FORT WORTH, Texas - Sabre (NYSE: TSG) today reported that its third quarter net earnings, excluding special items described below, increased 13.8 percent to $72 million, or $0.55 per share on a diluted basis, compared to net earnings of $63 million, or $0.48 per share on a diluted basis, in the same period last year. Operating income, excluding the special items, was $110 million for the quarter, an increase of 10.5 percent, compared to $99 million for the same period in 1998.
Revenues for the third quarter were $617 million, an increase of 2.1 percent over revenues for the third quarter of 1998. Revenues from the electronic travel distribution business grew 10.8 percent over third quarter 1998, while revenues from the information technology solutions business declined 9.0 percent.
"We are pleased with our third quarter financial results, particularly the growth in net earnings and the improvement in operating margins," said Jeffery M. Jackson, executive vice president and chief financial officer. "Revenue growth within the travel distribution business remains very strong. As anticipated, revenues from the information technology solutions business were down mainly due to the move of the US Airways, Inc. outsourcing contract into steady state operation as well as lower revenue in the software sales and development business. The cost cutting initiatives that were implemented in the quarter will help us align our expenses with revenue growth."
Financial results for the third quarter include certain one-time severance charges of $8.0 million, or $5.0 million net of tax, related to the reduction in force of approximately 330 employees at the end of August. In addition, the company recorded a credit to earnings of $18.9 million, or $11.7 million net of tax, related to the accounting treatment of six million options issued to US Airways, Inc. as part of the long-term technology agreement signed in 1997.
Including these special items, net earnings were $78 million, or $0.55 per share on a diluted basis, for the third quarter 1999, an increase of 9.8 percent compared to net earnings of $71 million in the third quarter 1998. Operating income was $121 million for the quarter, an increase of 22.5 percent, compared to $98 million for the same period in 1998.
Total worldwide travel bookings processed through the Sabre computer reservations system, which includes direct bookings and joint venture bookings, were 113 million for the quarter, an increase of 6.2 percent over the same period last year.
Direct worldwide reservations booked through the Sabre system were 94 million during the third quarter - an increase of 3.0 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 2.4 percent for the quarter, while direct international bookings grew 4.5 percent.
The company recently announced a proposed merger of its Travelocity.com business with Preview Travel, Inc. to form a new company, Travelocity.com. The transaction is expected to close in the first quarter 2000. The proposed merger is subject to regulatory approval, customary closing conditions and requires approval of Preview Travel, Inc.'s stockholders.
The value of travel sales booked through Travelocity.com reached a record $226 million in the third quarter, a 173.1 percent increase over the third quarter of 1998 and a 30.7 percent increase over the second quarter in the current year.
"The Sabre business model is a strong one, and Sabre is in a unique position to provide value-added services through the traditional travel distribution business as well as through new avenues such as Travelocity.com. Sabre continues to make significant progress in advancing both its electronic travel distribution and its information technology solutions businesses," said Donald J. Carty, chairman and interim chief executive officer of Sabre. "Our key objectives at the present time are to continue to build on that progress and to fill the CEO position with an individual who has the business acumen that will complement the excellent management team in place at Sabre. We feel confident that we will have someone named in the near future. We believe that these steps will position Sabre for continued long term growth."
Total Sabre revenues for the nine months ended September 30, 1999 were $1.9 billion, an increase of 9.2 percent over the same period last year. Net earnings for this same period, excluding special items, rose 8.5 percent to $222 million, or $1.70 per share on a diluted basis, compared to net earnings of $205 million, $1.57 per share on a diluted basis, in the same period last year. Operating income, before special items, grew 5.3 percent to $342 million for the nine months ended September 30, 1999, compared to $325 million for the same period in 1998.
Including special items, net earnings for the nine months ended September 30, 1999, were $235 million, an increase of 10.8 percent compared to the same period in 1998. Operating income was $329 million for the same period, compared to $322 million for the same period in 1998, an increase of 2.0 percent.
Sabre is the global leader in applying information technology to meet the needs of the travel and transportation industries with advanced and innovative technology skills to deliver progressive solutions. Headquartered in Dallas/Fort Worth, Texas, the company has more than 10,000 employees worldwide who span 45 countries. Sabre reported 1998 revenues of $2.3 billion, up 29 percent from 1997. Net earnings were $232 million, up 16 percent from the prior year. More information on Sabre is a