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Segment Information (Tables)
9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
Summary of Segment Information
Segment information for the three and nine months ended September 30, 2016 and 2015 is as follows (in thousands):
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue
 

 
 

 
 

 
 

Travel Network
$
582,364

 
$
569,190

 
$
1,805,750

 
$
1,571,635

Airline and Hospitality Solutions
262,391

 
218,978

 
752,940

 
640,510

Eliminations
(5,773
)
 
(3,166
)
 
(14,923
)
 
(9,704
)
Total revenue
$
838,982

 
$
785,002

 
$
2,543,767

 
$
2,202,441

 
 
 
 
 
 
 
 
Adjusted Gross Profit (a)
 

 
 

 
 

 
 

Travel Network
$
255,657

 
$
263,732

 
$
842,557

 
$
733,778

Airline and Hospitality Solutions
114,136

 
99,373

 
323,481

 
284,354

Corporate
(24,812
)
 
(16,297
)
 
(59,596
)
 
(37,778
)
Total
$
344,981

 
$
346,808

 
$
1,106,442

 
$
980,354

 
 
 
 
 
 
 
 
Adjusted EBITDA (b)
 

 
 

 
 

 
 

Travel Network
$
219,865

 
$
231,230

 
$
744,626

 
$
669,274

Airline and Hospitality Solutions
95,072

 
85,275

 
269,955

 
237,748

Total segments
314,937

 
316,505

 
1,014,581

 
907,022

Corporate
(77,080
)
 
(74,839
)
 
(217,760
)
 
(194,197
)
Total
$
237,857

 
$
241,666

 
$
796,821

 
$
712,825

 
 
 
 
 
 
 
 
Depreciation and amortization
 

 
 

 
 

 
 

Travel Network
$
19,519

 
$
15,947

 
$
57,725

 
$
45,571

Airline and Hospitality Solutions
41,732

 
32,363

 
114,080

 
107,270

Total segments
61,251

 
48,310

 
171,805

 
152,841

Corporate
47,979

 
39,927

 
132,151

 
102,013

Total
$
109,230

 
$
88,237

 
$
303,956

 
$
254,854

 
 
 
 
 
 
 
 
Adjusted Capital Expenditures (c)
 

 
 

 
 

 
 

Travel Network
$
25,763

 
$
18,957

 
$
72,918

 
$
46,515

Airline and Hospitality Solutions
68,990

 
61,370

 
200,455

 
168,349

Total segments
94,753

 
80,327

 
273,373

 
214,864

Corporate
16,195

 
14,862

 
45,436

 
37,849

Total
$
110,948

 
$
95,189

 
$
318,809

 
$
252,713

______________________________
(a)
The following table sets forth the reconciliation of Adjusted Gross Profit to operating income in our statement of operations (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Adjusted Gross Profit
$
344,981

 
$
346,808

 
$
1,106,442

 
$
980,354

Less adjustments:
 

 
 

 
 

 
 

Selling, general and administrative
155,182

 
166,324

 
435,924

 
412,042

Cost of revenue adjustments:
 

 
 

 
 

 
 

Depreciation and amortization (1)
77,397

 
59,334

 
209,276

 
177,080

Amortization of upfront incentive consideration (2)
17,139

 
9,525

 
43,372

 
31,575

Stock-based compensation
5,113

 
2,853

 
14,259

 
9,288

Operating income
$
90,150

 
$
108,772

 
$
403,611

 
$
350,369


(b)
The following table sets forth the reconciliation of Adjusted EBITDA to income from continuing operations in our statement of operations (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Adjusted EBITDA
$
237,857

 
$
241,666

 
$
796,821

 
$
712,825

Less adjustments:
 
 
 
 
 
 
 
Depreciation and amortization of property and equipment (1a)
58,271

 
49,247

 
168,150

 
157,154

Amortization of capitalized implementation costs (1b)
11,529

 
7,606

 
28,228

 
23,032

Acquisition-related amortization (1c)
39,430

 
31,384

 
107,578

 
76,270

Amortization of upfront incentive consideration (2)
17,139

 
9,525

 
43,372

 
31,575

Interest expense, net
38,002

 
40,581

 
116,414

 
129,643

Loss on extinguishment of debt
3,683

 

 
3,683

 
33,235

Other, net (3)
(281
)
 
(92,568
)
 
(4,517
)
 
(88,320
)
Restructuring and other costs (4)
583

 
8,888

 
1,823

 
8,888

Acquisition-related costs (5)
90

 
9,350

 
714

 
13,214

Litigation costs, net (6)
7,034

 
9,318

 
5,089

 
14,797

Stock-based compensation
12,913

 
7,204

 
36,012

 
23,328

Provision for income taxes
7,208

 
38,007

 
79,905

 
84,966

Income from continuing operations
$
42,256

 
$
123,124

 
$
210,370

 
$
205,043

______________________________________________________
(1)
Depreciation and amortization expenses:
a.
Depreciation and amortization of property and equipment includes software developed for internal use.
b.
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
c.
Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures.
(2)
Our Travel Network business at times makes upfront cash payments or other consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized over an average expected life of the service contract, generally over three years to five years. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided up front. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.
(3)
In the first quarter of 2016, we recognized a gain of $6 million associated with the receipt of an earn-out payment from the sale of a business in 2013. Additionally, in the third quarter of 2015, we recognized a gain of $86 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 addition, other, net includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
(4)
Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs.
(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 costs, net represent charges and legal fee reimbursements associated with antitrust litigation (see Note 10, Contingencies).
(c)
Includes capital expenditures and capitalized implementation costs as summarized below (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Additions to property and equipment
$
89,639

 
$
75,108

 
$
254,232

 
$
203,071

Capitalized implementation costs
21,309

 
20,081

 
64,577

 
49,642

Adjusted Capital Expenditures
$
110,948

 
$
95,189

 
$
318,809

 
$
252,713