delivery organization with the appropriate level of trained personnel;
|
(iv)
|
forecasting resource requirements and managing resourcing requirements for Customer as a whole;
|
(v)
|
ensuring that the Provider Service delivery complies with Customer Policies, standards and operational procedures;
|
(vi)
|
providing support to Customer in accordance with the Procedures Manual;
|
(vii)
|
providing all Reports in accordance with
Section 4.6
of the Master Agreement; and
|
(viii)
|
implementing and meeting the requirements described in the Master Agreement regarding Disaster Recovery Services.
|
(c)
|
Provider Client Tower Service Delivery Managers
|
(i)
|
capturing key specific Customer satisfaction issues and implementing appropriate policies and procedures to resolve such issues;
|
(ii)
|
working with Customer Tower Leads and Customer Operations Manager to ensure that Provider supports Customer’s Service delivery needs; and
|
(iii)
|
collaborating with Customer Tower Leads and Customer Demand Manager on the definition and maintenance of a demand forecast for the Services.
|
(d)
|
Provider Client Finance Manager
|
(i)
|
providing the monthly invoice and all account billing and reporting functions;
|
(ii)
|
implementing and managing Provider financial system including time recording, labor reporting, billing, and budgeting, forecasting, and annual planning;
|
(iii)
|
acting as the primary Provider focus for new service establishment for Customer; and
|
(iv)
|
providing all financial reporting, including exception reporting, to Customer.
|
(e)
|
Provider Client Contract and Commercial Executive
|
(i)
|
acting as the commercial/contracts focal point, supporting the Customer governance team on all commercial and contracts related issues;
|
(ii)
|
determining/deriving in-scope and out-of-scope activities in discussion with Provider contracts specialists, technical leads and legal staff;
|
(iii)
|
reaching rapid agreement with Customer around Provider interpretations of ambiguous areas of contract wording;
|
(iv)
|
developing, implementing and maintaining commercial processes for the minimization of risk to Provider in accepting new services and performing the Services;
|
(v)
|
conducting reasonable training for non-commercial staff on commercial and contracts principles and processes;
|
(vi)
|
providing all Provider contract administration for the time-phased contractual commitments to assure fulfillment of Provider deliverables;
|
(vii)
|
preparing and negotiating contracts, contract amendments and other legal agreements in conjunction with Provider corporate legal departments;
|
(viii)
|
formulating commercial offers (price and terms) and subsequent authorization for all new services and changes to existing Services in conjunction with Customer governance team staff;
|
(ix)
|
supporting meetings and negotiations with Customer; and
|
(x)
|
resolving commercial disputes that arise in the course of performing the Services under the Agreement.
|
(f)
|
Provider Transition and Transformation Executive
|
(i)
|
ensuring the Provider fulfills its Transition and Transformation obligations under the Agreement; and
|
(ii)
|
communicating Transition and Transformation project status to the Customer.
|
6.
|
OTHER MEETINGS
|
7.
|
MANAGEMENT SUPPORT AND ADVICE
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sabre Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 1, 2017
|
By:
|
|
/s/ Sean Menke
|
|
|
|
|
Sean Menke
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(principal executive officer of the registrant)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sabre Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 1, 2017
|
By:
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/s/ Richard A. Simonson
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Richard A. Simonson
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Chief Financial Officer
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(principal financial officer of the registrant)
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a.
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The Form 10-Q of Sabre Corporation for the quarter ended
June 30, 2017
(the “Report”), filed on the date hereof with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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b.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Sabre Corporation.
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Date:
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August 1, 2017
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By:
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/s/ Sean Menke
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Sean Menke
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Chief Executive Officer
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(principal executive officer of the registrant)
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a.
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The Form 10-Q of Sabre Corporation for the quarter ended
June 30, 2017
(the “Report”), filed on the date hereof with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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b.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Sabre Corporation.
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Date:
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August 1, 2017
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By:
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/s/ Richard A. Simonson
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Richard A. Simonson
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Chief Financial Officer
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(principal financial officer of the registrant)
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