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FORM 10-K
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Delaware
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001-36422
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20-8647322
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(State or other jurisdiction
of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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3150 Sabre Drive
Southlake, TX 76092
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(Address, including zip code, of principal executive offices)
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(682) 605-1000
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(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Common Stock, $0.01 par value
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The NASDAQ Stock Market LLC
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(Title of class)
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(Name of exchange on which registered)
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Securities registered pursuant to Section 12(g) of the Act:
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None
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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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
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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ITEM 1.
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BUSINESS
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•
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Commitment to develop innovative technology products through investment of significant resources in solutions that address key customer needs which include retailing solutions, mobile capabilities, data analytics and business intelligence and workflow optimization.
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•
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Geographic expansion beyond our traditional strengths by seeking to deepen our presence in high-growth geographies in APAC, Europe, including high-growth Eastern European markets, and Latin America.
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•
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Pursuit of new customers and marketplace content through seeking to actively add new travel supplier content to Travel Network and continuing to pursue new customers for our Airline and Hospitality Solutions business.
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Strengthen relationships with existing customers, including promoting the adoption of our products within and across our existing customers.
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ITEM 1A.
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RISK FACTORS
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•
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general and local economic conditions;
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•
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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;
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•
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factors that affect demand for travel such as outbreaks of contagious diseases, including influenza, Zika, Ebola and the MERS virus, increases in fuel prices, changing attitudes towards the environmental costs of travel and safety concerns;
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•
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political events like acts or threats of terrorism, hostilities, and war;
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inclement weather, natural or man-made disasters; and
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•
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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.
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•
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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.
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•
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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.
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•
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the features of the implemented software may not meet the expectations or fit the business model of the customer;
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•
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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;
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•
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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
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•
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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.
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business, political and economic instability in foreign locations, including actual or threatened terrorist activities, and military action;
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•
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adverse laws and regulatory requirements, including more comprehensive regulation in the E.U. and the possible effects of the Brexit vote;
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•
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changes in foreign currency exchange rates and financial risk arising from transactions in multiple currencies;
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difficulty in developing, managing and staffing international operations because of distance, language and cultural differences;
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•
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disruptions to or delays in the development of communication and transportation services and infrastructure;
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•
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more restrictive data privacy requirements, including the GDPR;
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•
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consumer attitudes, including the preference of customers for local providers;
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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;
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export or trade restrictions or currency controls;
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governmental policies or actions, such as consumer, labor and trade protection measures and travel restrictions;
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taxes, restrictions on foreign investment and limits on the repatriation of funds;
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diminished ability to legally enforce our contractual rights; and
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decreased protection for intellectual property.
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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.
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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.
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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.
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•
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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.
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•
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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.
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•
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increased vulnerability to general adverse economic and industry conditions;
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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;
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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;
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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;
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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
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a competitive disadvantage compared to our competitors that have less debt.
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re-measurement gains and losses from changes in the value of foreign denominated assets and liabilities;
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translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars, our functional currency, upon consolidation;
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planning risk related to changes in exchange rates between the time we prepare our annual and quarterly forecasts and when actual results occur; and
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the impact of relative exchange rate movements on cross-border travel, principally travel between Europe and the United States.
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incur liens on our property, assets and revenue;
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borrow money, and guarantee or provide other support for the indebtedness of third parties;
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pay dividends or make other distributions on, redeem or repurchase our capital stock;
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prepay, redeem or repurchase certain of our indebtedness;
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enter into certain change of control transactions;
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make investments in entities that we do not control, including joint ventures;
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enter into certain asset sale transactions, including divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries;
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enter into certain transactions with affiliates;
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enter into secured financing arrangements;
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enter into sale and leaseback transactions;
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change our fiscal year; and
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enter into substantially different lines of business.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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Name
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Age
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Position
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Sean Menke
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49
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Chief Executive Officer, President and Director, Sabre
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Richard A. Simonson
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59
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Executive Vice President and Chief Financial Officer, Sabre
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Clinton Anderson
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47
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Executive Vice President, Sabre and President, Hospitality Solutions
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Rachel A. Gonzalez
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48
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Executive Vice President and Chief Administrative Officer, Sabre
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Wade Jones
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51
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Executive Vice President, Sabre and President, Travel Network
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David Shirk
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51
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Executive Vice President, Sabre and President, Sabre Airline Solutions
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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High
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Low
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Dividends
Declared
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Year Ended December 31, 2017:
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Fourth Quarter
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$
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20.79
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$
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18.00
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$
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0.14
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Third Quarter
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$
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22.28
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$
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17.40
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$
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0.14
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Second Quarter
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$
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24.73
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$
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20.50
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$
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0.14
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First Quarter
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$
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25.14
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$
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20.91
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$
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0.14
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Year Ended December 31, 2016:
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Fourth Quarter
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$
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27.99
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$
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23.18
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$
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0.13
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Third Quarter
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$
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29.34
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$
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26.63
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$
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0.13
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Second Quarter
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$
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29.35
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$
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25.30
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$
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0.13
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First Quarter
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$
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28.92
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$
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23.18
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$
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0.13
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Period 2017
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Total Number of Shares Purchased
(1)
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Average Price Paid Per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(2)
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
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October 1 to October 31
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626,528
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$
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18.24
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626,528
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$
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390,898,678
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November 1 to November 30
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—
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—
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—
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390,898,678
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December 1 to December 31
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—
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—
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—
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390,898,678
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Total
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626,528
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626,528
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(1)
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Represents shares repurchased in open market transactions pursuant to the Share Repurchase Program (as defined below).
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(2)
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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 $500 million of outstanding shares of our common stock in privately negotiated transactions or in the open market, or otherwise.
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ITEM 6.
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SELECTED FINANCIAL DATA
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Year Ended December 31,
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2017
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2016
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2015
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2014
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2013
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Consolidated Statements of Operations Data:
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Revenue
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$
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3,598,484
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$
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3,373,387
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$
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2,960,896
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$
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2,631,417
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$
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2,523,546
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Operating income
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493,440
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459,572
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459,769
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421,345
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380,930
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|||||
Income from continuing operations
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249,576
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241,390
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234,555
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110,873
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52,066
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(Loss) income from discontinued operations, net of tax
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(1,932
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)
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5,549
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314,408
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(38,918
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)
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(149,697
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)
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Net income (loss) attributable to Sabre Corporation
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242,531
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242,562
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545,482
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69,223
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(100,494
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)
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Net income (loss) attributable to common stockholders
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242,531
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242,562
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545,482
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57,842
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(137,198
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)
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Net income (loss) per share attributable to common stockholders:
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||||||||||
Basic
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$
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0.87
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$
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0.87
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$
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2.00
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$
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0.24
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$
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(0.77
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)
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Diluted
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$
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0.87
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$
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0.86
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$
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1.95
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$
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0.23
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$
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(0.74
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)
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Weighted-average common shares outstanding:
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|
|
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|
|
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||||||||||
Basic
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276,893
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277,546
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273,139
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238,633
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178,125
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|||||
Diluted
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278,320
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282,752
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280,067
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246,747
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184,978
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|||||
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Consolidated Statements of Cash Flows Data:
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Cash provided by operating activities
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$
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678,033
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$
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699,400
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$
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529,207
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$
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387,659
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$
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228,232
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Cash used in investing activities
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(317,525
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)
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(445,808
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)
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(729,041
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)
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(258,791
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)
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(239,999
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)
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|||||
Cash provided by (used in) financing activities
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(356,780
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)
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(190,025
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)
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93,144
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(71,945
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)
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262,172
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|||||
Additions to property and equipment
|
316,436
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327,647
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286,697
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227,227
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209,523
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|||||
Cash payments for interest
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149,572
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151,495
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154,307
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197,782
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255,620
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|||||
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||||||||||
Other Financial Data:
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|||||
Adjusted Gross Profit
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$
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1,500,186
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$
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1,460,675
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$
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1,316,820
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$
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1,146,792
|
|
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$
|
1,060,302
|
|
Adjusted Operating Income
|
706,149
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|
|
720,361
|
|
|
653,105
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|
|
601,219
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|
|
584,548
|
|
|||||
Adjusted Net Income
|
390,118
|
|
|
370,937
|
|
|
308,072
|
|
|
232,477
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|
|
182,187
|
|
|||||
Adjusted EBITDA
|
1,078,571
|
|
|
1,046,646
|
|
|
941,587
|
|
|
840,028
|
|
|
778,754
|
|
|||||
Adjusted Capital Expenditures
|
377,202
|
|
|
411,052
|
|
|
350,079
|
|
|
265,038
|
|
|
268,337
|
|
|||||
Free Cash Flow
|
361,597
|
|
|
371,753
|
|
|
242,510
|
|
|
160,432
|
|
|
18,709
|
|
|||||
|
|
|
|
|
|
|
|
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|
||||||||||
Key Metrics:
|
|
|
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|
|||||
Travel Network
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Direct Billable Bookings - Air
|
462,381
|
|
|
445,050
|
|
|
384,309
|
|
|
321,962
|
|
|
314,275
|
|
|||||
Direct Billable Bookings - Lodging, Ground and Sea
|
62,443
|
|
|
60,421
|
|
|
58,414
|
|
|
54,122
|
|
|
53,503
|
|
|||||
Total Direct Billable Bookings
|
524,824
|
|
|
505,471
|
|
|
442,723
|
|
|
376,084
|
|
|
367,778
|
|
|||||
Airline Solutions Passengers Boarded
|
772,149
|
|
|
789,260
|
|
|
584,876
|
|
|
510,713
|
|
|
478,088
|
|
|
As of December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
361,381
|
|
|
$
|
364,114
|
|
|
$
|
321,132
|
|
|
$
|
155,679
|
|
|
$
|
308,236
|
|
Total assets
(1)
|
5,649,364
|
|
|
5,724,570
|
|
|
5,393,627
|
|
|
4,643,073
|
|
|
4,755,708
|
|
|||||
Long-term debt
(1)
|
3,398,731
|
|
|
3,276,281
|
|
|
3,169,344
|
|
|
3,040,009
|
|
|
3,643,548
|
|
|||||
Working capital deficit
(1)
|
(11,455
|
)
|
|
(312,977
|
)
|
|
(222,400
|
)
|
|
(201,052
|
)
|
|
(268,272
|
)
|
|||||
Redeemable preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
634,843
|
|
|||||
Noncontrolling interest
|
5,198
|
|
|
2,579
|
|
|
1,438
|
|
|
621
|
|
|
508
|
|
|||||
Total stockholders’ equity
|
698,500
|
|
|
625,615
|
|
|
484,140
|
|
|
84,383
|
|
|
(952,536
|
)
|
(1)
|
In the fourth quarter of 2015, we adopted new accounting standards that changed the presentation of deferred tax assets and liabilities and debt issuance costs. We applied the new guidance on a retrospective basis to the balance sheet data as of December 31, 2014. The balance sheet data as of December 31, 2013 was not adjusted.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Net income (loss) attributable to common stockholders
|
$
|
242,531
|
|
|
$
|
242,562
|
|
|
$
|
545,482
|
|
|
$
|
57,842
|
|
|
$
|
(137,198
|
)
|
Loss (income) from discontinued operations, net of tax
|
1,932
|
|
|
(5,549
|
)
|
|
(314,408
|
)
|
|
38,918
|
|
|
149,697
|
|
|||||
Net income attributable to noncontrolling interests
(1)
|
5,113
|
|
|
4,377
|
|
|
3,481
|
|
|
2,732
|
|
|
2,863
|
|
|||||
Preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
11,381
|
|
|
36,704
|
|
|||||
Income from continuing operations
|
249,576
|
|
|
241,390
|
|
|
234,555
|
|
|
110,873
|
|
|
52,066
|
|
|||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Impairment and related charges
(2)
|
81,112
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition-related amortization
(3a)
|
95,860
|
|
|
143,425
|
|
|
108,121
|
|
|
99,383
|
|
|
132,685
|
|
|||||
Loss on extinguishment of debt
|
1,012
|
|
|
3,683
|
|
|
38,783
|
|
|
33,538
|
|
|
12,181
|
|
|||||
Other, net
(5)
|
(36,530
|
)
|
|
(27,617
|
)
|
|
(91,377
|
)
|
|
63,860
|
|
|
305
|
|
|||||
Restructuring and other costs
(6)
|
23,975
|
|
|
18,286
|
|
|
9,256
|
|
|
10,470
|
|
|
27,921
|
|
|||||
Acquisition-related costs
(7)
|
—
|
|
|
779
|
|
|
14,437
|
|
|
—
|
|
|
—
|
|
|||||
Litigation (reimbursements) costs
(8)
|
(35,507
|
)
|
|
46,995
|
|
|
16,709
|
|
|
14,144
|
|
|
18,514
|
|
|||||
Stock-based compensation
|
44,689
|
|
|
48,524
|
|
|
29,971
|
|
|
20,094
|
|
|
3,387
|
|
|||||
Management fees
(9)
|
—
|
|
|
—
|
|
|
—
|
|
|
23,701
|
|
|
8,761
|
|
|||||
Tax impact of net income (loss) adjustments
(10), (11)
|
(34,069
|
)
|
|
(104,528
|
)
|
|
(52,383
|
)
|
|
(143,586
|
)
|
|
(73,633
|
)
|
|||||
Adjusted Net Income from continuing operations
|
$
|
390,118
|
|
|
$
|
370,937
|
|
|
$
|
308,072
|
|
|
$
|
232,477
|
|
|
$
|
182,187
|
|
Adjusted Net Income from continuing operations per share
|
$
|
1.40
|
|
|
$
|
1.31
|
|
|
$
|
1.10
|
|
|
$
|
0.94
|
|
|
$
|
0.98
|
|
Diluted weighted-average common shares outstanding
|
278,320
|
|
|
282,752
|
|
|
280,067
|
|
|
246,747
|
|
|
184,978
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted Net Income from continuing operations
|
390,118
|
|
|
370,937
|
|
|
308,072
|
|
|
232,477
|
|
|
182,187
|
|
|||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization of property and equipment
(3b)
|
264,880
|
|
|
233,303
|
|
|
213,520
|
|
|
157,592
|
|
|
123,414
|
|
|||||
Amortization of capitalized implementation costs
(3c)
|
40,131
|
|
|
37,258
|
|
|
31,441
|
|
|
35,859
|
|
|
34,143
|
|
|||||
Amortization of upfront incentive consideration
(4)
|
67,411
|
|
|
55,724
|
|
|
43,521
|
|
|
45,358
|
|
|
36,649
|
|
|||||
Interest expense, net
|
153,925
|
|
|
158,251
|
|
|
173,298
|
|
|
218,877
|
|
|
274,689
|
|
|||||
Remaining provision for income taxes
|
162,106
|
|
|
191,173
|
|
|
171,735
|
|
|
149,865
|
|
|
127,672
|
|
|||||
Adjusted EBITDA
|
1,078,571
|
|
|
1,046,646
|
|
|
941,587
|
|
|
840,028
|
|
|
778,754
|
|
|||||
Less:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(3)
|
400,871
|
|
|
413,986
|
|
|
351,480
|
|
|
289,630
|
|
|
287,038
|
|
|||||
Amortization of upfront incentive consideration
(4)
|
67,411
|
|
|
55,724
|
|
|
43,521
|
|
|
45,358
|
|
|
36,649
|
|
|||||
Acquisition related amortization
(3a)
|
(95,860
|
)
|
|
(143,425
|
)
|
|
(106,519
|
)
|
|
(96,179
|
)
|
|
(129,481
|
)
|
|||||
Adjusted Operating Income
|
$
|
706,149
|
|
|
$
|
720,361
|
|
|
$
|
653,105
|
|
|
$
|
601,219
|
|
|
$
|
584,548
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
848,336
|
|
|
$
|
246,833
|
|
|
$
|
(601,729
|
)
|
|
$
|
493,440
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
130,700
|
|
|
79,955
|
|
|
299,420
|
|
|
510,075
|
|
||||
Impairment and related charges
(2)
|
—
|
|
|
—
|
|
|
81,112
|
|
|
81,112
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
80,780
|
|
|
165,551
|
|
|
71,481
|
|
|
317,812
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
12,604
|
|
|
12,604
|
|
||||
Amortization of upfront incentive consideration
(4)
|
67,411
|
|
|
—
|
|
|
—
|
|
|
67,411
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
17,732
|
|
|
17,732
|
|
||||
Adjusted Gross Profit
|
1,127,227
|
|
|
492,339
|
|
|
(119,380
|
)
|
|
1,500,186
|
|
||||
Selling, general and administrative
|
(130,700
|
)
|
|
(79,955
|
)
|
|
(299,420
|
)
|
|
(510,075
|
)
|
||||
Joint venture equity income
|
2,580
|
|
|
—
|
|
|
—
|
|
|
2,580
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
5,305
|
|
|
3,425
|
|
|
74,329
|
|
|
83,059
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
11,371
|
|
|
11,371
|
|
||||
Litigation reimbursements
(8)
|
—
|
|
|
—
|
|
|
(35,507
|
)
|
|
(35,507
|
)
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
26,957
|
|
|
26,957
|
|
||||
Adjusted EBITDA
|
1,004,412
|
|
|
415,809
|
|
|
(341,650
|
)
|
|
1,078,571
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
86,085
|
|
|
168,976
|
|
|
145,810
|
|
|
400,871
|
|
||||
Amortization of upfront incentive consideration
(4)
|
67,411
|
|
|
—
|
|
|
—
|
|
|
67,411
|
|
||||
Acquisition-related amortization
(3a)
|
—
|
|
|
—
|
|
|
(95,860
|
)
|
|
(95,860
|
)
|
||||
Adjusted Operating Income (Loss)
|
$
|
850,916
|
|
|
$
|
246,833
|
|
|
$
|
(391,600
|
)
|
|
$
|
706,149
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
835,248
|
|
|
$
|
217,631
|
|
|
$
|
(593,307
|
)
|
|
$
|
459,572
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
132,537
|
|
|
71,685
|
|
|
421,931
|
|
|
626,153
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
72,110
|
|
|
153,204
|
|
|
62,039
|
|
|
287,353
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
12,660
|
|
|
12,660
|
|
||||
Amortization of upfront incentive consideration
(4)
|
55,724
|
|
|
—
|
|
|
—
|
|
|
55,724
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
19,213
|
|
|
19,213
|
|
||||
Adjusted Gross Profit
|
1,095,619
|
|
|
442,520
|
|
|
(77,464
|
)
|
|
1,460,675
|
|
||||
Selling, general and administrative
|
(132,537
|
)
|
|
(71,685
|
)
|
|
(421,931
|
)
|
|
(626,153
|
)
|
||||
Joint venture equity income
|
2,780
|
|
|
—
|
|
|
—
|
|
|
2,780
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
4,826
|
|
|
1,228
|
|
|
120,579
|
|
|
126,633
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
5,626
|
|
|
5,626
|
|
||||
Acquisition-related costs
(7)
|
—
|
|
|
—
|
|
|
779
|
|
|
779
|
|
||||
Litigation costs
(8)
|
—
|
|
|
—
|
|
|
46,995
|
|
|
46,995
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
29,311
|
|
|
29,311
|
|
||||
Adjusted EBITDA
|
970,688
|
|
|
372,063
|
|
|
(296,105
|
)
|
|
1,046,646
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
76,936
|
|
|
154,432
|
|
|
182,618
|
|
|
413,986
|
|
||||
Amortization of upfront incentive consideration
(4)
|
55,724
|
|
|
—
|
|
|
—
|
|
|
55,724
|
|
||||
Acquisition-related amortization
(3a)
|
—
|
|
|
—
|
|
|
(143,425
|
)
|
|
(143,425
|
)
|
||||
Adjusted Operating Income (Loss)
|
$
|
838,028
|
|
|
$
|
217,631
|
|
|
$
|
(335,298
|
)
|
|
$
|
720,361
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
751,546
|
|
|
$
|
180,448
|
|
|
$
|
(472,225
|
)
|
|
$
|
459,769
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
116,511
|
|
|
62,247
|
|
|
378,319
|
|
|
557,077
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
62,337
|
|
|
142,109
|
|
|
40,089
|
|
|
244,535
|
|
||||
Amortization of upfront incentive consideration
(4)
|
43,521
|
|
|
—
|
|
|
—
|
|
|
43,521
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
11,918
|
|
|
11,918
|
|
||||
Adjusted Gross Profit
|
973,915
|
|
|
384,804
|
|
|
(41,899
|
)
|
|
1,316,820
|
|
||||
Selling, general and administrative
|
(116,511
|
)
|
|
(62,247
|
)
|
|
(378,319
|
)
|
|
(557,077
|
)
|
||||
Joint venture equity income
|
14,842
|
|
|
—
|
|
|
—
|
|
|
14,842
|
|
||||
Joint venture intangible amortization
(3a)
|
1,602
|
|
|
—
|
|
|
—
|
|
|
1,602
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
3,428
|
|
|
904
|
|
|
102,613
|
|
|
106,945
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
9,256
|
|
|
9,256
|
|
||||
Acquisition-related costs
(7)
|
—
|
|
|
—
|
|
|
14,437
|
|
|
14,437
|
|
||||
Litigation costs
(8)
|
—
|
|
|
—
|
|
|
16,709
|
|
|
16,709
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
18,053
|
|
|
18,053
|
|
||||
Adjusted EBITDA
|
877,276
|
|
|
323,461
|
|
|
(259,150
|
)
|
|
941,587
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
65,765
|
|
|
143,013
|
|
|
142,702
|
|
|
351,480
|
|
||||
Amortization of upfront incentive consideration
(4)
|
43,521
|
|
|
—
|
|
|
—
|
|
|
43,521
|
|
||||
Acquisition-related amortization
(3a)
|
1,602
|
|
|
—
|
|
|
(108,121
|
)
|
|
(106,519
|
)
|
||||
Adjusted Operating Income (Loss)
|
$
|
766,388
|
|
|
$
|
180,448
|
|
|
$
|
(293,731
|
)
|
|
$
|
653,105
|
|
|
Year Ended December 31, 2014
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
657,326
|
|
|
$
|
176,730
|
|
|
$
|
(412,711
|
)
|
|
$
|
421,345
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
102,059
|
|
|
56,195
|
|
|
309,340
|
|
|
467,594
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
58,533
|
|
|
104,926
|
|
|
34,950
|
|
|
198,409
|
|
||||
Amortization of upfront incentive consideration
(4)
|
45,358
|
|
|
—
|
|
|
—
|
|
|
45,358
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
6,042
|
|
|
6,042
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
8,044
|
|
|
8,044
|
|
||||
Adjusted Gross Profit
|
863,276
|
|
|
337,851
|
|
|
(54,335
|
)
|
|
1,146,792
|
|
||||
Selling, general and administrative
|
(102,059
|
)
|
|
(56,195
|
)
|
|
(309,340
|
)
|
|
(467,594
|
)
|
||||
Joint venture equity income
|
12,082
|
|
|
—
|
|
|
—
|
|
|
12,082
|
|
||||
Joint venture intangible amortization
(3a)
|
3,204
|
|
|
—
|
|
|
—
|
|
|
3,204
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
2,174
|
|
|
992
|
|
|
88,055
|
|
|
91,221
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
4,428
|
|
|
4,428
|
|
||||
Litigation costs
(8)
|
—
|
|
|
—
|
|
|
14,144
|
|
|
14,144
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
12,050
|
|
|
12,050
|
|
||||
Management fees
(9)
|
—
|
|
|
—
|
|
|
23,701
|
|
|
23,701
|
|
||||
Adjusted EBITDA
|
778,677
|
|
|
282,648
|
|
|
(221,297
|
)
|
|
840,028
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
60,707
|
|
|
105,918
|
|
|
123,005
|
|
|
289,630
|
|
||||
Amortization of upfront incentive consideration
(4)
|
45,358
|
|
|
—
|
|
|
—
|
|
|
45,358
|
|
||||
Acquisition-related amortization
(3a)
|
3,204
|
|
|
—
|
|
|
(99,383
|
)
|
|
(96,179
|
)
|
||||
Adjusted Operating Income (Loss)
|
$
|
669,408
|
|
|
$
|
176,730
|
|
|
$
|
(244,919
|
)
|
|
$
|
601,219
|
|
|
Year Ended December 31, 2013
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
667,498
|
|
|
$
|
135,755
|
|
|
$
|
(422,323
|
)
|
|
$
|
380,930
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
106,392
|
|
|
51,538
|
|
|
279,523
|
|
|
437,453
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
50,254
|
|
|
75,093
|
|
|
67,076
|
|
|
192,423
|
|
||||
Amortization of upfront incentive consideration
(4)
|
36,649
|
|
|
—
|
|
|
—
|
|
|
36,649
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
11,491
|
|
|
11,491
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
1,356
|
|
|
1,356
|
|
||||
Adjusted Gross Profit
|
860,793
|
|
|
262,386
|
|
|
(62,877
|
)
|
|
1,060,302
|
|
||||
Selling, general and administrative
|
(106,392
|
)
|
|
(51,538
|
)
|
|
(279,523
|
)
|
|
(437,453
|
)
|
||||
Joint venture equity income
|
12,350
|
|
|
—
|
|
|
—
|
|
|
12,350
|
|
||||
Joint venture intangible amortization
(3a)
|
3,204
|
|
|
—
|
|
|
—
|
|
|
3,204
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
2,253
|
|
|
2,227
|
|
|
90,135
|
|
|
94,615
|
|
||||
Restructuring and other costs
(6)
|
—
|
|
|
—
|
|
|
16,430
|
|
|
16,430
|
|
||||
Litigation costs
(8)
|
—
|
|
|
—
|
|
|
18,514
|
|
|
18,514
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,031
|
|
|
2,031
|
|
||||
Management fees
(9)
|
—
|
|
|
—
|
|
|
8,761
|
|
|
8,761
|
|
||||
Adjusted EBITDA
|
772,208
|
|
|
213,075
|
|
|
(206,529
|
)
|
|
778,754
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(3)
|
52,507
|
|
|
77,320
|
|
|
157,211
|
|
|
287,038
|
|
||||
Amortization of upfront incentive consideration
(4)
|
36,649
|
|
|
—
|
|
|
—
|
|
|
36,649
|
|
||||
Acquisition-related amortization
(3a)
|
3,204
|
|
|
—
|
|
|
(132,685
|
)
|
|
(129,481
|
)
|
||||
Adjusted Operating Income (Loss)
|
$
|
679,848
|
|
|
$
|
135,755
|
|
|
$
|
(231,055
|
)
|
|
$
|
584,548
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Additions to property and equipment
|
$
|
316,436
|
|
|
$
|
327,647
|
|
|
$
|
286,697
|
|
|
$
|
227,227
|
|
|
$
|
209,523
|
|
Capitalized implementation costs
|
60,766
|
|
|
83,405
|
|
|
63,382
|
|
|
37,811
|
|
|
58,814
|
|
|||||
Adjusted capital expenditures
|
$
|
377,202
|
|
|
$
|
411,052
|
|
|
$
|
350,079
|
|
|
$
|
265,038
|
|
|
$
|
268,337
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Cash provided by operating activities
|
$
|
678,033
|
|
|
$
|
699,400
|
|
|
$
|
529,207
|
|
|
$
|
387,659
|
|
|
$
|
228,232
|
|
Cash used in investing activities
|
(317,525
|
)
|
|
(445,808
|
)
|
|
(729,041
|
)
|
|
(258,791
|
)
|
|
(239,999
|
)
|
|||||
Cash provided by (used in) financing activities
|
(356,780
|
)
|
|
(190,025
|
)
|
|
93,144
|
|
|
(71,945
|
)
|
|
262,172
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Cash provided by operating activities
|
$
|
678,033
|
|
|
$
|
699,400
|
|
|
$
|
529,207
|
|
|
$
|
387,659
|
|
|
$
|
228,232
|
|
Additions to property and equipment
|
(316,436
|
)
|
|
(327,647
|
)
|
|
(286,697
|
)
|
|
(227,227
|
)
|
|
(209,523
|
)
|
|||||
Free Cash Flow
|
$
|
361,597
|
|
|
$
|
371,753
|
|
|
$
|
242,510
|
|
|
$
|
160,432
|
|
|
$
|
18,709
|
|
(1)
|
Net income attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interest held in (i) Sabre Travel Network Middle East of 40% for all periods presented, (ii) Sabre Seyahat Dagitim Sistemleri A.S. of 40% beginning in April 2014, (iii) Abacus International Lanka Pte Ltd of 40% beginning in July 2015, and (iv) Sabre Bulgaria of 40% beginning in November 2017.
|
(2)
|
Impairment and related charges represents an $81 million charge in 2017 associated with net capitalized contract costs related to an Airline Solutions' customer based on our analysis of the recoverability of such amounts. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Factors Affecting our Results” for additional information.
|
(3)
|
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. Also includes amortization of the excess basis in our underlying equity interest in SAPPL's net assets prior to our acquisition of SAPPL on July 1, 2015.
|
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.
|
(4)
|
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. This consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. These 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. These 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.
|
(5)
|
In 2017, Other, net includes a benefit of $60 million due to a reduction to our liability under the Tax Receivable Agreement ("TRA") primarily due to a provisional adjustment resulting from the enactment of TCJA which reduced the U.S. corporate income tax rate (see Note
7. Income Taxes
, to our consolidated financial statements), offset by a loss of $15 million related to debt modification costs associated with a debt refinancing. In 2016, we recognized a gain of $15 million from the sale of our available-for-sale marketable securities, and $6 million gain associated with the receipt of an earn-out payment related to the sale of a business in 2013. In 2015, we recognized a gain of
$78 million
associated with the remeasurement of our previously-held 35% investment in SAPPL to its fair value and a gain of $12 million related to the settlement of pre-existing agreements between us and SAPPL. In 2014, Other, net primarily includes a charge of $66 million as a result of an increase to our TRA liability. The increase in our TRA liability is due to a reduction in a valuation allowance maintained against our deferred tax assets. This charge is fully offset by an income tax benefit recognized in the fourth quarter of 2014 from the reduction in the valuation allowance which is included in tax impacts of net income adjustments. In addition, all periods presented include foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Tax Receivable Agreement” for additional information regarding the TRA.
|
(6)
|
Restructuring and other costs represents 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. We recorded $25 million and $20 million in charges associated with announced actions to reduce our workforce in 2017 and 2016, respectively. These reductions aligned our operations with business needs and implemented an ongoing cost and organizational structure consistent with our expected growth needs and opportunities. In 2015, we recognized a restructuring charge of $9 million associated with the integration of Abacus, and reduced that estimate by $4 million in 2016, as a result of the reevaluation of our plan derived from a shift in timing and strategy of originally contemplated actions. As of December 31, 2017, our actions under this plan have been substantially completed and payments under the plan have been made.
|
(7)
|
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of Abacus, the Trust Group and Airpas Aviation.
|
(8)
|
Litigation (reimbursements) costs, net represent charges and legal fee reimbursements associated with antitrust litigation. In 2017, we recorded a $43 million reimbursement, net of accrued legal and related expenses, from a settlement with our insurance carriers with respect to the American Airlines litigation. In 2016, we recorded an accrual of $32 million representing the trebling of the jury award plus our estimate of attorneys’ fees, expenses and costs in the US Airways litigation. See Item 3, "Legal Proceedings."
|
(9)
|
We paid an annual management fee to TPG Global, LLC (“TPG”) and Silver Lake Management Company (“Silver Lake”) in an amount between (i) $5 million and (ii) $7 million, plus reimbursement of certain costs incurred by TPG and Silver Lake, pursuant to the management services agreement (the “MSA”). In addition, we paid a $21 million fee, in the aggregate, to TPG and Silver Lake in connection with our initial public offering in 2014. The MSA was terminated in conjunction with our initial public offering.
|
(10)
|
In 2017, the tax impact on net income adjustments includes a provisional impact of $47 million recognized in the fourth quarter of 2017 as a result of the enactment of the TCJA in December 2017. See Note
7. Income Taxes
, to our consolidated financial statements. In 2014, the tax impact on net income adjustments includes a $66 million benefit recognized in the fourth quarter of 2014 from the reduction in a valuation allowance maintained against our deferred tax assets.
|
(11)
|
In the first quarter of 2016, we adopted Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting. For the year ended December 31, 2016, we recognized $35 million in excess tax benefits associated with employee equity-based awards, as a result of the adoption of this standard. There were no other material impacts to our consolidated financial statements as a result of adopting this updated standard.
|
•
|
these non-GAAP financial measures exclude certain recurring, non-cash charges such as stock-based compensation expense and amortization of acquired intangible assets
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Profit and Adjusted EBITDA do not reflect cash requirements for such replacements;
|
•
|
Adjusted Operating Income (Loss), Adjusted Net Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
|
•
|
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
|
•
|
Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures or Free Cash Flow differently, which reduces their usefulness as comparative measures.
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
% Change
|
|||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||
Travel Network
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Billable Bookings - Air
|
462,381
|
|
|
445,050
|
|
|
384,309
|
|
|
3.9
|
%
|
|
15.8
|
%
|
Direct Billable Bookings - LGS
|
62,443
|
|
|
60,421
|
|
|
58,414
|
|
|
3.3
|
%
|
|
3.4
|
%
|
Total Direct Billable Bookings
|
524,824
|
|
|
505,471
|
|
|
442,723
|
|
|
3.8
|
%
|
|
14.2
|
%
|
Airline Solutions Passengers Boarded
|
772,149
|
|
|
789,260
|
|
|
584,876
|
|
|
(2.2
|
)%
|
|
34.9
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
3,598,484
|
|
|
$
|
3,373,387
|
|
|
$
|
2,960,896
|
|
Cost of revenue
|
2,513,857
|
|
|
2,287,662
|
|
|
1,944,050
|
|
|||
Selling, general and administrative
|
510,075
|
|
|
626,153
|
|
|
557,077
|
|
|||
Impairment and related charges
|
81,112
|
|
|
—
|
|
|
—
|
|
|||
Operating income
|
493,440
|
|
|
459,572
|
|
|
459,769
|
|
|||
Interest expense, net
|
(153,925
|
)
|
|
(158,251
|
)
|
|
(173,298
|
)
|
|||
Loss on extinguishment of debt
|
(1,012
|
)
|
|
(3,683
|
)
|
|
(38,783
|
)
|
|||
Joint venture equity income
|
2,580
|
|
|
2,780
|
|
|
14,842
|
|
|||
Other income, net
|
36,530
|
|
|
27,617
|
|
|
91,377
|
|
|||
Income from continuing operations before income taxes
|
377,613
|
|
|
328,035
|
|
|
353,907
|
|
|||
Provision for income taxes
|
128,037
|
|
|
86,645
|
|
|
119,352
|
|
|||
Income from continuing operations
|
$
|
249,576
|
|
|
$
|
241,390
|
|
|
$
|
234,555
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
2,550,470
|
|
|
$
|
2,374,849
|
|
|
$
|
175,621
|
|
|
7
|
%
|
Airline and Hospitality Solutions
|
1,074,360
|
|
|
1,019,306
|
|
|
55,054
|
|
|
5
|
%
|
|||
Total segment revenue
|
3,624,830
|
|
|
3,394,155
|
|
|
230,675
|
|
|
7
|
%
|
|||
Eliminations
|
(26,346
|
)
|
|
(20,768
|
)
|
|
(5,578
|
)
|
|
27
|
%
|
|||
Total revenue
|
$
|
3,598,484
|
|
|
$
|
3,373,387
|
|
|
$
|
225,097
|
|
|
7
|
%
|
•
|
a $13 million increase in Airline Solutions’ SabreSonic revenue for the year ended
December 31, 2017
compared to the prior year, driven by passengers boarded growth of 6% on a consistent carrier basis and the cut-over of Alitalia to SabreSonic CSS in the fourth quarter of 2016. Total passengers boarded decreased by
2%
to
772 million
for the year ended
December 31, 2017
, driven primarily by the termination of an agreement with Southwest Airlines related to services and processing for their legacy air reservation system in the second quarter of 2017, which was at a lower than average passengers boarded rate;
|
•
|
a $14 million increase in Airline Solutions’ commercial and operations solutions revenue driven by growth in multiple products across our portfolio;
|
•
|
a $34 million increase in Hospitality Solutions revenue to $258 million for the year ended
December 31, 2017
compared to the prior year, primarily driven by an increase in CRS transaction revenue from new and existing customers; and
|
•
|
a $6 million decrease in discrete professional service fees revenue, as a result of reduced sales compared to the prior period.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
1,423,242
|
|
|
$
|
1,279,231
|
|
|
$
|
144,011
|
|
|
11
|
%
|
Airline and Hospitality Solutions
|
582,022
|
|
|
576,786
|
|
|
5,236
|
|
|
1
|
%
|
|||
Eliminations
|
(26,346
|
)
|
|
(20,371
|
)
|
|
(5,975
|
)
|
|
29
|
%
|
|||
Total segment cost of revenue
|
1,978,918
|
|
|
1,835,646
|
|
|
143,272
|
|
|
8
|
%
|
|||
Corporate
|
149,716
|
|
|
108,939
|
|
|
40,777
|
|
|
37
|
%
|
|||
Depreciation and amortization
|
317,812
|
|
|
287,353
|
|
|
30,459
|
|
|
11
|
%
|
|||
Amortization of upfront incentive consideration
|
67,411
|
|
|
55,724
|
|
|
11,687
|
|
|
21
|
%
|
|||
Total cost of revenue
|
$
|
2,513,857
|
|
|
$
|
2,287,662
|
|
|
$
|
226,195
|
|
|
10
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative
|
$
|
510,075
|
|
|
$
|
626,153
|
|
|
$
|
(116,078
|
)
|
|
(19
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Impairment and related charges
|
$
|
81,112
|
|
|
$
|
—
|
|
|
$
|
81,112
|
|
|
100
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Other income, net
|
$
|
(36,530
|
)
|
|
$
|
(27,617
|
)
|
|
$
|
(8,913
|
)
|
|
(32
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
128,037
|
|
|
$
|
86,645
|
|
|
$
|
41,392
|
|
|
48
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
2,374,849
|
|
|
$
|
2,102,792
|
|
|
$
|
272,057
|
|
|
13
|
%
|
Airline and Hospitality Solutions
|
1,019,306
|
|
|
872,086
|
|
|
147,220
|
|
|
17
|
%
|
|||
Total segment revenue
|
3,394,155
|
|
|
2,974,878
|
|
|
419,277
|
|
|
14
|
%
|
|||
Eliminations
|
(20,768
|
)
|
|
(13,982
|
)
|
|
(6,786
|
)
|
|
49
|
%
|
|||
Total revenue
|
$
|
3,373,387
|
|
|
$
|
2,960,896
|
|
|
$
|
412,491
|
|
|
14
|
%
|
•
|
a $312 million increase in transaction-based revenue to $2,199 million due to growth in the business and the impact of the acquisition of Abacus in 2015. Direct Billable Bookings increased by 14% to 505 million in the year ended December 31, 2016. Excluding the impact of the acquisition of Abacus, Direct Billable Bookings increased by 3%, which was driven by growth of 6% in EMEA, 3% in North America and 1% in Latin America;
|
•
|
a decrease of $40 million in other revenue resulting from a $51 million decrease in other revenue related to services we provided to Abacus prior to the acquisition in July 2015, offset by an increase of $11 million primarily due to data analytic products revenue.
|
•
|
a $66 million increase in Airline Solutions’ SabreSonic revenue for the year ended December 31, 2016 compared to the prior year. Passengers boarded increased by 35% to 789 million for the year ended December 31, 2016, driven primarily by the cutover to SabreSonic CSS for American Airlines Group and Alitalia in the fourth quarter of 2015 and 2016, respectively, and by growth of existing customers. Revenue increased by $105 million primarily as a result of growth in PBs for the year ended December 31, 2016. This increase was partially offset by a $39 million decrease in non-PB revenue, primarily due to the expiration of a service contract in the fourth quarter of 2015 in conjunction with a litigation settlement agreement with that customer in 2012. In addition, in the last part of 2016, implementation schedules for several airlines were delayed to future years;
|
•
|
a $32 million increase in Airline Solutions’ commercial and operations solutions revenue driven by growth in multiple products across our portfolio;
|
•
|
a $66 million increase in Hospitality Solutions revenue to $225 million for the year ended December 31, 2016 compared to the prior year, primarily driven by an increase in CRS transactions. The increase was mainly driven by revenue growth of $26 million from new and existing customers and revenue growth of $40 million from the acquisition of the Trust Group; and
|
•
|
a $17 million decrease in discrete professional service fees revenue, as a result of certain unrealized customer contracts.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
1,279,231
|
|
|
$
|
1,128,878
|
|
|
$
|
150,353
|
|
|
13
|
%
|
Airline and Hospitality Solutions
|
576,786
|
|
|
487,282
|
|
|
89,504
|
|
|
18
|
%
|
|||
Eliminations
|
(20,371
|
)
|
|
(13,653
|
)
|
|
(6,718
|
)
|
|
49
|
%
|
|||
Total segment cost of revenue
|
1,835,646
|
|
|
1,602,507
|
|
|
233,139
|
|
|
15
|
%
|
|||
Corporate
|
108,939
|
|
|
53,487
|
|
|
55,452
|
|
|
104
|
%
|
|||
Depreciation and amortization
|
287,353
|
|
|
244,535
|
|
|
42,818
|
|
|
18
|
%
|
|||
Amortization of upfront incentive consideration
|
55,724
|
|
|
43,521
|
|
|
12,203
|
|
|
28
|
%
|
|||
Total cost of revenue
|
$
|
2,287,662
|
|
|
$
|
1,944,050
|
|
|
$
|
343,612
|
|
|
18
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative
|
$
|
626,153
|
|
|
$
|
557,077
|
|
|
$
|
69,076
|
|
|
12
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Interest expense, net
|
$
|
158,251
|
|
|
$
|
173,298
|
|
|
$
|
(15,047
|
)
|
|
(9
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Loss on extinguishment of debt
|
$
|
3,683
|
|
|
$
|
38,783
|
|
|
$
|
(35,100
|
)
|
|
(91
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Joint venture equity income
|
$
|
2,780
|
|
|
$
|
14,842
|
|
|
$
|
(12,062
|
)
|
|
(81
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Other income, net
|
$
|
(27,617
|
)
|
|
$
|
(91,377
|
)
|
|
$
|
63,760
|
|
|
(70
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
86,645
|
|
|
$
|
119,352
|
|
|
$
|
(32,707
|
)
|
|
(27
|
)%
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash and cash equivalents
|
$
|
361,381
|
|
|
$
|
364,114
|
|
Available balance under the Revolver
|
378,542
|
|
|
365,006
|
|
||
Reductions to the Revolver:
|
|
|
|
||||
Revolver outstanding balance
|
—
|
|
|
—
|
|
||
Outstanding letters of credit
|
21,458
|
|
|
34,994
|
|
•
|
receipt of proceeds totaling $1,898 million (net of $2 million discount) in February 2017 from the 2017 Term Loan B, which were used to pay off approximately $1,753 million of all existing classes of outstanding term loans (other than the 2016 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;
|
•
|
payments totaling $48 million on the principal outstanding on our term loans;
|
•
|
pursuant to the 2017 Refinancing in August 2017, payment of $7 million in debt modification costs;
|
•
|
first annual payment in January 2017 on the TRA liability for $99 million, excluding interest;
|
•
|
payment of
$155 million
in dividends on our common stock; and
|
•
|
receipt of net proceeds totaling
$13 million
from the settlement of employee stock-option awards and payment of $11 million in income tax withholdings associated with the settlement of employee restricted-stock awards; and
|
•
|
repurchase of
5,779,769
shares of our common stock outstanding totaling
$109 million
.
|
•
|
receipt of proceeds totaling $597 million (net of $3 million discount) from the 2016 Term Loan A and used a portion of the proceeds to repay $350 million of outstanding principal on our 2013 Term Loan B and 2013 Incremental Term Loan Facility;
|
•
|
payment of the remaining principal of $165 million on our senior secured notes due 2016, which matured in March 2016, paid down $26 million of the term loan outstanding as part of quarterly principal repayments;
|
•
|
draws on our 2013 Revolver totaling $458 million and payments totaling $458 million resulting in no outstanding balance as of December 31, 2016;
|
•
|
payment of $13 million for capital leases;
|
•
|
payment of $144 million in dividends on our common stock;
|
•
|
receipt of net proceeds of $27 million from the settlement of employee stock-option awards; and
|
•
|
repurchase of 3,980,672 shares of our common stock outstanding totaling $100 million.
|
•
|
in April 2015, issuance of $530 million of our 5.375% senior secured notes due in 2023 and use of the net proceeds of $522 million to redeem all of the $480 million principal of our senior secured notes due 2019, pay a $31 million redemption premium and $2 million make-whole premium;
|
•
|
in November 2015, issuance of $500 million of 5.25% senior secured notes due 2023 and use of the net proceeds of $494 million to repay $235 million of the $400 million senior secured notes due 2016, pay a $5 million make-whole premium and repurchase 3,400,000 shares of our common stock totaling $99 million;
|
•
|
payment of $21 million of the term loan outstanding as part of quarterly principal repayments;
|
•
|
payment of $99 million in dividends on our common stock; and
|
•
|
receipt of net proceeds of $47 million from the settlement of stock-based awards.
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Total debt
(1)
|
$
|
211,768
|
|
|
$
|
214,957
|
|
|
$
|
224,622
|
|
|
$
|
216,701
|
|
|
$
|
520,764
|
|
|
$
|
2,935,831
|
|
|
$
|
4,324,643
|
|
Operating lease obligations
(2)
|
24,467
|
|
|
20,872
|
|
|
17,733
|
|
|
14,189
|
|
|
11,156
|
|
|
29,884
|
|
|
118,301
|
|
|||||||
IT outsourcing agreement
(3)
|
173,561
|
|
|
144,108
|
|
|
136,117
|
|
|
122,365
|
|
|
105,034
|
|
|
105,034
|
|
|
786,219
|
|
|||||||
Purchase orders
(4)
|
275,860
|
|
|
6,413
|
|
|
5,006
|
|
|
402
|
|
|
287
|
|
|
—
|
|
|
287,968
|
|
|||||||
Transition tax
(5)
|
3,841
|
|
|
3,841
|
|
|
3,841
|
|
|
3,841
|
|
|
3,841
|
|
|
28,807
|
|
|
48,012
|
|
|||||||
Letters of credit
(6)
|
19,220
|
|
|
2,083
|
|
|
155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,458
|
|
|||||||
Unrecognized tax benefits
(7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,508
|
|
|||||||
Tax Receivable Agreement
(8)
|
59,844
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
234,059
|
|
|||||||
Total contractual cash obligations
(9)
|
$
|
768,561
|
|
|
$
|
392,274
|
|
|
$
|
387,474
|
|
|
$
|
357,498
|
|
|
$
|
641,082
|
|
|
$
|
3,099,556
|
|
|
$
|
5,913,168
|
|
(1)
|
Includes all interest and principal of borrowings under our senior secured credit facilities, senior secured notes due 2023 and capital lease obligations. Under certain circumstances, we are required to pay a percentage of the excess cash flow, if any, generated each year to our lenders which obligation is not reflected in the table above. Interest on the term loan is based on the LIBOR rate plus a base margin and includes the effect of interest rate swaps. For purposes of this table, we have used projected LIBOR rates for all future periods. See Note
8. Debt
, to our consolidated financial statements.
|
(2)
|
We lease approximately 1.5 million square feet of office space in 117 locations in 54 countries. Lease payment escalations are based on fixed annual increases, local consumer price index changes or market rental reviews. We have renewal options of various term lengths in approximately 50 leases. We have no purchase options and no restrictions imposed by our leases concerning dividends or additional debt.
|
(3)
|
Represents minimum amounts due to DXC under the terms of an outsourcing agreement through which DXC manages a significant portion of our information technology systems. Actual payments may vary significantly from the minimum amounts presented.
|
(4)
|
Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which we have not received the goods or services as of
December 31, 2017
. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the delivery of goods or performance of services.
|
(5)
|
Represents the provisional amount payable on foreign earnings subject to U.S. income tax pursuant to the TCJA enacted on December 22, 2017 (see Note
7. Income Taxes
, to our consolidated financial statements). Amounts per year are estimates as the Internal Revenue Service has not issued guidance on the timing of payments.
|
(6)
|
Our letters of credit consist of stand-by letters of credit, underwritten by a group of lenders, which we primarily issue for certain regulatory purposes as well as to certain hotel properties to secure our payment for hotel room transactions. The contractual expiration dates of these letters of credit are shown in the table above. There were no claims made against any stand‑by letters of credit during the years ended
December 31, 2017
,
2016
and
2015
.
|
(7)
|
Unrecognized tax benefits include associated interest and penalties. The timing of related cash payments for substantially all of these liabilities is inherently uncertain because the ultimate amount and timing of such liabilities is affected by factors which are variable and outside our control.
|
(8)
|
We paid
$60 million
, including interest, under our TRA in January 2018. See Note
7. Income Taxes
, to our consolidated financial statements and “—Tax Receivable Agreement.” The exact timing of future payments under the TRA is uncertain and dependent on the timing of the realization of taxable income.
|
(9)
|
Excludes pension obligations, see Note
14. Pension and Other Postretirement Benefit Plans
, to our consolidated financial statements.
|
–
|
Under current revenue recognition guidance, we recognize revenue related to license fee and maintenance agreements ratably over the life of the contract. Under the new guidance, revenue for license fees will be recognized upon delivery of the license and ongoing maintenance services will continue to be recognized ratably over the length of the contract. For existing open agreements, this change will result in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements, and before the impact of new sales.
|
–
|
Allocation of contract revenues among various products and solutions, and the timing of the recognition of those revenues, will be impacted by agreements with tiered pricing or variable rate structures that do not correspond with the goods or services delivered to the customer. For existing open agreements, this change will also result in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements.
|
–
|
In the year of adoption, as a result of the new revenue recognition standard, the changes detailed above will result in a significant beginning balance sheet adjustment and we preliminarily estimate our consolidated revenue could be reduced by approximately $40 million to $50 million.
|
•
|
Capitalization of incremental costs to obtain a contract (such as sales commissions), and recognition of these costs over the contract period will result in the recognition of an asset on our balance sheet and will impact our Airline and Hospitality Solutions segment. We currently expect that our results of operations will not be significantly impacted from the capitalization of these incremental costs.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
(1)
|
Subject to a
1%
floor.
|
(2)
|
Subject to a
0%
floor.
|
(3)
|
As of February 22, 2017.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Consolidated Financial Statements:
|
|
|
|
Financial Statement Schedules:
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
3,598,484
|
|
|
$
|
3,373,387
|
|
|
$
|
2,960,896
|
|
Cost of revenue
|
2,513,857
|
|
|
2,287,662
|
|
|
1,944,050
|
|
|||
Selling, general and administrative
|
510,075
|
|
|
626,153
|
|
|
557,077
|
|
|||
Impairment and related charges
|
81,112
|
|
|
—
|
|
|
—
|
|
|||
Operating income
|
493,440
|
|
|
459,572
|
|
|
459,769
|
|
|||
Other (expense) income:
|
|
|
|
|
|
||||||
Interest expense, net
|
(153,925
|
)
|
|
(158,251
|
)
|
|
(173,298
|
)
|
|||
Loss on extinguishment of debt
|
(1,012
|
)
|
|
(3,683
|
)
|
|
(38,783
|
)
|
|||
Joint venture equity income
|
2,580
|
|
|
2,780
|
|
|
14,842
|
|
|||
Other, net
|
36,530
|
|
|
27,617
|
|
|
91,377
|
|
|||
Total other expense, net
|
(115,827
|
)
|
|
(131,537
|
)
|
|
(105,862
|
)
|
|||
Income from continuing operations before income taxes
|
377,613
|
|
|
328,035
|
|
|
353,907
|
|
|||
Provision for income taxes
|
128,037
|
|
|
86,645
|
|
|
119,352
|
|
|||
Income from continuing operations
|
249,576
|
|
|
241,390
|
|
|
234,555
|
|
|||
(Loss) income from discontinued operations, net of tax
|
(1,932
|
)
|
|
5,549
|
|
|
314,408
|
|
|||
Net income
|
247,644
|
|
|
246,939
|
|
|
548,963
|
|
|||
Net income attributable to noncontrolling interests
|
5,113
|
|
|
4,377
|
|
|
3,481
|
|
|||
Net income attributable to common stockholders
|
$
|
242,531
|
|
|
$
|
242,562
|
|
|
$
|
545,482
|
|
|
|
|
|
|
|
||||||
Basic net income per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
0.88
|
|
|
$
|
0.85
|
|
|
$
|
0.85
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.02
|
|
|
1.15
|
|
|||
Net income per common share
|
$
|
0.87
|
|
|
$
|
0.87
|
|
|
$
|
2.00
|
|
Diluted net income per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
0.88
|
|
|
$
|
0.84
|
|
|
$
|
0.83
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.02
|
|
|
1.12
|
|
|||
Net income per common share
|
$
|
0.87
|
|
|
$
|
0.86
|
|
|
$
|
1.95
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
276,893
|
|
|
277,546
|
|
|
273,139
|
|
|||
Diluted
|
278,320
|
|
|
282,752
|
|
|
280,067
|
|
|||
|
|
|
|
|
|
||||||
Dividend per common share
|
$
|
0.56
|
|
|
$
|
0.52
|
|
|
$
|
0.36
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
$
|
247,644
|
|
|
$
|
246,939
|
|
|
$
|
548,963
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments (“CTA”):
|
|
|
|
|
|
||||||
Foreign CTA gains (losses), net of tax
|
13,136
|
|
|
(1,265
|
)
|
|
(4,382
|
)
|
|||
Reclassification adjustment for realized losses on foreign CTA, net of taxes of $0, $107 and $12,152
|
—
|
|
|
(198
|
)
|
|
(18,558
|
)
|
|||
Net change in foreign CTA gains (losses), net of tax
|
13,136
|
|
|
(1,463
|
)
|
|
(22,940
|
)
|
|||
Retirement-related benefit plans:
|
|
|
|
|
|
||||||
Net actuarial loss, net of taxes of $386, $9,701 and $2,273
|
(852
|
)
|
|
(17,223
|
)
|
|
(4,060
|
)
|
|||
Amortization of prior service credits, net of taxes of $517, $518 and $516
|
(915
|
)
|
|
(914
|
)
|
|
(915
|
)
|
|||
Amortization of actuarial losses, net of taxes of $(2,336), $(2,123) and $(2,545)
|
4,181
|
|
|
3,748
|
|
|
4,500
|
|
|||
Net change in retirement-related benefit plans, net of tax
|
2,414
|
|
|
(14,389
|
)
|
|
(475
|
)
|
|||
Derivatives and available-for-sale securities:
|
|
|
|
|
|
||||||
Unrealized gains (losses), net of taxes of $(5,989), $2,214 and $5,753
|
16,068
|
|
|
4,307
|
|
|
(9,642
|
)
|
|||
Reclassification adjustment for realized gains (losses), net of taxes of $(1,005), $1,170 and $(3,312)
|
2,082
|
|
|
(13,422
|
)
|
|
10,646
|
|
|||
Net change in derivatives and available-for-sale securities, net of tax
|
18,150
|
|
|
(9,115
|
)
|
|
1,004
|
|
|||
Share of other comprehensive income (loss) of joint venture
|
615
|
|
|
(697
|
)
|
|
(4,921
|
)
|
|||
Other comprehensive income (loss)
|
34,315
|
|
|
(25,664
|
)
|
|
(27,332
|
)
|
|||
Comprehensive income
|
281,959
|
|
|
221,275
|
|
|
521,631
|
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
(5,113
|
)
|
|
(4,377
|
)
|
|
(3,481
|
)
|
|||
Comprehensive income attributable to Sabre Corporation
|
$
|
276,846
|
|
|
$
|
216,898
|
|
|
$
|
518,150
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
361,381
|
|
|
$
|
364,114
|
|
Accounts receivable, net
|
490,558
|
|
|
400,667
|
|
||
Prepaid expenses and other current assets
|
108,753
|
|
|
88,600
|
|
||
Total current assets
|
960,692
|
|
|
853,381
|
|
||
Property and equipment, net
|
799,194
|
|
|
753,279
|
|
||
Investments in joint ventures
|
27,527
|
|
|
25,582
|
|
||
Goodwill
|
2,554,987
|
|
|
2,548,447
|
|
||
Acquired customer relationships, net
|
351,034
|
|
|
387,632
|
|
||
Other intangible assets, net
|
332,171
|
|
|
387,805
|
|
||
Deferred income taxes
|
31,817
|
|
|
95,285
|
|
||
Other assets, net
|
591,942
|
|
|
673,159
|
|
||
Total assets
|
$
|
5,649,364
|
|
|
$
|
5,724,570
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
162,755
|
|
|
$
|
168,576
|
|
Accrued compensation and related benefits
|
112,343
|
|
|
102,037
|
|
||
Accrued subscriber incentives
|
271,200
|
|
|
216,011
|
|
||
Deferred revenues
|
110,532
|
|
|
187,108
|
|
||
Other accrued liabilities
|
198,353
|
|
|
222,879
|
|
||
Current portion of debt
|
57,138
|
|
|
169,246
|
|
||
Tax Receivable Agreement
|
59,826
|
|
|
100,501
|
|
||
Total current liabilities
|
972,147
|
|
|
1,166,358
|
|
||
Deferred income taxes
|
99,801
|
|
|
88,957
|
|
||
Other noncurrent liabilities
|
480,185
|
|
|
567,359
|
|
||
Long-term debt
|
3,398,731
|
|
|
3,276,281
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Common stock: $0.01 par value; 450,000,000 authorized shares; 289,137,901 and 285,461,125 shares issued, 274,342,175 and 276,949,802 shares outstanding at December 31, 2017 and 2016, respectively
|
2,891
|
|
|
2,854
|
|
||
Additional paid-in capital
|
2,174,187
|
|
|
2,105,843
|
|
||
Treasury stock, at cost, 14,795,726 and 8,511,323 shares at December 31, 2017 and 2016 respectively
|
(341,846
|
)
|
|
(221,746
|
)
|
||
Retained deficit
|
(1,053,446
|
)
|
|
(1,141,116
|
)
|
||
Accumulated other comprehensive loss
|
(88,484
|
)
|
|
(122,799
|
)
|
||
Noncontrolling interest
|
5,198
|
|
|
2,579
|
|
||
Total stockholders’ equity
|
698,500
|
|
|
625,615
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,649,364
|
|
|
$
|
5,724,570
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
247,644
|
|
|
$
|
246,939
|
|
|
$
|
548,963
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
400,871
|
|
|
413,986
|
|
|
351,480
|
|
|||
Impairment and related charges
|
81,112
|
|
|
—
|
|
|
—
|
|
|||
Amortization of upfront incentive consideration
|
67,411
|
|
|
55,724
|
|
|
43,521
|
|
|||
Tax Receivable Agreement
|
(59,603
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
48,760
|
|
|
48,454
|
|
|
97,225
|
|
|||
Stock-based compensation expense
|
44,689
|
|
|
48,524
|
|
|
29,971
|
|
|||
Debt modification costs
|
14,758
|
|
|
—
|
|
|
—
|
|
|||
Allowance for doubtful accounts
|
9,459
|
|
|
10,567
|
|
|
8,558
|
|
|||
Amortization of debt issuance costs
|
5,923
|
|
|
9,611
|
|
|
6,759
|
|
|||
Joint venture equity income
|
(2,580
|
)
|
|
(2,780
|
)
|
|
(14,842
|
)
|
|||
Loss (income) from discontinued operations
|
1,932
|
|
|
(5,549
|
)
|
|
(314,408
|
)
|
|||
Dividends received from joint venture investments
|
1,088
|
|
|
640
|
|
|
28,700
|
|
|||
Loss on extinguishment of debt
|
1,012
|
|
|
3,683
|
|
|
38,783
|
|
|||
Litigation-related credits
|
—
|
|
|
(25,527
|
)
|
|
(60,998
|
)
|
|||
Gain on remeasurement of previously-held joint venture interest
|
—
|
|
|
—
|
|
|
(78,082
|
)
|
|||
Other
|
13,284
|
|
|
(5,426
|
)
|
|
3,556
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts and other receivables
|
(108,596
|
)
|
|
(12,949
|
)
|
|
10,662
|
|
|||
Upfront incentive consideration
|
(94,296
|
)
|
|
(70,702
|
)
|
|
(63,510
|
)
|
|||
Capitalized implementation costs
|
(60,766
|
)
|
|
(83,405
|
)
|
|
(63,382
|
)
|
|||
Prepaid expenses and other current assets
|
109
|
|
|
(11,809
|
)
|
|
(13,255
|
)
|
|||
Other assets
|
(21,111
|
)
|
|
(2,799
|
)
|
|
(66,873
|
)
|
|||
Accounts payable and other accrued liabilities
|
67,034
|
|
|
56,787
|
|
|
8,721
|
|
|||
Deferred revenue including upfront solution fees
|
13,861
|
|
|
22,663
|
|
|
9,390
|
|
|||
Accrued compensation and related benefits
|
6,038
|
|
|
2,768
|
|
|
18,268
|
|
|||
Cash provided by operating activities
|
678,033
|
|
|
699,400
|
|
|
529,207
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Additions to property and equipment
|
(316,436
|
)
|
|
(327,647
|
)
|
|
(286,697
|
)
|
|||
Acquisitions, net of cash acquired
|
—
|
|
|
(164,120
|
)
|
|
(442,344
|
)
|
|||
Proceeds from sale of marketable securities
|
—
|
|
|
45,959
|
|
|
—
|
|
|||
Other investing activities
|
(1,089
|
)
|
|
—
|
|
|
—
|
|
|||
Cash used in investing activities
|
(317,525
|
)
|
|
(445,808
|
)
|
|
(729,041
|
)
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Proceeds of borrowings from lenders
|
1,897,625
|
|
|
1,055,000
|
|
|
1,252,000
|
|
|||
Payments on borrowings from lenders
|
(1,880,506
|
)
|
|
(999,868
|
)
|
|
(960,807
|
)
|
|||
Cash dividends paid to common stockholders
|
(154,861
|
)
|
|
(144,355
|
)
|
|
(98,596
|
)
|
|||
Repurchase of common stock
|
(109,100
|
)
|
|
(100,000
|
)
|
|
(98,770
|
)
|
|||
Payments on Tax Receivable Agreement
|
(99,241
|
)
|
|
—
|
|
|
—
|
|
|||
Debt prepayment fees and issuance costs
|
(19,052
|
)
|
|
(11,377
|
)
|
|
(52,674
|
)
|
|||
Net proceeds on the settlement of equity-based awards
|
12,647
|
|
|
27,344
|
|
|
47,414
|
|
|||
Other financing activities
|
(4,292
|
)
|
|
(16,769
|
)
|
|
4,577
|
|
|||
Cash (used in) provided by financing activities
|
(356,780
|
)
|
|
(190,025
|
)
|
|
93,144
|
|
|||
Cash Flows from Discontinued Operations
|
|
|
|
|
|
||||||
Cash (used in) provided by operating activities
|
(4,848
|
)
|
|
(19,478
|
)
|
|
236
|
|
|||
Cash provided by investing activities
|
—
|
|
|
—
|
|
|
278,834
|
|
|||
Cash (used in) provided by discontinued operations
|
(4,848
|
)
|
|
(19,478
|
)
|
|
279,070
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1,613
|
)
|
|
(1,107
|
)
|
|
(6,927
|
)
|
|||
(Decrease) increase in cash and cash equivalents
|
(2,733
|
)
|
|
42,982
|
|
|
165,453
|
|
|||
Cash and cash equivalents at beginning of period
|
364,114
|
|
|
321,132
|
|
|
155,679
|
|
|||
Cash and cash equivalents at end of period
|
$
|
361,381
|
|
|
$
|
364,114
|
|
|
$
|
321,132
|
|
Cash payments for income taxes
|
$
|
40,211
|
|
|
$
|
39,032
|
|
|
$
|
27,816
|
|
Cash payments for interest
|
$
|
149,572
|
|
|
$
|
151,495
|
|
|
$
|
154,307
|
|
Capitalized interest
|
$
|
11,142
|
|
|
$
|
13,887
|
|
|
$
|
11,981
|
|
|
|
Stockholders’ Equity (Deficit)
|
||||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid in
Capital
|
|
Treasury Stock
|
|
Retained
Earnings
(Deficit)
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Noncontrolling
Interest
|
|
Total
Stockholders'
Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||||||||
Balance at December 31, 2014
|
|
268,237,547
|
|
|
$
|
2,682
|
|
|
$
|
1,931,796
|
|
|
437,386
|
|
|
$
|
(5,297
|
)
|
|
$
|
(1,775,616
|
)
|
|
$
|
(69,803
|
)
|
|
$
|
621
|
|
|
$
|
84,383
|
|
Comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
545,482
|
|
|
(27,332
|
)
|
|
3,481
|
|
|
521,631
|
|
|||||||
Common stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,596
|
)
|
|
—
|
|
|
—
|
|
|
(98,596
|
)
|
|||||||
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,400,000
|
|
|
(98,770
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,770
|
)
|
|||||||
Settlement of stock-based awards
|
|
10,844,926
|
|
|
108
|
|
|
54,425
|
|
|
289,257
|
|
|
(6,481
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,052
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
30,104
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,104
|
|
|||||||
Dividends paid to non-controlling interest on subsidiary common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,664
|
)
|
|
(2,664
|
)
|
|||||||
Balance at December 31, 2015
|
|
279,082,473
|
|
|
2,790
|
|
|
2,016,325
|
|
|
4,126,643
|
|
|
(110,548
|
)
|
|
(1,328,730
|
)
|
|
(97,135
|
)
|
|
1,438
|
|
|
484,140
|
|
|||||||
Comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242,562
|
|
|
(25,664
|
)
|
|
4,377
|
|
|
221,275
|
|
|||||||
Common stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(144,307
|
)
|
|
—
|
|
|
—
|
|
|
(144,307
|
)
|
|||||||
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,980,672
|
|
|
(100,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|||||||
Settlement of stock-based awards
|
|
6,378,652
|
|
|
64
|
|
|
38,602
|
|
|
404,008
|
|
|
(11,198
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,468
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
48,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,524
|
|
|||||||
Dividends paid to non-controlling interest on subsidiary common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,236
|
)
|
|
(3,236
|
)
|
|||||||
Adoption of New Accounting Standard
|
|
—
|
|
|
—
|
|
|
2,392
|
|
|
—
|
|
|
—
|
|
|
89,359
|
|
|
—
|
|
|
—
|
|
|
91,751
|
|
|||||||
Balance at December 31, 2016
|
|
285,461,125
|
|
|
2,854
|
|
|
2,105,843
|
|
|
8,511,323
|
|
|
(221,746
|
)
|
|
(1,141,116
|
)
|
|
(122,799
|
)
|
|
2,579
|
|
|
625,615
|
|
|||||||
Comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242,531
|
|
|
34,315
|
|
|
5,113
|
|
|
281,959
|
|
|||||||
Common stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154,861
|
)
|
|
—
|
|
|
—
|
|
|
(154,861
|
)
|
|||||||
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,779,769
|
|
|
(109,100
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109,100
|
)
|
|||||||
Settlement of stock-based awards
|
|
3,676,776
|
|
|
37
|
|
|
23,655
|
|
|
504,634
|
|
|
(11,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,692
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
44,689
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,689
|
|
|||||||
Dividends paid to non-controlling interest on subsidiary common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,494
|
)
|
|
(2,494
|
)
|
|||||||
Balance at December 31, 2017
|
|
289,137,901
|
|
|
$
|
2,891
|
|
|
$
|
2,174,187
|
|
|
14,795,726
|
|
|
$
|
(341,846
|
)
|
|
$
|
(1,053,446
|
)
|
|
$
|
(88,484
|
)
|
|
$
|
5,198
|
|
|
$
|
698,500
|
|
Buildings
|
Lesser of lease term or 35 years
|
Leasehold improvements
|
Lesser of lease term or useful life
|
Furniture and fixtures
|
5 to 15 years
|
Equipment, general office and computer
|
3 to 5 years
|
Software developed for internal use
|
3 to 5 years
|
–
|
Under current revenue recognition guidance, we recognize revenue related to license fee and maintenance agreements ratably over the life of the contract. Under the new guidance, revenue for license fees will be recognized upon delivery of the license and ongoing maintenance services will continue to be recognized ratably over the length of the contract. For existing open agreements, this change will result in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements, and before the impact of new sales.
|
–
|
Allocation of contract revenues among various products and solutions, and the timing of the recognition of those revenues, will be impacted by agreements with tiered pricing or variable rate structures that do not correspond with the goods or services delivered to the customer. For existing open agreements, this change will also result in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements.
|
–
|
In the year of adoption, as a result of the new revenue recognition standard, the changes detailed above will result in a significant beginning balance sheet adjustment and we preliminarily estimate our consolidated revenue could be reduced by approximately
$40 million
to
$50 million
.
|
•
|
Capitalization of incremental costs to obtain a contract (such as sales commissions), and recognition of these costs over the contract period will result in the recognition of an asset on our balance sheet and will impact our Airline and Hospitality Solutions segment. We currently expect that our results of operations will not be significantly impacted from the capitalization of these incremental costs.
|
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 SAPPL
|
(200,000
|
)
|
|
Fair value of SAPPL's previously held equity investment in national marketing companies
|
(1,880
|
)
|
|
Total acquisition price
|
$
|
508,368
|
|
|
Year Ended December 31,
|
||
|
2015
|
||
Revenue
|
$
|
3,109,310
|
|
Income from continuing operations
|
165,006
|
|
|
Net income attributable to common stockholders
|
475,933
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,815
|
|
Cost of revenue
|
—
|
|
|
—
|
|
|
21,520
|
|
|||
Selling, general and administrative
(3)
|
4,456
|
|
|
11,619
|
|
|
(23,077
|
)
|
|||
Operating (loss) income
|
(4,456
|
)
|
|
(11,619
|
)
|
|
26,372
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|||||
Gain on sale of businesses
(1)
|
—
|
|
|
305
|
|
|
294,276
|
|
|||
Other, net
|
2,094
|
|
|
(1,025
|
)
|
|
4,640
|
|
|||
Total other income (expense), net
|
2,094
|
|
|
(720
|
)
|
|
298,916
|
|
|||
(Loss) income from discontinuing operations before income taxes
|
(2,362
|
)
|
|
(12,339
|
)
|
|
325,288
|
|
|||
(Benefit) provision for income taxes
(2)
|
(430
|
)
|
|
(17,888
|
)
|
|
10,880
|
|
|||
Net (loss) income from discontinued operations
|
$
|
(1,932
|
)
|
|
$
|
5,549
|
|
|
$
|
314,408
|
|
(1)
|
The year ended December 31, 2015 includes
$31 million
of reclassified cumulative translation gains associated with our lastminute.com subsidiaries. See “Divestiture of lastminute.com—Cumulative Translation Adjustments” for additional information.
|
(2)
|
The year ended December 31, 2016 includes a
$17 million
tax benefit associated with the resolution of uncertain tax positions. The year ended December 31, 2015 includes a U.S. tax benefit of
$93 million
; see “Divestiture of lastminute.com—U.S. Tax Benefit” for additional information.
|
(3)
|
For the year ended December 31, 2015, selling, general and administrative includes a gain of
$40 million
as a result of the favorable final ruling from the Supreme Court of Hawaii and receipt of a cash refund related to our litigation of hotel occupancy taxes. See Note
15. Commitments and Contingencies
, for additional information.
|
|
Travel Network
|
|
Airline and
Hospitality
Solutions
|
|
Total
Goodwill
|
||||||
Balance as of December 31, 2015
|
$
|
2,099,580
|
|
|
$
|
340,851
|
|
|
$
|
2,440,431
|
|
Acquired
|
4,894
|
|
|
105,990
|
|
|
110,884
|
|
|||
Adjustments
(1)
|
68
|
|
|
(2,936
|
)
|
|
(2,868
|
)
|
|||
Balance as of December 31, 2016
|
2,104,542
|
|
|
443,905
|
|
|
2,548,447
|
|
|||
Acquired
|
439
|
|
|
—
|
|
|
439
|
|
|||
Adjustments
(1)
|
(159
|
)
|
|
6,260
|
|
|
6,101
|
|
|||
Balance as of December 31, 2017
|
$
|
2,104,822
|
|
|
$
|
450,165
|
|
|
$
|
2,554,987
|
|
(1)
|
Includes net foreign currency effects during the year.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Acquired customer relationships
|
$
|
1,038,106
|
|
|
$
|
(687,072
|
)
|
|
$
|
351,034
|
|
|
$
|
1,034,483
|
|
|
$
|
(646,851
|
)
|
|
$
|
387,632
|
|
Trademarks and brand names
|
332,238
|
|
|
(126,312
|
)
|
|
205,926
|
|
|
332,238
|
|
|
(114,430
|
)
|
|
217,808
|
|
||||||
Reacquired rights
|
113,500
|
|
|
(40,695
|
)
|
|
72,805
|
|
|
113,500
|
|
|
(24,481
|
)
|
|
89,019
|
|
||||||
Purchased technology
|
427,823
|
|
|
(390,139
|
)
|
|
37,684
|
|
|
427,823
|
|
|
(366,456
|
)
|
|
61,367
|
|
||||||
Acquired contracts, supplier and distributor agreements
|
37,600
|
|
|
(22,410
|
)
|
|
15,190
|
|
|
37,600
|
|
|
(18,953
|
)
|
|
18,647
|
|
||||||
Non-compete agreements
|
15,025
|
|
|
(14,459
|
)
|
|
566
|
|
|
15,025
|
|
|
(14,061
|
)
|
|
964
|
|
||||||
Total intangible assets
|
$
|
1,964,292
|
|
|
$
|
(1,281,087
|
)
|
|
$
|
683,205
|
|
|
$
|
1,960,669
|
|
|
$
|
(1,185,232
|
)
|
|
$
|
775,437
|
|
2018
|
$
|
67,983
|
|
2019
|
63,866
|
|
|
2020
|
62,256
|
|
|
2021
|
60,743
|
|
|
2022
|
56,179
|
|
|
2023 and thereafter
|
372,178
|
|
|
Total
|
$
|
683,205
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Prepaid Expenses
|
$
|
69,650
|
|
|
$
|
61,539
|
|
Value added tax receivable, net
|
35,556
|
|
|
26,244
|
|
||
Other
|
3,547
|
|
|
817
|
|
||
Prepaid expenses and other current assets
|
$
|
108,753
|
|
|
$
|
88,600
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Buildings and leasehold improvements
|
$
|
151,843
|
|
|
$
|
144,604
|
|
Furniture, fixtures and equipment
|
38,155
|
|
|
35,525
|
|
||
Computer equipment
|
323,818
|
|
|
288,982
|
|
||
Software developed for internal use
|
1,521,901
|
|
|
1,271,059
|
|
||
|
2,035,717
|
|
|
1,740,170
|
|
||
Accumulated depreciation and amortization
|
(1,236,523
|
)
|
|
(986,891
|
)
|
||
Property and equipment, net
|
$
|
799,194
|
|
|
$
|
753,279
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Capitalized implementation costs, net
|
$
|
208,415
|
|
|
$
|
249,317
|
|
Deferred customer discounts
|
92,373
|
|
|
212,065
|
|
||
Deferred upfront incentive consideration
|
151,693
|
|
|
125,289
|
|
||
Other
|
139,461
|
|
|
86,488
|
|
||
Other assets, net
|
$
|
591,942
|
|
|
$
|
673,159
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Tax receivable agreement
|
$
|
170,067
|
|
|
$
|
288,146
|
|
Pension and other postretirement benefits
|
115,114
|
|
|
123,002
|
|
||
Deferred revenue
|
99,044
|
|
|
77,260
|
|
||
Other
|
95,960
|
|
|
78,951
|
|
||
Other noncurrent liabilities
|
$
|
480,185
|
|
|
$
|
567,359
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Defined benefit pension and other postretirement benefit plans
|
$
|
(102,623
|
)
|
|
$
|
(105,036
|
)
|
Unrealized foreign currency translation gain (loss)
|
11,488
|
|
|
(2,264
|
)
|
||
Unrealized gain (loss) on foreign currency forward contracts, interest rate swaps and available-for-sale securities
|
2,651
|
|
|
(15,499
|
)
|
||
Total accumulated other comprehensive loss, net of tax
|
$
|
(88,484
|
)
|
|
$
|
(122,799
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Components of pre-tax income:
|
|
|
|
|
|
|
|
|
|||
Domestic
|
$
|
199,685
|
|
|
$
|
206,182
|
|
|
$
|
262,682
|
|
Foreign
|
177,928
|
|
|
121,853
|
|
|
91,225
|
|
|||
|
$
|
377,613
|
|
|
$
|
328,035
|
|
|
$
|
353,907
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current portion:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
50,829
|
|
|
$
|
8,357
|
|
|
$
|
1,730
|
|
State and Local
|
2,388
|
|
|
1,346
|
|
|
(6,249
|
)
|
|||
Non U.S.
|
26,060
|
|
|
28,488
|
|
|
26,646
|
|
|||
Total current
|
79,277
|
|
|
38,191
|
|
|
22,127
|
|
|||
Deferred portion:
|
|
|
|
|
|
|
|
|
|||
Federal
|
47,372
|
|
|
60,372
|
|
|
89,682
|
|
|||
State and Local
|
(6,178
|
)
|
|
(4,352
|
)
|
|
5,715
|
|
|||
Non U.S.
|
7,566
|
|
|
(7,566
|
)
|
|
1,828
|
|
|||
Total deferred
|
48,760
|
|
|
48,454
|
|
|
97,225
|
|
|||
Total provision for income taxes
|
$
|
128,037
|
|
|
$
|
86,645
|
|
|
$
|
119,352
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Income tax provision at statutory federal income tax rate
|
$
|
132,165
|
|
|
$
|
114,812
|
|
|
$
|
123,867
|
|
State income taxes, net of federal benefit
|
(1,727
|
)
|
|
(1,964
|
)
|
|
(1,263
|
)
|
|||
Impact of non U.S. taxing jurisdictions, net
|
(13,492
|
)
|
|
11,482
|
|
|
13,966
|
|
|||
Non-taxable gain on remeasurement of previously-held investment in Abacus
|
—
|
|
|
—
|
|
|
(27,279
|
)
|
|||
Impact of U.S. TCJA
(1)
|
46,563
|
|
|
—
|
|
|
—
|
|
|||
Employee stock based compensation
|
(4,977
|
)
|
|
(34,789
|
)
|
|
—
|
|
|||
Research tax credit
|
(8,777
|
)
|
|
(9,817
|
)
|
|
(3,857
|
)
|
|||
Tax receivable agreement (TRA)
(2)
|
(20,861
|
)
|
|
—
|
|
|
—
|
|
|||
Valuation allowance
|
—
|
|
|
8
|
|
|
3,010
|
|
|||
Other, net
|
(857
|
)
|
|
6,913
|
|
|
10,908
|
|
|||
Total provision for income taxes
|
$
|
128,037
|
|
|
$
|
86,645
|
|
|
$
|
119,352
|
|
(1)
|
This amount includes
$48 million
of transition tax expense, and the remainder is the net benefit on cumulative deferred taxes.
|
(2)
|
This amount includes a
$20 million
adjustment to the TRA, which is not taxable.
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
|
||
Accrued expenses
|
$
|
13,716
|
|
|
$
|
30,953
|
|
Employee benefits other than pension
|
22,829
|
|
|
43,197
|
|
||
Deferred revenue
|
51,151
|
|
|
75,727
|
|
||
Pension obligations
|
24,989
|
|
|
43,145
|
|
||
Tax loss carryforwards
|
156,327
|
|
|
312,073
|
|
||
Non-U.S. operations
|
14,565
|
|
|
(760
|
)
|
||
Incentive consideration
|
5,381
|
|
|
12,586
|
|
||
Tax credit carryforwards
|
58,848
|
|
|
58,357
|
|
||
Suspended loss
|
14,478
|
|
|
23,702
|
|
||
Other
|
243
|
|
|
(562
|
)
|
||
Total deferred tax assets
|
362,527
|
|
|
598,418
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Depreciation and amortization
|
(21,317
|
)
|
|
(42,238
|
)
|
||
Software developed for internal use
|
(180,108
|
)
|
|
(286,653
|
)
|
||
Intangible assets
|
(134,484
|
)
|
|
(173,838
|
)
|
||
Unrealized gains and losses
|
(29,669
|
)
|
|
(5,050
|
)
|
||
Investment in partnership
|
(5,932
|
)
|
|
(9,788
|
)
|
||
Total deferred tax liabilities
|
(371,510
|
)
|
|
(517,567
|
)
|
||
Valuation allowance
|
(59,001
|
)
|
|
(74,523
|
)
|
||
Net deferred tax (liability) asset
|
$
|
(67,984
|
)
|
|
$
|
6,328
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of year
|
$
|
49,331
|
|
|
$
|
68,746
|
|
|
$
|
58,616
|
|
Additions for tax positions taken in the current year
|
5,279
|
|
|
538
|
|
|
8,252
|
|
|||
Additions for tax positions of prior years
|
21,669
|
|
|
2,096
|
|
|
(786
|
)
|
|||
Additions for tax positions from acquisitions
|
—
|
|
|
—
|
|
|
11,343
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
(17,706
|
)
|
|
(4,599
|
)
|
|||
Reductions for tax positions of expired statute of limitations
|
(1,891
|
)
|
|
(3,743
|
)
|
|
(3,456
|
)
|
|||
Settlements
|
—
|
|
|
(600
|
)
|
|
(624
|
)
|
|||
Balance at end of year
|
$
|
74,388
|
|
|
$
|
49,331
|
|
|
$
|
68,746
|
|
|
|
|
|
|
December 31,
|
||||||
|
Rate
|
|
Maturity
|
|
2017
|
|
2016
|
||||
Senior secured credit facilities:
|
|
|
|
|
|
|
|
||||
Term Loan A
|
L + 2.00%
|
|
July 2022
|
|
$
|
555,750
|
|
|
$
|
—
|
|
Term Loan B
|
L + 2.25%
|
|
February 2024
|
|
1,881,048
|
|
|
—
|
|
||
2016 Term Loan A
(1)
|
L + 2.50%
|
|
July 2021
|
|
—
|
|
|
585,000
|
|
||
2013 Term Loan B
(2)
|
L + 3.00%
|
|
February 2019
|
|
—
|
|
|
1,420,896
|
|
||
2013 Incremental term loan facility
(2)
|
L + 3.50%
|
|
February 2019
|
|
—
|
|
|
282,354
|
|
||
2013 Term Loan C
(2)
|
L + 3.00%
|
|
December 2017
|
|
—
|
|
|
49,313
|
|
||
Revolver, $400 million
(3)
|
L + 2.00%
|
|
July 2022
|
|
—
|
|
|
—
|
|
||
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
(4)
|
5.80%
|
|
April 2017
|
|
—
|
|
|
79,741
|
|
||
Capital lease obligations
|
|
|
|
|
21,235
|
|
|
31,190
|
|
||
Face value of total debt outstanding
|
|
|
|
|
3,488,033
|
|
|
3,478,494
|
|
||
Less current portion of debt outstanding
|
|
|
|
|
(57,138
|
)
|
|
(169,246
|
)
|
||
Face value of long-term debt outstanding
|
|
|
|
|
$
|
3,430,895
|
|
|
$
|
3,309,248
|
|
(1)
|
Refinanced on August 23, 2017 by Term Loan A.
|
(2)
|
Refinanced on February 22, 2017 by the 2017 Term Loan B.
|
(3)
|
Pursuant to the August 23, 2017 refinancing, the interest rate on the Revolver was reduced from L+
2.50%
to L+
2.25%
and the maturity was extended from July 2021 to July 2022.
|
(4)
|
Extinguished on March 31, 2017 using proceeds from the 2017 Term Loan B.
|
|
Eurocurrency borrowings
|
|
Base rate borrowings
|
|
Applicable Margin
(1)
|
|
Applicable Margin
|
Term Loan A
|
2.00%
|
|
1.00%
|
Term Loan B
|
2.25%
|
|
1.25%
|
Revolver, $400 million
|
2.00%
|
|
1.00%
|
(1)
|
Applicable margins do not reflect potential step ups and downs of Term Loan A and Revolver,
$400 million
, which are determined by the Senior Secured Leverage Ratio. See below for additional information.
|
(2)
|
Term Loan A, Term Loan B, and Revolver,
$400 million
, are subject to a
0%
floor.
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Including the impact of interest rate swaps
|
4.35
|
%
|
|
4.72
|
%
|
|
4.48
|
%
|
Excluding the impact of interest rate swaps
|
4.03
|
%
|
|
4.55
|
%
|
|
4.48
|
%
|
(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 December 31,
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Consolidated Balance Sheet Location
|
|
2017
|
|
2016
|
||||
Foreign exchange contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
6,213
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
Other accrued liabilities
|
|
—
|
|
|
(7,360
|
)
|
||
Interest rate swaps
|
|
Prepaid expenses and other current assets
|
|
856
|
|
|
—
|
|
||
Interest rate swaps
|
|
Other assets, net
|
|
3,093
|
|
|
—
|
|
||
Interest rate swaps
|
|
Other accrued liabilities
|
|
—
|
|
|
(8,345
|
)
|
||
Interest rate swaps
|
|
Other noncurrent liabilities
|
|
—
|
|
|
(7,339
|
)
|
||
Total
|
|
|
|
$
|
10,162
|
|
|
$
|
(23,044
|
)
|
|
|
Derivative Assets (Liabilities)
|
||||||||
|
|
|
|
Fair Value as of December 31,
|
||||||
Derivatives Not Designated as Hedging Instruments
|
|
Consolidated Balance Sheet Location
|
|
2017
|
|
2016
|
||||
Interest rate swaps
|
|
Other accrued liabilities
|
|
$
|
(7,119
|
)
|
|
$
|
—
|
|
Total
|
|
|
|
$
|
(7,119
|
)
|
|
$
|
—
|
|
|
|
Amount of (Loss) Gain
Recognized in OCI on Derivative, Effective Portion
|
||||||||||
|
|
Year Ended December 31,
|
||||||||||
Derivatives in Cash Flow Hedging Relationships
|
|
2017
|
|
2016
|
|
2015
|
||||||
Foreign exchange contracts
|
|
$
|
13,205
|
|
|
$
|
(6,413
|
)
|
|
$
|
(5,505
|
)
|
Interest rate swaps
|
|
2,583
|
|
|
(3,446
|
)
|
|
(7,939
|
)
|
|||
Total
|
|
$
|
15,788
|
|
|
$
|
(9,859
|
)
|
|
$
|
(13,444
|
)
|
|
|
|
|
Amount of Loss (Gain) Reclassified from Accumulated
OCI into Income, Effective Portion
|
||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivatives in Cash Flow Hedging Relationships
|
|
Income Statement Location
|
|
2017
|
|
2016
|
|
2015
|
||||||
Foreign exchange contracts
|
|
Cost of revenue
|
|
$
|
(3,001
|
)
|
|
$
|
1,991
|
|
|
$
|
10,646
|
|
Interest rate swaps
|
|
Interest Expense, net
|
|
5,083
|
|
|
2,336
|
|
|
—
|
|
|||
Total
|
|
|
|
$
|
2,082
|
|
|
$
|
4,327
|
|
|
$
|
10,646
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
December 31, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
6,213
|
|
|
$
|
—
|
|
|
$
|
6,213
|
|
|
$
|
—
|
|
Interest rate swap contracts
|
(3,170
|
)
|
|
—
|
|
|
(3,170
|
)
|
|
—
|
|
||||
Total
|
$
|
3,043
|
|
|
$
|
—
|
|
|
$
|
3,043
|
|
|
$
|
—
|
|
|
|
|
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 December 31,
|
|
Carrying Value
(4)
at December 31,
|
||||||||||||
Financial Instrument
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Term Loan A
|
|
$
|
559,223
|
|
|
$
|
—
|
|
|
$
|
553,444
|
|
|
$
|
—
|
|
Term Loan B
|
|
$
|
1,890,453
|
|
|
—
|
|
|
1,873,993
|
|
|
—
|
|
|||
2016 Term Loan A
(1)
|
|
—
|
|
|
583,538
|
|
|
—
|
|
|
582,595
|
|
||||
2013 Term Loan B
(2)
|
|
—
|
|
|
1,435,993
|
|
|
—
|
|
|
1,417,616
|
|
||||
2013 Incremental Term Loan Facility
(2)
|
|
—
|
|
|
283,413
|
|
|
—
|
|
|
282,354
|
|
||||
2013 Term Loan C
(2)
|
|
—
|
|
|
49,436
|
|
|
—
|
|
|
49,237
|
|
||||
Revolver, $400 million
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5.375 % Senior Secured Notes Due 2023
|
|
546,563
|
|
|
542,919
|
|
|
530,000
|
|
|
530,000
|
|
||||
5.25% Senior Secured Notes Due 2023
|
|
512,500
|
|
|
515,000
|
|
|
500,000
|
|
|
500,000
|
|
(1)
|
Refinanced on August 23, 2017 by the Term Loan A.
|
(2)
|
Refinanced on February 22, 2017 by the 2017 Term Loan B.
|
(3)
|
Pursuant to the August 23, 2017 refinancing, the interest rate on the Revolver was reduced from L+
2.50%
to L+
2.25%
and the maturity was extended from July 2021 to July 2022.
|
(4)
|
Excludes net unamortized debt issuance costs.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Exercise price
|
$
|
21.33
|
|
|
$
|
27.12
|
|
|
$
|
22.64
|
|
Average risk-free interest rate
|
2.10
|
%
|
|
1.81
|
%
|
|
1.75
|
%
|
|||
Expected life (in years)
|
6.11
|
|
|
6.11
|
|
|
6.11
|
|
|||
Implied volatility
|
22.02
|
%
|
|
23.44
|
%
|
|
27.29
|
%
|
|||
Dividend yield
|
2.64
|
%
|
|
1.92
|
%
|
|
1.60
|
%
|
|
|
|
Weighted-Average
|
|
|
|||||||
|
Quantity
|
|
Exercise Price
|
|
Remaining
Contractual
Term (years)
|
|
Aggregate
Intrinsic Value
(in thousands)
(1)
|
|||||
Outstanding at December 31, 2016
|
5,815,879
|
|
|
$
|
17.18
|
|
|
7.3
|
|
$
|
45,199
|
|
Granted
|
1,721,767
|
|
|
21.33
|
|
|
|
|
|
|
||
Exercised
|
(1,945,187
|
)
|
|
12.44
|
|
|
|
|
|
|
||
Cancelled
|
(1,460,624
|
)
|
|
22.64
|
|
|
|
|
|
|
||
Outstanding at December 31, 2017
|
4,131,835
|
|
|
$
|
19.50
|
|
|
7.6
|
|
$
|
4,136
|
|
Vested and exercisable at December 31, 2017
|
1,995,650
|
|
|
$
|
16.18
|
|
|
6.1
|
|
$
|
8,616
|
|
(1)
|
Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options awards and the closing price of our common stock of
$20.50
on
December 31, 2017
.
|
|
Quantity
|
|
Weighted-Average
Grant Date
Fair Value
|
|||
Unvested at December 31, 2016
|
3,846,331
|
|
|
$
|
25.05
|
|
Granted
|
2,729,412
|
|
|
19.35
|
|
|
Vested
|
(1,085,948
|
)
|
|
23.50
|
|
|
Cancelled
|
(780,010
|
)
|
|
24.33
|
|
|
Unvested at December 31, 2017
|
4,709,785
|
|
|
$
|
23.77
|
|
|
Quantity
|
|
Weighted-Average
Grant Date
Fair Value
|
|||
Unvested at December 31, 2016
|
2,092,155
|
|
|
$
|
21.94
|
|
Granted
|
1,230,357
|
|
|
21.99
|
|
|
Vested
|
(646,208
|
)
|
|
18.71
|
|
|
Cancelled
|
(1,262,083
|
)
|
|
22.39
|
|
|
Unvested at December 31, 2017
|
1,414,221
|
|
|
$
|
23.06
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
|
|
|
|||
Income from continuing operations
|
$
|
249,576
|
|
|
$
|
241,390
|
|
|
$
|
234,555
|
|
Net income attributable to noncontrolling interests
|
5,113
|
|
|
4,377
|
|
|
3,481
|
|
|||
Net income from continuing operations available to common stockholders, basic and diluted
|
$
|
244,463
|
|
|
$
|
237,013
|
|
|
$
|
231,074
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Basic weighted-average common shares outstanding
|
276,893
|
|
|
277,546
|
|
|
273,139
|
|
|||
Dilutive effect of stock options and restricted stock awards
|
1,427
|
|
|
5,206
|
|
|
6,928
|
|
|||
Diluted weighted-average common shares outstanding
|
278,320
|
|
|
282,752
|
|
|
280,067
|
|
|||
Basic earnings per share
|
$
|
0.88
|
|
|
$
|
0.85
|
|
|
$
|
0.85
|
|
Diluted earnings per share
|
$
|
0.88
|
|
|
$
|
0.84
|
|
|
$
|
0.83
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Change in benefit obligation:
|
|
|
|
|
|
||
Benefit obligation at January 1
|
$
|
(444,662
|
)
|
|
$
|
(420,516
|
)
|
Service cost
|
—
|
|
|
—
|
|
||
Interest cost
|
(18,731
|
)
|
|
(20,041
|
)
|
||
Actuarial losses, net
|
(26,169
|
)
|
|
(28,350
|
)
|
||
Benefits paid
|
30,123
|
|
|
24,245
|
|
||
Benefit obligation at December 31
|
$
|
(459,439
|
)
|
|
$
|
(444,662
|
)
|
Change in plan assets:
|
|
|
|
|
|
||
Fair value of assets at January 1
|
$
|
324,471
|
|
|
$
|
326,586
|
|
Actual return on plan assets
|
46,425
|
|
|
22,130
|
|
||
Employer contributions
|
7,000
|
|
|
—
|
|
||
Benefits paid
|
(30,123
|
)
|
|
(24,245
|
)
|
||
Fair value of assets at December 31
|
$
|
347,773
|
|
|
$
|
324,471
|
|
Unfunded status at December 31
|
$
|
(111,666
|
)
|
|
$
|
(120,191
|
)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Net actuarial loss
|
$
|
(115,701
|
)
|
|
$
|
(118,739
|
)
|
Prior service credit
|
12,433
|
|
|
13,348
|
|
||
Accumulated other comprehensive loss
|
$
|
(103,268
|
)
|
|
$
|
(105,391
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Interest cost
|
$
|
18,731
|
|
|
$
|
20,041
|
|
|
$
|
19,097
|
|
Expected return on plan assets
|
(20,934
|
)
|
|
(20,803
|
)
|
|
(21,117
|
)
|
|||
Amortization of prior service credit
|
(1,432
|
)
|
|
(1,432
|
)
|
|
(1,432
|
)
|
|||
Amortization of actuarial loss
|
6,517
|
|
|
5,871
|
|
|
7,045
|
|
|||
Net cost
|
$
|
2,882
|
|
|
$
|
3,677
|
|
|
$
|
3,593
|
|
Weighted-average discount rate used to measure benefit obligations
|
3.81
|
%
|
|
4.36
|
%
|
|
4.86
|
%
|
|||
Weighted average assumptions used to determine net benefit cost:
|
|
|
|
|
|
||||||
Discount rate
|
4.36
|
%
|
|
4.86
|
%
|
|
4.36
|
%
|
|||
Expected return on plan assets
|
6.50
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
Obligations Recognized in
|
Year Ended December 31,
|
||||||||||
Other Comprehensive Income
|
2017
|
|
2016
|
|
2015
|
||||||
Net actuarial loss
|
$
|
679
|
|
|
$
|
27,023
|
|
|
$
|
6,472
|
|
Amortization of actuarial loss
|
(6,517
|
)
|
|
(5,871
|
)
|
|
(7,045
|
)
|
|||
Amortization of prior service credit
|
1,432
|
|
|
1,432
|
|
|
1,432
|
|
|||
Total (income) loss recognized in other comprehensive income
|
$
|
(4,406
|
)
|
|
$
|
22,584
|
|
|
$
|
859
|
|
Total recognized in net periodic benefit cost and other comprehensive income
|
$
|
(1,524
|
)
|
|
$
|
26,261
|
|
|
$
|
4,452
|
|
|
Fair Value Measurements at December 31, 2017
|
||||||||||||||
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Common collective trusts:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed income securities
|
$
|
—
|
|
|
$
|
191,125
|
|
|
$
|
—
|
|
|
$
|
191,125
|
|
Global equity securities
|
—
|
|
|
134,378
|
|
|
—
|
|
|
134,378
|
|
||||
Money market mutual fund
|
2,815
|
|
|
—
|
|
|
—
|
|
|
2,815
|
|
||||
Real estate
|
—
|
|
|
—
|
|
|
19,455
|
|
|
19,455
|
|
||||
Total assets at fair value
|
$
|
2,815
|
|
|
$
|
325,503
|
|
|
$
|
19,455
|
|
|
$
|
347,773
|
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Common collective trusts:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed income securities
|
$
|
—
|
|
|
$
|
174,899
|
|
|
$
|
—
|
|
|
$
|
174,899
|
|
Global equity securities
|
—
|
|
|
127,321
|
|
|
—
|
|
|
127,321
|
|
||||
Money market mutual fund
|
3,732
|
|
|
—
|
|
|
—
|
|
|
3,732
|
|
||||
Real estate
|
—
|
|
|
—
|
|
|
18,519
|
|
|
18,519
|
|
||||
Total assets at fair value
|
$
|
3,732
|
|
|
$
|
302,220
|
|
|
$
|
18,519
|
|
|
$
|
324,471
|
|
|
Real Estate
|
||
Ending balance at December 31, 2015
|
$
|
17,308
|
|
Contributions
|
246
|
|
|
Net distributions
|
(246
|
)
|
|
Advisory fee
|
(194
|
)
|
|
Net investment income
|
813
|
|
|
Unrealized gain
|
593
|
|
|
Net realized loss
|
(1
|
)
|
|
Ending balance at December 31, 2016
|
18,519
|
|
|
Contributions
|
279
|
|
|
Net distributions
|
(279
|
)
|
|
Advisory fee
|
(200
|
)
|
|
Net investment income
|
820
|
|
|
Unrealized gain
|
253
|
|
|
Net realized gain
|
63
|
|
|
Ending balance at December 31, 2017
|
$
|
19,455
|
|
|
Amount
|
||
2018
|
$
|
33,559
|
|
2019
|
32,589
|
|
|
2020
|
31,963
|
|
|
2021
|
30,080
|
|
|
2022
|
31,151
|
|
|
2023-2027
|
155,024
|
|
|
Amount
|
||
2018
|
$
|
24,467
|
|
2019
|
20,872
|
|
|
2020
|
17,733
|
|
|
2021
|
14,189
|
|
|
2022
|
11,156
|
|
|
Thereafter
|
29,884
|
|
|
Total
|
$
|
118,301
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
|
|
|
|
||||||
Travel Network
|
$
|
2,550,470
|
|
|
$
|
2,374,849
|
|
|
$
|
2,102,792
|
|
Airline and Hospitality Solutions
|
1,074,360
|
|
|
1,019,306
|
|
|
872,086
|
|
|||
Eliminations
|
(26,346
|
)
|
|
(20,768
|
)
|
|
(13,982
|
)
|
|||
Total revenue
|
$
|
3,598,484
|
|
|
$
|
3,373,387
|
|
|
$
|
2,960,896
|
|
Adjusted Gross Profit
(a)
|
|
|
|
|
|
|
|
|
|||
Travel Network
|
$
|
1,127,227
|
|
|
$
|
1,095,619
|
|
|
$
|
973,915
|
|
Airline and Hospitality Solutions
|
492,339
|
|
|
442,520
|
|
|
384,804
|
|
|||
Corporate
|
(119,380
|
)
|
|
(77,464
|
)
|
|
(41,899
|
)
|
|||
Total
|
$
|
1,500,186
|
|
|
$
|
1,460,675
|
|
|
$
|
1,316,820
|
|
Adjusted Operating Income
(b)
|
|
|
|
|
|
||||||
Travel Network
|
$
|
850,916
|
|
|
$
|
838,028
|
|
|
$
|
766,388
|
|
Airline and Hospitality Solutions
|
246,833
|
|
|
217,631
|
|
|
180,448
|
|
|||
Corporate
|
(391,600
|
)
|
|
(335,298
|
)
|
|
(293,731
|
)
|
|||
Total
|
$
|
706,149
|
|
|
$
|
720,361
|
|
|
$
|
653,105
|
|
Adjusted EBITDA
(c)
|
|
|
|
|
|
|
|
|
|||
Travel Network
|
$
|
1,004,412
|
|
|
$
|
970,688
|
|
|
$
|
877,276
|
|
Airline and Hospitality Solutions
|
415,809
|
|
|
372,063
|
|
|
323,461
|
|
|||
Total segments
|
1,420,221
|
|
|
1,342,751
|
|
|
1,200,737
|
|
|||
Corporate
|
(341,650
|
)
|
|
(296,105
|
)
|
|
(259,150
|
)
|
|||
Total
|
$
|
1,078,571
|
|
|
$
|
1,046,646
|
|
|
$
|
941,587
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|||
Travel Network
|
$
|
86,085
|
|
|
$
|
76,936
|
|
|
$
|
65,765
|
|
Airline and Hospitality Solutions
|
168,976
|
|
|
154,432
|
|
|
143,013
|
|
|||
Total segments
|
255,061
|
|
|
231,368
|
|
|
208,778
|
|
|||
Corporate
|
145,810
|
|
|
182,618
|
|
|
142,702
|
|
|||
Total
|
$
|
400,871
|
|
|
$
|
413,986
|
|
|
$
|
351,480
|
|
Adjusted Capital Expenditures
(d)
|
|
|
|
|
|
|
|
|
|||
Travel Network
|
$
|
90,881
|
|
|
$
|
97,798
|
|
|
$
|
73,469
|
|
Airline and Hospitality Solutions
|
221,156
|
|
|
252,367
|
|
|
226,260
|
|
|||
Total segments
|
312,037
|
|
|
350,165
|
|
|
299,729
|
|
|||
Corporate
|
65,165
|
|
|
60,887
|
|
|
50,350
|
|
|||
Total
|
$
|
377,202
|
|
|
$
|
411,052
|
|
|
$
|
350,079
|
|
(a)
|
The following table sets forth the reconciliation of Adjusted Gross Profit to operating income in our statement of operations (in thousands):
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Adjusted Gross Profit
|
$
|
1,500,186
|
|
|
$
|
1,460,675
|
|
|
$
|
1,316,820
|
|
Less adjustments:
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
510,075
|
|
|
626,153
|
|
|
557,077
|
|
|||
Impairment and related charges
(7)
|
81,112
|
|
|
—
|
|
|
—
|
|
|||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
(1)
|
317,812
|
|
|
287,353
|
|
|
244,535
|
|
|||
Amortization of upfront incentive consideration
(2)
|
67,411
|
|
|
55,724
|
|
|
43,521
|
|
|||
Restructuring and other costs
(4)
|
12,604
|
|
|
12,660
|
|
|
—
|
|
|||
Stock-based compensation
|
17,732
|
|
|
19,213
|
|
|
11,918
|
|
|||
Operating income
|
$
|
493,440
|
|
|
$
|
459,572
|
|
|
$
|
459,769
|
|
(b)
|
The following table sets forth the reconciliation of Adjusted Operating Income to operating income in our statement of operations (in thousands):
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Adjusted Operating income
|
$
|
706,149
|
|
|
$
|
720,361
|
|
|
$
|
653,105
|
|
Less adjustments:
|
|
|
|
|
|
||||||
Joint venture equity income
|
2,580
|
|
|
2,780
|
|
|
14,842
|
|
|||
Impairment and related charges
(7)
|
81,112
|
|
|
—
|
|
|
—
|
|
|||
Acquisition-related amortization
(1c)
|
95,860
|
|
|
143,425
|
|
|
108,121
|
|
|||
Restructuring and other costs
(4)
|
23,975
|
|
|
18,286
|
|
|
9,256
|
|
|||
Acquisition-related costs
(5)
|
—
|
|
|
779
|
|
|
14,437
|
|
|||
Litigation (reimbursements) costs
(6)
|
(35,507
|
)
|
|
46,995
|
|
|
16,709
|
|
|||
Stock-based compensation
|
44,689
|
|
|
48,524
|
|
|
29,971
|
|
|||
Operating income
|
$
|
493,440
|
|
|
$
|
459,572
|
|
|
$
|
459,769
|
|
(c)
|
The following table sets forth the reconciliation of Adjusted EBITDA to income from continuing operations in our statement of operations (in thousands):
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Adjusted EBITDA
|
$
|
1,078,571
|
|
|
$
|
1,046,646
|
|
|
$
|
941,587
|
|
Less adjustments:
|
|
|
|
|
|
|
|
|
|||
Impairment and related charges
(7)
|
81,112
|
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization of property and equipment
(1a)
|
264,880
|
|
|
233,303
|
|
|
213,520
|
|
|||
Amortization of capitalized implementation costs
(1b)
|
40,131
|
|
|
37,258
|
|
|
31,441
|
|
|||
Acquisition-related amortization
(1c)
|
95,860
|
|
|
143,425
|
|
|
108,121
|
|
|||
Amortization of upfront incentive consideration
(2)
|
67,411
|
|
|
55,724
|
|
|
43,521
|
|
|||
Interest expense, net
|
153,925
|
|
|
158,251
|
|
|
173,298
|
|
|||
Loss on extinguishment of debt
|
1,012
|
|
|
3,683
|
|
|
38,783
|
|
|||
Other, net
(3)
|
(36,530
|
)
|
|
(27,617
|
)
|
|
(91,377
|
)
|
|||
Restructuring and other costs
(4)
|
23,975
|
|
|
18,286
|
|
|
9,256
|
|
|||
Acquisition-related costs
(5)
|
—
|
|
|
779
|
|
|
14,437
|
|
|||
Litigation (reimbursements) costs
(6)
|
(35,507
|
)
|
|
46,995
|
|
|
16,709
|
|
|||
Stock-based compensation
|
44,689
|
|
|
48,524
|
|
|
29,971
|
|
|||
Provision for income taxes
(8)
|
128,037
|
|
|
86,645
|
|
|
119,352
|
|
|||
Income from continuing operations
|
$
|
249,576
|
|
|
$
|
241,390
|
|
|
$
|
234,555
|
|
(1)
|
Depreciation and amortization expenses (see Note
1. Summary of Business and Significant Accounting Policies
for associated asset lives):
|
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. Also includes amortization of the excess basis in our underlying equity interest in SAPPL's net assets prior to our acquisition of SAPPL on July 1, 2015.
|
(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
to
five
years. This consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. These 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. These 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 2017, Other, net includes a benefit of
$60 million
due to a reduction to our liability under the TRA primarily due to a provisional adjustment resulting from the enactment of TCJA in December 2017 which reduced the U.S. corporate income tax rate (see Note
7. Income Taxes
), offset by a loss of
$15 million
related to debt modification costs associated with debt refinancing. In 2016, we recognized a gain of
$15 million
from the sale of our available-for-sale marketable securities, and a
$6 million
gain associated with the receipt of an earn-out payment from the sale of a business in 2013. Additionally, in 2015, we recognized a gain of
$78 million
associated with the remeasurement of our previously-held
35%
investment in SAPPL to its fair value and a gain of
$12 million
related to the settlement of pre-existing agreements between us and SAPPL.
|
(4)
|
Restructuring and other costs represents 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. We recorded
$25 million
and
$20 million
in charges associated with an announced action to reduce our workforce in 2017 and 2016, respectively. These reductions aligned our operations with business needs and implemented an ongoing cost and organizational structure consistent with our expected growth needs and opportunities. In 2015, we recognized a restructuring charge of
$9 million
associated with the integration of Abacus, and reduced that estimate by
$4 million
in 2016, as a result of the reevaluation of our plan derived from a shift in timing and strategy of originally contemplated actions. As of December 31, 2017, our actions under this plan have been substantially completed and payments under the plan have been made.
|
(5)
|
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of Abacus, the Trust Group and Airpas Aviation. See Note
2. Acquisitions
.
|
(6)
|
Litigation (reimbursements) costs, net represent charges and legal fee reimbursements associated with antitrust litigation. In 2017, we recorded a
$43 million
reimbursement, net of accrued legal and related expenses, from a settlement with our insurance carriers with respect to the American Airlines litigation. In 2016, we recorded an accrual of
$32 million
representing the trebling of the jury award plus our estimate of attorneys’ fees, expenses and costs in the US Airways litigation. See Note
15. Commitments and Contingencies
.
|
(7)
|
Impairment and related charges represents an
$81 million
impairment charge recorded in 2017 associated with net capitalized contract costs related to an Airline Solutions' customer based on our analysis of the recoverability of such amounts. See Note
4. Impairment and Related Charges
for additional information.
|
(8)
|
In 2017, provision for income taxes includes a provisional impact of
$47 million
recognized in the fourth quarter of 2017 as a result of the enactment of the TCJA in December 2017. See Note
7. Income Taxes
.
|
(d)
|
Includes capital expenditures and capitalized implementation costs as summarized below (in thousands):
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Additions to property and equipment
|
$
|
316,436
|
|
|
$
|
327,647
|
|
|
$
|
286,697
|
|
Capitalized implementation costs
|
60,766
|
|
|
83,405
|
|
|
63,382
|
|
|||
Adjusted Capital Expenditures
|
$
|
377,202
|
|
|
$
|
411,052
|
|
|
$
|
350,079
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenue
|
$
|
915,353
|
|
|
$
|
900,663
|
|
|
$
|
900,606
|
|
|
$
|
881,862
|
|
Operating income
|
163,326
|
|
|
18,718
|
|
|
176,796
|
|
|
134,600
|
|
||||
Income (loss) from continuing operations
|
77,722
|
|
|
(4,152
|
)
|
|
92,825
|
|
|
83,181
|
|
||||
(Loss) income from discontinued operations, net of tax
|
(477
|
)
|
|
(1,222
|
)
|
|
(529
|
)
|
|
296
|
|
||||
Net income (loss)
|
77,245
|
|
|
(5,374
|
)
|
|
92,296
|
|
|
83,477
|
|
||||
Net income (loss) attributable to common stockholders
|
75,939
|
|
|
(6,487
|
)
|
|
90,989
|
|
|
82,090
|
|
||||
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
0.28
|
|
|
(0.02
|
)
|
|
0.33
|
|
|
0.30
|
|
||||
Diluted
|
0.27
|
|
|
(0.02
|
)
|
|
0.33
|
|
|
0.30
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenue
|
$
|
859,543
|
|
|
$
|
845,242
|
|
|
$
|
838,982
|
|
|
$
|
829,620
|
|
Operating income
|
171,422
|
|
|
142,039
|
|
|
90,150
|
|
|
55,961
|
|
||||
Income from continuing operations
|
134,343
|
|
|
106,468
|
|
|
49,464
|
|
|
31,020
|
|
||||
Income (loss) from discontinued operations, net of tax
|
13,350
|
|
|
(2,098
|
)
|
|
(394
|
)
|
|
(5,309
|
)
|
||||
Net income
|
106,269
|
|
|
73,097
|
|
|
41,862
|
|
|
25,711
|
|
||||
Net income attributable to common stockholders
|
105,167
|
|
|
72,019
|
|
|
40,815
|
|
|
24,561
|
|
||||
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
0.38
|
|
|
0.26
|
|
|
0.15
|
|
|
0.09
|
|
||||
Diluted
|
0.37
|
|
|
0.25
|
|
|
0.14
|
|
|
0.09
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
•
|
“Certain Information Regarding Nominees for Director” under “Proposal 1. Election of Directors,” which identifies our directors and nominees for our Board of Directors, and “Stockholders’ Agreement” under “Corporate Governance.”
|
•
|
Other Information—“Section 16(a) Beneficial Ownership Reporting Compliance.”
|
•
|
“Corporate Governance—Other Corporate Governance Practices and Policies—Code of Business Ethics,” which describes our Code of Business Ethics.
|
•
|
“Corporate Governance—Stockholder Nominations for Directors,” which describes the procedures by which stockholders may nominate candidates for election to our Board of Directors.
|
•
|
“Corporate Governance—Board Committees—Audit Committee," which identifies members of the Audit Committee of our Board of Directors and audit committee financial experts.
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
Number of securities to be issued upon exercise of outstanding options (a)
|
|
Weighted average exercise price of outstanding options (b)
|
|
Number of securities remaining available for future issuance under equity compensation plans
|
||
Equity compensation plans approved by stockholders
|
—
|
|
$
|
—
|
|
|
—
|
Equity compensation plans not approved by stockholders
|
10,255,841
|
|
$
|
19.50
|
|
|
13,914,640
|
(a)
|
Includes shares of common stock to be issued upon the exercise of outstanding options under our 2016 Omnibus Plan, 2014 Omnibus Plan, the Sovereign 2012 MEIP and the Sovereign MEIP. Also includes
6,124,006
restricted share units under our 2016 Omnibus Plan and 2014 Omnibus Plan (including shares that may be issued pursuant to outstanding performance-based restricted share units, assuming the target award is met; actual shares may vary, depending on actual performance).
|
(b)
|
Excludes restricted share units which do not have an exercise price.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
1.
|
Financial statements.
The financial statements are set forth under Item 8 of this Annual Report on Form 10-K.
|
2.
|
Financial statement schedules.
Schedule II Valuation and Qualifying Accounts is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the financial statements and notes thereto contained in Item 8.
|
3.
|
Exhibits.
|
Exhibit
Number
|
|
Description of Exhibits
|
2.1
|
|
|
2.2
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
Exhibit
Number
|
|
Description of Exhibits
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7+
|
|
|
10.8+
|
|
|
10.9+
|
|
|
10.10+
|
|
|
10.11+
|
|
|
10.12+
|
|
|
10.13+
|
|
|
10.14+
|
|
|
10.15
|
|
|
10.16
|
|
|
10.17
|
|
|
10.18
|
|
|
10.19
|
|
Exhibit
Number
|
|
Description of Exhibits
|
10.20*+
|
|
|
10.21+
|
|
|
10.22+
|
|
|
10.23+
|
|
|
10.24+
|
|
|
10.25+
|
|
|
10.26+
|
|
|
10.27
|
|
|
10.28+
|
|
|
10.29+
|
|
|
10.30
|
|
|
10.31+
|
|
|
10.32
|
|
|
10.33
|
|
|
10.34+
|
|
|
10.35†
|
|
|
10.36+
|
|
|
10.37+
|
|
|
10.38+
|
|
|
10.39+
|
|
Exhibit
Number
|
|
Description of Exhibits
|
10.40+
|
|
|
10.41
|
|
|
10.42
|
|
|
10.43
|
|
|
10.44+
|
|
|
10.45+
|
|
|
10.46
|
|
|
10.47
|
|
|
10.48+
|
|
|
10.49+
|
|
|
10.50
|
|
|
10.51
|
|
|
10.52
|
|
|
10.53
|
|
|
10.54+
|
|
|
10.55+
|
|
|
Exhibit
Number |
|
Description of Exhibits
|
21.1*
|
|
|
23.1*
|
|
|
24.1*
|
|
|
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
|
+
|
Indicates management contract or compensatory plan or arrangement.
|
†
|
Confidential treatment has been granted to portions of this exhibit by the Securities and Exchange Commission.
|
*
|
Filed herewith.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
|
|
SABRE CORPORATION
|
|
|
|
|
Date:
|
February 16, 2018
|
By:
|
/s/ Richard A. Simonson
|
|
|
|
Richard A. Simonson
|
|
|
|
Executive Vice President and
|
|
|
|
Chief Financial Officer
|
/s/ Sean Menke
|
|
President and Chief Executive Officer and Director
|
February 16, 2018
|
Sean Menke
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Richard A. Simonson
|
|
Executive Vice President and Chief Financial Officer
|
February 16, 2018
|
Richard A. Simonson
|
|
(Principal Financial Officer)
|
|
|
|
|
|
/s/ Jami B. Kindle
|
|
Vice President and Corporate Controller
|
February 16, 2018
|
Jami B. Kindle
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
/s/ Lawrence W. Kellner
|
|
Chairman of the Board and Director
|
February 16, 2018
|
Lawrence W. Kellner
|
|
|
|
|
|
|
|
/s/ George Bravante, Jr.
|
|
Director
|
February 16, 2018
|
George Bravante, Jr.
|
|
|
|
|
|
|
|
/s/ Hervé Couturier
|
|
Director
|
February 16, 2018
|
Hervé Couturier
|
|
|
|
|
|
|
|
/s/ Renée James
|
|
Director
|
February 16, 2018
|
Renée James
|
|
|
|
|
|
|
|
/s/ Gary Kusin
|
|
Director
|
February 16, 2018
|
Gary Kusin
|
|
|
|
|
|
|
|
/s/ Greg Mondre
|
|
Director
|
February 16, 2018
|
Greg Mondre
|
|
|
|
|
|
|
|
/s/ Judy Odom
|
|
Director
|
February 16, 2018
|
Judy Odom
|
|
|
|
|
|
|
|
/s/ Joseph Osnoss
|
|
Director
|
February 16, 2018
|
Joseph Osnoss
|
|
|
|
|
|
|
|
/s/ Karl Peterson
|
|
Director
|
February 16, 2018
|
Karl Peterson
|
|
|
|
|
|
|
|
/s/ Zane Rowe
|
|
Director
|
February 16, 2018
|
Zane Rowe
|
|
|
|
|
Balance at
Beginning
|
|
Charged to
Expense or
Other Accounts
|
|
Write-offs and
Other Adjustments
|
|
Balance at
End of Period
|
||||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
||||
Year ended December 31, 2017
|
$
|
37.1
|
|
|
$
|
9.5
|
|
|
$
|
(3.6
|
)
|
|
$
|
43.0
|
|
Year ended December 31, 2016
|
$
|
32.3
|
|
|
$
|
10.6
|
|
|
$
|
(5.8
|
)
|
|
$
|
37.1
|
|
Year ended December 31, 2015
|
$
|
27.5
|
|
|
$
|
8.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
32.3
|
|
Valuation Allowance for Deferred Tax Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Year ended December 31, 2017
|
$
|
74.5
|
|
|
$
|
(8.8
|
)
|
|
$
|
(6.7
|
)
|
|
$
|
59.0
|
|
Year ended December 31, 2016
|
$
|
80.7
|
|
|
$
|
1.1
|
|
|
$
|
(7.3
|
)
|
|
$
|
74.5
|
|
Year ended December 31, 2015
|
$
|
160.0
|
|
|
$
|
(69.8
|
)
|
|
$
|
(9.5
|
)
|
|
$
|
80.7
|
|
Reserve for Value-Added Tax Receivables
|
|
|
|
|
|
|
|
|
|
|
|
||||
Year ended December 31, 2017
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
Year ended December 31, 2016
|
$
|
1.8
|
|
|
$
|
(1.6
|
)
|
|
$
|
0.1
|
|
|
$
|
0.3
|
|
Year ended December 31, 2015
|
$
|
6.9
|
|
|
$
|
(3.1
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
1.8
|
|
INDEMNITEE
Address: _______________________________
_______________________________
_______________________________
_______________________________
Facsimile: _______________________________
|
SABRE CORPORATION
By:
Name:
Title:
|
|
|
Legal Name of Subsidiary
|
|
Jurisdiction of
Incorporation or
Organization
|
|
% of Voting
Interest Directly
or Indirectly
Held (If Not Wholly-owned)
|
Abacus Distribution Systems (Cambodia) Private Limited
|
|
Cambodia
|
|
|
Airline Technology Services Mauritius Ltd.
|
|
Mauritius
|
|
|
Airpas Aviation GmbH
|
|
Germany
|
|
|
Asiana Sabre Inc.
|
|
Korea, Republic of
|
|
20%
|
E-Beam Limited
|
|
United Kingdom
|
|
|
Elektroniczne Systemy Sprzedazy Sp. ZO.O.
|
|
Poland
|
|
40%
|
Excellent Management Limited
|
|
Hong Kong
|
|
20%
|
FlightLine Data Services, Inc.
|
|
Georgia
|
|
|
Gesellschaft Zur Entwicklung und Vermarktung Interaktiver Tourismusanwendungen mbH
|
|
Germany
|
|
26%
|
GetThere Inc.
|
|
Delaware
|
|
|
GetThere L.P.
|
|
Delaware
|
|
|
IHS GmbH
|
|
Germany
|
|
|
IHS US Inc.
|
|
Florida
|
|
|
Innlink, LLC
|
|
Delaware
|
|
|
Lastminute (Cyprus) Limited
|
|
Cyprus
|
|
|
lastminute.com Holdings, Inc.
|
|
Delaware
|
|
|
lastminute.com Limited
|
|
United Kingdom
|
|
|
lastminute.com LLC
|
|
Delaware
|
|
|
LCC24AG
|
|
Germany
|
|
7.3%
|
Leisure Cars Broker S.L.
|
|
Spain
|
|
|
Leisure Cars International Limited
|
|
United Kingdom
|
|
|
Nexus World Services, Inc.
|
|
Delaware
|
|
|
Online Travel Corporation Limited
|
|
United Kingdom
|
|
|
PRISM Group, Inc.
|
|
Maryland
|
|
|
PRISM Technologies, LLC
|
|
New Mexico
|
|
|
PT. Sabre Travel Network Indonesia
|
|
Indonesia
|
|
5%
|
Sabre (Australia) Pty, Ltd.
|
|
Australia
|
|
|
Sabre (Thailand) Holdings LLC
|
|
Delaware
|
|
|
Sabre Airline Solutions GmbH
|
|
Germany
|
|
|
Sabre AS (Luxembourg) S.a r.l.
|
|
Luxembourg
|
|
|
Sabre Asia Pacific Pte. Ltd.
|
|
Singapore
|
|
|
Sabre Australia Technologies I Pty. Ltd.
|
|
Australia
|
|
|
Sabre Austria GmbH
|
|
Austria
|
|
|
Sabre Belgium SA
|
|
Belgium
|
|
|
Sabre Bulgaria AD
|
|
Bulgaria
|
|
60%
|
Sabre China Sea Technologies Ltd.
|
|
Labuan
|
|
|
Sabre Colombia Ltda.
|
|
Columbia
|
|
|
Sabre Computer Reservierungssystem GmbH
|
|
Austria
|
|
|
Sabre Danmark ApS
|
|
Denmark
|
|
|
Sabre Decision Technologies International, LLC
|
|
Delaware
|
|
|
Legal Name of Subsidiary
|
|
Jurisdiction of
Incorporation or Organization |
|
% of Voting
Interest Directly or Indirectly Held (If Not Wholly-owned) |
Sabre Deutschland Marketing GmbH
|
|
Germany
|
|
|
Sabre Digital Limited
|
|
United Kingdom
|
|
|
Sabre Dynamic Argentina SRL
|
|
Argentina
|
|
|
Sabre EMEA Marketing Limited
|
|
United Kingdom
|
|
|
Sabre Espana Marketing, S.A.
|
|
Spain
|
|
|
Sabre Finance (Luxembourg) S.a.r.l.
|
|
Luxembourg
|
|
|
Sabre France Sarl
|
|
France
|
|
|
Sabre GLBL Inc.
|
|
Delaware
|
|
|
Sabre Global Services S.A.
|
|
Uruguay
|
|
|
Sabre Global Technologies, Limited
|
|
United Kingdom
|
|
|
Sabre Headquarters, LLC
|
|
Delaware
|
|
|
Sabre Hellas Computer Reservation Systems Services Societe Anonyme
|
|
Greece
|
|
|
Sabre Holdings (Luxembourg) S.a.r.l.
|
|
Luxembourg
|
|
|
Sabre Holdings Corporation
|
|
Delaware
|
|
|
Sabre Holdings GmbH
|
|
Germany
|
|
|
Sabre Iceland ehf.
|
|
Iceland
|
|
|
Sabre Informacion S.A. de C.V.
|
|
Mexico
|
|
|
Sabre International (Bahrain) W.L.L.
|
|
Bahrain
|
|
|
Sabre International (Luxembourg) S.a.r.l.
|
|
Luxembourg
|
|
|
Sabre International B.V.
|
|
Luxembourg
|
|
|
Sabre International Holdings, LLC
|
|
Delaware
|
|
|
Sabre International Newco, Inc.
|
|
Delaware
|
|
|
Sabre International, LLC.
|
|
Delaware
|
|
|
Sabre Ireland Limited
|
|
Ireland
|
|
|
Sabre Israel Travel Technologies LTD.
|
|
Israel
|
|
|
Sabre Italia S.r.l.
|
|
Italy
|
|
|
Sabre Limited
|
|
New Zealand
|
|
|
Sabre Marketing Nederland B.V.
|
|
Netherlands
|
|
|
Sabre Marketing Pte. Ltd.
|
|
Singapore
|
|
|
Sabre Mexico LLC
|
|
Delaware
|
|
|
Sabre Norge AS
|
|
Norway
|
|
|
Sabre Pakistan (Private) Limited
|
|
Pakistan
|
|
|
Sabre Polska Sp. Z.o.o.
|
|
Poland
|
|
|
Sabre Portugal Servicios Lda
|
|
Portugal
|
|
|
Sabre Rocade AB
|
|
Sweden
|
|
|
Sabre Rocade Assist AB
|
|
Sweden
|
|
|
Sabre Seyahat Dagitim Sisternleri A.S.
|
|
Turkey
|
|
|
Sabre Sociedad Technologica S de RL de CV
|
|
Mexico
|
|
|
Sabre South Pacific I
|
|
Australia
|
|
|
Sabre Suomi Oy
|
|
Finland
|
|
|
Sabre Sverige AB
|
|
Sweden
|
|
|
Sabre Technology Enterprises II, Ltd.
|
|
Cayman Islands
|
|
|
Sabre Technology Enterprises, Ltd.
|
|
Cayman Islands
|
|
|
Sabre Technology Holdings Pte. Ltd.
|
|
Singapore
|
|
|
Sabre Technology Holland II B.V.
|
|
Netherlands
|
|
|
Sabre Travel International Limited
|
|
Ireland
|
|
|
Legal Name of Subsidiary
|
|
Jurisdiction of
Incorporation or Organization |
|
% of Voting
Interest Directly or Indirectly Held (If Not Wholly-owned) |
Sabre Travel Network (Australia) Pty Ltd.
|
|
Australia
|
|
|
Sabre Travel Network (Bangladesh) Limited
|
|
Bangladesh
|
|
49%
|
Sabre Travel Network (Brunei) Sdn Bhd
|
|
Brunei Darussalam
|
|
15%
|
Sabre Travel Network (Central Asia) LLP
|
|
Kazakhstan
|
|
|
Sabre Travel Network (Hong Kong) Limited
|
|
Hong Kong
|
|
|
Sabre Travel Network (India) Private Limited
|
|
India
|
|
|
Sabre Travel Network (Lao) Co., Ltd.
|
|
Lao People's Democratic Republic
|
|
40%
|
Sabre Travel Network (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
|
|
Sabre Travel Network (New Zealand) Limited
|
|
New Zealand
|
|
|
Sabre Travel Network (Pakistan) Private Limited
|
|
Pakistan
|
|
30%
|
Sabre Travel Network (Philippines) Inc.
|
|
Philippines
|
|
17%
|
Sabre Travel Network (Singapore) Pte. Ltd.
|
|
Singapore
|
|
|
Sabre Travel Network (Thailand) Ltd.
|
|
Thailand
|
|
|
Sabre Travel Network Eqypt LLC
|
|
Egypt
|
|
|
Sabre Travel Network Lanka (Private) Limited
|
|
Sri Lanka
|
|
60%
|
Sabre Travel Network Middle East W.L.L.
|
|
Bahrain
|
|
60%
|
Sabre Travel Network Romania S.R.L.
|
|
Romania
|
|
|
Sabre Travel Network Southern Africa (Proprietary) Limited
|
|
South Africa
|
|
|
Sabre Travel Network Taiwan Ltd.
|
|
Taiwan
|
|
4.39%
|
Sabre Travel Technologies (Private) Limited
|
|
India
|
|
|
Sabre UK Marketing Ltd.
|
|
United Kingdom
|
|
|
Sabre Ukraine Limited
|
|
United Kingdom
|
|
|
Sabre Ukraine Limited, LLC
|
|
Ukraine
|
|
|
Sabre Zenon Cyprus Limited
|
|
Cyprus
|
|
|
SabreMark G.P., LLC
|
|
Delaware
|
|
|
SabreMark Limited Partnership
|
|
Delaware
|
|
|
Secret Hotels2 Ltd
|
|
United Kingdom
|
|
|
Switch Automated Booking Services Co WLL
|
|
Kuwait
|
|
49%
|
TG India Holdings Company
|
|
Cayman Islands
|
|
|
TG India Management Company
|
|
Cayman Islands
|
|
|
Travelocity Global Technologies Private Limited
|
|
India
|
|
|
TravLynx LLC
|
|
Florida
|
|
|
TRUST - International Hotel Reservation Services GmbH
|
|
Germany
|
|
|
TVL Australia Pty Ltd.
|
|
Australia
|
|
|
TVL Common, Inc.
|
|
Delaware
|
|
|
TVL Europe
|
|
United Kingdom
|
|
|
TVL Holdings I, LLC
|
|
Delaware
|
|
|
TVL Holdings, Inc.
|
|
Delaware
|
|
|
TVL International B.V.
|
|
Netherlands
|
|
|
TVL LLC
|
|
Delaware
|
|
|
TVL LP
|
|
Delaware
|
|
|
TVL Services Canada Ltd.
|
|
Canada
|
|
|
TVL Travel Limited
|
|
United Kingdom
|
|
|
TVLY S.R.L.
|
|
Argentina
|
|
|
Zuji Holdings Ltd.
|
|
Cayman Islands
|
|
|
(1)
|
Registration Statement (Form S-8 No. 333-211661) pertaining to the Sabre Corporation 2016 Omnibus Incentive Compensation Plan,
|
(2)
|
Registration Statement (Form S-3 No. 333-204267) and related Prospectus of Sabre Corporation, and
|
(3)
|
Registration Statement (Form S-8 No. 333-196056) pertaining to the Sovereign Holdings, Inc. Management Equity Incentive Plan, Sovereign Holdings, Inc. 2012 Management Equity Incentive Plan, and the Sabre Corporation 2014 Omnibus Incentive Compensation Plan
|
Dallas, Texas
|
February 16, 2018
|
1.
|
I have reviewed this annual report on Form 10-K 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:
|
February 16, 2018
|
By:
|
|
/s/ Sean Menke
|
|
|
|
|
Sean Menke
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(principal executive officer of the registrant)
|
1.
|
I have reviewed this annual report on Form 10-K 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:
|
February 16, 2018
|
By:
|
|
/s/ Richard A. Simonson
|
|
|
|
|
Richard A. Simonson
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(principal financial officer of the registrant)
|
a.
|
The Form 10-K of Sabre Corporation for the year ended
December 31, 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
|
b.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Sabre Corporation.
|
Date:
|
February 16, 2018
|
By:
|
|
/s/ Sean Menke
|
|
|
|
|
Sean Menke
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(principal executive officer of the registrant)
|
a.
|
The Form 10-K of Sabre Corporation for the year ended
December 31, 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
|
b.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Sabre Corporation.
|
Date:
|
February 16, 2018
|
By:
|
|
/s/ Richard A. Simonson
|
|
|
|
|
Richard A. Simonson
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(principal financial officer of the registrant)
|