The SABRE Group Reports Second Quarter Results
FORT WORTH, Texas - The SABRE Group (NYSE: TSG) today announced record breaking revenue and earnings for the second quarter ended June 30, 1998. The company generated revenue of $577 million in the quarter, an increase of 28.4 percent over second quarter 1997 revenue. Net earnings for the period grew 17.1 percent to $69 million, or $0.52 per share on a diluted basis, compared to net earnings of $59 million, or $0.45 per share on a diluted basis, in the same period last year. Operating income grew 15.4 percent to $109 million for the quarter, compared to $95 million during the same period in 1997.
"Our second quarter revenue growth was very strong due primarily to the US Airways outsourcing contract, the Year 2000 compliance project for American Airlines, growth in international airline bookings, and a booking fee price increase implemented in February 1998," said Michael J. Durham, president and chief executive officer of The SABRE Group. "We are especially pleased with our year-over-year earnings growth, which is somewhat higher than we had anticipated."
The SABRE Group also stated that Year 2000 spending for the roll-out of its travel agency software was about $5 million less than originally estimated for the second quarter, however costs will increase during the latter half of the year. The company continues to estimate total Year 2000 spending at $55 million to $60 million in 1998.
"We have been working on our Year 2000 project since 1995 and are almost fully complete with work on systems for both American Airlines and Canadian Airlines, our host computer reservation system and our travel agency applications," Durham said. "During the second half of the year, we will escalate the deployment of our Year 2000-compliant software at travel agency locations."
Direct worldwide reservations booked through the SABRE system were 91.3 million during the second quarter -- a decline of 2.4 percent over the same period last year. This decline was due primarily to the introduction of a new non-billable booking code for certain types of airline bookings and the transfer of bookings in the Asia region to ABACUS International, the company's new joint venture. Excluding the bookings made in the Asia/Pacific region from second quarter 1997, results yield year-over-year direct bookings growth of 2.1 percent.
Direct bookings within the United States showed a slight decline of 0.7 percent for the quarter, primarily as a result of the non-billable booking code. Direct international bookings, excluding Asia/Pacific, were strong and grew 10.2 percent for the quarter. Total worldwide bookings processed through the SABRE system were 106.4 million, which includes direct and joint venture bookings -- an increase of 10.2 percent over the same period last year.
Revenue for the first six months of 1998 was $1.1 billion, an increase of 27.2 percent over the same period last year. Net earnings for that period rose 12.1 percent to $140 million, or $1.07 per share on a diluted basis, compared to net earnings of $125 million, $0.96 per share on a diluted basis, in the same period last year. Operating income grew 10.1 percent to $224 million for the six months ended June 30, compared to $203 million for the same period in 1997.
"Our year-to-date results demonstrate The SABRE Group's potential for strong revenue growth," Durham added. "Our earnings growth is quite satisfactory, particularly in light of the significant costs associated with our complex Year 2000 project and the investments we continue to make in new distribution channels and in our outsourcing business. As we seek to grow the company, we will continue our efforts to reduce all costs that will not negatively impact our long term growth."
The SABRE Group is a world leader in the electronic distribution of travel and travel-related services around the globe, and is a leading provider of information technology solutions for the travel and transportation industry, including customized software development and software products, transaction processing, consulting and total IT 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 The SABRE Group 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 and its affiliates; competition and technological innovation by competitors; risks related to the Company's technology, such as a failure to timely achieve Year 2000 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 . The SABRE Group 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.
SABRE is a registered service mark, and the SABRE Group logo is a service mark of an affiliate of The SABRE Group Inc. 1998 The SABRE Group Inc. All rights reserved.