Segment information for the three and six months ended June 30, 2015 and 2014 is as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenue
Travel Network	$	494,515		$	462,337		$	1,002,445		$	954,064
Airline and Hospitality Solutions	216,632			186,573			421,532			363,290
Eliminations	(4,056		)	(2,530		)	(6,538		)	(4,559		)
Total revenue	$	707,091		$	646,380		$	1,417,439		$	1,312,795

Adjusted Gross Margin ^(a)
Travel Network	$	225,927		$	217,161		$	470,046		$	453,809
Airline and Hospitality Solutions	95,782			75,259			184,981			140,799
Corporate	(8,885		)	(5,457		)	(21,481		)	(20,780		)
Total	$	312,824		$	286,963		$	633,546		$	573,828

Adjusted EBITDA ^(b)
Travel Network	$	205,957		$	197,971		$	438,044		$	412,814
Airline and Hospitality Solutions	80,985			62,555			152,473			116,015
Total segments	286,942			260,526			590,517			528,829
Corporate	(59,369		)	(45,978		)	(119,358		)	(103,018		)
Total	$	227,573		$	214,548		$	471,159		$	425,811

Depreciation and amortization
Travel Network	$	15,280		$	15,772		$	29,624		$	31,809
Airline and Hospitality Solutions	31,910			26,700			74,907			53,698
Total segments	47,190			42,472			104,531			85,507
Corporate	29,366			28,231			62,086			66,830
Total	$	76,556		$	70,703		$	166,617		$	152,337

Adjusted Capital Expenditures ^(c)
Travel Network	$	14,473		$	15,307		$	27,558		$	30,620
Airline and Hospitality Solutions	52,542			39,390			106,979			77,790
Total segments	67,015			54,697			134,537			108,410
Corporate	14,270			12,059			22,987			15,657
Total	$	81,285		$	66,756		$	157,524		$	124,067

______________________________


(a)	The following table sets forth the reconciliation of Adjusted Gross Margin to operating income in our statement of operations (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Adjusted Gross Margin	$	312,824	$	286,963	$	633,546	$	573,828
Less adjustments:
Selling, general and administrative	123,360		127,651		245,718		238,389
Cost of revenue adjustments:
Depreciation and amortization ⁽¹⁾	53,079		48,115		117,746		106,924
Amortization of upfront incentive consideration ⁽²⁾	10,878		11,742		22,050		22,789
Restructuring and other costs ⁽⁴⁾	—		1,401		—		2,579
Stock-based compensation	2,902		1,972		6,435		3,358
Operating income	$	122,605	$	96,082	$	241,597	$	199,789


(b)	The following table sets forth the reconciliation of Adjusted EBITDA to income from continuing operations in our statement of operations (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015		2014
Adjusted EBITDA	$	227,573		$	214,548		$	471,159	$	425,811
Less adjustments:
Depreciation and amortization of property and equipment ^(1a)	46,244			40,661			107,907		81,110
Amortization of capitalized implementation costs ^(1b)	7,902			8,890			15,426		17,987
Acquisition-related amortization ^(1c)	23,211			21,953			44,886		54,842
Amortization of upfront incentive consideration ⁽²⁾	10,878			11,742			22,050		22,789
Interest expense, net	42,609			53,235			89,062		117,179
Loss on extinguishment of debt	33,235			30,558			33,235		33,538
Other, net ⁽³⁾	(197		)	(391		)	4,248		1,963
Restructuring and other costs ⁽⁴⁾	—			2,128			—		3,684
Acquisition-related costs ⁽⁵⁾	2,053			—			3,864		—
Litigation costs ⁽⁶⁾	2,043			2,572			5,479		7,118
Stock-based compensation	7,330			4,885			16,124		8,484
Management fees ⁽⁷⁾	—			21,576			—		23,508
Provision for income taxes	19,676			10,284			46,959		25,195
Income from continuing operations	$	32,589		$	6,455		$	81,919	$	28,414

______________


(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)	Other, net primarily represents 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 (see Note 12, Subsequent Events).


(6)	Litigation costs represent charges or settlements associated with airline antitrust litigation (see Note 10, Contingencies).

(7)

We paid an annual management fee, pursuant to a Management Services Agreement (“MSA”), to TPG Global, LLC (“TPG”) and Silver Lake Management Company (“Silver Lake”) in an amount between (i) $5 million and (ii) $7 million, the actual amount of which is calculated based upon 1% of Adjusted EBITDA, earned by the company in such fiscal year up to a maximum of $7 million. In addition, we paid a $21 million fee, in the aggregate, to TPG and Silver Lake at the closing of our initial public offering in April of 2014. The MSA was terminated thereafter.


(c)	Includes capital expenditures and capitalized implementation costs as summarized below (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Additions to property and equipment	$	66,051	$	56,812	$	127,963	$	106,470
Capitalized implementation costs	15,234		9,944		29,561		17,597
Adjusted Capital Expenditures	$	81,285	$	66,756	$	157,524	$	124,067