What changed in this filing

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Item 1. Financial Statements

2020-08-10 compared with 2020-05-08 · 280 added, 162 removed, 724 unchanged (38% of the section changed)

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(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Revenue $ 83,044 $ 1,000,006 $ 742,021 $ 2,049,367

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(Loss) Income from continuing operations ( 443,530 ) 28,094 ( 653,301 ) 87,308

Loss from discontinued operations, net of tax ( 2,126 ) ( 1,452 )

(Loss) income from discontinued operations, net of tax ( 672 ) 1,350 ( 2,798 ) ( 102 )

Net (loss) income ( 444,202 ) 29,444 ( 656,099 ) 87,206

Net income attributable to noncontrolling interests 783 912

Net (loss) income attributable to noncontrolling interests ( 71 ) 1,606 712 2,518

Net (loss) income attributable to common stockholders $ ( 444,131 ) $ 27,838 $ ( 656,811 ) $ 84,688

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(Loss) income from continuing operations $ ( 1.61 ) $ 0.10 $ ( 2.38 ) $ 0.31

Loss from discontinued operations ( 0.01 ) ( 0.01 )

(Loss) income from discontinued operations — — ( 0.01 ) —

Net (loss) income per common share $ ( 1.61 ) $ 0.10 $ ( 2.39 ) $ 0.31

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(Loss) income from continuing operations $ ( 1.61 ) $ 0.10 $ ( 2.38 ) $ 0.31

Loss from discontinued operations ( 0.01 ) ( 0.01 )

(Loss) income from discontinued operations — — ( 0.01 ) —

Net (loss) income per common share $ ( 1.61 ) $ 0.10 $ ( 2.39 ) $ 0.31

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(In thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net (loss) income $ ( 444,202 ) $ 29,444 $ ( 656,099 ) $ 87,206

Other comprehensive loss, net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments ("CTA") 2,087 1,206 293 ( 1,088 )

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Amortization of actuarial losses, net of taxes of $( 561 ), $( 353 ), $( 926 ), and $( 706 )

1,942 1,222 3,206 2,444

Net change in retirement-related benefit plans, net of tax 1,664 944 6,791 1,888

Unrealized losses, net of taxes of $ 6,447 and $ 1,596

Unrealized gains (losses), net of taxes of $( 262 ), $ 2,647 , $ 6,185 , and $ 4,243

1,012 ( 9,174 ) ( 22,806 ) ( 14,583 )

Reclassification adjustment for realized gains, net of taxes of $( 1,787 ), $( 86 ), $( 2,302 ), and $( 641 )

6,559 307 8,394 2,510

Net change in derivatives, net of tax 7,571 ( 8,867 ) ( 14,412 ) ( 12,073 )

Share of other comprehensive (loss) income of equity method investments ( 653 ) 28

Other comprehensive loss ( 19,303 ) ( 4,528 )

Share of other comprehensive loss of equity method investments ( 145 ) ( 447 ) ( 798 ) ( 419 )

Other comprehensive income (loss) 11,177 ( 7,164 ) ( 8,126 ) ( 11,692 )

Comprehensive (loss) income ( 433,025 ) 22,280 ( 664,225 ) 75,514

Comprehensive loss attributable to noncontrolling interests ( 783 ) ( 912 )

Comprehensive loss (income) attributable to noncontrolling interests 71 ( 1,606 ) ( 712 ) ( 2,518 )

Comprehensive (loss) income attributable to Sabre Corporation $ ( 432,954 ) $ 20,674 $ ( 664,937 ) $ 72,996

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(In thousands)

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Current assets

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1,000,000 authorized shares;

296,543 and 294,319 shares issued, 275,314 and 273,733 shares outstanding at March 31, 2020 and December 31, 2019, respectively

297,131 and 294,319 shares issued, 275,872 and 273,733 shares outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital 2,411,716 2,317,544

Treasury Stock, at cost, 21,229 and 20,587 shares at March 31, 2020 and December 31, 2019, respectively

Treasury Stock, at cost, 21,259 and 20,587 shares at June 30, 2020 and December 31, 2019, respectively

( 474,105 ) ( 468,618 )

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(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

Net (loss) income $ ( 656,099 ) $ 87,206

Adjustments to reconcile net (loss) income to cash provided by operating activities:

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

Depreciation and amortization 189,815 208,290

Deferred income taxes ( 41,732 ) ( 13,932 )

Allowance for credit losses 47,727 13,613

Acquisition termination fee 24,811 —

Deferred income taxes ( 45,793 ) ( 14,140 )

Amortization of upfront incentive consideration 37,289 38,974

Stock-based compensation expense 26,339 33,989

Other ( 4,196 ) ( 1,189 )

Acquisition termination fee 24,811 —

Amortization of debt discount and debt issuance costs 6,445 1,986

Loss from discontinued operations 2,798 102

Dividends received from equity method investments 1,652 1,164

Amortization of debt issuance costs 993 993

Equity method loss (income) 1,185 ( 946 )

Other 1,223 ( 803 )

Changes in operating assets and liabilities:

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Deferred revenue including upfront solution fees 21,029 14,934

Cash provided by operating activities 40,431 152,000

Cash (used in) provided by operating activities ( 395,036 ) 257,661

Investing Activities

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Payments on borrowings from lenders ( 37,905 ) ( 23,655 )

Payments of debt issuance costs ( 29,473 ) —

Net payments on the settlement of equity-based awards ( 5,241 ) ( 7,002 )

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Balance at March 31, 2020 296,543,470 $ 2,965 $ 2,335,171 21,228,917 $ ( 473,890 ) $ ( 1,022,297 ) $ ( 168,609 ) $ 9,371 $ 682,711

Comprehensive loss — — — — — ( 444,131 ) 11,177 ( 71 ) ( 433,025 )

Settlement of stock-based awards 587,232 6 168 29,664 ( 215 ) — — — ( 41 )

Stock-based compensation expense — — 8,762 — — — — — 8,762

Equity component of convertible note issuance, net — — 67,615 — — — — — 67,615

Balance at June 30, 2020 297,130,702 $ 2,971 $ 2,411,716 21,258,581 $ ( 474,105 ) $ ( 1,466,428 ) $ ( 157,432 ) $ 9,300 $ 326,022

(1) A quarterly cash dividend of $ 0.14 per share on our common stock.

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Balance at March 31, 2019 293,909,061 $ 2,939 $ 2,262,424 18,280,416 $ ( 420,301 ) $ ( 750,310 ) $ ( 137,252 ) $ 8,099 $ 965,599

Comprehensive income — — — — — 27,838 ( 7,164 ) 1,606 22,280

Common stock dividends (1)

— — — — — ( 38,281 ) — — ( 38,281 )

Repurchase of common stock — — — 2,182,247 ( 45,490 ) — — — ( 45,490 )

Settlement of stock-based awards 250,503 3 1,276 65,149 ( 1,441 ) — — — ( 162 )

Stock-based compensation expense — — 18,295 — — — — — 18,295

Dividends paid to non-controlling interest on subsidiary common stock

— — — — — — — ( 2,553 ) ( 2,553 )

Balance at June 30, 2019 294,159,564 $ 2,942 $ 2,281,995 20,527,812 $ ( 467,232 ) $ ( 760,753 ) $ ( 144,416 ) $ 7,152 $ 919,688

(1) A quarterly cash dividend of $ 0.14 per share on our common stock.

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Recent Events— The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus ("COVID-19") in January 2020, as well as by government directives that have been enacted to slow the spread of the virus.

As expected, this pandemic has had a material impact to our consolidated financial results in the first quarter of 2020, resulting in a material decrease in transaction-based revenue across all three of our business units.

As expected, this pandemic continued to have a material impact to our consolidated financial results in the second quarter of 2020, resulting in a material decrease in transaction-based revenue across all three of our business units compared to the prior year.

Lower Travel Network volumes resulted in a material decline in incentive consideration costs, as expected.

The reduction in revenues as the result of COVID-19 has significantly adversely affected our liquidity.

We are responding with measures to increase our cash position, including the suspension of dividends and share repurchases under the Share Repurchase Program, borrowing under our existing revolving credit facility of $ 375 million, and the completion of debt offerings totaling $ 1,120 million.

Subsequent Events for further information on these debt offerings.

We have responded with measures to increase our cash position, including our previously disclosed suspension of dividends and share repurchases under the Share Repurchase Program, borrowing under our existing revolving credit facility, and the completion of debt offerings.

Debt for further information.

We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months;

however, given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary.

Additionally, we have identified and are in the process of removing costs from the business in 2020.

In connection with these cost savings measures, we recorded a $ 25 million charge associated with the announced action to reduce our workforce in the first quarter of 2020.

Additionally, the COVID-19 pandemic has caused major shifts in the travel ecosystem resulting in the changing needs of our airline, hotel and agency customers.

As a result, we decided in the second quarter of 2020 to accelerate the organizational changes we began in 2018 to address the changing travel landscape through a strategic realignment of our airline and agency-focused businesses to respond to the impacts of the COVID-19 pandemic on our business and cost structure.

During the third quarter of 2020, we will substantially complete our implementation of these initiatives and other measures to support the new organizational structure.

In connection with these measures, we recorded a $ 48 million charge associated with these restructuring activities in the second quarter of 2020.

During the six months ended June 30, 2020, we recorded a charge of $ 73 million in connection with these restructuring activities.

Restructuring Activities for further details on the costs incurred related to restructuring activities.

Subsequent Events for further information on the organizational impact this restructuring will have on our business beginning in the third quarter.

The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.

Cancellations of airline travel reservations prior to the day of departure are estimated based on the historical level of cancellation rates, adjusted to take into account any recent factors which could cause a change in those rates.

In the first quarter of 2020, the airline industry experienced a significantly higher number of airline travel reservation cancellations as a result of COVID-19 than expected as of December 31, 2019.

As a result, our cancellation reserve as of March 31, 2020 was adjusted for the significant effect that COVID-19 has had on the travel industry and the resulting volume of airline travel cancellations.

Given the unprecedented amount of air booking cancellations in the first quarter of 2020, we expect additional variability in the amount of our cancellation reserve in future periods as estimates of cancellations may differ from historical experience.

Our air booking cancellation reserve totaled $ 44 million at March 31, 2020.

Revenue from Contracts with Customers.

Additionally, our bad debt expense for the three months ended March 31, 2020 was $ 36 million, primarily related to fully reserving for balances related to certain customers, an increase in our forecasted credit losses due to the impact of the COVID-19 pandemic on the global economy and other general increases in bad debt from aging balances as applied under the newly adopted credit loss standard.

In the first and second quarters of 2020, the airline industry experienced a significantly higher number of airline travel reservation cancellations as a result of COVID-19 than expected as of December 31, 2019 and March 31, 2020.

As a result, our cancellation reserve as of June 30, 2020 was further adjusted for the significant effect that COVID-19 has had on the travel industry and the resulting volume of airline travel cancellations.

Given the unprecedented amount of air booking cancellations in the first half of 2020, we expect variability in the amount of our cancellation reserve in future periods as estimates of cancellations may differ from historical and recent experience.

Our air booking cancellation reserve totaled $ 60 million at June 30, 2020.

Revenue from Contracts with Customers for further information regarding the impact of cancellations on revenue during the second quarter.

Additionally, our provision for expected credit losses for the six months ended June 30, 2020 was $ 48 million, primarily related to fully reserving for aged balances related to certain customers, bankruptcy-related reserves, an increase in our forecasted credit losses due to the impact of the COVID-19 pandemic on the global economy and other general increases in bad debt from aging balances as applied under the newly adopted credit loss standard.

Credit Losses.

Given the uncertainties surrounding the duration and effects of COVID-19 on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used in our estimates will be accurate.

We reviewed our goodwill and other long-lived assets including intangible assets, and did not identify any material impairments.

Fair Value Measurements for further information about our interim goodwill quantitative assessment.

As we cannot predict the duration or scope of the COVID-19 pandemic, future impairments may occur and the negative financial impact to our consolidated financial statements and results of operations cannot be reasonably estimated but could be material.

We reviewed our goodwill and other long-lived assets including intangible assets as of June 30, 2020, and did not identify any material impairments.

Fair Value Measurements for further information about our interim goodwill assessment.

As we cannot predict the duration or scope of the COVID-19 pandemic, future impairments may occur and the negative financial impact to our consolidated financial statements and results of operations of potential future impairments cannot be reasonably estimated but could be material.

Basis of Presentation— The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information.

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In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated.

Operating results for the three months ended March 31, 2020 are not necessarily indicative of results that may be expected for any other interim period or for

the year ending December 31, 2020.

Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2020.

The accompanying interim financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 26, 2020 .

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Repurchases under the Share Repurchase Program may take place in the open market or privately negotiated transactions.

For the three months ended March 31, 2020, we did no t repurchase any shares pursuant to the Share Repurchase Program.

For the six months ended June 30, 2020, we did no t repurchase any shares pursuant to the Share Repurchase Program.

On March 16, 2020, we announced the suspension of share repurchases under the Share Repurchase Program in conjunction with certain cash management measures we are undertaking as a result of the market conditions caused by COVID-19.

Approximately $ 287 million remains authorized for repurchases under the Share Repurchase Program as of March 31, 2020.

Approximately $ 287 million remains authorized for repurchases under the Share Repurchase Program as of June 30, 2020.

Adoption of New Accounting Standards

In March 2020, the FASB issued updated guidance which provides optional expedients and exceptions for applying U.S.

In March 2020, the Financial Accounting Standards Board ("FASB") issued updated guidance which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued, if certain criteria are met.

The updated standard is effective for all entities upon issuance and we will apply the amendments prospectively through December 31, 2022.

There was no impact to our consolidated financial statements for the three months ended March 31, 2020 as a result of adopting this standard.

There was no impact to our consolidated financial statements for the three and six months ended June 30, 2020 as a result of adopting this standard.

Our current hedging contracts do not extend past December 31, 2021.

In October 2018, the Financial Accounting Standards Board ("FASB") issued updated guidance that eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest and instead requires entities to consider these indirect interests on a proportional basis.

In October 2018, the FASB issued updated guidance that eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest and instead requires entities to consider these indirect interests on a proportional basis.

We adopted this standard in the first quarter of 2020, which did not have a material impact on our consolidated financial statements.

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The standard requires that capitalized implementation costs related to a hosting arrangement that is a service contract be amortized over the term of the hosting arrangement, beginning when the component of the hosting arrangement is ready for its intended use, similar to requirements in guidance on software developed for internal use.

In addition, costs incurred during the preliminary project and post-implementation phases are expensed as they are incurred.

In addition, costs incurred during the preliminary project and post-

implementation phases are expensed as they are incurred.

We adopted this standard prospectively in the first quarter of 2020, which did not have a material impact on our consolidated financial statements.

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Recent Accounting Pronouncements

In August 2020, the FASB issued updated guidance limiting the accounting models for convertible instruments, which will result in fewer embedded conversion features being separately recognized from the host contract when compared to existing guidance.

Under the updated guidance, some convertible debt instruments will be accounted for as a single liability measured at amortized cost.

Additionally, the updated guidance both enhances disclosures around convertible instruments and requires the use of the if-converted method to calculate diluted earnings per share for convertible instruments.

The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020.

We are evaluating the impact this standard will have on our consolidated financial statements.

In December 2019, the FASB issued updated guidance which simplifies the accounting for income taxes, eliminates certain exceptions within existing income tax guidance, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

We do not expect the adoption of this standard will have a material impact to our consolidated financial statements.

We do not expect the adoption of this standard to have a material impact to our consolidated financial statements.

Revenue from Contracts with Customers

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Timing differences among revenue recognition, unconditional rights to bill, and receipt of contract consideration may result in contract assets or contract liabilities.

The following table presents our assets and liabilities with customers as of March 31, 2020 and December 31, 2019 (in thousands):

Account Consolidated Balance Sheet Location March 31, 2020 December 31, 2019

The following table presents our assets and liabilities with customers as of June 30, 2020 and December 31, 2019 (in thousands):

Account Consolidated Balance Sheet Location June 30, 2020 December 31, 2019

Contract assets and customer advances and discounts (1)

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________________________________

(1) Includes contract assets of $ 6 million for March 31, 2020 and December 31, 2019.

During the three months ended March 31, 2020, we recognized revenue of approximately $ 16 million from contract liabilities that existed as of January 1, 2020.

(1) Includes contract assets of $ 5 million and $ 6 million for June 30, 2020 and December 31, 2019, respectively.

During the six months ended June 30, 2020, we recognized revenue of approximately $ 17 million from contract liabilities that existed as of January 1, 2020.

Our long-term trade unbilled receivables, net relate to license fees billed ratably over the contractual period and recognized when the customer gains control of the software.

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The following table presents our revenues disaggregated by business (in thousands):

Three Months Ended March 31

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Air $ ( 69,732 ) $ 584,424 $ 245,585 $ 1,224,902

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Transaction revenue for airline travel reservations is recognized by Travel Network at the time of booking of the reservation, net of estimated future cancellations.

Cancellations of airline travel reservations prior to the day of departure were estimated based on the historical level of cancellation rates, adjusted to take into account the significant effect that COVID-19 has had on the travel industry and the resulting volume of airline travel cancellations.

Revenue for the second quarter was negatively impacted by approximately $ 100 million resulting from increased cancellation activity beyond what was initially estimated.

Our cancellation reserve is highly sensitive to our estimate of bookings that we expect will eventually travel, as well as to the mix of those bookings between domestic and international, given the varying rates paid by airline suppliers.

To address this change in estimate, we further increased our reserve for future cancellations to $ 60 million as of June 30, 2020 to account for the significant effect that COVID-19 has had on the travel industry and the resulting volume of airline travel cancellations and the impacts on the booking fee rate for higher international cancellations and lower international new bookings than previously experienced.

We may occasionally recognize revenue in the current period for performance obligations partially or fully satisfied in the previous periods resulting from changes in estimates for the transaction price, including any changes to our assessment of whether an estimate of variable consideration is constrained.

For the three months ended March 31, 2020, the impact on

revenue recognized in the current period, from performance obligations partially or fully satisfied in the previous period, is immaterial.

For the six months ended June 30, 2020, the impact on revenue recognized in the current period, from performance obligations partially or fully satisfied in the previous period, is immaterial.

We recognize revenue under long-term contracts that primarily includes variable consideration based on transactions processed.

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On April 7, 2020, the trial court ruled in favor of Sabre, denying the DOJ's request for an injunction.

On April 8, 2020 the DOJ filed a notice of appeal.

On April 9, 2020, the U.K.

Competition and Markets Authority ("CMA") blocked the acquisition following its Phase 2 investigation.

We intend to appeal the CMA's decision to the U.K.

Competition Appeal Tribunal.

Under the acquisition agreement, as amended, we agreed to advance certain attorneys’ fees incurred by Farelogix in responding to certain governmental reviews of the acquisition and in defending against certain antitrust proceedings, which totaled $ 25 million as of March 31, 2020.

Given the CMA's decision, we recorded a charge of $ 46 million during the three months ended March 31, 2020 included in other, net in our consolidated statements of operations which is comprised of the $ 25 million in advances mentioned above and additional termination fees of $ 21 million.

Sabre and Farelogix agreed to terminate the acquisition agreement on May 1, 2020 and we have paid Farelogix aggregate termination fees of $ 21 million in the second quarter of 2020 pursuant to the acquisition agreement.

Given the CMA's decision, we recorded a charge of $ 46 million during the three months ended March 31, 2020 included in other, net in our consolidated statements of operations which is comprised of $ 25 million in advances for certain attorneys' fees and additional termination fees of $ 21 million.

Sabre and Farelogix agreed to terminate the acquisition agreement on May 1, 2020 and we paid Farelogix aggregate termination fees of $ 21 million in the second quarter of 2020 pursuant to the acquisition agreement.

In October 2019, we completed the acquisition of Radixx, a provider of retailing and customer service solutions to airlines in the low-cost carrier ("LCC") market, for $ 107 million, net of cash acquired and funded by cash on hand.

Radixx is managed as a part of our Airline Solutions segment.

The accounting related to intangible assets and the associated deferred taxes remains subject to finalization due to ongoing analysis as of March 31, 2020.

Our effective tax rates for the three months ended March 31, 2020 and 2019 were 11 % and 17 %, respectively.

The decrease in the effective tax rate for the three months ended March 31, 2020 as compared to the same period in 2019 was primarily due to tax losses related to the impact of COVID-19 on our results of operations, and various discrete items recorded in each of the respective three month periods including a decrease in the India withholding tax rate resulting from legislation enacted on March 27, 2020.

The decrease in the India withholding tax rate resulted in a $ 4 million income tax benefit, which includes the impact for the three-month period ended March 31, 2020 and the application of the newly enacted rates to existing deferred balances.

The accounting related to intangible assets and the associated deferred taxes remains subject to finalization due to ongoing analysis as of June 30, 2020.

Restructuring Activities

Given the market conditions as the result of COVID-19, we have responded with cost savings measures, including a plan to reduce our workforce through involuntary and voluntary severance and voluntary early retirement programs.

The COVID-19 pandemic has caused major shifts in the travel ecosystem resulting in the changing needs of our airline, hotel and agency customers.

During the three months ended June 30, 2020, we incurred $ 48 million in connection with these restructuring activities, of which $ 41 million is recorded within cost of revenue and $ 7 million is recorded within selling, general and administrative costs within our consolidated statement of operations.

During the six months ended June 30, 2020, we incurred $ 73 million in connection with these restructuring activities, of which $ 57 million is recorded within cost of revenue and $ 16 million is recorded within selling, general and administrative costs within our consolidated statement of operations.

Substantially all of these costs represent future cash expenditures for the payment of severance and related benefits costs.

This strategic realignment and related actions are expected to be substantially complete in the third quarter of 2020.

We do not expect additional restructuring charges associated with these activities to be significant.

Subsequent Events for further information on the organizational changes as a result of these restructuring activities.

The following table summarizes the accrued liability, as recorded within accrued compensation and related benefits within our consolidated balance sheet, related to these restructuring activities (in thousands):

Six Months Ended June 30, 2020

Balance as of January 1, 2020 $ —

Charges 72,989

Cash Payments ( 13,448 )

Balance as of June 30, 2020 $ 59,541

Our effective tax rates for the six months ended June 30, 2020 and 2019 were 5 % and 22 %, respectively.

The decrease in the effective tax rate for the six months ended June 30, 2020 as compared to the same period in 2019 was primarily due to a valuation allowance recorded on tax losses generated in the current year related to the impact of COVID-19 on our results of operations and various discrete items recorded in each of the respective six month periods.

The difference between our effective tax rates and the U.S.

federal statutory income tax rate primarily results from our geographic mix of taxable income in various tax jurisdictions, tax permanent differences and tax credits.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment.

Management believes it is more likely than not that the results of future operations will not generate sufficient taxable income in the U.S.

and in certain foreign jurisdictions to realize the full benefits of its deferred tax assets.

On the basis of this evaluation, as of June 30, 2020, a valuation allowance of $ 94 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized.

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased.

We recognize liabilities when we believe that an uncertain tax position may not be fully sustained upon examination by the tax authorities.

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When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate.

Our net unrecognized tax benefits, excluding interest and penalties, included in our consolidated balance sheets, were $ 63 million and $ 65 million as of March 31, 2020 and December 31, 2019, respectively.

Our net unrecognized tax benefits, excluding interest and penalties, included in our consolidated balance sheets, were $ 65 million as of June 30, 2020 and December 31, 2019

Tax Receivable Agreement

Immediately prior to the closing of our initial public offering in April 2014, we entered into the Tax Receivable Agreement (the "TRA"), which provides the right to receive future payments from us to stockholders and equity award holders that were our stockholders and equity award holders, respectively, immediately prior to the closing of our initial public offering (collectively, the “Pre-IPO Existing Stockholders”).

We made payments on the TRA, including interest, of $ 72 million and $ 74 million during the three months ended March 31, 2020 and 2019, respectively.

In December 2019, we exercised our right under the terms of the TRA to accelerate our remaining payments under the TRA and make an early termination payment of $ 1 million, to the Pre-IPO Existing Shareholders, which was included in the January 2020 payment of $ 72 million described above.

stockholders and equity award holders, respectively, immediately prior to the closing of our initial public offering (collectively, the “Pre-IPO Existing Stockholders”).

As a result, no future payments are required to be made to the Pre-IPO Existing Stockholders under the TRA.

We made payments on the TRA, including interest, of $ 72 million and $ 105 million during the six months ended June 30, 2020 and 2019, respectively.

Credit Losses

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Our allowance for credit losses relates to all financial assets, primarily trade receivables due in less than one year recorded in Accounts Receivable, net on our consolidated balance sheets.

Our allowance for credit losses for the three months ended March 31, 2020 for our portfolio segment is summarized as follows (in thousands):

Three Months Ended

March 31, 2020

Our allowance for credit losses for the six months ended June 30, 2020 for our portfolio segment is summarized as follows (in thousands):

Six Months Ended June 30, 2020

Balance at December 31, 2019 $ 57,730

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Write-offs ( 13,703 )

Balance at March 31, 2020 $ 102,755

For the three months ended March 31, 2020, we made a decision to fully reserve for balances related to particular customers due to heightened uncertainty regarding collectability during the quarter.

Additionally, the impact of the COVID-19 pandemic on the global economy and other general increases in aging balances affected our current estimate of expected credit losses since year-end.

Macro-economic factors, including the economic downtown and lack of liquidity in the capital markets resulting from the COVID-19 pandemic, can have a significant effect on additions to the allowance as the pandemic may result in the restructuring or bankruptcy of certain of our customers.

Given the uncertainties surrounding the duration and effects of COVID-19, we cannot provide assurance that the assumptions used in our estimates will be accurate.

As of March 31, 2020 and December 31, 2019, our outstanding debt included in our consolidated balance sheets totaled $ 3,699 million and $ 3,343 million, respectively, which are net of debt issuance costs of $ 14 million and $ 15 million, respectively, and unamortized discounts of $ 5 million and $ 6 million, respectively.

The following table sets forth the face values of our outstanding debt as of March 31, 2020 and December 31, 2019 (in thousands):

Rate Maturity March 31, 2020 December 31, 2019

Balance at June 30, 2020 $ 102,863

Our provision for expected credit losses totaled $ 11 million and $ 48 million for the three and six months ended June 30, 2020, respectively.

For the six months ended June 30, 2020, we made a decision to fully reserve for certain aged balances related to particular customers due to heightened uncertainty regarding collectability, including uncertainty related to bankruptcy

filings by several of our customers during the second quarter of 2020.

Additionally, the impact of the COVID-19 pandemic on the global economy and other general increases in aging balances has affected our current estimate of expected credit losses since year-end.

Given the uncertainties surrounding the duration and effects of COVID-19, we cannot provide assurance that the assumptions used in our estimates will be accurate and actual write-offs may vary from our estimates.

As of June 30, 2020 and December 31, 2019, our outstanding debt included in our consolidated balance sheets totaled $ 4,686 million and $ 3,343 million, respectively, which are net of debt issuance costs of $ 38 million and $ 15 million, respectively, and unamortized discounts of $ 93 million and $ 6 million, respectively.

See "—Exchangeable Notes" below regarding the increase in unamortized discounts as of June 30, 2020.

The following table sets forth the face values of our outstanding debt as of June 30, 2020 and December 31, 2019 (in thousands):

Rate Maturity June 30, 2020 December 31, 2019

Senior secured credit facilities:

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5.25 % November 2023 500,000 500,000

9.25 % senior secured notes due 2025

9.25 % April 2025 775,000 —

4.00 % senior exchangeable notes due 2025

4.00 % April 2025 345,000 —

Finance lease obligations 2,065 5,882

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Face value of long-term debt outstanding $ 4,739,210 $ 3,282,195

On April 17, 2020, Sabre GLBL entered into two new debt agreements consisting of the following:

(1) $ 775 million aggregate principal amount of 9.250 % senior secured notes due 2025 (the “Secured Notes”) and (2) $ 345 million aggregate principal amount of 4.000 % senior exchangeable notes due 2025 (the “Exchangeable Notes” and together with the Secured Notes, the “Notes”).

Subsequent Events for further information.

We had $ 375 million outstanding under the Revolver as of June 30, 2020 and no balance outstanding as of December 31, 2019.

We had outstanding letters of credit totaling $ 12 million as of June 30, 2020 and December 31, 2019, respectively, which reduced our overall credit capacity under the Revolver.

Senior Secured Credit Facilities

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Pursuant to Credit Agreement Amendments, effective July 18, 2016, the maximum leverage ratio has been adjusted to be based on the Total Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) and we are required, at all times (no longer solely when a threshold amount of revolving loans or letters of credit were outstanding), to maintain a Total Net Leverage Ratio of less than 4.5 to 1.0 .

As of March 31, 2020, we are in compliance with all covenants under the Amended and Restated Credit Agreement.

Under the terms of the Amended and Restated Credit Agreement, our Total Net Leverage Ratio requirement may be suspended for a limited time if a “Material Travel Event Disruption” has occurred.

As defined in the Amended and Restated Credit Agreement, a “Material Travel Event Disruption” means, in any given calendar month, a decrease of 10 % or more in the number of “domestic revenue passenger enplanements” (determined by reference to the monthly “Air Traffic Statistics” published by the Bureau of Transportation Statistics) has occurred as a result of or in connection with a Travel Event (as defined in the Amended and Restated Credit Agreement) as compared to the number of “domestic revenue passenger enplanements” (determined by reference to the monthly “Air Traffic Statistics” published by the Bureau of Transportation Statistics) occurring in the corresponding month during the prior year or, if a Material Travel Event Disruption existed during such month, the most recent corresponding month in which no Material Travel Event Disruption occurred/existed.

We had $ 375 million outstanding under the Revolver as of March 31, 2020 and no balance outstanding as of December 31, 2019.

We had outstanding letters of credit totaling $ 11 million and $ 12 million as of March 31, 2020 and December 31, 2019, respectively, which reduced our overall credit capacity under the Revolver.

However, under the terms of the Amended and Restated Credit Agreement, our Total Net Leverage Ratio requirement may be suspended for a limited time if a “Material Travel Event Disruption” has occurred.

“Material Travel Event Disruption,” as defined in the Amended and Restated Credit Agreement, means a decrease of 10 % or more has occurred in any given calendar month in the number of “domestic revenue passenger enplanements” as a result of, or in connection with, a Travel Event (as defined in the Amended and Restated Credit Agreement) when compared to the number of “domestic revenue passenger enplanements” occurring in the corresponding month during the prior year, or if a Material Travel Event Disruption existed during such month, the most recent corresponding month in which no Material Travel Event Disruption occurred/existed.

The number of “domestic revenue passenger enplanements” is determined by reference to the monthly “Air Traffic Statistics,” which terms are published by the Bureau of Transportation Statistics.

We have determined that a Material Travel Event Disruption occurred in the first and second quarter of 2020.

Pursuant to the terms of the Amended and Restated Credit Agreement, the Total Net Leverage Ratio covenant has been suspended for at least the second and third quarters of 2020.

As of June 30, 2020, we are in compliance with all covenants not suspended under the terms of the Amended and Restated Credit Agreement.

Secured Notes

On April 17, 2020, Sabre GLBL entered into a new debt agreement consisting of $ 775 million aggregate principal amount of 9.250 % senior secured notes due 2025 (the “Secured Notes”).

The Secured Notes are jointly and severally, irrevocably and unconditionally guaranteed by Sabre Holdings and all of Sabre GLBL’s restricted subsidiaries that guarantee Sabre GLBL’s credit facility.

The Secured Notes bear interest at a rate of 9.250 % per annum and interest payments are due semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2020.

The Secured Notes mature on April 15, 2025.

The net proceeds received from the sale of the Secured Notes of $ 763 million, net of underwriting fees and commissions, are being used for general corporate purposes.

Exchangeable Notes

On April 17, 2020, Sabre GLBL entered into a new debt agreement consisting of $ 345 million aggregate principal amount of 4.000 % senior exchangeable notes due 2025 (the “Exchangeable Notes”).

The Exchangeable Notes are senior, unsecured obligations of Sabre GLBL, accrue interest payable semi-annually in arrears and mature on April 15, 2025, unless earlier repurchased or exchanged in accordance with specified circumstances and terms of the indenture governing the Exchangeable Notes.

Under the terms of indenture, the notes are exchangeable into common stock of Sabre Corporation (referred to as "our common stock" herein) at the following times or circumstances:

• during any calendar quarter commencing after the calendar quarter ended June 30, 2020, if the last reported sale price per share of our common stock exceeds 130 % of the exchange price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

• during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the "Measurement Period") if the trading price per $1,000 principal amount of Exchangeable Notes, as determined following a request by their holder in accordance with the procedures in the indenture, for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the exchange rate on such trading day;

• upon the occurrence of certain corporate events or distributions on our common stock, including but not limited to a “Fundamental Change” (as defined in the indenture governing the notes);

• upon the occurrence of specified corporate events;

• on or after October 15, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, April 15, 2025.

With certain exceptions, upon a Change of Control or other Fundamental Change (both as defined in the indenture governing the Exchangeable Notes), the holders of the Exchangeable Notes may require us to repurchase all or part of the principal amount of the Exchangeable Notes at a repurchase price equal to 100 % of the principal amount of the Exchangeable Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date.

As of June 30, 2020 , none of the conditions allowing holders of the Exchangeable Notes to exchange have been met.

Although not convertible as of June 30, 2020, the value of the Exchangeable Notes, if converted on June 30, 2020, exceeds the outstanding principal amount by $ 8 million for approximately 44 million underlying shares.

The Exchangeable Notes are convertible at their holder’s election into shares of our common stock based on an initial conversion rate of 126.9499 shares of common stock per $1,000 principal amount of the Exchangeable Notes, which is equivalent to an initial conversion price of approximately $ 7.88 per share.

The exchange rate is subject to anti-dilution and other adjustments.

Upon conversion, Sabre GLBL will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of common stock, at our election.

If a “Make-Whole Fundamental Change” (as defined in the Exchangeable Notes Indenture) occurs with respect to any Exchangeable Note and the exchange date for the exchange of such Exchangeable Note occurs during the related “Make-Whole Fundamental Change Exchange Period” (as defined in the Exchangeable Notes Indenture), then, subject to the provisions set forth in the Exchangeable Notes Indenture, the exchange rate applicable to such exchange will be increased by a number of shares set forth in the table contained in the Exchangeable Notes

Indenture, based on a function of the time since origination and our stock price on the date of the occurrence of such Make-Whole Fundamental Change.

The net proceeds received from the sale of the Exchangeable Notes of $ 336 million, net of underwriting fees and commissions, are being used for general corporate purposes.

We allocated the proceeds of the Exchangeable Notes between long-term debt and equity.

The allocation to the long-term debt component was based on an estimated fair value of a similar debt instrument that does not contain features permitting exchange into common stock (a Level 2 input, as defined in Note 9.

Fair Value Measurements).

We determined the fair value of the long-term debt component as the present value of contractual future cash flows.

The carrying amount of the equity component was calculated by deducting the fair value of the long-term debt component from the initial proceeds of the Exchangeable Notes.

Accordingly, at issuance, we allocated $ 255 million to long-term debt and $ 90 million to additional paid-in capital.

We recorded a net deferred tax liability of $ 20 million in connection with the debt discount and issuance costs associated with the Exchangeable Notes that is recorded in deferred income taxes on the consolidated balance sheets.

The difference between the face value of the Exchangeable Notes and the long-term debt component is accounted for as a debt discount, which is amortized, along with debt issuance costs, to interest expense over the term of the Exchangeable Notes ending April 15, 2025 using an effective interest rate of approximately 12 %.

The following table sets forth the carrying value of the Exchangeable Notes as of June 30, 2020 (in thousands):

June 30, 2020

Liability component:

Principal $ 345,000

Unamortized debt discount ( 87,622 )

Net Carrying Value (1)

Equity component:

Conversion feature $ 90,500

Equity portion of debt issuance costs ( 3,167 )

Deferred tax liability ( 19,718 )

Net Carrying Value $ 67,615

(1) Excludes net unamortized debt issuance costs of $ 9 million as of June 30, 2020.

The following table sets forth interest expense recognized related to the Exchangeable Notes for the three and six months ended June 30, 2020 (in thousands):

Three and Six Months Ended June 30,

Contractual interest expense $ 2,798

Amortization of debt discount and issuance costs $ 3,095

Hedging Objectives —We are exposed to certain risks relating to ongoing business operations.

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The interest rate swap agreements modify our exposure to interest rate risk by converting floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense and net earnings.

These agreements involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreements without an exchange of the underlying principal amount.

These agreements involve the receipt of floating rate amounts in

exchange for fixed rate interest payments over the life of the agreements without an exchange of the underlying principal amount.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portions and ineffective portions of the gain or loss on the derivative instruments, and the hedge components excluded from the assessment of effectiveness, are reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.

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We have designated these instruments as cash flow hedges.

No hedging ineffectiveness was recorded in earnings relating to the forward contracts during the three months ended March 31, 2020 and 2019.

As of March 31, 2020, we estimate that $ 9 million in losses will be reclassified from other comprehensive (loss) income to earnings over the next 12 months.

As of March 31, 2020 and December 31, 2019, we had the following unsettled purchased foreign currency forward contracts that were entered into to hedge our operational exposure to foreign currency movements (in thousands, except for average contract rates):

Outstanding Notional Amounts as of March 31, 2020

No hedging ineffectiveness was recorded in earnings relating to the forward contracts during the three and six months ended June 30, 2020 and 2019.

As of June 30, 2020, we estimate that $ 3 million in losses will be reclassified from other comprehensive (loss) income to earnings over the next 12 months.

As of June 30, 2020 and December 31, 2019, we had the following unsettled purchased foreign currency forward contracts that were entered into to hedge our operational exposure to foreign currency movements (in thousands, except for average contract rates):

Outstanding Notional Amounts as of June 30, 2020

Buy Currency Sell Currency Foreign Amount USD Amount Average

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Swedish Krona US Dollar 38,100 4,106 0.1075

Interest Rate Swap Contracts — Interest rate swaps outstanding during the three months ended March 31, 2020 and 2019 are as follows:

Interest Rate Swap Contracts — Interest rate swaps outstanding during the six months ended June 30, 2020 and 2019 are as follows:

Notional Amount Interest Rate

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We have designated these swaps as cash flow hedges.

The estimated fair values of our derivatives designated as hedging instruments as of March 31, 2020 and December 31, 2019 are as follows (in thousands):

The estimated fair values of our derivatives designated as hedging instruments as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

Derivative Assets (Liabilities)

Fair Value as of

Derivatives Designated as Hedging Instruments Consolidated Balance Sheet Location March 31, 2020 December 31, 2019

Derivatives Designated as Hedging Instruments Consolidated Balance Sheet Location June 30, 2020 December 31, 2019

Foreign exchange contracts Other accrued liabilities $ ( 2,627 ) $ —

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$ ( 30,426 ) $ ( 12,985 )

The effects of derivative instruments, net of taxes, on OCI for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

Amount of (Loss) Gain Recognized in OCI on Derivative, Effective Portion

Three Months Ended March 31,

The effects of derivative instruments, net of taxes, on OCI for the three and six months ended June 30, 2020 and 2019 are as follows (in thousands):

Amount of Gain (Loss) Recognized in OCI on Derivative,

Effective Portion

Three Months Ended June 30, Six Months Ended June 30,

Derivatives in Cash Flow Hedging Relationships 2020 2019 2020 2019

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Total $ 1,012 $ ( 9,174 ) $ ( 22,806 ) $ ( 14,583 )

Amount of Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion

Derivatives in Cash Flow Hedging Relationships Income Statement Location Three Months Ended March 31,

Amount of Loss (Gain) Reclassified from Accumulated OCI into Income, Effective Portion

Derivatives in Cash Flow Hedging Relationships Income Statement Location Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Foreign exchange contracts Cost of revenue $ 2,602 $ 844 $ 3,223 $ 3,566

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Interest Rate Swaps— The fair value of our interest rate swaps is estimated using a combined income and market-based valuation methodology based upon Level 2 inputs, including credit ratings and forward interest rate yield curves obtained from independent pricing services reflecting broker market quotes

The following tables present our (liabilities) assets that are required to be measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 (in thousands):

The following tables present our (liabilities) assets that are required to be measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 (in thousands):

Fair Value at Reporting Date Using

March 31, 2020 Level 1 Level 2 Level 3

June 30, 2020 Level 1 Level 2 Level 3

Derivatives (1)

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Derivatives for further detail.

There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three months ended March 31, 2020.

There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three and six months ended June 30, 2020.

Other Financial Instruments

The carrying value of our financial instruments including cash and cash equivalents, and accounts receivable approximates their fair values.

The fair values of our senior secured notes due 2023 and term loans under our Amended and Restated Credit Agreement are determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input.

The following table presents the fair value and carrying value of our senior notes and borrowings under our senior secured credit facilities as of March 31, 2020 and December 31, 2019 (in thousands):

The fair values of our senior exchangeable notes due 2025, senior secured notes due 2025, senior secured notes due 2023 and term loans under our Amended and Restated Credit Agreement are determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input.

The following table presents the fair value and carrying value of our senior notes and borrowings under our senior secured credit facilities as of June 30, 2020 and December 31, 2019 (in thousands):

Fair Value at Carrying Value at (1)

Financial Instrument March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019

Financial Instrument June 30, 2020 December 31, 2019 June 30, 2020 December 31, 2019

Term Loan A $ 426,360 $ 485,106 $ 455,078 $ 483,317

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460,623 514,670 500,000 500,000

9.25 % senior secured notes due 2025

817,393 — 775,000 —

4.00 % senior exchangeable notes due 2025

438,435 — 257,378 —

(1) Excludes net unamortized debt issuance costs.

Goodwill Quantitative Assessment

Due to the impacts of the COVID-19 pandemic on our current and projected future results of operations, we identified a triggering event requiring an interim quantitative assessment on our goodwill.

The quantitative assessment is based on our current projections and is subject to various risks, uncertainties and estimates including:

Due to the impacts of the COVID-19 pandemic on our current and projected future results of operations, we identified a triggering event requiring an interim quantitative assessment on our goodwill in the first quarter of 2020.

The quantitative assessment, performed as of March 31, 2020, was based on our current projections and was subject to various risks, uncertainties and estimates including:

(1) forecasted revenues, expenses and cash flows, including future travel supplier capacity and load factors on those estimates and technology costs, (2) the duration and extent of the impact of the COVID-19 pandemic on our business and our customers, (3) current discount and long-term growth rates, (4) the reduction in our market capitalization, (5) current market transaction trends and (6) changes to the regulatory environment impacting our industry.

We consider these to be Level 3 inputs in the fair value hierarchy, as they involve unobservable inputs for which there is little or no market data and thus require management to develop its own assumptions.

Based on our interim impairment assessment as of March 31, 2020, we have determined that our goodwill is not impaired;

however, we estimate that Airline Solutions has a fair value that approximates its carrying value, subject to the risks noted above.

If the factors associated with our estimate of the fair value of Airlines Solutions differ from actual results (for example, the period of time for our cash flows to recover from the COVID-19 pandemic), Airline Solutions goodwill totaling $ 372 million could be subject to impairment in the future, which would negatively impact our financial results but would not impact our cash flow.

The impact of an impairment on our results of operations could be material.

Our interim impairment assessment as of March 31, 2020, determined that our goodwill was not impaired.

We conducted an update to this interim quantitative impairment assessment as of June 30, 2020, and have determined that our goodwill is no t impaired for any business unit as of June 30, 2020.

Accumulated Other Comprehensive Loss

As of March 31, 2020 and December 31, 2019, the components of accumulated other comprehensive loss, net of related deferred income taxes, are as follows (in thousands):

March 31, 2020 December 31, 2019

As of June 30, 2020 and December 31, 2019, the components of accumulated other comprehensive loss, net of related deferred income taxes, are as follows (in thousands):

June 30, 2020 December 31, 2019

Defined benefit pension and other post-retirement benefit plans $ ( 136,598 ) $ ( 143,389 )

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Unrealized loss on foreign currency forward contracts and interest rate swaps

( 24,618 ) ( 10,206 )

Total accumulated other comprehensive loss, net of tax $ ( 157,432 ) $ ( 149,306 )

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The following table reconciles the numerators and denominators used in the computations of basic and diluted earnings per share from continuing operations (in thousands, except per share data):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Loss) income from continuing operations $ ( 443,530 ) $ 28,094 $ ( 653,301 ) $ 87,308

Net income attributable to non-controlling interests 783 912

Net (loss) income attributable to non-controlling interests ( 71 ) 1,606 712 2,518

Net (loss) income from continuing operations available to common stockholders, basic and diluted $ ( 443,459 ) $ 26,488 $ ( 654,013 ) $ 84,790

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Diluted earnings per share are based on the weighted-average number of common shares outstanding plus the effect of all dilutive common stock equivalents during each period.

The diluted weighted-average common shares outstanding calculation excludes 2 million of dilutive stock options and restricted stock awards for the three months ended March 31, 2020 as their effect would be anti-dilutive given the net loss incurred in the period.

The calculation of diluted weighted-average shares excludes the impact of 1 million of anti-dilutive common stock equivalents for the three months ended March 31, 2019.

The diluted weighted-average common shares outstanding calculation excludes 2 million of dilutive stock options and restricted stock awards for the six months ended June 30, 2020 as their effect would be anti-dilutive given the net loss incurred in the period.

The calculation of diluted weighted-average shares excludes the impact of 8 million and 2 million of anti-dilutive common stock equivalents for each of the three and six months ended June 30, 2020, respectively, and 2 million and 1 million of anti-dilutive common stock equivalents for each of the three and six months ended June 30, 2019, respectively.

As we expect to settle the principal amount of the outstanding Exchangeable Notes in shares of our common stock, we have used the if-converted method for calculating any potential dilutive effect of these notes on our diluted net income per share.

Under the if-converted method, the Exchangeable Notes are assumed to be converted at the beginning of the period and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period being presented and interest expense, net of tax, recorded in connection with the Exchangeable Notes is added back to the numerator, only in the periods in which such effect is dilutive.

The approximately 44 million resulting common shares related to the Exchangeable Notes are not included in the dilutive weighted-average common shares outstanding calculation for the three and six months ended June 30, 2020, as their effect would be anti-dilutive given the net loss incurred in the period.

We lease certain facilities under long-term operating leases.

Operating lease assets are included in operating lease right-of-use (“ROU”) assets within other noncurrent assets and operating lease liabilities are included in other current liabilities and other noncurrent liabilities in our consolidated balance sheets.

During the three months ended March 31, 2020, an operating lease commenced with a lease term of 10 years which is reflected in the information below.

During the six months ended June 30, 2020, an operating lease commenced with a lease term of 10 years which is reflected in the information below.

Our finance leases are not material to our consolidated financial statements and have been omitted from the information below.

The following table presents supplemental cash flow information related to operating leases (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental Cash Flow Information

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The following table presents supplemental balance sheet information related to operating leases (in thousands):

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Operating Leases

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others include options to terminate the agreement within three years .

Future minimum lease payments under non-cancellable operating leases as of March 31, 2020 are as follows (in thousands):

Future minimum lease payments under non-cancellable operating leases as of June 30, 2020 are as follows (in thousands):

Year Ending December 31, Operating Leases

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Based on the jury’s verdict, in March 2017 the court entered final judgment in favor of US Airways in the amount of $ 15 million, which is three times the jury’s award of $ 5 million as required by the Sherman Act.

As a result of the jury's verdict, US

Airways was also entitled to receive reasonable attorneys’ fees and costs under the Sherman Act.

As a result of the jury's verdict, US Airways was also entitled to receive reasonable attorneys’ fees and costs under the Sherman Act.

As such, it filed a motion seeking approximately $ 125 million in attorneys’ fees and costs, the amount of which we strongly dispute.

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As a result of the Second Circuit’s opinion, we believe that the claims associated with this case are not probable;

therefore, in the third quarter of 2019, we reversed our previously accrued loss of $ 32 million and do no t have any losses accrued for this matter as of March 31, 2020.

therefore, in the third quarter of 2019, we reversed our previously accrued loss of $ 32 million and do no t have any losses accrued for this matter as of June 30, 2020.

We have and will incur significant fees, costs and expenses for as long as the litigation is ongoing.

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On April 7, 2020, the trial court ruled in favor of Sabre, denying the DOJ's request for an injunction.

On April 8, 2020, the DOJ filed a notice of appeal.

On April 9, 2020, the CMA blocked the acquisition following its Phase 2 investigation.

We intend to appeal the CMA's decision to the U.K.

We have appealed the CMA's decision to the U.K.

Competition Appeal Tribunal.

Under the acquisition agreement, as amended, we had agreed to advance certain attorneys’ fees incurred by Farelogix in responding to certain governmental reviews of the acquisition and in defending against certain antitrust proceedings, which totaled $ 25 million as of March 31, 2020.

Given the CMA's decision, we recorded a charge of $ 46 million during the three months ended March 31, 2020 included in Other, net in our consolidated statements of operations which is comprised of the $ 25 million in advances mentioned above and additional termination fees of $ 21 million.

Following the termination of the acquisition agreement, the DOJ filed a motion with the U.S.

Court of Appeals for the Third Circuit seeking to vacate the trial court's decision as moot, which the Court of Appeals granted.

European Commission’s Directorate-General for Competition ("EC") Investigation

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The DIT also assessed taxes on a similar basis for assessment years ending March 2006 through March 2016 and appeals for assessment years ending March 2006 through 2016 are pending before the ITAT.

If the DIT were to fully prevail on every claim against us, including SAPPL, we could be subject to taxes, interest and penalties of approximately $ 45 million as of March 31, 2020.

If the DIT were to fully prevail on every claim against us, including SAPPL, we could be subject to taxes, interest and penalties of approximately $ 43 million as of June 30, 2020.

We intend to continue to aggressively defend against each of the foregoing claims.

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SynXis Central Reservation System

As previously disclosed, we became aware of an incident involving unauthorized access to payment information contained in a subset of hotel reservations processed through the Sabre Hospitality Solutions SynXis Central Reservation System (the “HS Central Reservation System”).

Central Reservation System”).

Our investigation was supported by third party experts, including a leading cybersecurity firm.

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We are also cooperating with various governmental authorities that are investigating this incident.

Separately, in November 2017, Sabre

Hospitality Solutions observed a pattern of activity that, after further investigation, led it to believe that an unauthorized party improperly obtained access to certain hotel user credentials for purposes of accessing the HS Central Reservation System.

Separately, in November 2017, Sabre Hospitality Solutions observed a pattern of activity that, after further investigation, led it to believe that an unauthorized party improperly obtained access to certain hotel user credentials for purposes of accessing the HS Central Reservation System.

We deactivated the compromised accounts and notified law enforcement of this activity.

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Our most significant VAT receivable is in Greece.

As of March 31, 2020, we have approximately $ 22 million in VAT receivables for which refund claims have been filed with the Greek government.

As of June 30, 2020, we have approximately $ 22 million in VAT receivables for which refund claims have been filed with the Greek government.

Although we have paid these amounts and believe we are entitled to a refund, the Greek tax authorities have challenged our position.

Subsequent to March 31, 2020, we received notice that the tax court has accepted our arguments to dismiss certain claims by the Greek tax authorities;

In the second quarter of 2020, we received notice that the tax court has accepted our arguments to dismiss certain claims by the Greek tax authorities;

however, this ruling may be subject to appeal.

In Greece, as in other jurisdictions, we intend to vigorously defend our positions against any claims that are not insignificant, including through litigation when necessary.

As of March 31, 2020, we do not believe that an adverse outcome is probable with respect to the claims of the Greek tax authorities or any other jurisdiction;

As of June 30, 2020, we do not believe that an adverse outcome is probable with respect to the claims of the Greek tax authorities or any other jurisdiction;

as a result, we have not accrued any material amounts for exposure related to such contingencies or adverse decisions.

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Benefit expenses, facility costs and depreciation expense on the corporate headquarters building are allocated to the segments based on headcount.

Unallocated corporate costs include certain shared expenses such as accounting, finance, human resources, legal, corporate systems, amortization of acquired intangible assets, impairment and related charges, stock-based compensation, restructuring charges, legal reserves and other items not identifiable with one of our segments.

corporate costs include certain shared expenses such as accounting, finance, human resources, legal, corporate systems, amortization of acquired intangible assets, impairment and related charges, stock-based compensation, restructuring charges, legal reserves and other items not identifiable with one of our segments.

We account for significant intersegment transactions as if the transactions were with third parties, that is, at estimated current market prices.

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We define Adjusted EBITDA as (loss) income from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, amortization of upfront incentive consideration, interest expense, net, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation and provision for income taxes.

Segment information for the three months ended March 31, 2020 and 2019 is as follows (in thousands):

Three Months Ended March 31,

Segment information for the three and six months ended June 30, 2020 and 2019 is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Travel Network $ ( 33,262 ) $ 724,632 $ 394,441 $ 1,498,600

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Total revenue $ 83,044 $ 1,000,006 $ 742,021 $ 2,049,367

Adjusted Gross Profit (a)

Adjusted Gross Profit (Loss) (a)

Travel Network $ ( 110,874 ) $ 252,293 $ 1,295 $ 534,973

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

Three Months Ended March 31,

Adjusted Gross Profit $ 167,100 $ 373,090

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Adjusted Gross Profit (Loss) $ ( 129,000 ) $ 350,438 $ 38,100 $ 723,528

Less adjustments:

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74,993 86,593 152,366 171,513

Restructuring and other costs (6)

40,752 — 57,447 —

Amortization of upfront incentive consideration (2)

1 unchanged sentence

Stock-based compensation 3,686 7,381 11,043 14,625

Restructuring and other costs (6)

Operating (loss) income $ ( 384,070 ) $ 81,913 $ ( 535,481 ) $ 192,320

(b) The following table sets forth the reconciliation of Adjusted Operating (Loss) Income to operating (loss) income in our statement of operations (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Adjusted Operating (Loss) Income $ ( 306,809 ) $ 126,953 $ ( 379,679 ) $ 282,715

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16,509 16,011 33,310 31,995

Restructuring and other costs (6)

48,001 — 73,282 —

Acquisition-related costs (5)

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Litigation costs, net (4)

115 1,386 1,856 2,824

Stock-based compensation 8,762 18,295 26,339 33,989

Restructuring and other costs (6)

Operating (loss) income $ ( 384,070 ) $ 81,913 $ ( 535,481 ) $ 192,320

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Adjusted EBITDA $ ( 210,288 ) $ 235,635 $ ( 185,885 ) $ 497,984

3 unchanged sentences

Amortization of capitalized implementation costs (1b)

9,417 9,627 18,964 21,738

Acquisition-related amortization (1c)

16,509 16,011 33,310 31,995

Restructuring and other costs (6)

48,001 — 73,282 —

Amortization of upfront incentive consideration (2)

2 unchanged sentences

Other, net (3)

Restructuring and other costs (6)

6,098 2,479 53,584 4,349

Acquisition-related costs (5)

1 unchanged sentence

Litigation costs, net (4)

115 1,386 1,856 2,824

Stock-based compensation 8,762 18,295 26,339 33,989

11 unchanged sentences

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 a $ 46 million charge in connection with our proposed acquisition of Farelogix, as well as 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.

(3) Other, net during the six months ended June 30, 2020 i ncludes a $ 46 million charge related to termination payments incurred in the first quarter of 2020 in connection with our proposed acquisition of Farelogix, as well as 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.

Acquisitions for further detail regarding the Farelogix acquisition.

2 unchanged sentences

(5) Acquisition-related costs represent fees and expenses incurred associated with the 2018 agreement to acquire Farelogix.

(6) Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations.

In the first quarter of 2020, we recorded a $ 25 million charge associated with an announced action to reduce our workforce in connection with cost savings measures as a result of the market conditions caused by COVID-19.

(6) Restructuring and other costs represent charges associated with business restructuring and associated changes, including a strategic realignment of our airline and agency-focused businesses, as well as other measures to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business and cost structure.

Restructuring Activities for further details.

Subsequent Events

Debt Offerings

On April 17, 2020, Sabre GLBL entered into two new debt agreements consisting of the following:

The Secured Notes bear interest at a rate of 9.250 % per annum and interest payments are due semi-annually on April 15 and October 15 of each year, beginning with October 15, 2020.

The Secured Notes mature on April 15, 2025.

The Exchangeable Notes are senior, unsecured obligations of Sabre GLBL, accrue interest payable semi-annually in arrears and mature on April 15, 2025, unless earlier repurchased or exchanged.

The Exchangeable Notes are exchangeable at their holders’ election, under specified circumstances, into consideration based on Sabre common stock.

This consideration consists of shares of Sabre common stock, cash, or a mixture of the two at Sabre GLBL’s election.

Upon any future occurrence of a “fundamental change” (as defined in the indenture governing the Exchangeable Notes), holders may require Sabre GLBL to repurchase their Exchangeable Notes at a price equal to principal amount plus accrued and unpaid interest.

The Exchangeable Notes bear interest at a rate of 4.00 % per annum and interest payments are due semi-annually on April 15 and October 15 of each year, beginning with October 15, 2020.

The Exchangeable Notes are guaranteed on a senior unsecured basis by Sabre and Sabre Holdings.

The net proceeds from the sales of the Notes will be used for general corporate purposes.

The COVID-19 pandemic has caused major shifts in the travel ecosystem resulting in the changing needs of our airline, hotel and agency customers.

The organizational changes involve the creation of a functional-oriented structure to further enhance our long-term growth opportunities and help deliver new retailing, distribution and fulfillment solutions to the travel marketplace.

As a result of these strategic realignment efforts, we will operate our business and present our results through two business segments beginning in the third quarter of 2020:

(i) Travel Solutions, our global travel solutions for travel suppliers and travel buyers, including a broad portfolio of software technology products and solutions for airlines, and (ii) Hospitality Solutions, an extensive suite of software solutions for hoteliers.

All revenue and expenses previously assigned to the Travel Network and Airline Solutions business segments will be consolidated into a unified revenue and expense structure which will align with information that our CODM plans to utilize beginning in the third quarter of 2020 to evaluate segment performance and allocate resources.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements