2014

Sabre Reports Second Quarter Earnings Results; Travel Distribution Revenues Up 15 Percent

    FORT WORTH, Texas, July 21 /PRNewswire/ -- Sabre (NYSE:   TSG) today
 reported revenues of $639 million for the second quarter ended June 30, an
 increase of 11 percent over revenues for the second quarter of 1998.  Revenue
 from the electronic travel distribution business grew 15 percent over second
 quarter 1998, while revenue from the information technology solutions business
 grew 5 percent over the same period.
     The company's net earnings, excluding the charge described below,
 increased 11 percent to $77 million, or $0.59 per share on a diluted basis,
 compared to net earnings of $69 million, or $0.53 per share on a diluted
 basis, in the same period last year.  Operating income, excluding the charge,
 was $118 million for the quarter, an increase of 6 percent, compared to
 $111 million for the same period in 1998.
     "Growth in travel bookings in both the travel agency channel and the on-
 line consumer channel drove solid revenue and earnings growth in the travel
 distribution business," said Michael J. Durham, president and chief executive
 officer of Sabre.  "As expected, with the ramp down in the US Airways system
 conversion efforts and conclusion of Year 2000 remediation work for American
 Airlines, revenue growth in the IT solutions business was slower than last
 year.  We are pleased with our overall earnings results, which were within our
 expectations, and although operating margins were slightly down from last
 year, we are taking steps now that we believe will improve margins in the
 latter half of the year."
     During the second quarter, the company incurred a significant charge to
 earnings related to amortization expense on options issued to US Airways as
 part of the long-term technology agreement signed in 1997.  US Airways
 received options for 6,000,000 shares of Sabre stock at an exercise price of
 $27 per share.  The first tranche of options for 3,000,000 shares is
 exercisable during the six-month period of July 1, 1999 through
 December 31, 1999.  The second tranche of options for the remaining
 3,000,000 shares is exercisable for a 10 year period beginning on
 January 2, 2003.
     The options are considered liability instruments under Statement of
 Financial Accounting Standards No. 123, which requires adjusting the value of
 the options based upon the difference between the current stock price and the
 exercise price of the option.  With the significant price appreciation in
 Sabre's stock during the second quarter, the amortization expense related to
 these options was $22 million, $13 million net of tax, or $0.10 per share on a
 diluted basis.  Comparatively, the option expense incurred in the second
 quarter of 1998 was $1.3 million, $0.8 million net of tax, or $0.01 per share.
 Due to the nature of this charge, the company has separated out this expense
 for comparative purposes.
     Including this option amortization expense, net earnings were $63 million,
 or $0.48 per share on a diluted basis for the second quarter 1999, a decline
 of 7 percent compared to the second quarter 1998.  Operating income was
 $96 million for the quarter, a decline of 12 percent, compared to $109 million
 for the same period in 1998.
     Total worldwide bookings processed through the Sabre computer reservations
 system, which include direct bookings and joint venture bookings, were
 116 million for the quarter, an increase of 9 percent over the same period
 last year.
     Direct worldwide reservations booked through the Sabre system were
 97 million during the second quarter -- an increase of 6 percent over the same
 period in 1998, driven by travel growth, market share gains and rapid growth
 in Travelocity.com, the company's leading travel Web site.  Direct bookings
 within the United States grew 3 percent for the quarter, while direct
 international bookings grew 12 percent for that period.
     Travel sales, which represents the value of travel products sold, through
 Travelocity.com reached $173 million in the second quarter, an increase of
 190 percent over the second quarter of 1998 and a 35 percent increase over the
 first quarter of this year.  As reported earlier, the company continues to
 evaluate alternative capital structures for this Internet business.
     Revenue for the first six months of 1999 was $1.3 billion, an increase of
 13 percent over the same period last year.  Net earnings for the first half of
 the year, excluding certain items booked in the first and second quarters,
 rose 6 percent to $150 million, or $1.15 per share on a diluted basis,
 compared to net earnings of $142 million, $1.08 per share on a diluted basis,
 in the same period last year.  Operating income, before special items, grew
 3 percent to $233 million for the six months ended June 30, compared to
 $226 million for the same period in 1998.
     In the first quarter of 1999 the company recorded a one-time gain of
 $21 million, net of tax, or $0.16 per share on a diluted basis, arising from
 the sale in a secondary offering of 490,000 shares of Equant, N.V., a
 telecommunications company.  In addition the first quarter includes charges
 related to the US Airways options of $2 million, net of tax, or $0.01 per
 share on a diluted basis.
     Including these items, net earnings for the six months ended
 June 30, 1999, were $156 million, an increase of 11 percent compared to the
 same period in 1998.  Operating income was $208 million for the first half of
 1999, compared to $224 million for the first half of 1998, a decline of
 7 percent.
     "The travel distribution business has performed very well in the first
 half of 1999, as we continue our efforts to gain market share through leading
 edge technology and superior customer service," Durham added.  "With our
 industry knowledge and extensive applications portfolio, we believe the long-
 term prospects for our outsourcing business remain strong.  In the short-term,
 we will be implementing measures throughout the company to reduce our costs to
 match our current revenue growth and to improve margins within this business."
     The company indicated that efforts to balance costs with revenue growth
 will likely result in some headcount reductions in certain areas of the
 business as sales and marketing efforts, as well as product development
 initiatives continue to be streamlined.
     Sabre is a world leader in the electronic distribution of travel and is a
 leading provider of information technology solutions for the travel and
 transportation industries, including customized software development and
 software products, transaction processing, consulting and total information
 technology outsourcing.
     Statements in this news release about anticipated or expected future
 revenue and earnings growth are forward-looking statements within the meaning
 of Section 21E of the Securities Exchange Act of 1934, as amended.  All
 forward-looking statements in this release are based upon information
 available to Sabre on the date of this release.  Any forward-looking
 statements involve risks and uncertainties that could cause actual events or
 results to differ materially from the events or results described in the
 forward-looking statements, including risks of changes in relationships with
 American or US Airways and their affiliates; competition and technological
 innovation by competitors; risks related to the Company's technology, such as
 a failure to timely achieve Year 2000 or Euro currency compliance; seasonality
 of the travel industry and booking revenues; sensitivity to general economic
 conditions and events that affect airline travel; risks associated with the
 Company's international operations; and legal and regulatory issues.  Sabre
 undertakes no obligation to publicly update or revise any forward-looking
 statements, whether as a result of new information, future events or
 otherwise. Readers are cautioned not to place undue reliance on these forward-
 looking statements.
     Current Sabre news releases may be accessed via the Internet.  Visit the
 Company's Web site at http://www.sabre.com.
     Sabre and the Sabre logo are registered trademarks of an affiliate of The
 SABRE Group, soon to be known as Sabre Inc.
 
                           The Sabre Group Holdings, Inc.
                    Condensed Consolidated Statements of Income
                             Three months ended June 30
                (In millions, except per share amounts and percents)
 
     Statement of Income Before Special Items
 
                                                  1999     1998
                                                 Actual   Actual   Change*
 
     Revenues
      Electronic travel distribution              $388     $339     14.6%
      Information technology solutions             251      238      5.3%
      Total revenues                               639      577     10.8%
 
     Operating expenses                            521      466     11.8%
     Operating income                              118      111      6.4%
 
     Other income (expense)
      Interest income (expense), net                 4        1       **
      Other, net                                     0       (0)      **
 
     Income before provision for income taxes      121      111      9.1%
 
     Provision for income taxes                     45       42      6.3%
 
     Net earnings                                  $77      $69     10.8%
 
     Operating Margin                             18.4%    19.2%    (0.8) pts
 
     Earnings per common share, basic            $0.59    $0.53
     Earnings per common share, diluted          $0.59    $0.53
 
     Weighted average shares, basic              129.7    130.1
     Weighted average shares, diluted            131.2    130.8
 
     Direct reservations booked using
      the Sabre system (A)                          97       92      5.7%
     Total reservations processed using
      the Sabre system (B)                         116      107      8.5%
 
     *   Percents shown reflect changes in unrounded figures and may not agree
         to the percent changes in figures after rounding.
     **  Greater than 100 percent.
 
     (A)  CRS reservations for which Sabre collects a CRS booking fee --
          excluding Asia/Pacific bookings transferred to Abacus International,
          our joint venture partner in that region.
     (B)  Includes direct reservations plus CRS reservations processed by joint
          venture partners using the Sabre system.
 
                           The Sabre Group Holdings, Inc.
                    Condensed Consolidated Statements of Income
                             Three months ended June 30
                (In millions, except per share amounts and percents)
 
                                                  1999      1998
                                                 Actual    Actual    Change*
 
     Revenues
      Electronic travel distribution              $388      $339      14.6%
      Information technology solutions             251       238       5.3%
      Total revenues                               639       577      10.8%
 
     Operating expenses                            543       467      16.2%
     Operating income                               96       109     (12.2%)
 
     Other income (expense)
      Interest income (expense), net                 4         1        **
      Other, net                                     0        (0)       **
 
     Income before provision for income taxes      100       110      (9.3%)
 
     Provision for income taxes                     36        41     (12.4%)
 
     Net earnings                                  $63       $69      (7.4%)
 
     Operating Margin                             15.0%     18.9%     (3.9) pts
 
     Earnings per common share, basic            $0.49     $0.53
     Earnings per common share, diluted          $0.48     $0.52
 
     Weighted average shares, basic              129.7     130.1
     Weighted average shares, diluted            131.2     130.8
 
     Direct reservations booked using
      the Sabre system (A)                          97        92       5.7%
     Total reservations processed using
      the Sabre system (B)                         116       107       8.5%
 
     *   Percents shown reflect changes in unrounded figures and may not agree
         to the percent changes in figures after rounding.
     **  Greater than 100%
 
     (A) CRS reservations for which Sabre collects a CRS booking fee --
         excluding Asia/Pacific bookings transferred to Abacus International,
         our joint venture partner in that region.
     (B) Includes direct reservations plus CRS reservations processed by joint
         venture partners using the Sabre system.
 
                           The Sabre Group Holdings, Inc.
                    Condensed Consolidated Statements of Income
                              Six months ended June 30
                (In millions, except per share amounts and percents)
 
     Statement of Income Before Special Items
 
                                                  1999      1998
                                                 Actual    Actual    Change*
 
     Revenues
      Electronic travel distribution              $769      $684      12.5%
      Information technology solutions             508       447      13.6%
      Total revenues                             1,277     1,131      12.9%
 
     Operating expenses                          1,044       905      15.4%
     Operating income                              233       226       3.0%
 
     Other income (expense)
      Interest income (expense), net                 6         3        **
      Other, net                                     0         0     (39.9%)
 
     Income before provision for income taxes      239       229       4.5%
 
     Provision for income taxes                     89        87       1.8%
 
     Net earnings                                 $150      $142       6.2%
 
     Operating Margin                             18.2%     20.0%     (1.8) pts
 
     Earnings per common share, basic            $1.16     $1.09
     Earnings per common share, diluted          $1.15     $1.08
 
     Weighted average shares, basic              129.7     130.2
     Weighted average shares, diluted            130.9     130.8
 
     Direct reservations booked using
      the Sabre system (A)                         196       185      5.9%
     Total reservations processed using
      the Sabre system (B)                         232       211     10.0%
 
     *   Percents shown reflect changes in unrounded figures and may not agree
         to the percent changes in figures after rounding.
     **  Greater than 100%
 
     (A)  CRS reservations for which Sabre collects a CRS booking fee --
          excluding Asia/Pacific bookings transferred to Abacus International,
          our joint venture partner in that region.
     (B)  Includes direct reservations plus CRS reservations processed by joint
          venture partners using the Sabre system.
 
                           The Sabre Group Holdings, Inc.
                    Condensed Consolidated Statements of Income
                              Six months ended June 30
                (In millions, except per share amounts and percents)
 
                                                  1999      1998
                                                 Actual    Actual    Change*
 
     Revenues
      Electronic travel distribution              $769      $684      12.5%
      Information technology solutions             508       447      13.6%
      Total revenues                             1,277     1,131      12.9%
 
     Operating expenses                          1,069       907      17.9%
     Operating income                              208       224      (7.0%)
 
     Other income (expense)
      Interest income (expense), net                 6         3        **
      Other, net                                    35         0        **
 
     Income before provision for income taxes      249       227       9.7%
 
     Provision for income taxes                     92        86       7.0%
 
     Net earnings                                 $156      $140      11.3%
 
     Operating Margin                             16.3%     19.8%     (3.5) pts
 
     Earnings per common share, basic            $1.20     $1.08
     Earnings per common share, diluted          $1.19     $1.07
 
     Weighted average shares, basic              129.7     130.2
     Weighted average shares, diluted            130.9     130.8
 
     Direct reservations booked using
      the Sabre system (A)                         196       185      5.9%
     Total reservations processed using
      the Sabre system (B)                         232       211     10.0%
 
     *   Percents shown reflect changes in unrounded figures and may not agree
         to the percent changes in figures after rounding.
     **  Greater than 100%
 
     (A)  CRS reservations for which Sabre collects a CRS booking fee --
          excluding Asia/Pacific bookings transferred to Abacus International,
          our joint venture partner in that region.
     (B)  Includes direct reservations plus CRS reservations processed by joint
          venture partners using the Sabre system.
 
 

SOURCE Sabre

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