What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-10 · 282 added, 216 removed, 457 unchanged (52% of the section changed)

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We connect people and places with technology that reimagines the business of travel.

We operate through three business segments:

(i) Travel Network, our global business-to-business travel marketplace for travel suppliers and travel buyers, (ii) Airline Solutions, a broad portfolio of software technology products and solutions primarily for airlines, and (iii) Hospitality Solutions, an extensive suite of leading software solutions for hoteliers.

Collectively, these offerings enable travel suppliers to better serve their customers across the entire travel lifecycle, from route planning to post-trip business intelligence and analytics.

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 accelerated 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.

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 now operate our business and

present our results through two business segments effective the third quarter:

(i) Travel Solutions, our global business-to-business travel marketplace 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 leading software solutions for hoteliers.

All revenue and expenses previously assigned to the Travel Network and Airline Solutions business segments have been consolidated into a unified revenue and expense structure now reported as the Travel Solutions business segment.

There have been no changes to the historical Hospitality Solutions reporting segment.

Additionally, we have reclassified expenses on our statement of operations to provide additional clarification on our costs by separating technology costs from cost of revenue and realigning certain expenses previously classified as cost of revenue to selling, general and administrative classification, considering how we assess our results of operations in the current organizational structure.

Certain historical amounts have been reclassified to align with the current presentation.

General Information for further information.

A significant portion of our revenue is generated through transaction-based fees that we charge to our customers.

For Travel Network, this fee is in the form of a transaction fee for bookings on our GDS;

for Airline Solutions and Hospitality Solutions, this fee is a recurring usage-based fee for the use of our Software-as-a-Service ("SaaS") and hosted systems, as well as upfront fees and professional service fees.

Items that are not allocated to our business segments are identified as corporate and primarily include stock-based compensation expense, litigation costs, corporate headcount-related costs and other items that are not identifiable with either one of our segments.

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.

Subsequent Events for further details of the organizational restructuring.

For Travel Solutions, we generate revenue from our distribution activities through transaction fees for bookings on our global distribution system ("GDS"), and from our IT solutions through recurring usage-based fees for the use of our Software-as-a-Service ("SaaS") and hosted systems, as well as upfront fees and professional services fees.

For Hospitality Solutions, we generate revenue from recurring usage-based fees for the use of our SaaS and hosted systems, as well as upfront fees and professional services fees.

We substantially completed the strategic realignment of our airline and agency-focused businesses during the third quarter of 2020 to address the changing travel landscape and to respond to the impacts of the COVID-19 pandemic on our business and cost structure.

Segment Information for results for the three and nine months ended September 30, 2020 by reportable segment.

Recent Developments Affecting our Results of Operations

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

As expected, this pandemic has 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 over the prior year.

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

Additionally, our mix of transactions has shifted such that domestic bookings now exceed international bookings, negatively impacting revenue.

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

Lower Travel Network volumes resulted in a material decline in incentive consideration costs, as expected, which was partially offset by a higher provision for expected credit losses due to the impact of the COVID-19 pandemic on the global economy and our customers and other general increases in bad debt from aging balances as applied under the newly adopted credit loss standard.

Given the market conditions as the result of COVID-19, as disclosed previously, we responded with measures to increase our cash position through the suspension of dividends and share repurchases under the Share Repurchase Program, borrowing under our existing revolving credit facility, and the completion of debt offerings totaling $1,120 million.

See "—Liquidity and Capital Resources." Additionally, we have taken the following actions with regard to our workforce and compensation programs as part of these cost reduction efforts :

Actual cancellations during the third quarter were fewer than expected as of the end of the second quarter.

This combination of actual cancellation activity and fewer bookings resulted in a reduction in the cancellation reserve during the third quarter.

Lower GDS volumes resulted in a material decline in incentive consideration costs, as expected, which was partially offset by a higher provision for expected credit losses due to the impact of the COVID-19 pandemic on the global economy and our customers and other general increases in bad debt from aging balances as applied under the newly adopted credit loss standard.

Given the market conditions as the result of COVID-19, as disclosed previously, we responded with measures to increase our cash position through the suspension of common stock dividends and share repurchases under the Share Repurchase Program, borrowing under our existing revolving credit facility, and the completion of debt offerings totaling $1,120 million.

Additionally, during the third quarter of 2020, we completed equity offerings which resulted in net proceeds of $598 million, extended the maturity of our Term Loan A and Revolver, and used proceeds from newly issued notes due in September 2025 to pay down Term Loan A and notes due in April 2023.

See "—Liquidity and Capital Resources." We have taken the following actions with regard to our workforce and compensation programs as part of these cost reduction efforts :

• A temporary reduction in base compensation pay for our US-based salaried workforce, including a 25% reduction for our CEO, from March 16, 2020 through July 5, 2020;

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This reduction is in addition to the separation of approximately 400 participants in voluntary severance and voluntary early retirement programs described above.

Subsequent Events for further details on this organizational restructuring.

In connection with these measures, we recorded a $48 million charge associated with these restructuring activities during the three months ended June 30, 2020 and $73 million during the six months ended June 30, 2020.

In connection with these measures, we recorded a $74 million charge associated with these restructuring activities during the nine months ended September 30, 2020.

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

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• Amended the key strategic initiatives associated with the long-term performance-based cash incentive awards that are payable in March 2022;

• Awarded time-based restricted stock unit awards to executive and certain key employees on June 15, 2020, with 50% of the units vesting on the first and second anniversaries of the grant date;

• Awarded cash retention bonuses to certain key technology resources on June 15, 2020 in conjunction with our technology transformation initiatives payable upon the completion of two and three years of service.

• Amended the 2020 performance metrics associated with the performance stock awards that vest in March 2021;

• Awarded time-based restricted stock unit awards to executive and certain key employees in June 2020, with 50% of the units vesting on the first and second anniversaries of the grant date;

• Awarded cash retention bonuses to certain key technology resources in June 2020 in conjunction with our technology transformation initiatives payable upon the completion of two and three years of service.

We believe the ongoing effects of COVID-19 on our operations and global bookings will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak.

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GAAP and adjusted basis for the year ended December 31, 2020 despite the cost saving measures described above.

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

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.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law, which provides over $2 trillion in economic relief in response to the COVID-19 pandemic.

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In addition, we do not expect any of the provisions of the CARES Act to have a material impact on our consolidated financial statements.

During the second quarter of 2020, several of our customers have filed for bankruptcy protection in various jurisdictions.

During the nine months ended September 30, 2020, several of our customers filed for bankruptcy protection in various jurisdictions.

Due to our creditor position, we do not expect significant recovery for amounts due to us prior to the customer's filing for bankruptcy protection and have fully reserved for any amounts due;

however, we continue to provide services and receive timely payment for post-bankruptcy balances due in most cases.

In April 2019, a customer of Travel Network and Airline Solutions, Jet Airways (India) Ltd.

("Jet Airways"), ceased operations and began insolvency proceedings.

Our revenue was negatively impacted in 2019 and will continue to be negatively impacted in 2020.

This insolvency, coupled with the macroeconomic and geopolitical

environment and channel shift related to certain European carriers, has negatively impacted our revenue growth and contributed to reduced growth rates in the GDS industry.

In addition, for Airline Solutions, Bangkok Airways Public Company Limited and Philippine Airlines, Inc.

(the "Transitioned Customers"), previously made decisions to transition from our services, which will impact our revenue on a year-over-year basis.

Philippine Airlines transitioned in March 2019 and Bangkok Airways Public Company Limited transitioned in August 2019.

Factors Affecting our Results

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Components of Revenues and Expenses

Travel Network primarily generates revenues from Direct Billable Bookings processed on our GDS, adjusted for estimated cancellations of those bookings, as well as the sale of aggregated bookings data to carriers.

Airline Solutions and Hospitality Solutions primarily generate revenue through upfront solution fees and recurring usage-based fees for the use of our software solutions hosted on secure platforms or deployed through our SaaS and through other professional service fees including Digital Experience ("DX").

Travel Solutions generates revenues from distribution activities through Direct Billable Bookings processed on our GDS, adjusted for estimated cancellations of those bookings.

Travel Solutions also generates revenues from IT solutions activities from its product offerings including reservation systems for full-cost and low-cost carriers, commercial and operations products, agency solutions and booking data.

Hospitality Solutions generates revenue through upfront solution fees and recurring usage-based fees for the use of our software solutions hosted on secure platforms or deployed through our SaaS and through other professional service fees including Digital Experience ("DX").

Certain professional service fees are discrete sales opportunities that may have a high degree of variability from period to period, and we cannot guarantee that we will have such fees in the future consistent with prior periods.

Airline Solutions also generates revenue through software licensing and maintenance fees.

Travel Solutions also generates revenue through software licensing and maintenance fees.

Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized.

Cost of Revenue

Cost of revenue incurred by Travel Network, Airline Solutions and Hospitality Solutions consists of expenses related to technology operations including hosting, third-party software and expensed research and development labor costs, other salaries and benefits, and allocated overhead such as facilities and other support costs.

Cost of revenue for Travel Network also includes incentive consideration expense representing payments or other consideration to travel agencies for reservations made on our GDS which accrue on a monthly basis.

Corporate cost of revenue includes expenses associated with our technology organization such as corporate systems and risk and security.

Corporate cost of revenue also includes certain expenses such as stock-based compensation, restructuring charges, legal reserves and other items not identifiable with one of our segments.

Depreciation and amortization included in cost of revenue is associated with property and equipment, amortization of capitalized implementation costs which relates to Airline Solutions and Hospitality Solutions, intangible assets for technology purchased through acquisitions or established with our take private transactions in 2007, and software developed for internal use that supports our revenue, businesses and systems.

Cost of revenue incurred by Travel Solutions and Hospitality Solutions consists primarily of costs associated with the delivery and distribution of our products and services and includes employee-related costs for our delivery, customer operations and call center teams as well as allocated overhead such as facilities and other support costs.

Cost of revenue for Travel Solutions also includes incentive consideration expense representing payments or other consideration to travel agencies for reservations made on our GDS which accrue on a monthly basis.

Corporate cost of revenue includes certain expenses such as stock-based compensation and restructuring charges and other items not identifiable with either of our segments.

Depreciation and amortization included in cost of revenue is associated with capitalized implementation costs and intangible assets associated with contracts, supplier and distributor agreements purchased through acquisitions or established with our take private transactions in 2007.

Cost of revenue also includes amortization of upfront incentive consideration representing upfront payments or other consideration provided to travel agencies for reservations made on our GDS which are capitalized and amortized over the expected life of the contract.

We have reclassified expenses on our statement of operations to provide additional clarification on our costs.

As a result, cost of revenue decreased by $332 million and $981 million for the three and nine months ended September 30, 2019, respectively.

General Information for more information.

Technology Costs

Technology costs incurred by Travel Solutions and Hospitality Solutions consist of expenses related to technology operations including hosting, third-party software, maintenance and expensed research and development labor costs associated with our development teams responsible for the maintenance and enhancement of our existing products and the development of new products and services.

Depreciation and amortization included in technology costs is associated with software developed for internal use that supports our products, businesses and systems and intangible assets for technology purchased through acquisitions or established through the take private transaction in 2007.

As discussed in Note 1.

General Information, we have reclassified expenses on our statement of operations to provide additional clarification on our costs by separately reporting technology costs.

For the three months ended September 30, 2019, we reclassified $298 million from cost of revenue and $25 million from selling, general and administrative to technology costs.

For the nine months ended September 30, 2019, we reclassified $885 million from cost of revenue and $79 million from selling, general and administrative to technology costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of personnel-related expenses, including stock-based compensation, for employees that sell our services to new customers and administratively support the business, information technology and communication costs, professional service fees, certain settlement charges or reimbursements, costs to defend legal disputes, provision for expected credit losses, depreciation and amortization and other overhead costs.

Selling, general and administrative expenses consist of professional service fees, certain settlement charges or reimbursements, costs to defend legal disputes, provision for expected credit losses, other overhead costs, and personnel-related expenses, including stock-based compensation, for employees engaged in sales, sales support, account management and who administratively support the business in finance, legal, human resources, information technology and communications.

Depreciation and amortization included in selling, general and administrative expenses is associated with property and equipment, acquired customer relationships, trademarks and brand names purchased through acquisitions or established through the take private transaction in 2007.

We have reclassified expenses on our statement of operations to provide additional clarification on our costs.

As a result , selling, general and administrative expenses increased by $9 million and $17 million for the three and nine months ended September 30, 2019, respectively.

General Information for more information.

Intersegment Transactions

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

Airline Solutions and Hospitality Solutions pay fees to Travel Network for airline trips and hotel stays booked through our GDS.

“Direct Billable Bookings” and “Passengers Boarded” are the primary metrics utilized by Travel Network and Airline Solutions, respectively, to measure operating performance.

Travel Network generates fees for each Direct Billable Booking which include bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")) and through our equity method investments in cases where we are paid directly by the travel supplier and for Air Bookings, are presented net of bookings cancelled within the period presented.

Passengers Boarded (“PBs”) is the primary metric used by Airline Solutions to recognize SaaS and hosted revenue from recurring usage-based fees.

Hospitality Solutions pays fees to Travel Solutions for hotel stays booked through our GDS.

“Direct Billable Bookings” and “Passengers Boarded” are the primary metrics utilized by Travel Solutions to measure operating performance.

Travel Solutions generates distribution revenue for each Direct Billable Booking which include bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")) and through our equity method investments in cases where we are paid directly by the travel supplier and for Air Bookings, are presented net of bookings cancelled within the period presented.

Travel Solutions also recognizes IT solutions revenue from recurring usage based fees for Passengers Boarded ("PBs").

The primary metric utilized by Hospitality Solutions is booking transactions processed through the Sabre Hospitality Solutions SynXis Central Reservation System (the "HS Central Reservation System").

These key metrics allow management to analyze customer volume over time for each of our three business segments to monitor industry trends and analyze performance.

These key metrics allow management to analyze customer volume over time for each of our business segments to monitor industry trends and analyze performance.

We believe that these key metrics are useful for investors and other third parties as indicators of our financial performance and industry trends.

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The following table sets forth these key metrics for the periods indicated (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 % Change 2020 2019 % Change

Travel Network

Travel Solutions

Direct Billable Bookings - Air 16,539 123,586 (86.6)% 80,439 386,752 (79.2)%

Direct Billable Bookings - LGS 3,381 17,327 (80.5)% 17,932 51,223 (65.0)%

Total Direct Billable Bookings (7,302) 142,125 (105.1)% 78,451 297,062 (73.6)%

Airline Solutions Passengers Boarded 19,799 180,386 (89.0)% 187,174 366,563 (48.9)%

Hospitality Solutions Central Reservation System Transactions 11,094 28,890 (61.6)% 32,113 51,914 (38.1)%

Distribution Total Direct Billable Bookings 19,920 140,913 (85.9)% 98,371 437,975 (77.5)%

IT Solutions Passengers Boarded 56,970 187,373 (69.6)% 244,144 553,936 (55.9)%

Hospitality Solutions

Central Reservations System Transactions 19,268 30,462 (36.7)% 51,381 82,376 (37.6)%

Definitions of Non-GAAP Financial Measures

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Quarterly Report on Form 10-Q, including Adjusted Gross Profit, Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income from continuing operations ("Adjusted Net (Loss) Income"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures.

We define Adjusted Gross Profit as operating (loss) income adjusted for selling, general and administrative expenses, the cost of revenue portion of depreciation and amortization, restructuring and other costs, amortization of upfront incentive consideration, and stock-based compensation included in cost of revenue.

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Quarterly Report on Form 10-Q, including Adjusted Gross Profit (Loss), Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income from continuing operations ("Adjusted Net (Loss) Income"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures.

As a result of our business realignment, we have separated our technology costs from cost of revenue and moved certain expenses previously classified as cost of revenue to selling, general and administrative to provide increased visibility to our technology costs for analytical and decision-making purposes and to align costs with the current leadership and operational organizational structure.

While there is no impact to other financial measures, as a result of these changes, our Adjusted Gross Profit (Loss) is more favorable than previously reported as it excludes costs that were previously classified as cost of revenue.

Technology costs are evaluated separately from Adjusted Gross Profit (Loss) and excluded from this measure to provide a more transparent view of variable expenses, gross margin, and key operational expense ratios.

We define Adjusted Gross Profit (Loss) as operating (loss) income adjusted for selling, general and administrative expenses, technology costs, the cost of revenue portion of depreciation and amortization, restructuring and other costs, amortization of upfront incentive consideration, and stock-based compensation included in cost of revenue.

We define Adjusted Operating (Loss) Income as operating (loss) income adjusted for equity method (loss) income, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.

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We believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate our ability to service debt obligations, fund capital expenditures and meet working capital requirements.

We also believe that Adjusted Gross Profit, Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income and Adjusted EBITDA assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense.

We also believe that Adjusted Gross Profit (Loss), Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income and Adjusted EBITDA assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense.

In addition, amounts derived from Adjusted EBITDA are a primary component of certain covenants under our senior secured credit facilities.

Adjusted Gross Profit, Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP.

Adjusted Gross Profit (Loss), Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP.

These non-GAAP financial measures and ratios based on them are unaudited and have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity.

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• these non-GAAP financial measures exclude certain recurring, non-cash charges such as stock-based compensation expense and amortization of acquired intangible assets;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Profit and Adjusted EBITDA do not reflect cash requirements for such replacements;

• Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Profit (Loss) and Adjusted EBITDA do not reflect cash requirements for such replacements;

• Adjusted Gross Profit (Loss), Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted Gross Profit (Loss) does not include technology costs, including transaction-based technology costs, which differs from our previous presentations;

• Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;

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• Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness;

• other companies, including companies in our industry, may calculate Adjusted Gross Profit, Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

• other companies, including companies in our industry, may calculate Adjusted Gross Profit (Loss), Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

The following table sets forth the reconciliation of net (loss) income attributable to common stockholders to Adjusted Net (Loss) Income, Adjusted EBITDA and Adjusted Operating (Loss) Income (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net (loss) income attributable to common stockholders $ (312,449) $ 63,813 $ (969,260) $ 148,501

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

Net (loss) income attributable to non-controlling interests (1)

Loss from discontinued operations, net of tax 533 596 3,331 698

Net income attributable to non-controlling interests (1)

125 771 837 3,289

Preferred stock dividends 2,231 — 2,231 —

(Loss) income from continuing operations (309,560) 65,180 (962,861) 152,488

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947 — 74,229 —

Loss on extinguishment of debt 10,333 — 10,333 —

Other, net (4)

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Adjusted Operating (Loss) Income $ (196,693) $ 133,074 $ (576,372) $ 415,789

The following tables set forth the reconciliation of operating (loss) income in our statement of operations to Adjusted Gross Profit, Adjusted EBITDA and Adjusted Operating (Loss) Income by business segment (in thousands):

Three Months Ended June 30, 2020

Network Airline

Solutions Hospitality

The following tables set forth the reconciliation of operating (loss) income in our statement of operations to Adjusted Gross Profit (Loss), Adjusted EBITDA and Adjusted Operating (Loss) Income by business segment (in thousands):

Three Months Ended September 30, 2020

Solutions Corporate Total

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Selling, general and administrative 55,870 10,501 53,255 119,626

Technology costs 232,666 25,332 18,364 276,362

Cost of revenue adjustments:

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Stock-based compensation — — 1,422 1,422

Adjusted Gross Profit (110,874) (11,017) (768) (6,341) (129,000)

Adjusted Gross Profit (Loss) 168,971 24,507 (646) 192,832

Selling, general and administrative (55,870) (10,501) (53,255) (119,626)

Technology costs (232,666) (25,332) (18,364) (276,362)

Equity method loss (460) — — (460)

Selling, general and administrative adjustments:

Selling, general and administrative and technology costs adjustments:

Depreciation and amortization (2)

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Acquisition-related costs (6)

— — — 4,373 4,373

Litigation costs, net (5)

— — — 115 115

Stock-based compensation — — 17,144 17,144

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Adjusted Operating Loss $ (146,337) $ (12,609) $ (37,747) $ (196,693)

Three Months Ended June 30, 2019

Network Airline

Three Months Ended September 30, 2019

Solutions Hospitality

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Selling, general and administrative 74,227 10,061 44,503 128,791

Technology costs 276,572 28,322 17,669 322,563

Cost of revenue adjustments:

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Stock-based compensation — — 1,536 1,536

Adjusted Gross Profit 252,293 85,801 16,767 (4,423) 350,438

Adjusted Gross Profit (Loss) 561,372 35,762 (508) 596,626

Selling, general and administrative (74,227) (10,061) (44,503) (128,791)

Technology costs (276,572) (28,322) (17,669) (322,563)

Equity method income 1,027 — — 1,027

Selling, general and administrative adjustments:

Selling, general and administrative and technology costs adjustments:

Depreciation and amortization (2)

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Adjusted Operating Income (Loss) $ 183,582 $ (4,008) $ (46,500) $ 133,074

Six Months Ended June 30, 2020

Travel Network Airline Solutions Hospitality Solutions Corporate Total

Nine Months Ended September 30, 2020

Travel Solutions Hospitality Solutions Corporate Total

Operating loss $ (406,939) $ (48,475) $ (313,116) $ (768,530)

Selling, general and administrative 217,103 31,498 198,410 447,011

Technology costs 724,609 74,954 84,274 883,837

Cost of revenue adjustments:

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Stock-based compensation — — 3,668 3,668

Adjusted Gross Profit 1,295 41,010 4,926 (9,131) 38,100

Adjusted Gross Profit (Loss) 612,869 61,590 (2,402) 672,057

Selling, general and administrative (217,103) (31,498) (198,410) (447,011)

Technology costs (724,609) (74,954) (84,274) (883,837)

Equity method loss (1,645) — — (1,645)

Selling, general and administrative adjustments:

Selling, general and administrative and technology costs adjustments:

Depreciation and amortization (2)

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Adjusted Operating Loss $ (408,584) $ (48,475) $ (119,313) $ (576,372)

Six Months Ended June 30, 2019

Travel Network Airline Solutions Hospitality Solutions Corporate Total

Nine Months Ended September 30, 2019

Travel Solutions Hospitality Solutions Corporate Total

Operating income (loss) $ 572,662 $ (15,471) $ (251,411) $ 305,780

Selling, general and administrative 221,549 32,070 189,050 442,669

Technology costs 826,680 83,969 53,748 964,397

Cost of revenue adjustments:

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Stock-based compensation — — 4,758 4,758

Adjusted Gross Profit 534,973 163,932 32,477 (7,854) 723,528

Adjusted Gross Profit (Loss) 1,703,704 104,676 (1,246) 1,807,134

Selling, general and administrative (221,549) (32,070) (189,050) (442,669)

Technology costs (826,680) (83,969) (53,748) (964,397)

Equity method income 1,973 — — 1,973

Selling, general and administrative adjustments:

Selling, general and administrative and technology costs adjustments:

Depreciation and amortization (2)

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The following tables present information from our statements of cash flows and set forth the reconciliation of Free Cash Flow to cash (used in) provided by operating activities, the most directly comparable GAAP measure (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash (used in) provided by operating activities $ (587,069) $ 424,365

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Cash provided by (used in) financing activities 1,873,804 (351,424)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash (used in) provided by operating activities $ (587,069) $ 424,365

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(c) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.

(3) Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to ten years.

(3) Our Travel Solutions business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to ten years.

This consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty.

These service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided up front.

These service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed

the cost of the incentive consideration provided up front.

These service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.

(4) Other, net includes a $46 million charge related to termination payments incurred in the first quarter of 2020 in connection with our proposed acquisition of Farelogix Inc.

("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.

(5) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters.

(4) Other, net includes a $46 million charge related to termination payments incurred in the first quarter of 2020 in connection with the now-terminated acquisition of Farelogix Inc.

("Farelogix") and a $14 million pension settlement charge recorded in the third quarter of 2020, 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 now-terminated Farelogix acquisition and Note 10.

Accumulated Other Comprehensive Loss for discussion of the pension settlement.

(5) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters and includes the reversal of our previously accrued loss related to the US Airways legal matter for $32 million in the third quarter of 2019.

Contingencies , to our consolidated financial statements.

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

(6) Acquisition-related costs represent fees and expenses incurred associated with the now-terminated agreement to acquire Farelogix.

Acquisitions.

4 unchanged sentences

The following table sets forth our consolidated statement of operations data for each of the periods presented:

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

2 unchanged sentences

Cost of revenue 115,426 419,385 458,068 1,320,720

Technology costs 276,362 322,563 883,837 964,397

Selling, general and administrative 119,626 128,791 447,011 442,669

1 unchanged sentence

Interest expense, net (67,651) (39,743) (163,674) (117,364)

Loss on debt extinguishment (10,333) — (10,333) —

Equity method (loss) income (460) 1,027 (1,645) 1,973

3 unchanged sentences

(Loss) income from continuing operations $ (309,560) $ 65,180 $ (962,861) $ 152,488

Three Months Ended June 30, 2020 and 2019

Three Months Ended June 30,

Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Travel Network $ (33,262) $ 724,632 $ (757,894) (105) %

Airline Solutions 89,524 211,833 (122,309) (58) %

Travel Solutions $ 237,018 $ 919,031 $ (682,013) (74) %

Hospitality Solutions 44,924 74,818 (29,894) (40) %

2 unchanged sentences

Total revenue $ 278,365 $ 984,199 $ (705,834) (72) %

Travel Network— Revenue decreased $758 million, or 105%, for the three months ended June 30, 2020 compared to the same period in the prior year, primarily due to a decrease in transaction-based revenue of $741 million, including increased cancellation activity in the second quarter of approximately $100 million beyond what was initially estimated.

The decrease in revenue is primarily due from lower transaction volume as the result of the COVID-19 pandemic and cancellations, which resulted in negative net Direct Billable Bookings in April and May 2020.

While net Direct Billable Bookings were positive in June 2020, Direct Billable Bookings decreased 105% for the second quarter from the prior year to net cancelled bookings of 7 million primarily resulting from the COVID-19 pandemic.

Airline Solutions— Revenue decreased $122 million, or 58%, for the three months ended June 30, 2020 compared to the same period in the prior year.

The $122 million decrease in revenue primarily resulted from:

• a $94 million decrease in Reservation revenue for the three months ended June 30, 2020 compared to the same period in the prior year.

This decline is primarily due to the impact of the COVID-19 pandemic on our existing customer base and a $5 million decrease in revenue compared to the same period in the prior year due to the demigration of the Transitioned Customers.

Travel Solutions— Revenue decreased $682 million, or 74%, for the three months ended September 30, 2020 compared to the same period in the prior year, primarily due to:

• a $569 million, or 84%, decrease in transaction-based distribution revenue primarily due to a 86% decrease in Direct Billable Bookings to 20 million resulting from lower transaction volume as the result of the COVID-19 pandemic, partially offset by $18 million of revenue recognized in the third quarter of 2020 resulting from less cancellation activity on bookings scheduled to depart during the third quarter than estimated as of June 30, 2020;

• a $113 million decrease in IT solutions revenue consisting of a $84 million, or 65%, decrease in reservation revenue primarily due to the impact of the COVID-19 pandemic on our existing customer base.

This decrease was partially offset by an increase of $3 million driven by the acquisition of Radixx in October 2019.

Passengers Boarded, inclusive of Radixx, decreased by 89% to 20 million for the three months ended June 30, 2020;

• a $28 million decrease in AirVision and AirCentre commercial and operations solutions revenue primarily due to the impact of the COVID-19 pandemic on our existing customer base.

Hospitality Solutions— Revenue decreased $45 million, or 61%, for the three months ended June 30, 2020 compared to the same period in the prior year.

Passengers Boarded, inclusive of Radixx, decreased by 70% to 57 million for the three months ended September 30, 2020.

Additionally, commercial and operations revenue decreased $32 million primarily due to the impact of the COVID-19 pandemic on our existing customer base.

Hospitality Solutions— Revenue decreased $30 million, or 40%, for the three months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by a reduction in SynXis Software and Services revenue due to a decrease in transaction volumes of 37% to 19 million, as a result of the COVID-19 pandemic.

Cost of Revenue

Three Months Ended June 30,

Three Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Travel Network $ 77,611 $ 472,338 $ (394,727) (84) %

Airline Solutions 100,541 126,031 (25,490) (20) %

Travel Solutions $ 68,047 $ 357,660 $ (289,613) (81) %

Hospitality Solutions 20,417 39,056 (18,639) (48) %

5 unchanged sentences

Total cost of revenue $ 115,426 $ 419,385 $ (303,959) (72) %

Travel Network— Cost of revenue decreased $395 million, or 84%, for the three months ended June 30, 2020 compared to the same period in the prior year.

The decrease was primarily the result of a $366 million decline in incentive consideration in all regions due to lower transaction volume as the result of the COVID-19 pandemic, as well as a $22 million reduction in non-development labor costs in connection with our cost reduction measures.

The decrease is also driven by a decline in technology costs associated with lower transaction volumes.

Airline Solutions— Cost of revenue decreased $25 million, or 20%, for the three months ended June 30, 2020 compared to the same period in the prior year.

The decrease was primarily the result of a reduction in non-development labor costs as a result of our cost reduction measures and a decline in technology costs associated with lower transaction volumes.

Hospitality Solutions— Cost of revenue decreased $27 million, or 48%, for the three months ended June 30, 2020 compared to the same period in the prior year.

Travel Solutions— Cost of revenue decreased $290 million, or 81%, for the three months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily the result of a $281 million decline in incentive consideration in all regions due to lower transaction volume as the result of the COVID-19 pandemic, as well as a $8 million reduction in labor and professional services costs in connection with our cost reduction measures.

Hospitality Solutions— Cost of revenue decreased $19 million, or 48%, for the three months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by a $15 million reduction in transaction-related costs due to the decline in transaction volume as a result of the COVID-19 pandemic and a reduction in non-development labor costs in connection with our cost reduction measures.

Corporate— Cost of revenue associated with corporate costs increased $39 million, or 331%, for the three months ended June 30, 2020 compared to the same period in the prior year.

The increase was primarily due to a restructuring charge of $41 million for severance benefits and an increase in labor costs from implementing the shift to open source and cloud-based solutions.

This increase was partially offset by a reduction in non-development labor costs in connection with our cost reduction measures.

Depreciation and amortization— Depreciation and amortization decreased $12 million, or 13%, for the three months ended June 30, 2020 compared to the same period in the prior year.

The decrease is primarily due to a change in mix of our technology spend in 2019 resulting in less capitalized internal use software.

Amortization of upfront incentive consideration— Amortization of upfront incentive consideration decreased for the three months ended June 30, 2020 compared to the same period in the prior year.

Amortization of upfront incentive consideration— Amortization of upfront incentive consideration decreased $1 million for the three months ended September 30, 2020 compared to the same period in the prior year.

The decrease is primarily due to a reduction in upfront consideration provided to travel agencies.

Technology Costs

Three Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Technology costs $ 276,362 $ 322,563 $ (46,201) (14) %

Technology costs decreased $46 million, or 14%, for the three months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by reductions impacting our Travel Solutions and Hospitality Solutions segments, including a $25 million decline in technology costs associated with lower transaction volumes resulting from the COVID-19 pandemic, a $15 million decrease in depreciation and amortization due to a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software, and a reduction in technology labor of $17 million in connection with our cost reduction measures.

This decrease was partially offset by a continued decline in the capitalization mix of our technology spend as we implement opensource and cloud-based solutions, resulting in a $9 million increase in labor costs.

Corporate technology costs increased due to a restructuring charge of $1 million for severance benefits.

Selling, General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

2020 2019 Change

1 unchanged sentence

Selling, general and administrative $ 119,626 $ 128,791 $ (9,165) (7) %

Selling, general and administrative expenses decreased $38 million, or 25%, for the three months ended June 30, 2020 compared to the same period in the prior year, primarily driven by a $24 million decrease in labor costs in connection with our cost reduction measures, a decrease in technology costs of $9 million, a $5 million reduction in legal costs associated with the potential acquisition of Farelogix in the prior year, and a reduction in costs due to our expense management initiatives given the decline in transaction volume resulting from COVID-19.

This decrease was partially offset by a restructuring charge of $7 million for severance benefits.

Selling, general and administrative expenses decreased $9 million, or 7%, for the three months ended September 30, 2020 compared to the same period in the prior year, primarily driven by a $24 million decrease in labor and professional services costs in connection with our cost reduction measures, a $9 million decrease in legal costs associated with the now-terminated acquisition of Farelogix, a $3 million decrease in other litigation costs, and a reduction in other costs due to our expense management initiatives.

The decrease is substantially offset by an increase of $32 million due to the reversal of a previously accrued loss in the prior year related to the US Airways legal matter and an $8 million increase in the provision for expected credit losses, primarily related to fully reserving for aged balances related to certain customers and other general increases in bad debt from aging balances as applied under the newly adopted credit loss standard.

Interest expense, net

Three Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Interest expense, net $ 67,651 $ 39,743 $ 27,908 70 %

Interest expense increased $28 million during the three months ended September 30, 2020 compared to the same period in the prior year primarily due to additional borrowings under the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020 and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020.

Loss on Extinguishment of Debt

Three Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Loss on extinguishment of debt $ 10,333 $ — $ 10,333 **

** not meaningful

As a result of the debt refinancing in the third quarter of 2020, we recognized a loss on extinguishment of debt of $10 million during the three months ended September 30, 2020 which consisted of a redemption premium of $7 million and the write-off of unamortized debt issuance costs of $3 million.

Other expense, net

Three Months Ended June 30,

Three Months Ended September 30,

2020 2019 Change

2 unchanged sentences

** not meaningful

Other expense, net increased $4 million for the three months ended June 30, 2020 compared to the same period in the prior year primarily due to an actuarial loss associated with our pension plan in the current year as well as realized and unrealized foreign currency exchange losses.

The increase is also due to a benefit recognized in the prior year associated with a reduction to our TRA liability due to the settlement of an audit.

Other expense, net increased $17 million for the three months ended September 30, 2020 compared to the same period in the prior year primarily due to a pension plan settlement charge of $14 million recognized in the third quarter of 2020 as well as realized and unrealized foreign currency exchange losses.

Provision for Income Taxes

Three Months Ended June 30,

Three Months Ended September 30,

2020 2019 Change

1 unchanged sentence

Provision for income taxes $ (20,364) $ 7,795 $ (28,159) (361) %

Our effective tax rates for the three months ended June 30, 2020 and 2019 were 1% and 30%, respectively.

The decrease in the effective tax rate for the three months ended June 30, 2020 as compared to the same period in 2019 was primarily due to a $70 million valuation allowance recorded on tax losses generated in the current tax year 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.

Our effective tax rates for the three months ended September 30, 2020 and 2019 were 6% and 11%, respectively.

The decrease in the effective tax rate for the three months ended September 30, 2020 as compared to the same period in 2019 was primarily due to a $45 million valuation allowance recorded on tax losses generated in the current quarter 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.

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.

Six Months Ended June 30, 2020 and 2019

Six Months Ended June 30,

Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Travel Network $ 394,441 $ 1,498,600 $ (1,104,159) (74) %

Airline Solutions 269,409 424,760 (155,351) (37) %

Travel Solutions $ 900,868 $ 2,842,391 $ (1,941,523) (68) %

Hospitality Solutions 133,163 221,525 (88,362) (40) %

2 unchanged sentences

Total revenue $ 1,020,386 $ 3,033,566 $ (2,013,180) (66) %

Travel Network— Revenue decreased $1,104 million, or 74%, for the six months ended June 30, 2020 compared to the same period in the prior year, primarily due to a decrease in transaction-based revenue of $1,084 million to $328 million.

The decrease in revenue primarily resulted from a 74% decrease in Direct Billable Bookings to 78 million primarily resulting from the COVID-19 pandemic.

Airline Solutions— Revenue decreased $155 million, or 37%, for the six months ended June 30, 2020 compared to the same period in the prior year.

The $155 million decrease in revenue primarily resulted from:

• a $116 million decrease in Reservation revenue for the six months ended June 30, 2020 compared to the same period in the prior year.

This decline is primarily due the impact of the COVID-19 pandemic on our existing customer base and a $20 million decrease in revenue compared to the same period in the prior year due to the demigration of the Transitioned Customers and Jet Airways' insolvency in April 2019.

Travel Solutions— Revenue decreased $1,942 million, or 68%, for the nine months ended September 30, 2020 compared to the same period in the prior year, primarily due to:

• a $1,642 million, or 78%, decrease in transaction-based distribution revenue primarily due to a 78% decrease in Direct Billable Bookings to 98 million resulting from lower transaction volume as the result of the COVID-19 pandemic;

• a $300 million decrease in IT solutions revenue consisting of a $209 million, or 55%, decrease in reservation revenue primarily due to the impact of the COVID-19 pandemic on our existing customer base and a $28 million decrease in revenue compared to the same period in the prior year due to the transition away from our services by certain customers and Jet Airways' insolvency in April 2019.

This decrease was partially offset by an increase of $12 million driven by the acquisition of Radixx in October 2019.

Passengers Boarded, inclusive of Radixx, decreased by 49% to 187 million for the six months ended June 30, 2020;

• a $39 million decrease in AirVision and AirCentre commercial and operations solutions revenue primarily due to the impact of the COVID-19 pandemic on our existing customer base, and Jet Airways' insolvency in April 2019.

Hospitality Solutions— Revenue decreased $58 million, or 40%, for the six months ended June 30, 2020 compared to the same period in the prior year.

Passengers Boarded, inclusive of Radixx, decreased by 56% to 244 million for the nine months ended September 30, 2020.

Additionally, commercial and operations revenue decreased $103 million primarily due to the impact of the COVID-19 pandemic on our existing customer base.

Hospitality Solutions— Revenue decreased $88 million, or 40%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by a reduction in SynXis Software and Services revenue due to a decrease in transaction volumes of 38% to 51 million, as a result of the COVID-19 pandemic.

Cost of Revenue

Six Months Ended June 30,

Nine Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Travel Network $ 393,144 $ 963,627 $ (570,483) (59) %

Airline Solutions 228,398 260,827 (32,429) (12) %

Travel Solutions $ 287,999 $ 1,138,685 $ (850,686) (75) %

Hospitality Solutions 71,573 116,850 (45,277) (39) %

5 unchanged sentences

Total cost of revenue $ 458,068 $ 1,320,720 $ (862,652) (65) %

Travel Network— Cost of revenue decreased $570 million, or 59%, for the six months ended June 30, 2020 compared to the same period in the prior year.

The decrease was primarily the result of a $541 million decline in incentive consideration in all regions due to lower transaction volume as the result of the COVID-19 pandemic, as well as a $29 million reduction in development and non-development labor costs in connection with our cost reduction measures.

Airline Solutions— Cost of revenue decreased $32 million, or 12%, for the six months ended June 30, 2020 compared to the same period in the prior year.

Hospitality Solutions— Cost of revenue decreased $31 million, or 27%, for the six months ended June 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by a $24 million reduction in transaction-related costs due to the decline in transaction volume as a result of the COVID-19 pandemic and a reduction in non-development labor costs in connection with our cost reduction measures.

Corporate— Cost of revenue associated with corporate costs increased $55 million, or 245%, for the six months ended June 30, 2020 compared to the same period in the prior year.

This increase was primarily due to a restructuring charge of $57 million for severance benefits and an increase in labor costs resulting from the shift to open source and cloud-based solutions.

This increase was partially offset by a reduction in non-development labor costs in connection with our cost reduction measures.

Depreciation and amortization— Depreciation and amortization decreased $19 million, or 11%, for the six months ended June 30, 2020 compared to the same period in the prior year.

The decrease is primarily due to a change in mix of our technology spend in 2019 resulting in less capitalized internal use software.

Amortization of upfront incentive consideration— Amortization of upfront incentive consideration decreased $2 million, or 4%, for the six months ended June 30, 2020 compared to the same period in the prior year.

Travel Solutions— Cost of revenue decreased $851 million, or 75%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily the result of a $821 million decline in incentive consideration in all regions due to lower transaction volumes as a result of the COVID-19 pandemic, as well as a $26 million reduction in labor and professional services costs in connection with our cost reduction measures.

Hospitality Solutions— Cost of revenue decreased $45 million, or 39%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by $38 million reduction in transaction-related costs due to the decline in transaction volume as a result of the COVID-19 pandemic and a reduction in non-development labor costs in connection with our cost reduction measures.

Corporate— Cost of revenue associated with corporate costs increased $22 million, or 360%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

This increase was primarily due to a restructuring charge of $22 million for severance benefits.

Depreciation and amortization— Depreciation and amortization decreased $2 million, or 6%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

The decrease is primarily due to customer implementations that became fully amortized during the nine months ended September 30, 2020.

Amortization of upfront incentive consideration— Amortization of upfront incentive consideration decreased $3 million, or 5%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

The decrease is primarily due to a reduction in upfront consideration provided to travel agencies.

Technology Costs

Nine Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Technology costs $ 883,837 $ 964,397 $ (80,560) (8) %

Technology costs decreased $81 million, or 8%, for the nine months ended September 30, 2020 compared to the same period in the prior year.

The decrease was primarily driven by reductions impacting our Travel Solutions and Hospitality Solutions segments, including a decrease in technology labor of $75 million in connection with our cost reduction measures, a $39 million decline in technology costs associated with lower transaction volumes resulting from the COVID-19 pandemic, and a $33 million decrease in depreciation and amortization primarily due to a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software.

Corporate technology costs increased due to a restructuring charge of $32 million for severance benefits.

Selling, General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

2020 2019 Change

1 unchanged sentence

Selling, general and administrative $ 447,011 $ 442,669 $ 4,342 1 %

Selling, general and administrative expenses increased $9 million, or 3%, for the six months ended June 30, 2020 compared to the same period in the prior year, primarily driven by a $34 million increase in the provision for expected credit losses, primarily related to fully reserving for aged balances related to certain customers, an increase in 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.

The increase is also due to a restructuring charge of $16 million for severance benefits.

The increase is partially offset by a $28 million decrease in labor costs in connection with our cost reduction measures, a $6 million decrease in technology costs and a reduction in other costs due to our expense management initiatives given the decline in transaction volume resulting from COVID-19.

Selling, general and administrative expenses increased $4 million, or 1%, for the nine months ended September 30, 2020 compared to the same period in the prior year, primarily driven by a $42 million increase in the provision for expected credit losses, primarily related to fully reserving for aged balances related to certain customers, an increase in 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.

The increase is also due to a restructuring charge of $20 million for severance benefits recorded in the current year and an increase of $32 million due to the reversal of a previously accrued loss in the prior year related to the US Airways legal matter.

The increase is substantially offset by a $58 million decrease in labor and professional services costs in connection with our cost reduction measures, a $7 million decrease in legal costs associated with the now-terminated acquisition of Farelogix and a reduction in other costs due to our expense management initiatives.

Interest expense, net

Nine Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Interest expense, net $ 163,674 $ 117,364 $ 46,310 39 %

Interest expense increased $46 million during the nine months ended September 30, 2020 compared to the same period in the prior year primarily due to additional borrowings under the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020 and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020.

Loss on Extinguishment of Debt

Nine Months Ended September 30,

2020 2019 Change

(Amounts in thousands)

Loss on extinguishment of debt $ 10,333 $ — $ 10,333 **

** not meaningful

As a result of the debt refinancing in the third quarter of 2020, we recognized a loss on extinguishment of debt of $10 million during the nine months ended September 30, 2020 which consisted of a redemption premium of $7 million and the write-off of unamortized debt issuance costs of $3 million.

Other expense, net

Six Months Ended June 30,

Nine Months Ended September 30,

2020 2019 Change

2 unchanged sentences

** not meaningful

Other expense, net increased $49 million for the six months ended June 30, 2020 compared to the same period in the prior year primarily due to a $46 million charge related to termination payments in connection with our proposed acquisition of Farelogix, an actuarial loss associated with our pension plan, and realized and unrealized foreign currency exchange losses.

Other expense, net increased $66 million for the nine months ended September 30, 2020 compared to the same period in the prior year primarily due to a $46 million charge related to termination payments in connection with our proposed acquisition of Farelogix, a pension plan settlement charge of $14 million, and realized and unrealized foreign currency exchange losses.

The increase is also due to a benefit recognized in the prior year associated with a reduction to our TRA liability due to the settlement of an audit.

1 unchanged sentence

Provision for Income Taxes

Six Months Ended June 30,

Nine Months Ended September 30,

2020 2019 Change

1 unchanged sentence

Provision for income taxes $ (53,336) $ 31,783 $ (85,119) (268) %

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$94 million valuation allowance recorded on tax losses generated in the current tax 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.

Our effective tax rates for the nine months ended September 30, 2020 and 2019 were 5% and 17%, respectively.

The decrease in the effective tax rate for the nine months ended September 30, 2020 as compared to the same period in 2019 was primarily due to a $139 million valuation allowance recorded on tax losses generated in the current tax year related to the impact of COVID-19 on our results of operations and various discrete items recorded in each of the respective nine month periods.

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

4 unchanged sentences

Borrowing availability under our Revolver is reduced by our outstanding letters of credit and restricted cash collateral.

As of June 30, 2020 and December 31, 2019, our cash and cash equivalents, Revolver and outstanding letters of credit were as follows (in thousands):

June 30, 2020 December 31, 2019

As of September 30, 2020 and December 31, 2019, our cash and cash equivalents, Revolver and outstanding letters of credit were as follows (in thousands):

September 30, 2020 December 31, 2019

Cash and cash equivalents $ 1,668,352 $ 436,176

7 unchanged sentences

We invest in a money market fund which is classified as cash and cash equivalents in our consolidated balance sheets and statements of cash flows.

We held no short-term investments as of June 30, 2020 and December 31, 2019.

We held no short-term investments as of September 30, 2020 and December 31, 2019.

As of December 31, 2018, we have utilized substantially all of our U.S.

6 unchanged sentences

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

As previously disclosed, we responded with measures to increase our cash position, including the suspension of dividends and share repurchases under the Share Repurchase Program (the "Share Repurchase Program"), borrowing under our existing revolving credit facility, implementation of cost savings measures, and the completion of debt offerings.

As previously disclosed, we responded with measures to increase our cash position, including the suspension of common stock dividends and share repurchases under the Share Repurchase Program (the "Share Repurchase Program"), borrowing under our Revolver, implementation of cost savings measures, and the completion of debt offerings.

Additionally, during the third quarter of 2020, we completed equity offerings which resulted in net proceeds of $598 million, extended the maturity of our Term Loan A and Revolver and used proceeds from newly issued notes due in September 2025 to pay down Term Loan A and notes due in April 2023.

Given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor travel activity and take additional steps should we determine they are necessary.

3 unchanged sentences

We may conduct debt or equity offerings to support future strategic investments, provide additional liquidity, or pay down debt.

in addition, we are reviewing opportunities to refinance our outstanding debt and extend our debt maturity profile, including Term Loan A and our Revolver.

We utilize cash and cash equivalents, supplemented by our Revolver, primarily to pay our operating expenses, make capital expenditures, invest in our information technology infrastructure, products and offerings, pay taxes, and service our debt and other long-term liabilities.

On August 27, 2020, Sabre GLBL entered into a new debt agreement consisting of $850 million aggregate principal amount of 7.375% senior secured notes due 2025 (the “September 2025 Notes”).

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

1 unchanged sentence

On March 17, 2020, we drew $375 million under the Revolver to supplement our liquidity needs.

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, which reduced our overall credit capacity under the Revolver.

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

We had outstanding letters of credit totaling $11 million and $12 million as of September 30, 2020 and December 31, 2019, which reduced our overall credit capacity under the Revolver.

The current interest rate for borrowings under the Revolver is LIBOR plus an adjusted spread based on leverage as reflected in the Revolver.

The Revolver will expire, at the earliest, on July 1, 2022.

On August 27, 2020, Sabre GLBL entered into an amendment to the Amended and Restated Credit Agreement which extended the maturity of the Revolver from July 1, 2022 to August 16, 2023, subject to certain "springing" maturity conditions that may extend the maturity to February 22, 2024 at the latest and extended the maturity of the remaining balance of Term Loan A from July 1, 2022 to August 16, 2023, subject to certain "springing" maturity conditions that may extend the maturity to February 22, 2024 at the latest.

Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations.

7 unchanged sentences

Debt Agreements

On August 27, 2020, Sabre GLBL entered into a new debt agreement consisting of $850 million aggregate principal amount of the September 2025 Notes.

The September 2025 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 September 2025 Notes bear interest at a rate of 7.375% per annum and interest payments are due semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021.

The September 2025 Notes mature on September 1, 2025.

The net proceeds received from the sale of the September 2025 Notes, net of underwriting fees and commissions, plus cash on hand, were used to:

(1) repay approximately $319 million principal amount of debt under the Term Loan A;

(2) redeem all of our outstanding 5.375% senior secured notes due 2023;

and (3) repay approximately $3 million principal amount of debt under the Term Loan B.

Debt for further information.

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

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

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 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.

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The net proceeds from the sales of the Notes are being used for general corporate purposes.

Cost Reduction Efforts

Given the market conditions as the result of COVID-19, we have identified and are in the process of removing costs from the business in 2020.

As part of these cost reduction efforts, we are implementing several immediate actions with regard to our workforce and other costs during this difficult business climate.

See "—Recent Developments Affecting our Results of Operations" for further information.

Farelogix Acquisition

On August 20, 2019, the U.S.

Department of Justice ("DOJ") filed a complaint in federal court in the District of Delaware, seeking a permanent injunction to prevent Sabre from acquiring Farelogix, alleging that the proposed acquisition is likely to substantially lessen competition in violation of federal antitrust law.

On April 9, 2020, the U.K.

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

Given the CMA's decision, we recorded a charge of $46 million during the six months ended June 30, 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.

During the six months ended June 30, 2020, we paid a quarterly cash dividend of $0.14 per share of our common stock totaling $39 million.

Equity Offerings

On August 24, 2020, we completed concurrent offerings of 3,340,000 shares of our 6.50% Series A Mandatory Convertible Preferred Stock (the "Preferred Stock") which generated net proceeds of approximately $323 million and 41,071,429 shares of common stock which generated net proceeds of approximately $275 million.

The Preferred Stock accumulates cumulative dividends at a rate per annum equal to 6.50% and dividends are payable when, as and if declared by our board of directors, out of funds legally available for their payment to the extent paid in cash, quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on December 1, 2020 and ending on, and including, September 1, 2023.

Declared dividends on the Preferred Stock will be payable, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock.

We recorded $2 million of accrued preferred stock dividends in our consolidated balance sheet as of September 30, 2020.

In October 2020, the Board of Directors declared a dividend of $1.7514 per share on Preferred Stock payable on December 1, 2020 to holders of record of the Preferred Stock on November 15, 2020.

During the nine months ended September 30, 2020, we paid a quarterly cash dividend of $0.14 per share of our common stock totaling $39 million.

On March 16, 2020, we announced the suspension of the payment of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment.

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

For the six months ended June 30, 2020, we did not repurchase any shares pursuant to the Share Repurchase Program.

For the nine months ended September 30, 2020, we did not 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 the 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 June 30, 2020.

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

Cost Reduction Efforts

Given the market conditions as the result of COVID-19, we have identified and are in the process of removing costs from the business in 2020.

As part of these cost reduction efforts, we are implementing several immediate actions with regard to our workforce and other costs during this difficult business climate.

See "—Recent Developments Affecting our Results of Operations" for further information.

Senior Secured Credit Facilities

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The Revolver and the Term Loan A mature on July 1, 2022.

The applicable margins for the Term Loan A and the Revolver were reduced to (i) between 2.50% and 1.75% per annum for Eurocurrency rate loans and (ii) between 1.50% and 0.75% per annum for base rate loans, in each case with the applicable margin for any quarter reduced by 25 basis points (up to 75 basis points total) if the Senior Secured First-Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) is less than 3.75 to 1.0, 3.00 to 1.0, or 2.25 to 1.0, respectively.

to 1.0, or 2.25 to 1.0, respectively.

Term Loan B matures on February 22, 2024.

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We incurred no additional indebtedness as a result of this transaction.

On August 27, 2020, Sabre GLBL entered into a Third Revolving Facility Refinancing Amendment to the Amended and Restated Credit Agreement (the "Third Revolving Refinancing Amendment") and the First Term A Loan Extension Amendment to the Amended and Restated Credit Agreement (the "Term A Loan Extension Amendment" and, together with the Third Revolving Refinancing Amendment, the "2020 Refinancing"), which extended the maturity of the Revolver from July 1, 2022 to August 16, 2023 at the earliest and February 22, 2024 at the latest, depending on certain "springing" maturity conditions as described in the Third Revolving Refinancing Amendment.

and extended the maturity of the Term Loan A from July 1, 2022 to August 16, 2023 at the earliest and February 22, 2024 at the latest, depending on certain "springing" maturity conditions as described in the Term A Loan Extension Amendment.

In the event that, as of August 16, 2023, the maturity date of the 5.25% senior secured notes due 2023 (the "November 2023 Notes") has not been extended or refinanced to a date after August 20, 2024, the extension is subject to an earlier "springing" maturity date of August 16, 2023.

In the event that, as of November 23, 2023, the maturity date of the Term Loan B has not been extended or refinanced to a date after August 20, 2024, the extension is subject to an earlier "springing" maturity date of November 23, 2023.

In addition to extending the maturity date of the Revolver and Term A Loan, the 2020 Refinancing also provides that, during any covenant suspension resulting from a "Material Travel Event Disruption" (as defined in the Amended and Restated Credit Agreement and discussed further below), including during the current covenant suspension period, we must maintain liquidity of at least $450 million on a monthly basis.

In addition, during this covenant suspension, the 2020 Refinancing limits certain payments to equity holders, certain investments, certain prepayments of unsecured debt and the ability of certain subsidiaries to incur additional debt.

The interest rate spreads for the Revolver and Term Loan A were increased by 0.25%, during covenant suspension, in connection with the 2020 Refinancing.

The maturity date of Term Loan B remains February 22, 2024.

Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including certain restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends, as well as a maximum leverage ratio.

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Under the terms of the Amended and Restated Credit Agreement, the financial covenant related to our leverage ratio is 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.

As of June 30, 2020, the recent capacity reductions by domestic airlines in response to the COVID-19 outbreak and related anticipated decreases in domestic passenger enplanements, and a recent sharp decline in GDS bookings, has led to a finding that a Material Travel Event Disruption has occurred.

As such, the leverage ratio covenant has been suspended for at least the second and third quarters of 2020.

As of September 30, 2020, the recent capacity reductions by domestic airlines in response to the COVID-19 outbreak and related anticipated decreases in domestic passenger enplanements, and a recent sharp decline in GDS bookings, has led to a finding that a Material Travel Event Disruption has occurred.

As such, the leverage ratio covenant has been suspended for at least the third and fourth quarters of 2020.

We are also required to pay down the term loans by an amount equal to 50% of annual excess cash flow, as defined in the Amended and Restated Credit Agreement.

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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.

Technology Expenditures

We maintain and make enhancements to our products, services, technologies and systems in response to technological developments, industry standards, trends, and customer demands.

We deploy resources in research and development in order to help maintain a competitive advantage and deliver innovation to the marketplace.

Software developed for internal use includes costs incurred to enhance our infrastructure, software applications and reservation systems.

Additionally, we rely on other third-party providers, including DXC, Amazon Web Services, Inc., Google Cloud, and Microsoft Corporation, to operate computer data centers and network systems and provide hosting services.

The aggregation of these costs represents our total technology expenditures of $458 million and $517 million for the six months ended June 30, 2020 and 2019, respectively.

These amounts include hosting, third-party software and expensed research and development costs of $434 million and $466 million for the six months ended June 30, 2020 and 2019, respectively, and capitalized software development expenditures, of $24 million and $51 million for these respective periods.

Six Months Ended June 30,

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

Nine Months Ended September 30,

(Amounts in thousands)

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Operating Activities

Cash used in operating activities for the six months ended June 30, 2020 was $395 million and consisted of net loss from continuing operations of $653 million, offset by adjustments for non-cash and other items of $291 million, and a decrease in cash from changes in operating assets and liabilities of $32 million.

The adjustments for non-cash and other items consist primarily of $190 million of depreciation and amortization, $48 million in allowance for credit losses, $37 million in amortization of upfront incentive consideration, $26 million stock-based compensation expense, $25 million in acquisition termination fees, and $6 million in amortization of debt discount and debt issuance costs, partially offset by $46 million in deferred income taxes.

Cash used in operating activities for the nine months ended September 30, 2020 was $587 million and consisted of net loss from continuing operations of $963 million, offset by adjustments for non-cash and other items of $443 million, and a decrease in cash from changes in operating assets and liabilities of $67 million.

The adjustments for non-cash and other items consist primarily of $279 million of depreciation and amortization, $58 million in allowance for credit losses, $57 million in amortization of upfront incentive consideration, $45 million stock-based compensation expense, $25 million in acquisition termination fees, a $14 million pension settlement charge, $13 million in amortization of debt discount and debt issuance costs, and a $10 million loss on debt extinguishment, partially offset by $67 million in deferred income taxes.

The decrease in cash from changes in operating assets and liabilities of $67 million was primarily the result of a decrease of $264 million in accounts payable due to reductions in incentive fees due to the impact of COVID-19 on our volumes and the payment of the remaining $21 million associated with termination fees for the Farelogix transaction, $26 million used for upfront incentive fees due to agencies, and $11 million in capitalized implementation costs.

These decreases were offset by a $178 million decrease in accounts receivable due to the impact of COVID-19 on our revenue and billings to customers, $20 million decrease in other assets, an increase of $21 million in deferred revenue, $17 million used in accrued compensation and related benefits, and a decrease of $3 million in prepaid expenses and other current assets.

Cash provided by operating activities for the six months ended June 30, 2019 was $258 million and consisted of net income from continuing operations of $87 million, adjustments for non-cash and other items of $282 million and a decrease in cash from changes in operating assets and liabilities of $112 million.

The adjustments for non-cash and other items consist primarily of $208 million of depreciation and amortization, $39 million in amortization of upfront incentive consideration, $34 million stock-based compensation expense, $14 million in allowance for doubtful accounts, offset by $14 million in deferred income taxes.

The decrease in cash from changes in operating assets and liabilities of $112 million was primarily the result of a $104 million increase in accounts receivable primarily due to seasonality, $35 million used for upfront incentive consideration, $24 million used for accrued compensation and related benefits, $15 million used for capitalized implementation costs, $4 million increase in other prepaid expenses and other current assets, and a $2 million increase in other assets.

These decreases were partially offset by an increase of $57 million in accounts payable and other accrued liabilities due to seasonality in incentives and business growth, and an increase of $15 million in deferred revenue.

These decreases were offset by a $182 million decrease in accounts receivable due to the impact of COVID-19 on our revenue and billings to customers, a $13 million decrease in other assets, an increase of $28 million in deferred revenue, and a $13 million increase in accrued compensation and related benefits.

Cash provided by operating activities for the nine months ended September 30, 2019 was $424 million and consisted of net income from continuing operations of $152 million, adjustments for non-cash and other items of $415 million and a decrease in cash from changes in operating assets and liabilities of $143 million.

The adjustments for non-cash and other items consist primarily of $312 million of depreciation and amortization, $60 million in amortization of upfront incentive consideration, $51 million stock-based compensation expense, $17 million in allowance for doubtful accounts, partially offset by $27 million in deferred income taxes.

The decrease in cash from changes in operating assets and liabilities of $143 million was primarily the result of a $67 million increase in accounts receivable primarily due to seasonality, $65 million used for upfront incentive consideration, $26 million used for accrued compensation and related benefits, $20 million used for capitalized implementation costs, $9 million increase in other prepaid expenses and other current assets, and a $3 million decrease in deferred revenue.

These decreases were partially offset by an increase of $35 million in accounts payable and other accrued liabilities due to seasonality in incentives and business growth, and a $13 million decrease in other assets.

Investing Activities

For the six months ended June 30, 2020, we used cash of $39 million on capital expenditures, including $24 million related to software developed for internal use.

For the six months ended June 30, 2019, we used cash of $76 million in investing activities, including $51 million related to software developed for internal use.

For the nine months ended September 30, 2020, we used cash of $48 million on capital expenditures, including $32 million related to software developed for internal use.

For the nine months ended September 30, 2019, we used cash of $108 million in investing activities, including $70 million related to software developed for internal use.

Additionally, we used cash of $16 million as an advance of purchase price to Farelogix for certain attorneys' fees.

See "Liquidity Outlook" for additional information on the now-terminated Farelogix acquisition agreement.

Financing Activities

For the six months ended June 30, 2020, financing activities provided $1,308 million.

For the nine months ended September 30, 2020, financing activities provided $1,874 million.

Significant highlights of our financing activities include:

• proceeds from borrowings under the Notes of $1,970 million;

• proceeds from issuance of stock of $598 million;

• proceeds from borrowings under the Revolver of $375 million;

• payment of $530 million on 5.375% senior secured notes due 2023;

• payment of $365 million on Term Loan A and Term Loan B;

• fourth and final annual payment on the TRA liability for $72 million, excluding interest;

• payment of $39 million in dividends on our common stock;

• payment of $38 million on our Term Loan A and Term Loan B;

• payment of $54 million on debt issuance costs;

• payment of $39 million in dividends on our common stock;

• net payments of $5 million from the settlement of employee stock-option awards, including payments of $5 million in income tax withholdings associated with the settlement of employee restricted-stock awards;

• payment of $5 million on our capital leases.

For the six months ended June 30, 2019, we used $293 million for financing activities.

For the nine months ended September 30, 2019, we used $351 million for financing activities.

Significant highlights of our financing activities include:

• payment of $115 million in dividends on our common stock;

• annual payment on the TRA liability for $101 million, excluding interest;

• payment of $45 million on our revolving credit facility and $43 million on our Term Loan A and Term Loan B;

• proceeds of $45 million from borrowings under our Revolver;

• repurchase of 3,673,768 shares of our common stock outstanding totaling $78 million;

• payment of $77 million in dividends on our common stock;

• payment of $24 million on our Term Loan A and Term Loan B;

• net payments of $7 million from the settlement of employee stock-based awards, including $5 million in proceeds from the exercise of employee stock options, net of payments for $12 million in income tax withholding associated with the settlement of employee stock-based awards.

• net payments of $6 million from the settlement of employee stock-based awards, including $7 million in proceeds from the exercise of employee stock options, net of payments for $13 million in income tax withholdings associated with the settlement of employee stock-based awards.

Contractual Obligations

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Off Balance Sheet Arrangements

We had no off balance sheet arrangements during the six months ended June 30, 2020 and year ended December 31, 2019.

We had no off balance sheet arrangements during the nine months ended September 30, 2020 and year ended December 31, 2019.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis