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Item 5. Market for Registrant’s Common Equity

2021-02-25 compared with 2020-02-26 · 141 added, 206 removed, 169 unchanged (67% of the section changed)

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Our common stock is listed on the NASDAQ Global Select Market under the symbol “SABR.” As of February 22, 2021, there were 104 stockholders of record of our common stock.

We expect to continue to pay quarterly cash dividends on our common stock, subject to declaration of our board of directors.

The amount of future cash dividends, if any, will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, number of shares of common stock outstanding and other factors the board of directors may deem relevant.

We have suspended the payment of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment.

The amount of future cash dividends on our common stock, if any, will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, number of shares of common stock outstanding and other factors the board of directors may deem relevant.

The timing and amount of future dividend payments will be at the discretion of our board of directors.

Our board of directors has declared a cash dividend of $0.14 per share of common stock which will be paid on March 30, 2020 to stockholders of record as of March 20, 2020.

See Item 7 , “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources —Dividends.” There were no shares repurchased during the fourth quarter of 2020.

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The following selected financial data should be read in conjunction with Item 7 , “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” and our consolidated financial statements and notes thereto contained in Item 8 , “ Financial Statements and Supplementary Data ,” of this Annual Report on Form 10-K.

Pursuant to the early adoption of the changes to Item 301 of Regulation S-K, we have elected to present three years of selected financial data, which we believe represents relevant historical periods and information for our readers in light of our Strategic Realignment.

The consolidated statements of operations data and consolidated statements of cash flows data for the years ended December 31, 2020, 2019 and 2018 and the consolidated balance sheet data as of December 31, 2020 and 2019 are derived from our audited consolidated financial statements contained in Item 8 , “ Financial Statements and Supplementary Data ,” of this Annual Report on Form 10-K.

The consolidated statements of operations data and consolidated statements of cash flows data for the years ended December 31, 2016 and 2015 and the consolidated balance sheet data as of December 31, 2017, 2016, and 2015 are derived from audited consolidated financial statements not included in this Annual Report on Form 10-K.

The consolidated balance sheet data as of December 31, 2018 is derived from audited consolidated financial statements not included in this Annual Report on Form 10-K.

Our historical results are not necessarily indicative of the results to be expected in the future.

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Consolidated Statements of Operations Data:

$ 3,974,988 $ 3,866,956 $ 3,598,484 $ 3,373,387 $ 2,960,896

Operating income (1)

363,417 562,016 493,440 459,572 459,769

Income from continuing operations (1)

164,312 340,921 249,576 241,390 234,555

(Loss) Income from discontinued operations, net of tax (1)

(1,766) 1,739 (1,932) 5,549 314,408

Net income attributable to common stockholders (1)

158,592 337,531 242,531 242,562 545,482

Net income per share attributable to common stockholders:

$ 0.57 $ 1.23 $ 0.87 $ 0.87 $ 2.00

$ 0.57 $ 1.22 $ 0.87 $ 0.86 $ 1.95

Revenue $ 1,334,100 $ 3,974,988 $ 3,866,956

Operating (loss) income (988,039) 363,417 562,016

(Loss) income from continuing operations (1,274,332) 164,312 340,921

Income (loss) from discontinued operations, net of tax 2,788 (1,766) 1,739

Net (loss) income attributable to common stockholders (1,280,403) 158,592 337,531

Net (loss) income per share attributable to common stockholders:

Basic $ (4.42) $ 0.57 $ 1.23

Diluted $ (4.42) $ 0.57 $ 1.22

Weighted-average common shares outstanding:

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Consolidated Statements of Cash Flows Data:

Cash provided by operating activities $ 581,260 $ 724,797 $ 678,033 $ 699,400 $ 529,207

Cash used in investing activities (243,026) (275,259) (317,525) (445,808) (729,041)

Cash (used in) provided by financing activities (409,721) (306,506) (356,780) (190,025) 93,144

Cash (used in) provided by operating activities $ (770,245) $ 581,260 $ 724,797

Cash (used in) provided by investing activities (1,291) (243,026) (275,259)

Cash provided by (used in) financing activities 1,837,741 (409,721) (306,506)

Additions to property and equipment 65,420 115,166 283,940

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Other Financial Data:

Adjusted Gross Profit (1)

$ 1,391,806 $ 1,521,408 $ 1,500,186 $ 1,460,675 $ 1,316,820

Adjusted Operating Income (1)

513,408 701,432 706,149 720,361 653,105

Adjusted Net Income (1)

279,215 427,570 390,118 370,937 308,072

Adjusted Operating (Loss) Income $ (745,274) $ 513,408 $ 701,432

Adjusted Net (Loss) Income (922,321) 279,215 427,570

Adjusted EBITDA (372,852) 946,360 1,124,390

946,360 1,124,390 1,078,571 1,046,646 941,587

Free Cash Flow (835,665) 466,094 440,857

Travel Network

Travel Solutions

Direct Billable Bookings - Air 103,331 499,111 491,820

Direct Billable Bookings - Lodging, Ground and Sea

Total Direct Billable Bookings 566,308 558,274 524,824 505,471 442,723

Airline Solutions Passengers Boarded 741,107 752,548 772,149 789,260 584,876

Hospitality Solutions Central Reservations System Transactions 108,482 88,655 N/A N/A N/A

21,353 67,197 66,454

(1) In the first quarter of 2018, we adopted the comprehensive update to revenue recognition guidance in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), on a prospective basis from January 1, 2018.

Revenue from Contracts with Customers with Customers, to our consolidated financial statements.

Distribution Total Direct Billable Bookings 124,684 566,308 558,274

IT Solutions Passengers Boarded 322,714 741,107 752,548

Hospitality Solutions

Central Reservations System Transactions 67,046 108,482 88,655

As of December 31,

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Long-term debt 4,639,782 3,261,821 3,337,467

3,261,821 3,337,467 3,398,731 3,276,281 3,169,344

Working capital surplus (deficit) (2) (3)

Working capital surplus (2)

1,266,162 96,377 169,235

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________________________________

(1) In the first quarter of 2019, we adopted new lease accounting guidance on a modified retrospective basis in accordance with ASC 842, Leases.

(1) In the first quarter of 2019, we adopted new lease accounting guidance on a modified retrospective basis in accordance with Accounting Standards Codification (" ASC") 842, Leases.

Leases, to our consolidated financial statements.

(2) In the first quarter of 2018, we adopted the comprehensive update to revenue recognition guidance, ASC 606, on a prospective basis from January 1, 2018.

Revenue from Contracts with Customers , to our consolidated financial statements.

(3) In the fourth quarter of 2015, we adopted new accounting standards that changed the presentation of deferred tax assets and liabilities and debt issuance costs and were applied retrospectively.

(2) In the first quarter of 2020, we adopted the comprehensive update for the measurement of credit losses, ASC 326, on a modified retrospective basis.

Credit Losses, to our consolidated financial statements.

Non-GAAP Financial Measures

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

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

Year Ended December 31,

2020 2019 2018

Net income attributable to common stockholders $ 158,592 $ 337,531 $ 242,531 $ 242,562 $ 545,482

Loss (Income) from discontinued operations, net of tax 1,766 (1,739) 1,932 (5,549) (314,408)

Net income attributable to noncontrolling interests (1)

Net (loss) income attributable to common stockholders $ (1,280,403) $ 158,592 $ 337,531

(Income) loss from discontinued operations, net of tax (2,788) 1,766 (1,739)

Net income attributable to non-controlling interests (1)

1,200 3,954 5,129

Income from continuing operations 164,312 340,921 249,576 241,390 234,555

Preferred stock dividends

(Loss) Income from continuing operations (1,274,332) 164,312 340,921

Impairment and related charges (2)

— — 81,112 — —

Acquisition-related amortization (3a)

65,998 64,604 68,008

Restructuring and other costs (6)

Loss on extinguishment of debt

— 633 1,012 3,683 38,783

Other, net (5)

66,961 9,432 8,509

Restructuring and other costs (6)

— — 23,975 18,286 9,256

Acquisition-related costs (7)

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69,946 66,885 57,263

Tax impact of net income adjustments (9), (10)

Tax impact of adjustments (9)

18,131 (42,476) (59,353)

Adjusted Net Income from continuing operations $ 279,215 $ 427,570 $ 390,118 $ 370,937 $ 308,072

Adjusted Net Income from continuing operations per share $ 1.01 $ 1.54 $ 1.40 $ 1.31 $ 1.10

Adjusted Net (Loss) Income from continuing operations $ (922,321) $ 279,215 $ 427,570

Adjusted Net (Loss) Income from continuing operations per share $ (3.18) $ 1.01 $ 1.54

Diluted weighted-average common shares outstanding 289,855 276,217 277,518

Adjusted Net Income from continuing operations $ 279,215 $ 427,570 $ 390,118 $ 370,937 $ 308,072

Depreciation and amortization of property and equipment (3b)

Operating (loss) income $ (988,039) $ 363,417 $ 562,016

Equity method (loss) income (2,528) 2,044 2,556

Impairment and related charges (2)

Acquisition-related amortization (3a)

65,998 64,604 68,008

Amortization of capitalized implementation costs (3c)

Restructuring and other costs (6)

Acquisition-related costs (7)

16,787 41,037 3,266

Amortization of upfront incentive consideration (4)

Litigation costs, net (8)

(1,919) (24,579) 8,323

Interest expense, net 156,391 157,017 153,925 158,251 173,298

Remaining provision for income taxes 77,802 116,845 162,106 191,173 171,735

Adjusted EBITDA $ 946,360 $ 1,124,390 $ 1,078,571 $ 1,046,646 $ 941,587

Depreciation and amortization (3)

Stock-based compensation 69,946 66,885 57,263

Adjusted Operating (Loss) Income $ (745,274) $ 513,408 $ 701,432

(Loss) income from continuing operations $ (1,274,332) $ 164,312 $ 340,921

Depreciation and amortization of property and equipment (3b)

260,651 310,573 303,612

Amortization of upfront incentive consideration (4)

Amortization of capitalized implementation costs (3c)

37,094 39,444 41,724

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65,998 64,604 68,008

Adjusted Operating Income $ 513,408 $ 701,432 $ 706,149 $ 720,361 $ 653,105

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

Year Ended December 31, 2019

Network Airline

Solutions Hospitality

Solutions Corporate Total

Operating income (loss) $ 646,794 $ 80,428 $ (21,632) $ (342,173) $ 363,417

Selling, general and administrative 178,664 85,801 38,597 273,506 576,568

Cost of revenue adjustments:

Depreciation and amortization (3)

108,302 160,381 47,877 24,329 340,889

Impairment and related charges (2)

Restructuring and other costs (6)

Amortization of upfront incentive consideration (4)

74,677 82,935 77,622

Stock-based compensation — — — 27,997 27,997

Adjusted Gross Profit 1,016,695 326,610 64,842 (16,341) 1,391,806

Selling, general and administrative (178,664) (85,801) (38,597) (273,506) (576,568)

Joint venture equity income 2,044 — — — 2,044

Selling, general and administrative adjustments:

Depreciation and amortization (3)

Interest expense, net 235,091 156,391 157,017

Other, net (5)

66,961 9,432 8,509

Loss on extinguishment of debt 21,626 — 633

Acquisition-related costs (7)

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Stock-based compensation 69,946 66,885 57,263

Provision for income taxes (39,913) 35,326 57,492

Adjusted EBITDA $ (372,852) $ 946,360 $ 1,124,390

Depreciation and amortization (3)

121,083 171,014 53,098 69,426 414,621

Amortization of upfront incentive consideration (4)

82,935 — — — 82,935

Acquisition-related amortization (3a)

— — — (64,604) (64,604)

Adjusted Operating Income (Loss) $ 648,838 $ 80,428 $ (21,632) $ (194,226) $ 513,408

The following tables set forth the reconciliation of Adjusted Operating (Loss) Income to Operating (Loss) Income in our statement of operations and Adjusted EBITDA to (Loss) Income from Continuing Operations in our statement of operations by business segment (in thousands):

Year Ended December 31, 2020

Network Airline

Solutions Hospitality

Solutions Corporate Total

Operating income (loss) $ 753,255 $ 111,146 $ 12,881 $ (315,266) $ 562,016

Selling, general and administrative 160,298 73,675 33,626 245,927 513,526

Cost of revenue adjustments:

Depreciation and amortization (3)

Adjusted Operating Loss $ (523,122) $ (63,915) $ (158,237) $ (745,274)

Equity method loss (2,528) — — (2,528)

Impairment and related charges (2)

— — 8,684 8,684

Amortization of upfront incentive consideration (4)

Acquisition-related amortization (3a)

— — 65,998 65,998

Stock-based compensation — — — 26,591 26,591

Adjusted Gross Profit 1,098,052 355,079 83,333 (15,056) 1,521,408

Selling, general and administrative (160,298) (73,675) (33,626) (245,927) (513,526)

Joint venture equity income 2,556 — — — 2,556

Selling, general and administrative adjustments:

Depreciation and amortization (3)

Restructuring and other costs (6)

— — 85,797 85,797

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Stock-based compensation — — 69,946 69,946

Operating loss $ (520,594) $ (63,915) $ (403,530) $ (988,039)

Adjusted EBITDA $ (197,905) $ (21,126) $ (153,821) $ (372,852)

Depreciation and amortization (3)

Depreciation and amortization of property and equipment (3b)

217,808 38,427 4,416 260,651

Amortization of upfront incentive consideration (4)

Amortization of capitalized implementation costs (3c)

32,732 4,362 — 37,094

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— — 65,998 65,998

Adjusted Operating Income (Loss) $ 755,811 $ 111,146 $ 12,881 $ (178,406) $ 701,432

Year Ended December 31, 2017

Network Airline

Solutions Hospitality

Solutions Corporate Total

Operating income (loss) $ 744,045 $ 137,932 $ 9,670 $ (398,207) $ 493,440

Selling, general and administrative 162,997 78,638 47,121 221,319 510,075

Impairment and related charges (2)

— — 8,684 8,684

Cost of revenue adjustments:

Depreciation and amortization (3)

96,796 149,685 31,686 39,645 317,812

Restructuring and other costs (6)

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74,677 — — 74,677

Stock-based compensation — — — 17,732 17,732

Adjusted Gross Profit 1,071,249 366,255 88,477 (25,795) 1,500,186

Selling, general and administrative (162,997) (78,638) (47,121) (221,319) (510,075)

Joint venture equity income 2,580 — — — 2,580

Selling, general and administrative adjustments:

Depreciation and amortization (3)

12,783 8,820 1,428 60,028 83,059

Restructuring and other costs (6)

Acquisition-related costs (7)

— — 16,787 16,787

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Stock-based compensation — — 69,946 69,946

Adjusted EBITDA 923,615 296,437 42,784 (184,265) 1,078,571

Depreciation and amortization (3)

109,579 158,505 33,114 99,673 400,871

Amortization of upfront incentive consideration (4)

67,411 — — — 67,411

Acquisition-related amortization (3a)

— — — (95,860) (95,860)

Adjusted Operating Income (Loss) $ 746,625 $ 137,932 $ 9,670 $ (188,078) $ 706,149

Equity method loss (2,528) — — (2,528)

Operating loss $ (520,594) $ (63,915) $ (403,530) $ (988,039)

Interest expense, net (235,091)

Other, net (5)

Loss on extinguishment of debt (21,626)

Equity method loss (2,528)

Provision for income taxes 39,913

Loss from continuing operations $ (1,274,332)

Year Ended December 31, 2019

Network Airline

Solutions Hospitality

Solutions Corporate Total

Operating income (loss) $ 735,354 $ 136,177 $ 16,807 $ (428,766) $ 459,572

Selling, general and administrative 165,520 74,048 33,867 352,718 626,153

Cost of revenue adjustments:

Depreciation and amortization (3)

82,963 144,697 21,823 37,870 287,353

Restructuring and other costs (6)

— — — 12,660 12,660

Amortization of upfront incentive consideration (4)

55,724 — — — 55,724

Stock-based compensation — — — 19,213 19,213

Adjusted Gross Profit 1,039,561 354,922 72,497 (6,305) 1,460,675

Selling, general and administrative (165,520) (74,048) (33,867) (352,718) (626,153)

Joint venture equity income 2,780 — — — 2,780

Selling, general and administrative adjustments:

Depreciation and amortization (3)

9,809 5,488 1,334 110,002 126,633

Restructuring and other costs (6)

Adjusted Operating Income (Loss) $ 729,266 $ (21,632) $ (194,226) $ 513,408

Equity method income 2,044 — — 2,044

Acquisition-related amortization (3a)

— — 64,604 64,604

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Stock-based compensation — — 66,885 66,885

Operating income (loss) $ 727,222 $ (21,632) $ (342,173) $ 363,417

Adjusted EBITDA $ 1,104,298 $ 31,466 $ (189,404) $ 946,360

Depreciation and amortization (3)

Depreciation and amortization of property and equipment (3b)

257,390 48,361 4,822 310,573

Amortization of upfront incentive consideration (4)

Amortization of capitalized implementation costs (3c)

34,707 4,737 — 39,444

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— — 64,604 64,604

Adjusted Operating Income (Loss) $ 738,134 $ 136,177 $ 16,807 $ (170,757) $ 720,361

Year Ended December 31, 2015

Network Airline

Solutions Hospitality

Solutions Corporate Total

Operating income (loss) $ 679,045 $ 134,660 $ 6,236 $ (360,172) $ 459,769

Selling, general and administrative 156,775 68,730 30,387 301,185 557,077

Cost of revenue adjustments:

Depreciation and amortization (3)

71,003 134,811 16,313 22,408 244,535

Amortization of upfront incentive consideration (4)

82,935 — — 82,935

Stock-based compensation — — — 11,918 11,918

Adjusted Gross Profit 950,344 338,201 52,936 (24,661) 1,316,820

Selling, general and administrative (156,775) (68,730) (30,387) (301,185) (557,077)

Joint venture equity income 14,842 — — — 14,842

Joint venture intangible amortization (3a)

Acquisition-related costs (7)

— — 41,037 41,037

Selling, general and administrative adjustments:

Depreciation and amortization (3)

Litigation costs, net (8)

— — (24,579) (24,579)

Restructuring and other costs (6)

Stock-based compensation — — 66,885 66,885

Equity method income 2,044 — — 2,044

Operating income (loss) $ 727,222 $ (21,632) $ (342,173) $ 363,417

Interest expense, net (156,391)

Other, net (5)

Equity method income 2,044

Provision for income taxes (35,326)

Income from continuing operations $ 164,312

Year Ended December 31, 2018

Solutions Hospitality

Solutions Corporate Total

Adjusted Operating Income (Loss) $ 866,957 $ 12,881 $ (178,406) $ 701,432

Equity method income 2,556 — — 2,556

Acquisition-related amortization (3a)

— — 68,008 68,008

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Stock-based compensation — — 57,263 57,263

Operating income (loss) $ 864,401 $ 12,881 $ (315,266) $ 562,016

Adjusted EBITDA $ 1,245,286 $ 52,824 $ (173,720) $ 1,124,390

Depreciation and amortization (3)

Depreciation and amortization of property and equipment (3b)

262,745 36,181 4,686 303,612

Amortization of upfront incentive consideration (4)

Amortization of capitalized implementation costs (3c)

37,962 3,762 — 41,724

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— — 68,008 68,008

Adjusted Operating Income (Loss) $ 693,887 $ 134,660 $ 6,236 $ (181,678) $ 653,105

Amortization of upfront incentive consideration (4)

77,622 — — 77,622

Acquisition-related costs (7)

— — 3,266 3,266

Litigation costs, net (8)

— — 8,323 8,323

Stock-based compensation — — 57,263 57,263

Equity method income 2,556 — — 2,556

Operating income (loss) $ 864,401 $ 12,881 $ (315,266) $ 562,016

Interest expense, net (157,017)

Other, net (5)

Loss on extinguishment of debt (633)

Equity method income 2,556

Provision for income taxes (57,492)

Income from continuing operations $ 340,921

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

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2020 2019 2018

Cash provided by operating activities $ 581,260 $ 724,797 $ 678,033 $ 699,400 $ 529,207

Cash (used in) provided by operating activities $ (770,245) $ 581,260 $ 724,797

Cash used in investing activities (1,291) (243,026) (275,259)

Cash (used in) provided by financing activities (409,721) (306,506) (356,780) (190,025) 93,144

Cash provided by (used in) financing activities 1,837,741 (409,721) (306,506)

Year Ended December 31,

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________________________________

(1) Net income attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interest held in (i) Sabre Travel Network Middle East of 40% and Sabre Seyahat Dagitim Sistemleri A.S.

(1) Net income attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interests held in (i) Sabre Travel Network Middle East of 40% and Sabre Seyahat Dagitim Sistemleri A.S.

of 40% for all periods presented, (ii) Sabre Travel Network Lanka (Pte) Ltd of 40% beginning in July 2015, and (iii) Sabre Bulgaria of 40% beginning in November 2017.

(2) Impairment and related charges represents an $81 million charge in 2017 associated with net capitalized contract costs related to an Airline Solutions' customer based on our analysis of the recoverability of such amounts.

Impairment and Related Charges for additional information.

(2) Impairment and related charges consists of $5 million associated with s oftware developed for internal use and $4 million associated with capitalized implementation costs related to a specific customer based on our analysis of the recoverability of such amounts.

(3) Depreciation and amortization expenses:

Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date.

Also includes amortization of the excess basis in our underlying equity interest in the net assets of SAPPL prior to its acquisition on July 1, 2015.

Depreciation and amortization of property and equipment includes software developed for internal use as well as amortization of contract acquisition costs.

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

(4) 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.

(4) 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, excluding technology costs 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.

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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.

(5) In 2019, Other, net, primarily includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.

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

("Farelogix") and a $18 million pension settlement charge recorded in 2020, partially offset by a $10 million gain on sale of our headquarters building in the fourth quarter of 2020.

In 2018, we recorded an expense of $5 million related to our liability under the Tax Receivable Agreement ("TRA") and an offsetting gain of $8 million on the sale of an investment.

In 2017, we recognized a benefit of $60 million due to a reduction to our liability under the TRA primarily due to a provisional adjustment resulting from the enactment of TCJA which reduced the U.S.

corporate income tax rate, offset by a loss of $15 million related to debt modification costs associated with a debt refinancing.

In 2016, we recognized a gain of $15 million from the sale of our available-for-sale marketable securities, and $6 million gain associated with the receipt of an earn-out payment related to the sale of a business in 2013.

In 2015, we recognized a gain of $78 million associated with the remeasurement of our previously-held 35% investment in SAPPL to its fair value and a gain of $12 million related to the settlement of pre-existing agreements between us and SAPPL.

In addition, all periods presented include 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.

See Item 7 , “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources —Tax Receivable Agreement” for additional information regarding the TRA.

(6) Restructuring and other costs represents charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs.

We recorded $25 million and $20 million in charges associated with announced actions to reduce our workforce in 2017 and 2016, respectively.

These reductions aligned our operations with business needs and implemented an ongoing cost and organizational structure consistent with our expected growth needs and opportunities.

In 2015, we recognized a restructuring charge of $9 million associated with the integration of Abacus, and reduced that estimate by $4 million in 2016, as a result of the reevaluation of our plan derived from a shift in timing and strategy of originally contemplated actions.

As of December 31, 2018, our actions under these activities were substantially completed and payments under the plans have been made.

(7) Acquisition-related costs represent fees and expenses incurred associated with the 2018 agreement to acquire Farelogix, which is anticipated to close in 2020, as well as costs related to the acquisition of Radixx in 2019.

In 2016, acquisition-related costs relate to the acquisition of the Trust Group and Airpas Aviation.

In 2015, acquisition-related costs relate to the acquisition of Abacus and the Trust Group.

Acquisitions to our consolidated financial statements regarding the Farelogix termination and Note 16.

Pension and Other Postretirement Benefit Plans to our consolidated financial statements regarding the pension settlements.

(6) Restructuring and other costs represents charges associated with business restructuring and associated changes, including the Strategic Realignment, as well as other measures to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.

Restructuring Activities to our consolidated financial statements for further details.

(7) Acquisition-related costs represent fees and expenses incurred associated with the now-terminated agreement to acquire Farelogix, as well as costs related to the acquisition of Radixx in 2019.

Acquisitions to our consolidated financial statements.

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

In 2020, we reversed the previously accrued non-income tax expense of $4 million due to success in our claims.

In 2019, we recorded the reversal of our previously accrued loss related to the US Airways legal matter for $32 million.

In 2018, we recorded non-income tax expense of $5 million for tax, penalties and interest associated with certain non-income tax claims for historical periods regarding permanent establishment in a foreign jurisdiction.

In 2017, we recorded a $43 million reimbursement, net of accrued legal and related expenses, from a settlement with our insurance carriers with respect to the American Airlines litigation.

In 2016, we recorded an accrual of $32 million representing the trebling of the jury award plus our estimate of attorneys’ fees, expenses and costs in the US Airways litigation.

Commitments and Contingencies to our consolidated financial statements.

(9) The tax impact on net income adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, and the tax effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions and other items.

In 2018, the tax impact on net income adjustments includes a benefit of $27 million related to the provisional impact for deferred taxes and foreign tax effects recorded for the enactment of the TCJA in 2017.

In 2017, the tax impact on net income adjustments includes a provisional impact of $47 million recognized in the fourth quarter of 2017 as a result of the enactment of the TCJA in December 2017.

(10) In the first quarter of 2016, we adopted Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting.

For the year ended December 31, 2016, we recognized $35 million in excess tax benefits associated with employee equity-based awards, as a result of the adoption of this standard.

There were no other material impacts to our consolidated financial statements as a result of adopting this updated standard.

(9) The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, the impact of the adjustments on valuation allowance assessments, and the tax effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions, and other items.

In 2018, the provision for income taxes includes a benefit of $27 million related to the enactment of the TCJA for deferred taxes and foreign tax effects.

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 Annual Report on Form 10-K, including Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income from continuing operations ("Adjusted Net Income"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures.

We define Adjusted Gross Profit as operating income (loss) adjusted for selling, general and administrative expenses, impairment and related charges, 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 Income (Loss) as operating income (loss) adjusted for joint venture equity income, impairment and related charges, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.

We define Adjusted Net Income as net income attributable to common stockholders adjusted for income (loss) from discontinued operations, net of tax, net income attributable to noncontrolling interests, impairment and related charges, acquisition-related amortization, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of net income adjustments.

We define Adjusted EBITDA as Adjusted Net Income adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, amortization of upfront incentive consideration, interest expense, net, and the remaining provision for income taxes.

We define Free Cash Flow as cash provided by operating activities less cash used in additions to property and equipment.

We define Adjusted Net Income from continuing operations per share as Adjusted Net Income divided by diluted weighted-average common shares outstanding.

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Annual Report on Form 10-K, including 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 the Strategic 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.

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

We define Adjusted Net (Loss) Income as net (loss) income attributable to common stockholders adjusted for loss (income) from discontinued operations, net of tax, net income attributable to noncontrolling interests, impairment and related charges, acquisition-related amortization, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of net income adjustments.

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

We define Free Cash Flow as cash (used in) provided by operating activities less cash used in additions to property and equipment.

We define Adjusted Net (Loss) Income from continuing operations per share as Adjusted Net (Loss) Income divided by diluted weighted-average common shares outstanding.

These non-GAAP financial measures are key metrics used by management and our board of directors to monitor our ongoing core operations because historical results have been significantly impacted by events that are unrelated to our core operations as a result of changes to our business and the regulatory environment.

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

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 Income (Loss), Adjusted Net 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 EBITDA does not reflect cash requirements for such replacements;

• Adjusted EBITDA does not reflect amortization of upfront incentive consideration or capitalized implementation costs associated with our revenue contracts, which may require future working capital or cash needs in the future;

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

1 unchanged sentence

• 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 Income (Loss), Adjusted Net 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 Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

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-K

Item 5. Market for Registrant’s Common Equity