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v3.19.3

Segment Information (Tables) | 9 Months Ended
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Sep. 30, 2019
Segment Reporting [Abstract] |
Summary of Segment Information | Segment information for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Revenue |  |  |  |  |  |  |  |  |  |  |
Travel Network | $ | 711,003 |  |  | $ | 700,196 |  |  | $ | 2,209,603 |  |  | $ | 2,141,017 |
Airline Solutions | 208,028 |  |  | 209,388 |  |  | 632,788 |  |  | 620,813 |
Hospitality Solutions | 74,818 |  |  | 69,911 |  |  | 221,525 |  |  | 206,353 |
Eliminations | (9,650 | ) |  | (9,212 | ) |  | (30,350 | ) |  | (25,155 | )
Total revenue | $ | 984,199 |  |  | $ | 970,283 |  |  | $ | 3,033,566 |  |  | $ | 2,943,028 |
Adjusted Gross Profit (Loss) (a) |  |  |  |  |  |  |  |  |  |  |
Travel Network | $ | 248,999 |  |  | $ | 268,604 |  |  | $ | 783,972 |  |  | $ | 842,359 |
Airline Solutions | 83,203 |  |  | 90,428 |  |  | 247,135 |  |  | 264,450 |
Hospitality Solutions | 17,151 |  |  | 23,069 |  |  | 49,628 |  |  | 61,965 |
Corporate | (2,935 | ) |  | (4,315 | ) |  | (10,789 | ) |  | (12,732 | )
Total | $ | 346,418 |  |  | $ | 377,786 |  |  | $ | 1,069,946 |  |  | $ | 1,156,042 |
Adjusted Operating Income (Loss) (b) |  |  |  |  |  |  |
Travel Network | $ | 158,938 |  |  | $ | 182,533 |  |  | $ | 511,907 |  |  | $ | 590,380 |
Airline Solutions | 24,644 |  |  | 28,505 |  |  | 62,728 |  |  | 82,030 |
Hospitality Solutions | (4,008 | ) |  | 5,826 |  |  | (15,471 | ) |  | 9,927 |
Corporate | (46,500 | ) |  | (42,891 | ) |  | (143,375 | ) |  | (138,782 | )
Total | $ | 133,074 |  |  | $ | 173,973 |  |  | $ | 415,789 |  |  | $ | 543,555 |
Adjusted EBITDA(c) |  |  |  |  |  |  |  |  |  |  |
Travel Network | $ | 210,306 |  |  | $ | 229,983 |  |  | $ | 663,525 |  |  | $ | 735,669 |
Airline Solutions | 66,945 |  |  | 74,094 |  |  | 191,284 |  |  | 217,629 |
Hospitality Solutions | 9,618 |  |  | 16,116 |  |  | 24,497 |  |  | 38,830 |
Total segments | 286,869 |  |  | 320,193 |  |  | 879,306 |  |  | 992,128 |
Corporate | (45,305 | ) |  | (41,688 | ) |  | (139,758 | ) |  | (135,283 | )
Total | $ | 241,564 |  |  | $ | 278,505 |  |  | $ | 739,548 |  |  | $ | 856,845 |
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  |
Travel Network | $ | 30,517 |  |  | $ | 29,243 |  |  | $ | 91,793 |  |  | $ | 87,965 |
Airline Solutions | 42,301 |  |  | 45,589 |  |  | 128,556 |  |  | 135,599 |
Hospitality Solutions | 13,626 |  |  | 10,290 |  |  | 39,968 |  |  | 28,903 |
Total segments | 86,444 |  |  | 85,122 |  |  | 260,317 |  |  | 252,467 |
Corporate | 17,171 |  |  | 17,610 |  |  | 51,588 |  |  | 55,084 |
Total | $ | 103,615 |  |  | $ | 102,732 |  |  | $ | 311,905 |  |  | $ | 307,551 |
Capital Expenditures |  |  |  |  |  |  |  |  |  |  |
Travel Network | $ | 3,215 |  |  | $ | 16,963 |  |  | $ | 13,078 |  |  | $ | 45,002 |
Airline Solutions | 7,919 |  |  | 25,315 |  |  | 31,505 |  |  | 72,485 |
Hospitality Solutions | 2,275 |  |  | 9,291 |  |  | 7,669 |  |  | 27,629 |
Total segments | 13,409 |  |  | 51,569 |  |  | 52,252 |  |  | 145,116 |
Corporate | 11,519 |  |  | 22,209 |  |  | 39,872 |  |  | 60,548 |
Total | $ | 24,928 |  |  | $ | 73,778 |  |  | $ | 92,124 |  |  | $ | 205,664 |
______________________________
(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,
| 2019 |  | 2018 |  | 2019 |  | 2018
Adjusted Gross Profit | $ | 346,418 |  |  | $ | 377,786 |  |  | $ | 1,069,946 |  |  | $ | 1,156,042 |
Less adjustments: |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative | 119,918 |  |  | 130,152 |  |  | 426,014 |  |  | 384,047 |
Cost of revenue adjustments: |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization(1) | 85,262 |  |  | 85,552 |  |  | 256,775 |  |  | 254,490 |
Amortization of upfront incentive consideration(2) | 20,851 |  |  | 18,207 |  |  | 59,825 |  |  | 57,324 |
Stock-based compensation | 6,927 |  |  | 7,112 |  |  | 21,552 |  |  | 19,184 |
Operating income | $ | 113,460 |  |  | $ | 136,763 |  |  | $ | 305,780 |  |  | $ | 440,997 |
(b) | The following table sets forth the reconciliation of Adjusted Operating Income to operating income in our statement of operations (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Adjusted Operating Income | $ | 133,074 |  |  | $ | 173,973 |  |  | $ | 415,789 |  |  | $ | 543,555 |
Less adjustments: |  |  |  |  |  |  |  |  |  |  |
Joint venture equity income | 1,027 |  |  | 333 |  |  | 1,973 |  |  | 2,455 |
Acquisition-related amortization(1c) | 15,976 |  |  | 16,407 |  |  | 47,971 |  |  | 51,585 |
Acquisition-related costs(5) | 9,696 |  |  | — |  |  | 30,337 |  |  | — |
Litigation costs, net(4) | (24,179 | ) |  | 5,225 |  |  | (21,355 | ) |  | 7,073 |
Stock-based compensation | 17,094 |  |  | 15,245 |  |  | 51,083 |  |  | 41,445 |
Operating income | $ | 113,460 |  |  | $ | 136,763 |  |  | $ | 305,780 |  |  | $ | 440,997 |
(c) | 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,
| 2019 |  | 2018 |  | 2019 |  | 2018
Adjusted EBITDA | $ | 241,564 |  |  | $ | 278,505 |  |  | $ | 739,548 |  |  | $ | 856,845 |
Less adjustments: |  |  |  |  |  |  |
Depreciation and amortization of property and equipment(1a) | 78,060 |  |  | 76,226 |  |  | 232,617 |  |  | 225,649 |
Amortization of capitalized implementation costs(1b) | 9,579 |  |  | 10,099 |  |  | 31,317 |  |  | 30,317 |
Acquisition-related amortization(1c) | 15,976 |  |  | 16,407 |  |  | 47,971 |  |  | 51,585 |
Amortization of upfront incentive consideration(2) | 20,851 |  |  | 18,207 |  |  | 59,825 |  |  | 57,324 |
Interest expense, net | 39,743 |  |  | 39,291 |  |  | 117,364 |  |  | 116,809 |
Loss on extinguishment of debt | — |  |  | — |  |  | — |  |  | 633 |
Other, net(3) | 1,769 |  |  | 1,905 |  |  | 6,118 |  |  | 10,746 |
Acquisition-related costs (5) | 9,696 |  |  | — |  |  | 30,337 |  |  | — |
Litigation costs, net(4) | (24,179 | ) |  | 5,225 |  |  | (21,355 | ) |  | 7,073 |
Stock-based compensation | 17,094 |  |  | 15,245 |  |  | 51,083 |  |  | 41,445 |
Provision for income taxes | 7,795 |  |  | 25,021 |  |  | 31,783 |  |  | 61,371 |
Income from continuing operations | $ | 65,180 |  |  | $ | 70,879 |  |  | $ | 152,488 |  |  | $ | 253,893 |
______________________________________________________
(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, as well as amortization of contract acquisition costs.
c. | Acquisition-related amortization represents amortization of intangible assets resulting from purchase accounting.
(2) | 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 years to ten 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) | Other, net primarily 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) | Litigation costs, net represent charges associated with antitrust litigation and for the three months ended September 30, 2019 include the reversal of our previously accrued loss related to the US Airways legal matter for $32 million. See Note 10. Contingencies, to our consolidated financial statements.
(5) Acquisition-related costs represent fees and expenses incurred associated with the 2018 agreement to acquire Farelogix.

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