4 unchanged sentences
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018
−Removed: Consolidated Statements of Other Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017
+Added: Consolidated Statements of Other Comprehensive (Loss) Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020 and 2019
7 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Sabre Corporation (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “ consolidated financial statements ” ).
+Added: We have audited the accompanying consolidated balance sheets of Sabre Corporation (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “ consolidated financial statements ” ).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.
1 unchanged sentence
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company ’ s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2021 expressed an unqualified opinion thereon.
−Removed: Adoption of ASU No.
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue from sales to customers in 2018 due to the adoption of ASU No.
−Removed: 2014-09, Revenue from Contracts with Customers (Topic 606).
Basis for Opinion
13 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Capitalization of Software Development Costs
−Removed: Description of the Matter For the year ended December 31, 2019, the Company capitalized $89 million of software development costs for internal use.
−Removed: As discussed in Note 1 of the financial statements, the Company capitalizes certain internal and external costs associated with developing its infrastructure, software applications and reservation systems.
−Removed: Auditing management’s capitalization of software development costs for internal use was complex and challenging due to the judgment involved in assessing qualification for cost capitalization in accordance with applicable accounting standards.
−Removed: This is specifically judgmental as it relates to determining the development stage of the project and whether the development costs incurred result in significant additional functionality, which is capitalized, or are ongoing maintenance activities, which are expensed.
−Removed: How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls related to the Company’s process for determining whether software development costs incurred qualify for capitalization.
−Removed: For example, we tested controls over management’s evaluation of the project stages and its assessment whether the associated costs resulted in significant additional functionality for existing internal use software.
−Removed: Our audit procedures also included, among others, testing a sample of development costs through inspection of project plan documentation and making inquiries of the project management team to assess the nature of the development costs and the respective stage of the project.
−Removed: We also reconciled amounts capitalized to payroll information.
−Removed: Measurement of Airline Solutions Revenue
−Removed: Description of the Matter As discussed in Note 2 of the financial statements, the Company recognized $840 million of revenue in the Airline Solutions (“AS”) segment.
−Removed: AS customer agreements are long-term contracts that frequently contain multiple performance obligations.
+Added: Measurement of IT Solutions Revenue
+Added: Description of the Matter As discussed in Note 2 of the financial statements, the Company recognized $595 million of IT Solutions revenue.
+Added: IT Solutions customer agreements are long-term contracts that frequently contain multiple performance obligations.
Judgment exists in determining which performance obligations are distinct and accounted for separately.
2 unchanged sentences
Contracts with variable consideration may require forecasts over the term of the contract to determine the appropriate rate used to recognize revenue.
−Removed: Auditing management’s recognition of AS revenue was complex and involved a high degree of judgment because of the significant management judgments and estimates required to identify the distinct performance obligations, estimate and allocate contract consideration and determine the rate used to recognize revenue.
−Removed: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls related to the Company’s process for recognizing AS revenue, including management’s review of the significant judgments and estimates used in the identification of distinct performance obligations, the estimation and allocation of amounts to each performance obligation, and the determination of the rate used to recognize revenue.
−Removed: Our audit procedures also included, among others, testing management’s identification of the distinct performance obligations based on terms in the contracts and the Company’s policies.
−Removed: Our procedures also included testing the judgments and estimates used to determine the rate to recognize revenue based on the contractual minimums, tiered pricing and other discounts.
−Removed: To test the calculation of the amount of consideration allocated to each distinct performance obligation, we performed procedures to test management’s judgments and assumptions related to the allocation of consideration to each distinct performance obligation and performed sensitivity analyses to evaluate how these assumptions affect the amount of revenue recognized.
+Added: Auditing management’s recognition of IT Solutions revenue was complex and involved a high degree of judgment because of the significant management judgments and estimates required to identify the distinct performance obligations, estimate and allocate contract consideration, and determine the rate used to recognize revenue.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls related to the Company’s process for recognizing IT Solutions revenue, including management’s review of the significant judgments and estimates used in the identification of distinct performance obligations, the estimation and allocation of amounts to each performance obligation, the estimation of revenue to constrain, and the determination of the rate used to recognize revenue.
+Added: Our audit procedures included, among others, testing management’s identification of the distinct performance obligations based on terms in the contracts and the Company’s policies.
+Added: Our procedures also included testing the judgments and estimates used to determine the rate to recognize revenue and estimation of revenue to constrain, based on the contractual minimums, tiered pricing and other discounts, current economic conditions and customer concessions.
+Added: To test the calculation of the amount of consideration allocated to each distinct performance obligation, we performed procedures to test management’s judgments and assumptions related to the allocation of consideration to each distinct performance obligation.
Our procedures included an evaluation of the significant assumptions and the accuracy and completeness of the underlying data used in management’s calculation of revenue recognized.
−Removed: We have also evaluated the adequacy of the Company’s AS revenue disclosures included in Note 2 in relation to these revenue recognition matters.
+Added: We have also evaluated the adequacy of the Company’s IT Solutions revenue disclosures included in Note 2 in relation to these revenue recognition matters.
Uncertain Tax Positions
−Removed: Description of the Matter As discussed in Note 7 of the financial statements, the Company operates in the United States and multiple international jurisdictions in which the taxing authorities may challenge income tax positions.
−Removed: Because the matters challenged by the taxing authorities are typically complex and open to subjective interpretation, their ultimate outcome may differ from the amounts recognized.
−Removed: The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more likely than not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition.
+Added: Description of the Matter As discussed in Note 7 of the financial statements, the Company operates in the United States and multiple international jurisdictions, and its income tax returns are subject to examination by tax authorities in those jurisdictions who may challenge income tax positions on these returns.
+Added: Uncertainty in a tax position may arise because tax laws are subject to interpretation.
+Added: The Company uses significant judgment in (1) determining whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition.
As of December 31, 2020, the Company accrued liabilities of $96 million for uncertain tax positions, including penalties and interest.
−Removed: Auditing Management’s analysis of the Company’s uncertain tax positions involved significant auditor judgment and use of tax professionals with specialized skills and knowledge to evaluate the Company’s interpretation of, and compliance with, tax laws across its multiple subsidiaries located in multiple taxing jurisdictions.
−Removed: Each tax position involves unique facts and circumstances that must be evaluated, and there may be many uncertainties around initial recognition and de-recognition of tax positions, including regulatory changes, litigation and examination activity.
−Removed: In addition, a higher degree of auditor judgment was required to evaluate the Company’s measurement of the largest amount of benefit, considered on a cumulative probability basis, which is more likely than not to be realized upon settlement.
−Removed: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s identification, recognition and measurement of uncertain tax positions.
−Removed: For example, we tested controls over management’s identification of uncertain tax positions and its application of the recognition and measurement principles, including management’s review of the inputs and calculations for uncertain tax positions.
−Removed: We involved our tax professionals to assess the technical merits and the amount of the benefit recognized related to the Company’s tax positions.
−Removed: Our procedures included, among others, evaluating changes in tax law that occurred during the year and assessing the Company’s interpretation of those changes under the relevant jurisdiction’s tax law.
−Removed: We also inspected correspondence, assessments and settlements with the relevant tax authorities.
−Removed: In addition, we evaluated income tax opinions or other third-party advice obtained by the Company in relation to specific income tax law.
−Removed: We also tested the completeness and accuracy of the underlying data used by the Company to calculate its uncertain tax positions.
+Added: Auditing management’s estimate of the amount of tax benefit that qualifies for recognition involved auditor judgment and use of tax professionals with specialized skills and knowledge to evaluate the Company’s interpretation of, and compliance with, tax laws and legal rulings across its multiple subsidiaries located in multiple taxing jurisdictions.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting process for uncertain tax positions.
+Added: For example, we tested controls over the Company’s assessment of the technical merits of tax positions and management’s process to measure the benefit of those tax positions.
+Added: Among other procedures performed, we involved our tax professionals to assess the technical merits of the Company’s tax positions.
+Added: This included assessing the Company’s correspondence with the relevant tax authorities and evaluating income tax opinions or other third-party advice obtained by the Company.
+Added: We also evaluated the appropriateness of the Company’s accounting for its tax positions taking into consideration relevant information, local income tax laws, and legal rulings.
+Added: We analyzed the Company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the accuracy of the calculations.
We have also evaluated the adequacy of the Company’s income tax disclosures included in Note 7 in relation to these tax matters.
+Added: Estimates Impacted by Coronavirus (COVID-19)
+Added: Description of the Matter As discussed in Note 1 of the financial statements, the Company utilizes estimates in evaluating the recoverability of the carrying value of long-lived assets and goodwill, capitalized implementation costs, subscriber payments, accounts receivable and reserves for estimated air booking cancellations.
+Added: The COVID-19 pandemic has had a significant and adverse impact on the Company as well as its customers.
+Added: As the extent and duration of the impact is unknown, there is a high degree of uncertainty around transaction volumes in the global travel industry, which results in significant judgment in determining the underlying forecasted cash flows and other key assumptions utilized in these estimates to evaluate the recoverability of these assets and the amount of the cancellation reserve.
+Added: Auditing management’s judgments in estimating forecasted cash flows was complex and involved a high degree of judgment because of the high degree of uncertainty around future transaction volumes in the global travel industry, including forecasted airline booking cancellations.
+Added: Additionally, the assumptions are affected by future market and economic conditions, airline insolvency, suspension of travel services or actions taken by local governments that may reduce travel and hospitality activities.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls related to estimating the recoverability of the carrying value of long-lived assets and goodwill, capitalized implementation costs, subscriber payments and accounts receivable, as well as controls related to estimating future airline booking cancellations impacting the determination of the air booking cancellation reserve, including management’s review of the significant judgments in the cash flow forecasts.
+Added: We also tested controls over management’s review of the data used in their cash flow forecasts.
+Added: Our audit procedures included, among others, assessing methodologies and testing the significant assumptions in the cash flow forecasts and the underlying data used by the Company in its analyses, including the estimated period in which travel will return to pre pandemic volumes.
+Added: For example, we performed procedures to test significant assumptions related to future air booking cancellation activity and performed sensitivity analyses to evaluate how those assumptions affect the air booking cancellation reserve.
+Added: We also compared projected cash flows to the Company’s historical cash flows and other available industry and general economic information and performed sensitivity analyses of the significant assumptions in evaluating the recoverability of the related assets.
/s/ Ernst & Young LLP
33 unchanged sentences
Revenue $ 1,334,100 $ 3,974,988 $ 3,866,956
−Removed: Cost of revenue 3,035,003 2,791,414 2,513,857
+Added: Cost of revenue, excluding technology costs 579,010 1,726,157 1,654,376
+Added: Technology costs 1,156,723 1,285,204 1,098,641
Selling, general and administrative 586,406 600,210 551,923
−Removed: Impairment and related charges — — 81,112
−Removed: Operating income 363,417 562,016 493,440
−Removed: Other (expense) income:
+Added: Operating (loss) income ( 988,039 ) 363,417 562,016
+Added: Other income (expense):
Interest expense, net ( 235,091 ) ( 156,391 ) ( 157,017 )
Loss on extinguishment of debt ( 21,626 ) — ( 633 )
−Removed: Joint venture equity income 2,044 2,556 2,580
+Added: Equity method (loss) income ( 2,528 ) 2,044 2,556
Other, net ( 66,961 ) ( 9,432 ) ( 8,509 )
Total other expense, net ( 326,206 ) ( 163,779 ) ( 163,603 )
−Removed: Income from continuing operations before income taxes 199,638 398,413 377,613
+Added: (Loss) income from continuing operations before income taxes ( 1,314,245 ) 199,638 398,413
Provision for income taxes ( 39,913 ) 35,326 57,492
−Removed: Income from continuing operations 164,312 340,921 249,576
−Removed: (Loss) Income from discontinued operations, net of tax ( 1,766 ) 1,739 ( 1,932 )
−Removed: Net income 162,546 342,660 247,644
+Added: (Loss) income from continuing operations ( 1,274,332 ) 164,312 340,921
+Added: Income (loss) from discontinued operations, net of tax 2,788 ( 1,766 ) 1,739
+Added: Net (loss) income ( 1,271,544 ) 162,546 342,660
Net income attributable to noncontrolling interests 1,200 3,954 5,129
−Removed: Net income attributable to common stockholders $ 158,592 $ 337,531 $ 242,531
−Removed: Basic net income per share attributable to common stockholders:
−Removed: Income from continuing operations $ 0.58 $ 1.22 $ 0.88
−Removed: (Loss) Income from discontinued operations ( 0.01 ) 0.01 ( 0.01 )
−Removed: Net income per common share $ 0.57 $ 1.23 $ 0.87
−Removed: Diluted net income per share attributable to common stockholders:
−Removed: Income from continuing operations $ 0.58 $ 1.21 $ 0.88
−Removed: (Loss) Income from discontinued operations ( 0.01 ) 0.01 ( 0.01 )
−Removed: Net income per common share $ 0.57 $ 1.22 $ 0.87
+Added: Net (loss) income attributable to Sabre Corporation ( 1,272,744 ) 158,592 337,531
+Added: Preferred stock dividends 7,659 — —
+Added: Net (loss) income attributable to common stockholders $ ( 1,280,403 ) $ 158,592 $ 337,531
+Added: Basic net (loss) income per share attributable to common stockholders:
+Added: (Loss) income from continuing operations $ ( 4.43 ) $ 0.58 $ 1.22
+Added: Income (loss) from discontinued operations 0.01 ( 0.01 ) 0.01
+Added: Net (loss) income per common share $ ( 4.42 ) $ 0.57 $ 1.23
+Added: Diluted net (loss) income per share attributable to common stockholders:
+Added: (Loss) income from continuing operations $ ( 4.43 ) $ 0.58 $ 1.21
+Added: Income (loss) from discontinued operations 0.01 ( 0.01 ) 0.01
+Added: Net (loss) income per common share $ ( 4.42 ) $ 0.57 $ 1.22
Weighted-average common shares outstanding:
4 unchanged sentences
SABRE CORPORATION
−Removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+Added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
1 unchanged sentence
2020 2019 2018
−Removed: Net income $ 162,546 $ 342,660 $ 247,644
−Removed: Other comprehensive (loss) income, net of tax:
+Added: Net (loss) income $ ( 1,271,544 ) $ 162,546 $ 342,660
+Added: Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments ("CTA") 7,698 ( 1,946 ) ( 3,651 )
2 unchanged sentences
( 11,778 ) ( 8,269 ) ( 19,143 )
+Added: Pension settlement, net of taxes of $( 4,066 ), $ — , $ —
Amortization of prior service credits, net of taxes of $ 321 , $ 321 and $ 321
3 unchanged sentences
Net change in retirement-related benefit plans, net of tax 7,793 ( 3,959 ) ( 14,516 )
−Removed: Derivatives and available-for-sale securities:
Unrealized (losses) gains, net of taxes of $ 5,571 , $ 4,497 and $ 1,474
( 20,521 ) ( 15,217 ) ( 6,842 )
−Removed: Reclassification adjustment for realized gains, net of taxes of $( 1,469 ), $( 1,248 ) and $( 1,005 )
+Added: Reclassification adjustment for realized losses, net of taxes of $( 4,959 ), $( 1,469 ) and $( 1,248 )
17,890 5,507 3,677
−Removed: Net change in derivatives and available for sale securities, net of tax ( 9,710 ) ( 3,165 ) 18,150
−Removed: Share of other comprehensive (loss) income of joint venture ( 967 ) ( 635 ) 615
−Removed: Other comprehensive (loss) income ( 16,582 ) ( 21,967 ) 34,315
−Removed: Comprehensive income 145,964 320,693 281,959
+Added: Net change in derivatives, net of tax ( 2,631 ) ( 9,710 ) ( 3,165 )
+Added: Share of other comprehensive income (loss) of equity method investments 489 ( 967 ) ( 635 )
+Added: Other comprehensive income (loss) 13,349 ( 16,582 ) ( 21,967 )
+Added: Comprehensive (loss) income ( 1,258,195 ) 145,964 320,693
Comprehensive income attributable to noncontrolling interests ( 1,200 ) ( 3,954 ) ( 5,129 )
−Removed: Comprehensive income attributable to Sabre Corporation $ 142,010 $ 315,564 $ 276,846
+Added: Comprehensive (loss) income attributable to Sabre Corporation $ ( 1,259,395 ) $ 142,010 $ 315,564
See Notes to Consolidated Financial Statements.
7 unchanged sentences
Total current assets 1,888,105 1,121,920
−Removed: Property and equipment, net 641,722 790,372
−Removed: Investments in joint ventures 27,494 27,769
+Added: Property and equipment, net of accumulated depreciation 363,491 641,722
+Added: Equity method investments 24,265 27,494
Goodwill 2,636,546 2,633,251
−Removed: Acquired customer relationships, net 311,015 323,731
−Removed: Other intangible assets, net 262,638 289,517
+Added: Acquired customer relationships, net of accumulated amortization 289,150 311,015
+Added: Other intangible assets, net of accumulated amortization 222,216 262,638
Deferred income taxes 24,181 21,812
16 unchanged sentences
Stockholders’ equity
+Added: Preferred stock;
+Added: $ 0.01 par value, 225,000 authorized, 3,340 and no shares issued and outstanding as of December 31, 2020 and 2019, respectively;
+Added: aggregate liquidation value of $ 334,000 and $ — as of December 31, 2020 and 2019, respectively
Common stock:
5 unchanged sentences
( 474,790 ) ( 468,618 )
−Removed: Retained deficit ( 763,482 ) ( 768,566 )
+Added: Accumulated deficit ( 2,090,022 ) ( 763,482 )
Accumulated other comprehensive loss ( 135,957 ) ( 149,306 )
9 unchanged sentences
Operating Activities
−Removed: Net income $ 162,546 $ 342,660 $ 247,644
−Removed: Adjustments to reconcile net income to cash provided by operating activities:
+Added: Net (loss) income $ ( 1,271,544 ) $ 162,546 $ 342,660
+Added: Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization 363,743 414,621 413,344
1 unchanged sentence
Stock-based compensation expense 69,946 66,885 57,263
+Added: Provision for expected credit losses 65,710 20,563 7,749
Deferred income taxes ( 46,234 ) ( 22,925 ) 43,099
−Removed: Allowance for doubtful accounts 20,563 7,749 9,459
−Removed: Amortization of debt issuance costs 3,972 3,981 5,923
−Removed: Joint venture equity income ( 2,044 ) ( 2,556 ) ( 2,580 )
−Removed: Loss (income) from discontinued operations 1,766 ( 1,739 ) 1,932
−Removed: Dividends received from joint venture investments 1,352 1,411 1,088
−Removed: Tax Receivable Agreement — 4,852 ( 59,603 )
−Removed: Debt modification costs — 1,558 14,758
+Added: Acquisition termination fee 24,811 — —
Loss on extinguishment of debt 21,626 — 633
+Added: Amortization of debt discount and issuance costs 18,939 3,972 3,981
+Added: Pension settlement charge 18,071 — —
+Added: Facilities-related charges 5,816 — —
Impairment and related charges 8,684 — —
+Added: (Income) loss from discontinued operations ( 2,788 ) 1,766 ( 1,739 )
Other 7,981 2,085 2,916
5 unchanged sentences
Other assets 16,012 38,795 ( 29,607 )
−Removed: Accounts payable and other accrued liabilities ( 27,232 ) ( 27,080 ) 67,034
Accrued compensation and related benefits ( 15,317 ) ( 17,469 ) ( 15,044 )
+Added: Accounts payable and other accrued liabilities ( 304,051 ) ( 27,232 ) ( 27,080 )
Deferred revenue including upfront solution fees 15,357 ( 12,481 ) 8,127
−Removed: Cash provided by operating activities 581,260 724,797 678,033
+Added: Cash (used in) provided by operating activities ( 770,245 ) 581,260 724,797
Investing Activities
+Added: Proceeds from sale of property 68,504 — —
Additions to property and equipment ( 65,420 ) ( 115,166 ) ( 283,940 )
3 unchanged sentences
Financing Activities
−Removed: Cash dividends paid to common stockholders ( 153,508 ) ( 154,080 ) ( 154,861 )
+Added: Proceeds of borrowings from lenders 2,982,000 45,000 —
Payments on borrowings from lenders ( 1,533,597 ) ( 106,560 ) ( 47,310 )
+Added: Proceeds from issuance of preferred stock, net 322,885 — —
+Added: Proceeds from issuance of common stock, net 275,003 — —
+Added: Debt prepayment fees and issuance costs ( 77,878 ) — ( 1,567 )
Payments on Tax Receivable Agreement ( 71,958 ) ( 101,482 ) ( 58,908 )
−Removed: Repurchase of common stock ( 77,636 ) ( 26,281 ) ( 109,100 )
−Removed: Proceeds of borrowings from lenders 45,000 — 1,897,625
+Added: Cash dividends paid to common stockholders ( 38,544 ) ( 153,508 ) ( 154,080 )
Net (payments) receipts on the settlement of equity-based awards ( 5,996 ) ( 5,736 ) 2,040
−Removed: Debt issuance and modification costs — ( 1,567 ) ( 19,052 )
+Added: Dividends paid on preferred stock ( 5,850 ) — —
+Added: Repurchase of common stock — ( 77,636 ) ( 26,281 )
Other financing activities ( 8,324 ) ( 9,799 ) ( 20,400 )
−Removed: Cash used in financing activities ( 409,721 ) ( 306,506 ) ( 356,780 )
+Added: Cash provided by (used in) financing activities 1,837,741 ( 409,721 ) ( 306,506 )
Cash Flows from Discontinued Operations
2 unchanged sentences
Effect of exchange rate changes on cash and cash equivalents 216 781 6,747
−Removed: (Decrease) increase in cash and cash equivalents ( 73,089 ) 147,884 ( 2,733 )
+Added: Increase (decrease) in cash and cash equivalents 1,063,489 ( 73,089 ) 147,884
Cash and cash equivalents at beginning of period 436,176 509,265 361,381
9 unchanged sentences
Stockholders’ Equity (Deficit)
−Removed: Common Stock Additional
+Added: Preferred Stock Common Stock Additional
Treasury Stock Retained
3 unchanged sentences
Stockholders'
−Removed: Shares Amount Shares Amount
+Added: Shares Amount Shares Amount Shares Amount
Balance at December 31, 2017 — — 289,137,901 $ 2,891 $ 2,174,187 14,795,726 $ ( 341,846 ) $ ( 1,053,446 ) $ ( 88,484 ) $ 5,198 $ 698,500
4 unchanged sentences
Stock-based compensation expense — — — — 57,263 — — — — — 57,263
+Added: Adoption of New Accounting Standard — — — — — — — 101,429 — — 101,429
Dividends paid to non-controlling interest on subsidiary common stock — — — — — — — — — ( 3,122 ) ( 3,122 )
5 unchanged sentences
Stock-based compensation expense — — — — 66,885 — — — — — 66,885
−Removed: Adoption of New Accounting Standard — — — — — 101,429 — — 101,429
Dividends paid to non-controlling interest on subsidiary common stock — — — — — — — — — ( 2,571 ) ( 2,571 )
Balance at December 31, 2019 — — 294,319,417 2,943 2,317,544 20,586,852 ( 468,618 ) ( 763,482 ) ( 149,306 ) 8,588 947,669
−Removed: Comprehensive income — — — — — 158,592 ( 16,582 ) 3,954 145,964
+Added: Comprehensive loss — — — — — — — ( 1,272,744 ) 13,349 1,200 ( 1,258,195 )
Common stock dividends — — — — — — — ( 38,544 ) — — ( 38,544 )
−Removed: Repurchase of common stock — — — 3,673,768 ( 77,636 ) — — — ( 77,636 )
+Added: Issuance of preferred stock, net 3,340,000 33 — — 322,852 — — — — — 322,885
+Added: Issuance of common stock, net — — 41,071,429 411 274,592 — — — — — 275,003
+Added: Preferred stock dividend (1)
+Added: — — — — — — — ( 7,659 ) — — ( 7,659 )
+Added: Equity component of the exchangeable notes, net — — — — 67,876 — — — — — 67,876
Settlement of stock-based awards — — 3,271,114 33 143 778,375 ( 6,172 ) — — — ( 5,996 )
1 unchanged sentence
Dividends paid to non-controlling interest on subsidiary common stock — — — — — — — — — ( 2,760 ) ( 2,760 )
+Added: Adoption of New Accounting Standard — — — — — — — ( 7,593 ) — — ( 7,593 )
Balance at December 31, 2020 3,340,000 $ 33 338,661,960 $ 3,387 $ 3,052,953 21,365,227 $ ( 474,790 ) $ ( 2,090,022 ) $ ( 135,957 ) $ 7,028 $ 362,632
+Added: (1) Our mandatory convertible preferred stock accumulates cumulative dividends at an annual rate of 6.50 %.
See Notes to Consolidated Financial Statements.
11 unchanged sentences
We connect people and places with technology that reimagines the business of travel.
−Removed: We operate through three business segments:
−Removed: (i) Travel Network, our global travel marketplace for travel suppliers and travel buyers, (ii) Airline Solutions, a broad portfolio of software technology products and solutions for airlines and other travel suppliers, and (iii) Hospitality Solutions, an extensive suite of leading software solutions for hoteliers.
+Added: We operate through two business segments:
+Added: (i) Travel Solutions, our global travel marketplace for travel suppliers and travel buyers, a broad portfolio of software technology products and solutions for airlines and other travel suppliers, and (ii) Hospitality Solutions, an extensive suite of leading software solutions for hoteliers.
+Added: Recent Events
+Added: The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus ("COVID-19") in January 2020, as well as by government directives that have been enacted to slow the spread of the virus.
+Added: This pandemic had a material impact to our consolidated financial results for the year ended December 31, 2020, resulting in a material decrease in transaction-based revenue across both of our business units compared to the prior year.
+Added: Lower global distribution system ("GDS") volumes resulted in a material decline in incentive consideration costs, as expected.
+Added: The reduction in revenues as the result of COVID-19 has significantly adversely affected our liquidity.
+Added: We have responded with measures to increase our cash position, including our previously disclosed suspension of common stock dividends and share repurchases under our multi-year share repurchase program (the "Share Repurchase Program"), borrowing under our existing revolving credit facility, and the completion of debt and equity offerings.
+Added: Debt and Note 13.
+Added: Stock and Stockholders’ Equity for further information.
+Added: We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months;
+Added: however, given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary.
+Added: As noted above, 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.
+Added: Restructuring Activities for further details on the costs incurred related to restructuring activities.
+Added: The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.
+Added: Cancellations of airline travel reservations prior to the day of departure are estimated based on the historical level of cancellation rates, adjusted to take into account any recent factors which could cause a change in those rates.
+Added: Revenue during 2020, particularly in the second quarter, was negatively impacted by increased cancellation activity.
+Added: Revenue from Contracts with Customers for further information regarding our cancellation reserve and the impact of cancellations on revenue during the year ended December 31, 2020.
+Added: Given the unprecedented amount of air booking cancellations during 2020, we expect variability in the amount of our cancellation reserve in future periods as estimates of cancellations may differ from historical and recent experience.
+Added: Additionally, our provision for expected credit losses for the year ended December 31, 2020 was $ 66 million, primarily related to fully reserving for aged balances related to certain customers, bankruptcy-related reserves, an increase in our forecasted credit losses due to the impact of the COVID-19 pandemic on the global economy and other general increases in bad debt from aging balances as applied under the newly adopted credit loss standard.
+Added: Credit Losses.
+Added: We updated our goodwill assessment on a qualitative basis and reviewed our other long-lived assets including intangible assets as of December 31, 2020, and did not identify any material impairments.
+Added: Goodwill and Intangible Assets for further information about our goodwill assessment.
+Added: 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.
+Added: Strategic Realignment
+Added: The COVID-19 pandemic has caused major shifts in the travel ecosystem resulting in the changing needs of our airline, hotel and agency customers.
+Added: As a result in 2020, we accelerated the organizational changes we began in 2018 to address the changing travel landscape through a strategic realignment ("the Strategic Realignment") of our airline and agency-focused businesses and to respond to the impacts of the COVID-19 pandemic on our business and cost structure.
+Added: 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.
+Added: As a result of the Strategic Realignment, we now operate our business and present our results through two business segments, effective the third quarter of 2020:
+Added: (i) Travel Solutions, our global travel solutions for travel suppliers and travel buyers, including a broad portfolio of software technology
+Added: products and solutions for airlines, and (ii) Hospitality Solutions, an extensive suite of leading software solutions for hoteliers.
+Added: 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.
+Added: The historical results of the Hospitality Solutions reporting segment have not changed.
+Added: 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 moving certain expenses previously classified as cost of revenue to selling, general and administrative to align with the current leadership and operational organizational structure.
+Added: Within our segments and results of operations, cost of revenue, excluding technology costs primarily consists of costs associated with the delivery and distribution of our products and services, including employee-related costs for our delivery, customer operations and call center teams, transactional-related costs, including travel agency incentive consideration for reservations made on our GDS for Travel Solutions and GDS transaction fees for Hospitality Solutions, and depreciation and amortization associated with capitalized implementation costs, certain intangible assets, and upfront incentive consideration.
+Added: Technology costs consist of expenses related to third-party providers and employee-related costs to operate technology operations including data processing and hosting, third-party software, other costs associated with the maintenance and minor enhancement of our technology, and depreciation and amortization associated with software developed for internal use that supports our products, assets supporting our technology platform, businesses and systems and intangible assets related to technology.
+Added: Technology costs also include costs associated with our technology transformation efforts.
+Added: 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, 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, and depreciation and amortization associated with property and equipment, acquired customer relationships, trademarks and brand names.
+Added: For the year ended December 31, 2019, we reclassified $ 1,179 million from cost of revenue and $ 106 million from selling, general and administrative to technology costs.
+Added: Additionally, for the year ended December 31, 2019, we reclassified $ 130 million from cost of revenue to selling, general and administrative.
+Added: For the year ended December 31, 2018, we reclassified $ 997 million from cost of revenue and $ 102 million from selling, general and administrative to technology costs.
+Added: Additionally, for the year ended December 31, 2018, we reclassified $ 140 million from cost of revenue to selling, general and administrative.
Basis of Presentation
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Actual results could differ from these estimates and assumptions.
−Removed: Our accounting policies, which include significant estimates and assumptions, include, among other things, estimation of the collectability of accounts receivable, estimation of future cancellations of bookings processed through the Sabre global distribution system ("GDS"), revenue recognition for Software-as-a-Service ("SaaS") arrangements, determination of the fair value of assets and liabilities acquired in a business combination, determination of the fair value of derivatives, the evaluation of the recoverability of the carrying value of intangible assets and goodwill, assumptions utilized in the determination of pension and other postretirement benefit liabilities, the evaluation of the recoverability of capitalized implementation costs, assumptions utilized to evaluate the recoverability of deferred customer advance and discounts, estimation of loss contingencies, and evaluation of uncertainties surrounding the calculation of our tax assets and liabilities.
−Removed: In the first quarter of 2018, we adopted the comprehensive update to revenue recognition guidance Revenue from Contracts with Customers ("ASC 606"), which replaced the previous standard ("ASC 605"), using the modified retrospective approach, applied to contracts that were not completed as of the adoption date.
−Removed: Our 2018 results are reported under ASC 606, while results prior to 2018 are reported under ASC 605.
−Removed: Under ASC 606, revenue is recognized when a company transfers the promised goods or services to customers in an amount that reflects the consideration that is expected to be received for those goods and services.
−Removed: Revenue from Contracts with Customers.
+Added: Our accounting policies, which include significant estimates and assumptions, include, among other things, estimation of the collectability of accounts receivable, estimation of future cancellations of bookings processed through the Sabre GDS, revenue recognition for Software-as-a-Service ("SaaS") arrangements, determination of the fair value of assets and liabilities acquired in a business combination, determination of the fair value of derivatives, the evaluation of the recoverability of the carrying value of intangible assets and goodwill, assumptions utilized in the determination of pension and other postretirement benefit liabilities, the evaluation of the recoverability of capitalized implementation costs, assumptions utilized to evaluate the recoverability of deferred customer advance and discounts, estimation of loss contingencies, and evaluation of uncertainties surrounding the calculation of our tax assets and liabilities.
Revenue Recognition
−Removed: Travel Network and Hospitality Solutions’ revenue recognition is primarily driven by GDS and central reservation system transactions, respectively.
−Removed: Airline Solutions’ revenue recognition is primarily driven by passengers boarded or other variable metrics relevant to the software service provided.
+Added: Travel Solutions and Hospitality Solutions’ revenue recognition is primarily driven by GDS and reservation system transactions.
Timing of revenue recognition is primarily based on the consistent provision of services in a stand-ready series SaaS environment and the amount of revenue recognized varies with the volume of transactions processed.
Performance Obligations
−Removed: A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under ASC 606.
+Added: A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Accounting Standards Codification ("ASC") 606.
The transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
−Removed: Most of our contracts in the Travel Network and Hospitality Solutions businesses have a single performance obligation.
−Removed: In the Airline Solutions business, many of our contracts may have multiple performance obligations, which generally include software and product solutions through SaaS and hosted delivery, and other service fees.
−Removed: In addition, at times we enter into agreements with customers to provide access to Travel Network’s GDS and, at or near the same time, enter into a separate agreement to provide Airline Solutions' software solutions through SaaS and hosted delivery, resulting in multiple performance obligations within a combined agreement.
+Added: Most of our contracts for GDS services and central reservation system (CRS) services for Hospitality Solutions have a single performance obligation.
+Added: For Travel Solutions' IT Solutions revenue, many of our contracts may have multiple performance obligations, which generally include software and product solutions through SaaS and hosted delivery, and other service fees.
+Added: In addition, at times we enter into agreements with customers to provide access to Travel Solutions’ GDS and, at or near the same time, enter into a separate agreement to provide IT solutions through SaaS and hosted delivery, resulting in multiple performance obligations within a combined agreement.
Our significant product and services and methods of recognition are as follows:
Stand-ready series revenue recognition
−Removed: Travel Network —Travel Network's service offering is a GDS or GDS services linking and engaging transactions between travel agents (those that seek travel on behalf of travelers) and travel suppliers (such as airlines, hotels, car rental companies and cruise lines).
+Added: We recognize revenue from usage-based fees for the use of the software which represents a stand-ready performance obligation.
+Added: Variability in the usage-based fee that does not align with the value provided to the customer can result in a difference between billings to the customer and the timing of contract performance and revenue recognition, which may result in the recognition of a contract asset.
+Added: This can result in a requirement to forecast expected usage-based fees and volumes over the contract term in order to determine the rate for revenue recognition.
+Added: This variable consideration is constrained if there is an inability to reliably forecast this revenue.
+Added: Additionally, we may occasionally recognize revenue in the current period for performance obligations partially or fully satisfied in the previous periods resulting from changes in estimates for the transaction price, including any changes to our assessment of whether an estimate of variable consideration is constrained.
+Added: Travel Solutions —Travel Solutions generates distribution revenue for bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")).
+Added: GDS services link and engage transactions between travel agents and travel suppliers.
Revenue is generated from contracts with the travel suppliers as each booking is made or transaction occurs and represents a stand-ready performance obligation where our systems perform the same service each day for the customer, based on the customer’s level of usage.
−Removed: Variability in the amounts billed to the customer and revenue recognized coincides with the customer’s level of usage or value received by the customer.
−Removed: Travel Network's revenue for air transactions is recognized at the time of booking of the reservation, net of estimated future cancellations.
−Removed: Travel Network's revenue for car rental, hotel transactions and other travel providers is recognized at the time the reservation is used by the customer.
−Removed: Airline Solutions and Hospitality Solutions —Airline Solutions and Hospitality Solutions provide technology solutions and other professional services to airlines, hotels and other business consumers in the travel industry.
+Added: Distribution revenue associated with car rental, hotel transactions and other travel providers is recognized at the time the reservation is used by the customer.
+Added: Distribution revenue associated with airline travel reservations is recognized at the time of booking of the reservation, net of estimated future cancellations.
+Added: Cancellations prior to the day of departure are estimated based on the historical level of cancellation rates, adjusted to take into account any recent factors which could cause a change in those rates.
+Added: Travel Solutions also generates IT solutions revenue from its product offerings including reservation systems for full-cost and low-cost carriers, commercial and operations products, agency solutions and booking data.
+Added: Reservation system revenue is primarily generated based on the number of passengers boarded.
+Added: Normally, customers are charged a fixed, upfront solutions fee and a recurring usage-based fee for the use of the software as a stand-ready performance obligation.
+Added: In the context of both our reservation systems and our commercial and operations products, upfront solutions fees are recognized primarily on a straight-line basis over the relevant contract term, upon cut-over of the primary SaaS solution.
+Added: Hospitality Solutions —Hospitality Solutions provides technology solutions and other professional services, through SaaS and hosted delivery models, to hoteliers around the world.
The technology solutions are primarily provided in a SaaS or hosted environment.
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Upfront solutions fees are recognized primarily on a straight-line basis over the relevant contract term, upon cut-over of the primary SaaS solution.
−Removed: Variability in the usage-based fee that does not align with the value provided to the customer can result in a difference between billings to the customer and the timing of contract performance and revenue recognition, which may result in the recognition of a contract asset.
−Removed: This can result in a requirement to forecast expected usage-based fees and volumes over the contract term in order to determine the rate for revenue recognition.
−Removed: This variable consideration is constrained if there is an inability to reliably forecast this revenue.
Contract Assets and Deferred Customer Advances and Discounts
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Deferred customer advances and discounts are reviewed for recoverability based on future contracted revenues and estimated direct costs of the contract when a significant event occurs that could impact the recoverability of the assets, such as a significant contract modification or early renewal of contract terms.
−Removed: For the year ended December 31, 2019, we did not impair any of these assets as a result of the related contract becoming uncollectable, modified or canceled.
−Removed: Impairment and Related Charges regarding 2017 impairments.
+Added: For the years ended December 31, 2020, 2019 and 2018, we did not impair any of these assets as a result of the related contract becoming uncollectible, modified or canceled.
Contracts are priced to generate total revenues over the life of the contract that exceed any discounts or advances provided and any upfront costs incurred to implement the customer contract.
Other revenue recognition patterns
−Removed: Airline Solutions also provides other services including development labor or professional consulting.
−Removed: These services can be sold separately or with other products and services, and Airline Solutions may bundle multiple technology solutions in one arrangement with these other services.
+Added: Travel Solutions also provides other services including development labor or professional consulting.
+Added: These services can be sold separately or with other products and services, and Travel Solutions may bundle multiple technology solutions in one arrangement with these other services.
Revenue from other services consisting of development services that represent minor configuration or professional consulting is generally recognized over the period the services are performed or upon completed delivery.
−Removed: Airline Solutions also directly licenses certain software to its customers where the customer obtains control of the license.
+Added: Travel Solutions also directly licenses certain software to its customers where the customer obtains control of the license.
Revenue from software license fees is recognized when the customer gains control of the software enabling them to directly use the software and obtain substantially all of the remaining benefits.
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As our market strategies evolve, we may modify pricing practices in the future which could result in changes to SSP.
−Removed: Revenue recognition from our Airline Solutions business requires significant judgments such as identifying distinct performance obligations including material rights within an agreement, estimating the total contract consideration and allocating amounts to each distinct performance obligation, determining whether variable pricing within a contract meets the allocation objective, and forecasting future volumes.
+Added: Revenue recognition from our Travel Solutions business requires significant judgments such as identifying distinct performance obligations including material rights within an agreement, estimating the total contract consideration and allocating amounts to each distinct performance obligation, determining whether variable pricing within a contract meets the allocation objective, and forecasting future volumes.
For a small subset of our contracts, we are required to forecast volumes as a result of pricing variability within the contract in order to calculate the rate for revenue recognition.
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We establish liabilities for these commitments and recognize the related expense as these travel agencies earn incentive consideration based on the applicable contractual terms.
−Removed: Periodically, we make cash payments to these travel agencies at inception or modification of a service contract which are capitalized and amortized to cost of revenue over the expected life of the service contract, which is generally three to five years .
+Added: Periodically, we make cash payments to these travel agencies at inception or modification of a service contract which are capitalized and amortized to cost of revenue over the expected life of the service contract, which is generally three to ten years .
Deferred charges related to such contracts are recorded in other assets, net on the consolidated balance sheets.
1 unchanged sentence
Incentive consideration paid to the travel agency represents a commission paid to the travel agency for booking travel on our GDS.
+Added: Similar to the revenue cancellation reserve, we record a reduction to incentive expense within cost of revenue, excluding technology costs for amounts considered probable of recovery from travel agencies for incentives previously paid on cancelled bookings.
Advertising Costs
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We classify all highly liquid instruments, including money market funds and money market securities with original maturities of three months or less, as cash equivalents.
−Removed: Allowance for Doubtful Accounts and Concentration of Credit Risk
−Removed: We evaluate the collectability of our accounts receivable based on a combination of factors.
−Removed: In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, such as bankruptcy filings or failure to pay amounts due to us or others, we record a specific reserve for bad debts against amounts due to reduce the recorded receivable to the amount we reasonably believe will be collected.
−Removed: For all other customers, we record reserves for bad debts based on historical experience and the length of time the receivables are past due.
−Removed: We maintained an allowance for doubtful accounts of approximately $ 58 million and $ 45 million at December 31, 2019 and 2018, respectively.
−Removed: See “—Recent Accounting Pronouncements" below for information on recently issued accounting guidance regarding the allowance for doubtful accounts.
−Removed: Our customers are primarily located in the United States, Canada, Europe, Latin America and Asia, and are concentrated in the travel industry.
−Removed: We generate a significant portion of our revenues and corresponding accounts receivable from services provided to the commercial air travel industry.
−Removed: Our other accounts receivable are generally due from other participants in the travel and transportation industry.
−Removed: As of December 31, 2019 and 2018, approximately $ 375 million, or 82 %, and $ 334 million, or 81 %, respectively, of our trade accounts receivable were attributable to services provided to the commercial air travel industry and travel agency customers.
−Removed: Substantially all of our accounts receivable represents trade balances.
−Removed: We generally do not require security or collateral from our customers as a condition of sale.
−Removed: We regularly monitor the financial condition of the air transportation industry.
−Removed: We believe the credit risk related to the air carriers’ difficulties is significantly mitigated by the fact that we collect a significant portion of the receivables from these carriers through the Airline Clearing House and other similar clearing houses (“ACH”).
−Removed: As of December 31, 2019, approximately 59 % of our air customers make payments through the ACH which accounts for approximately 89 % of our air revenue.
−Removed: For these carriers, we believe the use of ACH mitigates our credit risk with respect to airline bankruptcies.
+Added: Allowance for Credit Losses and Concentration of Credit Risk
+Added: We are exposed to credit losses primarily through our sales of services provided to participants in the travel and transportation industry, which we consider to be our singular portfolio segment.
+Added: We develop and document our methodology used in determining the allowance for credit losses at the portfolio segment level.
+Added: Within the travel portfolio segment, we identify airlines, hoteliers and travel agencies as each presenting unique risk characteristics associated with historical credit loss patterns unique to each and we determine the adequacy of our allowance for credit loss by assessing the risks and losses inherent in our receivables related to each.
+Added: The majority of our receivables are trade receivables due in less than one year.
+Added: In addition to our short-term trade and unbilled receivables, our receivables also include contract assets and long-term trade unbilled receivables.
+Added: Revenue from Contracts with Customers for more information about these financial assets.
+Added: Contract assets and long-term receivables are reviewed for recoverability on a periodic basis based on a review of subjective factors and trends in collection data including the aging of our trade receivable balances with these customers and expectations of future global economic growth.
+Added: We believe our credit risk is mitigated with carriers who use the Airline Clearing House (“ACH”) and other similar clearing houses, as ACH requires participants to deposit certain balances into their demand deposit accounts by certain deadlines, which facilitates a timely settlement process.
For those carriers from which we do not collect payments through the ACH or other similar clearing houses, our credit risk is higher.
−Removed: We monitor these carriers and account for the related credit risk through our normal reserve policies.
+Added: We monitor our ongoing credit exposure for these carriers through active review of customer balances against contract terms and due dates with account management.
+Added: Our activities include established collection processes, account reconciliations, dispute resolution and payment confirmations.
+Added: We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.
+Added: We generally do not require security or collateral from our customers as a condition of sale.
+Added: We evaluate the collectability of our receivables based on a combination of factors.
+Added: In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, such as bankruptcy filings or failure to pay amounts due to us or others, we specifically provide for credit losses against amounts due to reduce the recorded receivable to the amount we reasonably believe will be collected.
+Added: For all other customers, we record reserves for receivables, including unbilled receivables and contract assets, based on historical experience and the length of time the receivables are past due.
+Added: The estimate of credit losses is developed by analyzing historical twelve-month collection rates and adjusting for current customer-specific factors indicating financial instability and other macroeconomic factors that correlate with the expected collectability of our receivables.
+Added: Receivables are considered to be delinquent when contractual payment terms are exceeded.
+Added: All receivables aged over twelve months are fully reserved.
+Added: Receivables are written off against the allowance when it is probable that all remaining contractual payments will not be collected as evidenced by factors such as the extended age of the balance, the exhaustion of collection efforts, and the lack of ongoing contact or billing with the customer.
+Added: We maintained an allowance for credit losses of approximately $ 98 million and $ 58 million at December 31, 2020 and 2019, respectively.
+Added: See “—Recent Accounting Pronouncements" below for information on recently issued accounting guidance regarding the allowance for credit losses and Note 8.
+Added: Credit Losses for further considerations involved in the development of this estimate.
Derivative Financial Instruments
We recognize all derivatives on the consolidated balance sheets at fair value.
−Removed: If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are offset against the change in fair value of the hedged item through earnings (a “fair value hedge”) or recognized in other comprehensive income until the hedged item is recognized in earnings (a “cash flow hedge”).
+Added: If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are offset against the change in fair value of the hedged item through earnings (a “fair value hedge”) or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings (a “cash flow hedge”).
For derivative instruments not designated as hedging instruments, the gain or loss resulting from the change in fair value is recognized in current earnings during the period of change.
17 unchanged sentences
We also evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets used in combination to generate cash flows largely independent of other assets may not be recoverable.
+Added: During the year ended December 31, 2020, we recorded an impairment charge related to our Hospitality Solutions business of $ 5 million associated with software developed for internal use based on our analysis of the recoverability of such amounts.
+Added: This impairment charge is recorded within technology costs in our consolidated statement of operations.
+Added: Additionally, we recorded a $ 4 million impairment charge associated with leasehold improvements and furniture and fixtures of abandoned leased office space during the year ended December 31, 2020 which is recorded within selling, general, and administrative expenses in our consolidated statement of operations.
+Added: Restructuring Activities for further information.
We did not record any property and equipment impairment charges for the years ended December 31, 2019 and 2018.
2 unchanged sentences
Operating lease assets are included in operating lease right-of-use (“ROU”) assets within other noncurrent assets and operating lease liabilities are included in other current liabilities and other noncurrent liabilities in our consolidated balance sheets.
−Removed: Finance lease assets are included in property and equipment with associated liabilities included in current portion of debt and long-term debt in our consolidated balance sheets.
+Added: lease assets are included in property and equipment with associated liabilities included in current portion of debt and long-term debt in our consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
17 unchanged sentences
The useful economic lives are evaluated on an annual basis.
−Removed: We perform our annual assessment of possible impairment of goodwill as of October 1 of each year.
+Added: We perform our annual goodwill impairment assessment as of October 1 of each year and interim assessments as required upon the identification of a triggering event.
We begin with the qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the quantitative assessment described below.
1 unchanged sentence
If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the estimated fair value of that reporting unit, the carrying value of the reporting unit’s goodwill is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge.
−Removed: We have three reporting units associated with our continuing operations:
−Removed: Travel Network, Airline Solutions and Hospitality Solutions.
+Added: We have two reporting units associated with our continuing operations:
+Added: Travel Solutions and Hospitality Solutions.
We did no t record any goodwill impairment charges for the years ended December 31, 2020 , 2019 and 2018.
13 unchanged sentences
Contract Acquisition Costs and Capitalized Implementation Costs
−Removed: We incur contract acquisition costs related to new contracts with our customers in the form of sales commissions based on estimated contract value for our Airline Solutions and Hospitality Solutions businesses.
+Added: We incur contract acquisition costs related to new contracts with our customers in the form of sales commissions based on estimated contract value for our Travel Solutions and Hospitality Solutions businesses.
These costs are capitalized and reviewed for impairment on an annual basis.
5 unchanged sentences
Recoverability is measured based on the future estimated revenue and direct costs of the contract compared to the capitalized implementation costs.
+Added: D uring the year ended December 31, 2020, we recorded impairments totaling $ 10 million associated with capitalized implementation costs based on our analysis of the recoverability of such amounts.
Balance Sheet Components and Note 2.
−Removed: Revenue from Contracts with Customers, for amounts capitalized within other assets, net in our consolidated balance sheets.
+Added: Revenue from Contracts with Customers, for additional information.
Amortization of capitalized implementation costs, included in depreciation and amortization, totaled $ 37 million, $ 39 million and $ 38 million for the years ended December 31, 2020, 2019 and 2018, respectively.
−Removed: Impairment and Related Charges.
Deferred income tax assets and liabilities are determined based on differences between financial reporting and income tax basis of assets and liabilities and are measured using the tax rates and laws enacted at the time of such determination.
We regularly review our deferred tax assets for recoverability and a valuation allowance is provided when it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.
−Removed: In assessing the need for a valuation allowance, we make estimates and assumptions regarding projected future taxable income, our ability to carry back operating losses to prior periods, the reversal of deferred tax liabilities and implementation of tax planning strategies.
+Added: In assessing the need for a valuation allowance, we make estimates and assumptions regarding projected future taxable income, the reversal of deferred tax liabilities and implementation of tax planning strategies.
We reassess these assumptions regularly which could cause an increase or decrease to the valuation allowance, resulting in an increase or decrease in the effective tax rate, and could materially impact our results of operations.
18 unchanged sentences
We account for our stock awards and options by recognizing compensation expense, measured at the grant date based on the fair value of the award, on a straight-line basis over the award vesting period, giving consideration as to whether the amount of compensation cost recognized at any date is equal to the portion of grant date value that is vested at that date.
+Added: Compensation expense on stock awards subject to performance conditions, which is based on the quantity of awards we have determined are probable of vesting, is recognized over the longer of the estimated performance goal attainment period or time vesting period.
We recognize equity-based compensation expense net of any actual forfeitures.
We measure the grant date fair value of stock option awards as calculated by the Black-Scholes option-pricing model which requires certain subjective assumptions, including the expected term of the option, the expected volatility of our common stock, risk-free interest rates and expected dividend yield.
−Removed: The expected term is estimated by using the “simplified method” which is based on the midpoint between the vesting date and the expiration of the contractual term.
+Added: The expected term is estimated by using the “simplified method” which
+Added: is based on the midpoint between the vesting date and the expiration of the contractual term.
We utilized the simplified method due to the lack of sufficient historical experience under our current grant terms.
2 unchanged sentences
Treasury securities with maturities appropriate for the expected term of the stock options.
−Removed: The expected dividend yield was based on the calculated yield on our common stock at the time of grant assuming annual dividends totaling $ 0.56 per share for awards granted in 2019.
+Added: The expected dividend yield was based on the calculated yield on our common stock at the time of grant assuming quarterly dividends totaling $ 0.14 per share for awards granted prior to the suspension of our common stock dividends on March 16, 2020.
+Added: Subsequent to March 16, 2020, a zero expected dividend was used.
Foreign Currency
5 unchanged sentences
Adoption of New Accounting Standards
−Removed: In July 2019, the Financial Accounting Standards Board ("FASB") issued updated guidance that clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating certain redundancies and allowing for easier application of the codification.
−Removed: This standard is effective upon issuance and did not have a material impact on our consolidated financial statements.
−Removed: In October 2018, the FASB issued updated guidance that permits use of the Overnight Index Swap ("OIS") rate based on the Secured Overnight Financing Rate ("SOFR") as a U.S.
−Removed: benchmark interest rate for hedge accounting purposes in addition to the Direct Treasury obligations of the U.S.
−Removed: government, the London Interbank Offered Rate ("LIBOR") swap rate, the OIS rate based on the Federal Funds Effective Rate, and the Securities Industry and Financial Markets Association Municipal Swap Rate.
−Removed: We adopted this standard in the first quarter of 2019, which did not have a material impact on our consolidated financial statements.
−Removed: In February 2016, the FASB issued updated guidance requiring organizations that lease assets—referred to as "lessees"—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases, when the lease has a term of more than 12 months.
−Removed: The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
−Removed: In the first quarter of 2019, we adopted the new
−Removed: standard using the modified retrospective approach and elected the package of practical expedients and the hindsight practical expedient.
−Removed: Leases for more information on the impacts from adoption and ongoing considerations.
−Removed: Recent Accounting Pronouncements
−Removed: In December 2019, the FASB issued updated guidance which simplifies the accounting for income taxes, eliminates certain exceptions within existing income tax guidance , and clarifies certain aspects of the current guidance to promote consistency among reporting entities.
−Removed: The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.
−Removed: We do not expect the adoption of this standard will have a material impact to our consolidated financial statements.
+Added: In March 2020, the Financial Accounting Standards Board ("FASB") issued updated guidance which provides optional expedients and exceptions for applying U.S.
+Added: GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued, if certain criteria are met.
+Added: The updated standard is effective for all entities upon issuance, and we will apply the amendments prospectively through December 31, 2022.
+Added: There was no impact to our consolidated financial statements for the year ended December 31, 2020 as a result of adopting this standard.
+Added: Our current hedging contracts do not extend past December 31, 2021.
In October 2018, the FASB issued updated guidance that eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest and instead requires entities to consider these indirect interests on a proportional basis.
−Removed: The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.
−Removed: We do not expect the adoption of this standard will have a material impact to our consolidated financial statements.
+Added: We adopted this standard in the first quarter of 2020, which did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued updated guidance on customer's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract.
3 unchanged sentences
In addition, costs incurred during the preliminary project and post-implementation phases are expensed as they are incurred.
−Removed: The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.
−Removed: We do not expect the adoption of this standard will have a material impact to our consolidated financial statements.
+Added: We adopted this standard prospectively in the first quarter of 2020, which did not have a material impact on our consolidated financial statements.
In June 2016, the FASB issued updated guidance for the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
Under this updated standard, the current "incurred loss" approach is replaced with an "expected loss" model for instruments measured at amortized cost.
−Removed: For available-for-sale debt securities, allowances for losses will now be required rather than reducing the instruments carrying value.
−Removed: The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.
−Removed: We anticipate that the impacts described above will result in a net increase of approximately $ 13 million to $ 23 million in our opening retained deficit as of January 1, 2020 with a corresponding decrease in accounts receivable, net and other in-scope assets.
−Removed: Implications to tax-related accounts are not included in these estimated amounts.
−Removed: Our assessment of the impact of this standard is ongoing and subject to finalization.
−Removed: We are continuing to evaluate the impacts of the new guidance to our results of operations, current accounting policies, processes, controls, systems and financial statement disclosures.
+Added: We adopted this standard in the first quarter of 2020, resulting in a $ 10 million increase in the allowance for credit losses, partially offset by a $ 1 million decrease in deferred tax liabilities and a $ 1 million increase in accounts receivable with a corresponding increase of approximately $ 8 million in our opening retained deficit as of January 1, 2020.
+Added: Credit Losses for more information on the impacts from adoption and ongoing considerations.
+Added: Recent Accounting Pronouncements
+Added: In August 2020, the FASB issued updated guidance limiting the accounting models for convertible instruments, which will result in fewer embedded conversion features being separately recognized from the host contract when compared to existing guidance.
+Added: Under the updated guidance, some convertible debt instruments will be accounted for as a single liability measured at amortized cost.
+Added: Additionally, the updated guidance both enhances disclosures around convertible instruments and requires the use of the if-converted method to calculate diluted earnings per share for convertible instruments.
+Added: The updated standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020.
+Added: The standard provides for the option of full retrospective transition on January 1, 2021.
+Added: Although we are still evaluating the impact of the updated guidance and the effects on our financial statements, we anticipate using full retrospective transition on January 1, 2021 to account for the Exchangeable Notes on a whole-instrument basis.
+Added: As a result, we anticipate the amount previously bifurcated into equity will be reclassified as a component of long-term debt.
+Added: Additionally, we anticipate pre-tax interest expense will be retrospectively reduced and will align more closely with the contractual payments for the Exchangeable Notes.
+Added: In December 2019, the FASB issued updated guidance which simplifies the accounting for income taxes, eliminates certain exceptions within existing income tax guidance, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.
+Added: The updated standard is effective for public companies for fiscal years, and interim periods
+Added: within those fiscal years, beginning after December 15, 2020, with early adoption permitted.
+Added: We do not expect the adoption of this standard will have a material impact to our consolidated financial statements.
Revenue from Contracts with Customers
−Removed: In the first quarter of 2018, we adopted the comprehensive update to revenue recognition guidance Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), which replaced the previous standard ("ASC 605"), using the modified retrospective approach, applied to contracts that were not completed as of the adoption date.
−Removed: Under ASC 606, revenue is recognized when a company transfers the promised goods or services to customers in an amount that reflects the consideration that is expected to be received for those goods and services.
−Removed: The key areas of impact on our consolidated financial statements include:
−Removed: • Revenue recognition for our Travel Network and Hospitality Solutions businesses did not change significantly.
−Removed: The definition of a performance obligation for Travel Network under the new guidance impacts the calculation for our booking fee cancellation reserve, which resulted in a beginning balance sheet adjustment.
−Removed: • Our Airline Solutions business is primarily impacted by ASC 606 due to the following:
−Removed: – Under ASC 605, we recognized revenue related to license fee and maintenance agreements ratably over the life of the contract.
−Removed: Under ASC 606, revenue for license fees is recognized upon delivery of the license and ongoing maintenance services are to be recognized ratably over the life of the contract.
−Removed: For existing open agreements, this change resulted in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements.
−Removed: – Allocation of contract revenues among various products and solutions, and the timing of the recognition of those revenues, are impacted by agreements with tiered pricing or variable rate structures that do not correspond with the goods or services delivered to the customer.
−Removed: For existing open agreements, this change resulted in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements.
−Removed: • Capitalization of incremental contract acquisition costs (such as sales commissions), and recognition of these costs over the customer benefit period resulted in the recognition of an asset on our balance sheet and impacted our Airline Solutions and Hospitality Solutions businesses.
−Removed: Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with ASC 605.
−Removed: The impacts described above resulted in a net reduction to our opening retained deficit as of January 1, 2018 of approximately $ 102 million (net of tax, $ 78 million) with a corresponding increase primarily in current and long-term unbilled receivables, contract assets, other assets and other accrued liabilities.
Contract Balances
−Removed: Revenue recognition for a significant portion of our revenue coincides with normal billing terms, including Travel Network's transactional revenues, and Airline Solutions' and Hospitality Solutions' SaaS and hosted revenues.
+Added: Revenue recognition for a significant portion of our revenue coincides with normal billing terms, including our transactional revenues, SaaS revenues, and hosted revenues.
Timing differences among revenue recognition, unconditional rights to bill, and receipt of contract consideration may result in contract assets or contract liabilities.
7 unchanged sentences
_______________________________
−Removed: (1) Includes contract assets of $ 6 million and $ 4 million for December 31, 2019 and December 31, 2018, respectively.
+Added: (1) Includes contract assets of $ 8 million and $ 6 million for December 31, 2020 and 2019, respectively.
During the year ended December 31, 2020, we recognized revenue of approximately $ 20 million from contract liabilities that existed as of January 1, 2020.
1 unchanged sentence
We evaluate collectability of our accounts receivable based on a combination of factors and record reserves as reflected in Note 8.
−Removed: Summary of Business and Significant Accounting Policies.
+Added: Credit Losses.
The following table presents our revenues disaggregated by business (in thousands):
−Removed: December 31, 2019 December 31, 2018
−Removed: Air $ 2,338,602 $ 2,284,419
−Removed: Lodging, Ground and Sea 370,652 350,152
−Removed: Other 173,408 171,623
−Removed: Total Travel Network 2,882,662 2,806,194
−Removed: SabreSonic Passenger Reservation System 506,579 501,085
−Removed: Commercial and Operations Solutions (1)
+Added: Year Ended December 31,
2020 2019 2018
−Removed: Other 5,274 8,911
−Removed: Total Airline Solutions 840,338 822,747
−Removed: SynXis Software and Services 257,612 240,583
+Added: Distribution $ 582,115 $ 2,730,845 $ 2,651,407
+Added: IT Solutions (1)
+Added: 594,579 992,155 977,534
+Added: Total Travel Solutions 1,176,694 3,723,000 3,628,941
+Added: SynXis Software and Service 156,749 257,612 240,583
Other 17,879 35,268 32,496
3 unchanged sentences
_______________________________
−Removed: (1) Includes license fee revenue recognized upon delivery to the customer of $ 34 million and $ 27 million for the years ended December 31, 2019 and December 31, 2018, respectively.
+Added: (1) Includes license fee revenue recognized upon delivery to the customer of $ 31 million and $ 34 million for the years ended December 31, 2020 and 2019, respectively.
We may occasionally recognize revenue in the current period for performance obligations partially or fully satisfied in the previous periods resulting from changes in estimates for the transaction price, including any changes to our assessment of whether an estimate of variable consideration is constrained.
For the year ended December 31, 2020, the impact on revenue recognized in the current period, from performance obligations partially or fully satisfied in the previous period, is immaterial.
−Removed: We recognize revenue under long-term contracts that primarily includes variable consideration based on transactions processed.
−Removed: A majority of our consolidated revenue is recognized as a stand-ready performance obligation with the amount recognized based on the invoiced amounts for services performed, known as right to invoice revenue recognition.
−Removed: Certain of our contracts, primarily in the Airlines Solutions business, contain minimum transaction volumes, which in many instances are not considered substantive as the customer is expected to exceed the minimum in the contract.
Unearned performance obligations primarily consist of deferred revenue for fixed implementation fees and future product implementations, which are included in deferred revenue and other noncurrent liabilities in our consolidated balance sheet.
1 unchanged sentence
Summary of Business and Significant Accounting Policies regarding revenue recognition of our various revenue streams for more information.
+Added: Revenue during 2020, particularly in the second quarter, was negatively impacted by increased cancellation activity.
+Added: We estimate future cancellations using the expected value approach at the end of each reporting period based on the number of undeparted bookings, expected cancellations and an estimated rate.
+Added: Our cancellation reserve is highly sensitive to our estimate
+Added: of bookings that we expect will eventually travel, as well as to the mix of those bookings between domestic and international, given the varying rates paid by airline suppliers.
+Added: To address this change in estimate, we increased our reserve for future cancellations during the year to account for the significant effect that COVID-19 has had on the travel industry and the resulting volume of airline travel cancellations and the impacts on the booking fee rate for higher international cancellations and lower international new bookings than previously experienced.
+Added: The combination of actual cancellation activity and significantly fewer bookings resulted in a cancellation reserve of $ 18 million as of December 31, 2020.
+Added: The cancellation reserve as of December 31, 2019 was $ 34 million on a larger base of undeparted bookings.
+Added: Given the continued uncertainty caused by the COVID-19 pandemic, we expect variability in the amount of our cancellation reserve in future periods as estimates of cancellations may differ from historical and recent experience.
Contract Acquisition Costs and Capitalized Implementation Costs
4 unchanged sentences
Summary of Business and Significant Accounting Policies for an overview of our policy for capitalization of acquisition and implementation costs.
−Removed: December 31, 2019 December 31, 2018
+Added: The following table presents the activity of our acquisition costs and capitalized implementation costs for the years ended December 31, 2020 and 2019 (in thousands):
+Added: Year Ended December 31,
Contract acquisition costs:
8 unchanged sentences
Impairment (1)
+Added: ( 9,562 ) ( 2,405 )
Other ( 901 ) ( 219 )
Ending balance $ 145,712 $ 175,968
−Removed: We announced on November 14, 2018 that we have entered into an agreement to acquire Farelogix, Inc.
−Removed: ("Farelogix"), a travel industry innovator in the airline information technology and distribution landscape.
−Removed: At closing, Sabre will purchase Farelogix for $ 360 million, funded by cash on hand and Revolver borrowing.
−Removed: We have agreed to advance certain attorneys' fees incurred by Farelogix in responding to certain governmental reviews of the acquisition and in defending against certain antitrust proceedings, which have totaled $ 20 million for the year ended December 31, 2019.
−Removed: These advances will be applied against the purchase price upon closing.
+Added: _______________________________
+Added: (1) Includes an impairment charge related to a specific customer of $ 4 million and $ 6 million in other impairments for the year ended December 31, 2020.
On August 20, 2019, the U.S.
−Removed: Department of Justice ("DOJ") filed a complaint seeking a permanent injunction to prevent the acquisition.
−Removed: The trial concluded on February 6, 2020 and the trial court has not yet issued its decision.
−Removed: In addition, the U.K.
−Removed: Competitions and Market Authority ("CMA") has referred its review of the acquisition for a Phase 2 investigation and has published its provisional findings of competition concerns.
−Removed: There can be no assurance that the acquisition will occur on these terms or at all.
+Added: 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, Inc.
+Added: ("Farelogix"), alleging that the proposed acquisition is likely to substantially lessen competition in violation of federal antitrust law.
+Added: On April 7, 2020, the trial court ruled in favor of Sabre, denying the DOJ's request for an injunction.
+Added: On April 9, 2020, the U.K.
+Added: Competition and Markets Authority ("CMA") blocked the acquisition following its Phase 2 investigation.
+Added: Given the CMA's decision, we recorded a charge of $ 46 million during the year ended December 31, 2020 included in other, net in our consolidated statements of operations which is comprised of $ 25 million in advances for certain attorneys' fees and additional termination fees of $ 21 million.
+Added: Sabre and Farelogix agreed to terminate the acquisition agreement on May 1, 2020, and we paid Farelogix aggregate termination fees of $ 21 million pursuant to the acquisition agreement.
In October 2019, we completed the acquisition of Radixx, a provider of retailing and customer service solutions to airlines in the low-cost carrier ("LCC") market, for $ 107 million, net of cash acquired and funded by cash on hand.
−Removed: Radixx is being integrated and is managed as a part of our Airline Solutions segment.
−Removed: Purchase Price Allocation
−Removed: The purchase price allocation presented below is preliminary and based on information available as of the filing date of this Annual Report on Form 10-K.
−Removed: Primarily, we consider the accounting related to intangible assets and the associated deferred taxes to be incomplete due to ongoing analysis.
−Removed: We expect to finalize the purchase price allocation in the first quarter of 2020.
−Removed: A summary of the acquisition price and estimated fair values of assets acquired and liabilities assumed as of the date of acquisition is as follows (in thousands):
−Removed: Cash and cash equivalents $ 3,348
−Removed: Accounts receivable 2,587
−Removed: Other current assets 244
−Removed: Goodwill 82,402
−Removed: Intangible assets:
−Removed: Customer relationships 13,600
−Removed: Developed technology 10,800
−Removed: Trade name 1,400
−Removed: Property and equipment, net 2,142
−Removed: Deferred tax assets 2,968
−Removed: Other long term assets, net 2,641
−Removed: Current liabilities ( 7,071 )
−Removed: Deferred tax liabilities ( 1,583 )
−Removed: Other noncurrent liabilities ( 2,668 )
−Removed: Total acquisition price $ 110,810
−Removed: Under the purchase accounting method, the total purchase price was allocated to the net assets of Radixx based upon estimated fair values as of the acquisition date.
−Removed: The excess purchase price over the estimated fair value of the net tangible and intangible assets was recorded as goodwill, reflecting the growth potential of the business.
−Removed: The anticipated useful lives of the intangible assets acquired are 10 years for customer relationships, 5 years for developed technology and 18 years for the trade name.
−Removed: The acquisition of Radixx did not have a material impact to our consolidated financial statements, and therefore pro forma information is not presented.
−Removed: Impairment and Related Charges
−Removed: Capitalized implementation costs and deferred customer advances and discounts are reviewed for impairment if events and circumstances indicate that their carrying amounts may not be recoverable.
−Removed: Summary of Business and Significant Accounting Policies for more information.
−Removed: Given the substantial amount of uncertainty of reaching an agreement regarding the implementation of services pursuant to the contract with an Airline Solutions' customer, we evaluated the recoverability of net capitalized contract costs related to the customer and recorded a charge of $ 81 million during the year ended December 31, 2017.
−Removed: This charge was estimated based on a review of all balances with the customer including capitalized implementation costs, deferred customer advances and discounts, deferred revenue, contract liabilities, and other deferred charges.
−Removed: We will continue to monitor our position through the insolvency proceedings;
−Removed: however, there is no further exposure to our consolidated balance sheet as of December 31, 2019.
−Removed: Given the uncertainty associated with the ultimate resolution of this dispute, there could be further impacts to our consolidated statement of operations.
−Removed: This impairment charge was primarily non-cash and was recorded to Impairment and related charges in our consolidated statement of operations for the year ended December 31, 2017.
−Removed: Commitments and Contingencies—Other for additional information.
+Added: During the year ended December 31, 2020, we recorded immaterial measurement period adjustments to deferred income taxes and goodwill and completed the purchase price allocation for the Radixx acquisition.
+Added: Radixx is managed as a part of our Travel Solutions segment.
+Added: Restructuring Activities
+Added: Given the market conditions as a result of COVID-19, we have responded with cost savings measures, including a reduction in our workforce through involuntary and voluntary severance and voluntary early retirement programs, and the early abandonment of leased office space.
+Added: The COVID-19 pandemic has caused major shifts in the travel ecosystem resulting in the changing needs of our airline, hotel and agency customers.
+Added: As a result, in 2020 we accelerated the organizational changes we began in 2018 to address the changing travel landscape through the Strategic Realignment to respond to the impacts of the COVID-19 pandemic on our business and cost structure.
+Added: This Strategic Realignment and related actions are substantially complete.
+Added: We do not expect additional restructuring charges associated with these activities to be significant.
+Added: During the year ended December 31, 2020, we incurred $ 86 million in connection with these restructuring activities, of which $ 19 million is recorded within cost of revenue, excluding technology costs, $ 32 million is recorded within technology costs and $ 35 million is recorded within selling, general and administrative costs within our consolidated statement of operations.
+Added: These restructuring costs are comprised of $ 72 million that has been or will be paid in cash related to severance and related benefits costs and $ 2 million paid in cash related to early termination lease payments.
+Added: Additionally, we recorded a $ 12 million abandonment charge during the year ended December 31, 2020 related to the abandonment of certain leased office space.
+Added: The following table summarizes the accrued liability related to severance and related benefits costs as recorded within accrued compensation and related benefits within our consolidated balance sheet (in thousands):
+Added: December 31, 2020
+Added: Balance as of January 1, 2020 $ —
+Added: Charges 71,590
+Added: Cash Payments ( 48,337 )
+Added: Balance as of December 31, 2020 $ 23,253
Goodwill and Intangible Assets
+Added: Due to triggering events related to the COVID-19 pandemic, we performed a quantitative assessment, as of March 31, 2020.
+Added: This assessment was based on our current projections and was subject to various risks, uncertainties and estimates including:
+Added: (1) forecasted revenues, expenses and cash flows, including future travel supplier capacity and load factors, (2) the duration and extent of the impact of the COVID-19 pandemic on our business and our customers, (3) current discount and long-term growth rates, (4) the reduction in our market capitalization, (5) current market transaction trends and (6) changes to the regulatory environment impacting our industry.
+Added: In estimating fair value, a key assumption was the estimate of when travel would return to pre-COVID-19 levels.
+Added: Should a significant change in the estimated recovery period elongate further than our expectations, it could have a material impact on our estimates of fair value.
+Added: Our interim quantitative impairment assessment as of March 31, 2020 determined that our goodwill was not impaired.
+Added: We updated our goodwill assessment quarterly on a qualitative basis during 2020 and determined that our goodwill was not impaired at any reporting date in 2020.
+Added: Our qualitative assessments considered the latest information available regarding the items noted above including the most recent information available regarding the duration of the recovery period to 2019 levels.
+Added: As a result of the Strategic Realignment, our historical Travel Network and Airline Solutions business segments have been combined into a new business segment, Travel Solutions.
+Added: In connection with this reorganization, the historical Travel Network and Airline Solutions reporting units and their related goodwill were combined into a single Travel Solutions reporting unit, thereby requiring no reallocation of goodwill based on fair values.
+Added: There was no change to our historical Hospitality Solutions reporting unit.
+Added: We updated our goodwill assessment on a qualitative basis, reflecting both pre- and post-organization, for all reporting units as of June 30, 2020, and determined that our goodwill was not impaired for any reporting unit at this date.
Changes in the carrying amount of goodwill during the years ended December 31, 2020 and 2019 are as follows (in thousands):
−Removed: Travel Network Airline Solutions Hospitality
+Added: Solutions Hospitality
Balance as of December 31, 2018 $ 2,396,152 $ 156,217 $ 2,552,369
+Added: 82,402 — 82,402
Adjustments (1)
1 unchanged sentence
Balance as of December 31, 2019 2,478,440 154,811 2,633,251
−Removed: — 82,402 — 82,402
Adjustments (1)
41 unchanged sentences
Right-of-Use asset (2)
+Added: 125,110 64,191
Long-term trade unbilled receivables (1)
5 unchanged sentences
Revenue from Contracts with Customers for additional information.
−Removed: (2) In the first quarter of 2019, we adopted new lease accounting guidance on a modified retrospective basis in accordance with ASC 842, Leases.
+Added: (2) Refer to Note 12.
Leases, for additional information.
4 unchanged sentences
Lease liabilities (1)
−Removed: Tax receivable agreement — 72,939
+Added: 97,403 49,970
Other 85,443 95,069
1 unchanged sentence
___________________________
−Removed: (1) In the first quarter of 2019, we adopted new lease accounting guidance on a modified retrospective basis in accordance with ASC 842, Leases.
+Added: (1) Refer to Note 12.
Leases, for additional information.
7 unchanged sentences
Derivatives, for information on the income statement line items affected as the result of reclassification adjustments associated with derivatives.
−Removed: In 2018, we adopted an updated accounting standard and elected to reclassify the stranded income tax effects related to the enactment of the TCJA to retained earnings resulting in a decrease in our retained deficit of $ 22 million with a corresponding increase to accumulated other comprehensive income.
−Removed: On December 22, 2017, the TCJA was signed into law.
−Removed: The TCJA contains significant changes to the U.S.
−Removed: corporate income tax system, including a reduction of the federal corporate income tax rate from 35 % to 21 %, a limitation of the tax deduction for interest expense to 30 % of adjusted taxable income (as defined in the TCJA), base erosion and anti-avoidance tax (“BEAT”), foreign-derived intangible income (“FDII”) and global intangible low-taxed income (“GILTI”), one-time taxation of offshore earnings at reduced rates in connection with the transition of U.S.
−Removed: international taxation from a worldwide tax system to a territorial tax system (“transition tax”), and elimination of U.S.
−Removed: tax on dividends from foreign subsidiaries (subject to certain important exceptions).
−Removed: At December 31, 2017, we recorded a provisional net discrete tax cost associated with the TCJA of $ 47 million.
−Removed: The provisional amounts recorded in 2017 related primarily to the transition tax and were partially offset by the remeasurement of deferred taxes.
−Removed: Upon further analysis of certain aspects of the TCJA and subsequently published administrative guidance, and refinement of our calculations, during the year ended December 31, 2018, we reduced the provisional amount by $ 27 million.
−Removed: The Tax Receivable Agreement ("TRA") provides for future payments to Pre-IPO Existing Stockholders (as defined below) for cash savings for U.S.
−Removed: federal income tax realized as a result of the utilization of Pre-IPO Tax Assets (as defined below).
−Removed: These cash savings would be realized at the enacted statutory tax rate effective in the year of utilization.
−Removed: Primarily as a result of the reduction in the U.S.
−Removed: corporate income tax rate, we recorded a $ 58 million provisional reduction to the liability at December 31, 2017.
−Removed: In 2018, we finalized the 2017 U.S.
−Removed: federal income tax return and utilized additional Pre-IPO Tax Assets in the return, primarily as a result of electing to utilize our NOLs against our one-time transition tax income.
−Removed: As a result of the change in estimated NOL utilization at the higher corporate income tax rate in 2017 we recorded an increase to our liability of $ 5 million related to the TRA, which is reflected in our 2018 income from continuing operations before taxes.
−Removed: During 2019, we decreased the TRA liability by $ 3 million as a result of certain audit and transfer pricing adjustments recorded during the period, which is reflected in our 2019 income from continuing operations before taxes.
The components of pretax income from continuing operations, generally based on the jurisdiction of the legal entity, were as follows:
1 unchanged sentence
2020 2019 2018
−Removed: Components of pre-tax income:
+Added: Components of pre-tax (loss) income:
Domestic $ ( 1,032,549 ) $ 30,960 $ 190,291
28 unchanged sentences
— ( 536 ) 1,019
+Added: Valuation Allowance 201,863 957 3,878
Other, net 15,478 ( 2,150 ) ( 80 )
1 unchanged sentence
___________________________
−Removed: (1) In 2018, amount includes SAB 118 adjustments for deferred taxes and foreign tax effects.
−Removed: In 2017, amount includes $ 48 million of transition tax expense, and the remainder is the net benefit on cumulative deferred taxes.
+Added: (1) In 2018, amount includes adjustments for deferred taxes and foreign tax effects.
(2) Amount includes adjustments to the TRA, which are not taxable.
+Added: The Tax Receivable Agreement ("TRA") provided for payments to Pre-IPO Existing Stockholders (as defined below) for cash savings for U.S.
+Added: federal income tax realized as a result of the utilization of Pre-IPO Tax Assets (as defined below).
+Added: These cash savings would be realized at the enacted statutory tax rate effective in the year of utilization.
+Added: In 2018, we finalized the 2017 U.S.
+Added: federal income tax return and utilized additional Pre-IPO Tax Assets in the return, primarily as a result of electing to utilize our net operating loss ("NOLs") against our one-time transition tax income.
+Added: As a result of the change in estimated NOL utilization at the higher corporate income tax rate in 2017 we recorded an increase to our liability of $ 5 million related to the TRA, which is reflected in our 2018 income from continuing operations before taxes.
+Added: During 2019, we decreased the TRA liability by $ 3 million as a result of certain audit and transfer pricing adjustments recorded during the period, which is reflected in our 2019 income from continuing operations before taxes.
+Added: Additionally, during the year ended December 31, 2018, we reduced the provisional net discrete tax cost associated with the TCJA by $ 27 million to $ 20 million upon further analysis of certain aspects of the TCJA and subsequently published administrative guidance, and refinement of our calculations.
The components of our deferred tax assets and liabilities are as follows:
1 unchanged sentence
Deferred tax assets:
−Removed: Accrued expenses $ 7,547 $ 8,638
Employee benefits other than pension $ 21,903 $ 23,272
6 unchanged sentences
Suspended loss 14,528 14,635
−Removed: Other 5,916 8,008
+Added: Accrued expenses 1,797 7,547
Total deferred tax assets 432,328 198,681
Deferred tax liabilities:
+Added: Exchangeable notes ( 19,114 ) —
Right of use assets ( 21,376 ) ( 9,261 )
5 unchanged sentences
Investment in partnership ( 7,565 ) ( 7,306 )
+Added: Other ( 2,974 ) —
Total deferred tax liabilities ( 229,638 ) ( 245,999 )
1 unchanged sentence
Net deferred tax (liability) $ ( 48,563 ) $ ( 85,590 )
−Removed: In the first quarter of 2018, we adopted ASC 606, which replaced ASC 605, using the modified retrospective approach.
−Removed: As a result of the adoption of ASC 606, we recorded a cumulative effect adjustment as of January 1, 2018 to decrease our opening retained deficit as of January 1, 2018 by approximately $ 102 million with a corresponding increase to deferred tax liabilities of $ 24 million to recognize the increase to income taxes payable in the future related to revenue recognition.
As a result of the enactment of the TCJA, we recorded a one-time transition tax on the undistributed earnings of our foreign subsidiaries.
3 unchanged sentences
As of December 31, 2020, we have U.S.
−Removed: federal net operating loss carryforwards ("NOLs") of approximately $ 32 million, primarily related to the acquisition of Radixx, which will expire between 2022 and 2039.
−Removed: As a result of the acquisition of Radixx and other prior business combinations, all of the U.S.
−Removed: federal NOLs are subject to the annual limit on the ability of a corporation to use certain tax attributes (as defined in Section 382 of the Code).
+Added: federal NOL carryforwards of approximately $ 749 million, which primarily have an indefinite carryforward period.
+Added: Additionally, we have research tax credit carryforwards of approximately $ 18 million, which will expire between 2021 and 2041.
+Added: As a result of the acquisition of Radixx and other prior business combinations, $ 33 million of our U.S.
+Added: federal NOLs are subject to the annual limit on the ability of a corporation to use certain tax attributes (as defined in Section 382 of the Code) with the majority expiring between 2023 and 2037.
However, we expect that Section 382 will not limit our ability to fully realize the tax benefits.
−Removed: We have state NOLs of $ 7 million which will expire between 2020 and 2038 and state research tax credit carryforwards of $ 18 million which will expire between 2023 and 2039.
−Removed: We have $ 165 million of NOL carryforwards related to certain non-U.S.
+Added: We have state NOLs of $ 20 million which will expire primarily between 2021 and 2041 and state research tax credit carryforwards of $ 20 million which will expire between 2023 and 2040.
+Added: We have $ 415 million of NOL carryforwards and $ 12 million of foreign tax credits related to certain non-U.S.
taxing jurisdictions that are primarily from countries with indefinite carryforward periods.
1 unchanged sentence
The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible.
−Removed: In assessing the need for a valuation allowance for our deferred tax assets, we considered all available positive and negative evidence, including our ability to carry back NOLs to prior periods, the reversal of deferred tax liabilities, tax planning strategies and projected future taxable income.
−Removed: We maintained a state NOL valuation allowance of $ 5 million and $ 4 million as of December 31, 2019 and 2018, respectively.
−Removed: deferred tax assets of lastminute.com and other subsidiaries, we maintained a valuation allowance of $ 33 million and $ 55 million as of December 31, 2019 and 2018, respectively.
+Added: When assessing the need for a valuation allowance, all positive and negative evidence is analyzed, including our ability to carry back NOLs to prior periods, the reversal of deferred tax liabilities, tax planning strategies and projected future taxable income.
+Added: Significant losses related to COVID-19 resulted in a three-year cumulative loss in certain jurisdictions, which represents significant negative evidence regarding the ability to realize deferred tax assets.
+Added: As a result, we established a valuation allowance on a portion of our U.S.
+Added: deferred tax assets of $ 165 million as of December 31, 2020.
+Added: We also established and maintained a U.S.
+Added: state valuation allowance on current year losses and other deferred tax assets of $ 15 million and $ 5 million as of December 31, 2020 and 2019, respectively.
+Added: deferred tax assets of certain subsidiaries, we established and maintained a valuation allowance on current year losses and other deferred tax assets of $ 71 million and $ 33 million as of December 31, 2020 and 2019, respectively.
We reassess these assumptions regularly which could cause an increase or decrease to the valuation allowance.
1 unchanged sentence
It is our policy to recognize penalties and interest accrued related to income taxes as a component of the provision for income taxes from continuing operations.
−Removed: During the years ended December 31, 2019, 2018 and 2017, we recognized a benefit of $ 7 million, expense of $ 1 million and expense of $ 1 million, respectively.
−Removed: As of December 31, 2019 and 2018, we had a liability, including interest and penalty, of $ 81 million and $ 93 million, respectively, for unrecognized tax benefits, including cumulative accrued interest and penalties of approximately $ 16 million and $ 23 million, respectively.
+Added: During the years ended December 31, 2020, 2019 and 2018, we recognized an
+Added: expense of $ 6 million, benefit of $ 7 million and expense of $ 1 million, respectively, related to interest and penalties.
+Added: As of December 31, 2020 and 2019, we had a liability, including interest and penalties, of $ 96 million and $ 81 million, respectively, for unrecognized tax benefits, including cumulative accrued interest and penalties of approximately $ 23 million and $ 16 million, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
12 unchanged sentences
As of December 31, 2020, 2019, and 2018, the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $ 55 million, $ 48 million and $ 51 million, respectively.
−Removed: We believe that it is reasonably possible that $ 15 million in unrecognized tax benefits may be resolved in the next twelve months.
+Added: We believe that it is reasonably possible that $ 5 million in unrecognized tax benefits may be resolved in the next twelve months, due to statute of limitations expiration.
In the normal course of business, we are subject to examination by taxing authorities throughout the world.
3 unchanged sentences
Singapore 2016 - forward
−Removed: Texas 2015 - forward
+Added: India 1996 - 2015
Uruguay 2015 - forward
Federal 2014, 2015, 2017 - forward
+Added: Texas 2016 - forward
We currently have ongoing audits in India and various other jurisdictions.
2 unchanged sentences
Tax Receivable Agreement
−Removed: Immediately prior to the closing of our initial public offering, we entered into the TRA that provides the stockholders and equity award holders that were our stockholders and equity award holders, respectively, immediately prior to the closing of our initial public offering (collectively, the "Pre-IPO Existing Stockholders") the right to receive future payments from us.
−Removed: The future payments will equal 85 % of the amount of cash savings, if any, in U.S.
−Removed: federal income tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our initial public offerings, including NOLs, capital losses and the ability to realize tax amortization of certain intangible assets (collectively, the "Pre-IPO Tax Assets").
−Removed: Primarily due to the enactment of the Tax Cuts and Jobs Act (the "TCJA"), which reduced the U.S.
−Removed: corporate income tax rate, we recorded a total net reduction in the TRA liability of $ 55 million across the years ended December 31, 2018 and 2017.
−Removed: Additionally, there was another reduction of $ 3 million related to certain audit and transfer pricing adjustments recorded in 2019.
−Removed: The TRA payments accrue interest in accordance with the terms of the TRA subsequent to the tax year in which the tax benefits are realized through the date of the benefit payment.
−Removed: We made payments, including interest, of $ 72 million in January 2020, $ 30 million in April 2019, and $ 74 million, $ 60 million and $ 101 million in January 2019, 2018 and 2017, respectively.
+Added: Immediately prior to the closing of our initial public offering in April 2014, we entered into the TRA, which provides the right to receive future payments from us to stockholders and equity award holders that were our stockholders and equity award holders, respectively, immediately prior to the closing of our initial public offering (collectively, the "Pre-IPO Existing Stockholders").
+Added: In connection with the TRA, we made payments, including interest, of $ 72 million in January 2020, $ 105 million in 2019, and $ 60 million in 2018, respectively.
In December 2019, we exercised our right under the terms of the TRA to accelerate our remaining payments under the TRA and make an early termination payment of $ 1 million, to the Pre-IPO Existing Shareholders, which was included in the January 2020 payment of $ 72 million described above.
As a result, no future payments are required to be made to the Pre-IPO Existing Stockholders under the TRA.
+Added: Credit Losses
+Added: In the first quarter of 2020, we adopted the updated guidance within ASC 326, Credit Impairment for the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
+Added: Under this updated standard, the previous "incurred loss" approach is replaced with an "expected loss" model for instruments measured at amortized cost.
+Added: The adoption of this standard in the first quarter of 2020 resulted in a $ 10 million increase in the allowance for credit losses, partially offset by a $ 1 million decrease in deferred tax liabilities and a $ 1 million increase in accounts receivable with a corresponding increase of approximately $ 8 million in our opening retained deficit as of January 1, 2020.
+Added: Our allowance for credit losses relates to all financial assets, primarily trade receivables due in less than one year recorded in Accounts Receivable, net on our consolidated balance sheets.
+Added: Our allowance for credit losses for the year ended December 31, 2020 for our portfolio segment is summarized as follows (in thousands):
+Added: December 31, 2020
+Added: Balance at December 31, 2019 $ 57,730
+Added: Cumulative-effect adjustment upon adoption 9,868
+Added: Provision for expected credit losses 65,710
+Added: Write-offs ( 35,630 )
+Added: Other ( 110 )
+Added: Balance at December 31, 2020 $ 97,568
+Added: Our provision for expected credit losses totaled $ 66 million and $ 21 million for the year ended December 31, 2020 and 2019, respectively.
+Added: For the year ended December 31, 2020, we fully reserved certain aged balances related to particular customers due to heightened uncertainty regarding collectability, including uncertainty related to bankruptcy filings by several of our customers during the year ended December 31, 2020.
+Added: Additionally, the impact of the COVID-19 pandemic on the global economy and other general increases in aging balances has affected our current estimate of expected credit losses since implementation of the new credit impairment standard.
+Added: Macro-economic factors, including the economic downtown, lack of liquidity in the capital markets resulting from the COVID-19 pandemic and lack of additional government funding, can have a significant effect on additions to the allowance as the pandemic may result in the restructuring or bankruptcy of additional customers.
+Added: Given the uncertainties surrounding the duration and effects of COVID-19, we cannot provide assurance that the assumptions used in our estimates will be accurate and actual write-offs may vary from our estimates.
+Added: We regularly monitor the financial condition of the air transportation industry.
+Added: We believe the credit risk related to the air carriers’ difficulties is significantly mitigated by the fact that we collect a significant portion of the receivables from these carriers through the ACH.
+Added: As of December 31, 2020, approximately 52 % of our air customers make payments through the ACH which accounts for approximately 63 % of our air revenue.
+Added: For these carriers, we believe the use of ACH mitigates our credit risk with respect to airline bankruptcies.
+Added: For those carriers from which we do not collect payments through the ACH or other similar clearing houses, our credit risk is higher.
+Added: We monitor these carriers and account for the related credit risk through our normal reserve policies.
As of December 31, 2020 and 2019, our outstanding debt included in our consolidated balance sheets totaled $ 4,666 million and $ 3,343 million, respectively, which are net of debt issuance costs of $ 52 million and $ 15 million, respectively, and unamortized discounts of $ 90 million and $ 6 million, respectively.
+Added: See "—Senior Secured Notes due 2025" and "—Exchangeable Notes" below regarding the increase in unamortized discounts as of December 31, 2020.
The following table sets forth the face values of our outstanding debt as of December 31, 2020 and 2019 (in thousands):
1 unchanged sentence
Senior secured credit facilities:
−Removed: Term Loan A L + 2.25 %
−Removed: July 2022 $ 484,500 $ 527,250
+Added: Term Loan A (1)
+Added: August 2023 $ — $ 484,500
Term Loan B L+ 2.00 %
February 2024 1,824,616 1,843,427
+Added: Other Term Loan B L+ 4.00 %
+Added: December 2027 637,000 —
Revolver, $ 400 million (2)
−Removed: July 2022 — —
−Removed: 5.375% senior secured notes due 2023 5.375 % April 2023 530,000 530,000
−Removed: 5.25% senior secured notes due 2023 5.25 % November 2023 500,000 500,000
+Added: November 2023 375,000 —
+Added: 5.375 % senior secured notes due 2023 (3)
+Added: 5.375 % April 2023 — 530,000
+Added: 5.25 % senior secured notes due 2023 (1)
+Added: 5.25 % November 2023 — 500,000
+Added: 9.25 % senior secured notes due 2025
+Added: 9.25 % April 2025 775,000 —
+Added: 7.375 % senior secured notes due 2025
+Added: 7.375 % September 2025 850,000 —
+Added: 4.00 % senior exchangeable notes due 2025
+Added: 4.00 % April 2025 345,000 —
Finance lease obligations 889 5,882
2 unchanged sentences
Face value of long-term debt outstanding $ 4,781,437 $ 3,282,195
+Added: _____________________________
+Added: (1) Extinguished on December 17, 2020 using proceeds from the Other Term Loan B.
+Added: (2) Pursuant to the August 27, 2020 refinancing, the interest rate on the Revolver was increased from L+ 2.50 % to L+ 2.75 % and the maturity was extended from July 2022 to November 2023.
+Added: Subject to certain "springing" maturity conditions, the maturity may extend to February 2024 at the latest.
+Added: (3) Extinguished on August 27, 2020 using proceeds from the 7.375 % senior secured notes due 2025.
+Added: We had $ 375 million outstanding under the Revolver as of December 31, 2020 and no balance outstanding as of December 31, 2019.
+Added: We had outstanding letters of credit totaling $ 10 million and $ 12 million as of December 31, 2020 and 2019, which reduced our overall credit capacity under the Revolver.
Senior Secured Credit Facilities
−Removed: In February 2013, Sabre GLBL entered into the Amended and Restated Credit Agreement.
−Removed: The agreement replaced (i) the existing term loans with new classes of term loans of $ 1,775 million (the “2013 Term Loan B”) and $ 425 million (the “2013 Term Loan C”) and (ii) the existing revolving credit facility with a new revolving credit facility of $ 352 million (the “2013 Revolver”).
−Removed: In September 2013, Sabre GLBL entered into an agreement to amend the Amended and Restated Credit Agreement to add a new class of term loans in the amount of $ 350 million (the “2013 Incremental Term Loan Facility”).
−Removed: In July 2016, Sabre GLBL entered into a series of amendments (the “Credit Agreement Amendments”) to our Amended and Restated Credit Agreement to provide for an incremental term loan under a new class with an aggregate principal amount of $ 600 million (the “2016 Term Loan A”) and to replace the 2013 Revolver with a new revolving credit facility totaling $ 400 million (the “2016 Revolver”).
−Removed: The proceeds of $ 597 million, net of $ 3 million discount, from the 2016 Term Loan A were used to repay $ 350 million of outstanding principal on our 2013 Term Loan B and 2013 Incremental Term Loan Facility, on a pro rata basis, repay the $ 120 million then-outstanding balance on the 2016 Revolver, and pay $ 11 million in associated financing fees.
−Removed: We recognized a $ 4 million loss on extinguishment of debt in connection with these transactions during the year ended December 31, 2016.
−Removed: On February 22, 2017, Sabre GLBL entered into a Third Incremental Term Facility Amendment to our Amended and Restated Credit Agreement (the “2017 Term Facility Amendment”).
−Removed: The new agreement replaced the 2013 Term Loan B, 2013 Incremental Term Loan Facility and 2013 Term Loan C with a single class of term loan (the "2017 Term Loan B") with an aggregate principal amount of $ 1,900 million maturing on February 22, 2024.
−Removed: The proceeds of $ 1,898 million, net of $ 2 million discount on the 2017 Term Loan B, were used to pay off approximately $ 1,761 million of all existing classes of outstanding term loans (other than the 2016 Term Loan A), pay related accrued interest and pay $ 12 million in associated financing fees, which were recorded as debt modification costs in Other, net in the consolidated statement of operations during the three months ended March 31, 2017.
−Removed: The remaining proceeds of the 2017 Term Loan B were used to pay off approximately $ 80 million of Sabre’s outstanding mortgage on its corporate headquarters on March 31, 2017 and for other general corporate purposes.
−Removed: Unamortized debt issuance costs and discount related to existing classes of outstanding term loans prior to the 2017 Term Facility Amendment of $ 9 million and $ 3 million, respectively, will continue to be amortized over the remaining term of the 2017 Term Loan B along with the Term Loan B discount of $ 2 million.
−Removed: On August 23, 2017, Sabre GLBL entered into a Fourth Incremental Term Facility Amendment to our Amended and Restated Credit Agreement, Term Loan A Refinancing Amendment to the Credit Agreement, and Second Revolving Facility Refinancing Amendment to the Credit Agreement to refinance and modify the terms of the 2017 Term Loan B, the 2016 Term Loan A, and the 2016 Revolver, resulting in a reduction of the applicable margins for each of these instruments and approximately a one -year extension of the maturity of the 2016 Term Loan A and 2016 Revolver (the “2017 Refinancing”).
−Removed: We incurred no additional indebtedness as a result of the 2017 Refinancing.
−Removed: The 2017 Refinancing included a $ 400 million revolving credit facility ("Revolver") that replaced the 2016 Revolver, as well as the application of the proceeds of the approximately $ 1,891 million incremental Term Loan B facility (“Term Loan B”) and $ 570 million Term Loan A facility (“Term Loan A”) to replace the 2017 Term Loan B and the 2016 Term Loan A.
−Removed: The maturity of the Revolver and the Term Loan A was extended from July 18, 2021 to July 1, 2022.
−Removed: The applicable margins for the Term Loan B were reduced to 2.25 % per annum for Eurocurrency rate loans and 1.25 % per annum for base rate loans.
−Removed: 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.
−Removed: On March 2, 2018, Sabre GLBL entered into a Fifth Incremental Term Facility Amendment to our Amended and Restated Credit Agreement to refinance and modify the terms of the Term Loan B, resulting in a reduction of the applicable margins for the Term Loan B to 2.00 % per annum for Eurocurrency rate loans and 1.00 % per annum for base rate loans.
−Removed: We incurred no additional indebtedness as a result of this transaction and incurred $ 2 million in financing fees recorded within Other, net and a $ 1 million loss on extinguishment of debt, in our consolidated results of operations year ended December 31, 2018.
−Removed: 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.
−Removed: Pursuant to Credit Agreement Amendments, effective July 18, 2016, the maximum leverage ratio has been adjusted to be based on the Total Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) and we are required, at all times (no longer solely when a threshold amount of revolving loans or letters of credit were outstanding), to maintain a Total Net Leverage Ratio of less than 4.5 to 1.0.
−Removed: As of December 31, 2019 we are in compliance with all covenants under the Amended and Restated Credit Agreement.
−Removed: We had no balance outstanding under the Revolver as of December 31, 2019 and as of December 31, 2018.
−Removed: We had outstanding letters of credit totaling $ 12 million and $ 15 million as of December 31, 2019 and 2018, respectively, which reduced our overall credit capacity under the Revolver and 2016 Revolver.
+Added: Refinancing Transactions
+Added: On December 17, 2020, Sabre GLBL entered into a Sixth Term A Loan Refinancing and Incremental Amendment to our Amended and Restated Credit Agreement, resulting in additional Term Loan B borrowings of $ 637 million ("Other Term B Loans") due December 17, 2027.
+Added: The applicable interest rate margins for the Other Term B Loans are 4.00 % per annum for Eurocurrency rate loans and 3.00 % per annum for base rate loans, with a floor of 0.75 % for the Eurocurrency rate, and 1.75 % for the base bate, respectively.
+Added: The net proceeds of $ 623 million from the issuance, net of underwriting fees and commissions, were used to fully redeem both the $ 500 million outstanding 5.25 % senior secured notes due November 2023 and the $ 134 million outstanding Term Loan A.
+Added: Additionally, on December 17, 2020, Sabre GLBL entered into a Pro Rata Amendment and the Refinancing Amendment which reduced the minimum liquidity requirement described outlined below from $ 450 million to $ 300 million.
+Added: We incurred no material additional indebtedness as a result of these transactions, other than amounts for certain interest, fees and expenses.
+Added: We recognized a loss on extinguishment of debt of $ 11 million during the year ended December 31, 2020 in connection with these transactions, which consisted of a redemption premium of $ 6 million and the write-off of unamortized debt issuance costs of $ 5 million.
+Added: 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 November 23, 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.
+Added: 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.
+Added: In addition to extending the maturity date of the Revolver, 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 (reduced to $ 300 million pursuant to the refinancing in December 2020 as discussed above).
+Added: 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.
+Added: The applicable margins for the Revolver are between 2.50 % and 1.75 % per annum for Eurocurrency rate loans and between 1.50 % and 0.75 % per annum for base rate loans, 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.
+Added: These interest rate spreads for the Revolver were increased by 0.25 %, during covenant suspension, in connection with the 2020 Refinancing.
Principal Payments
−Removed: Principal payments on the Term Loan A are due on a quarterly basis equal to 1.25 % of its initial aggregate principal amount during the first two years of its term and 2.50 % of its initial aggregate principal amount during the next three years of its term.
−Removed: Term Loan B matures on February 22, 2024, and required principal payments in equal quarterly installments of 0.25 % through to the maturity date of which the remaining balance is due.
+Added: The Other Term B Loans mature on December 17, 2027 and require principal payments in equal quarterly installments of 0.25 % through to the maturity date on which the remaining balance is due.
+Added: Term Loan B matures on February 22, 2024 and requires principal payments in equal quarterly installments of 0.25 % through to the maturity date on which the remaining balance is due.
For the year ended December 31, 2020, we made $ 54 million of scheduled principal payments.
−Removed: We are also required to pay down the term loans by an amount equal to 50 % of annual excess cash flow, as defined in our Amended and Restated Credit Agreement.
+Added: We are also required to pay down the Term Loan B by an amount equal to 50 % of annual excess cash flow, as defined in the Amended and Restated Credit Agreement.
This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved.
−Removed: Based on our results for the year ended December 31, 2018, we were not required to make an excess cash flow payment in 2019, and no excess cash flow payment was required in 2020 with respect to our results for the year ended December 31, 2019.
+Added: Based on our results for the year ended December 31, 2019, we were not required to make an excess cash flow payment in 2020, and no excess cash flow payment is required in 2021 with respect to our results for the year ended December 31, 2020.
We are further required to pay down the term loan with proceeds from certain asset sales or borrowings as defined in the Amended and Restated Credit Agreement.
+Added: Financial Covenants
+Added: 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.
+Added: Pursuant to Credit Agreement Amendments, effective July 18, 2016, the maximum leverage ratio has been adjusted to be based on the Total Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) and we are required, at all times (no longer solely when a threshold amount of revolving loans or letters of credit were outstanding), to maintain a Total Net Leverage Ratio of less than 4.5 to 1.0.
+Added: 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.
+Added: 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.
+Added: As of December 31, 2020, the capacity reductions by domestic airlines in response to the COVID-19 outbreak and related 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.
+Added: As such, the leverage ratio covenant has been suspended for at least the fourth quarter of 2020 and first quarter of 2021.
+Added: As of December 31, 2020, we are in compliance with all covenants not suspended under the terms of the Amended and Restated Credit Agreement and with the additional covenants of the 2020 Refinancing.
Borrowings under the Amended and Restated Credit Agreement bear interest at a rate equal to either, at our option:
9 unchanged sentences
Applicable Margin
−Removed: Term Loan A 2.25 % 1.00 %
Term Loan B 2.00 % 1.00 %
+Added: Other Term Loan B 4.00 % 3.00 %
Revolver, $ 400 million
1 unchanged sentence
_____________________________
−Removed: (1) Applicable margins do not reflect potential step ups and downs of Term Loan A and Revolver, $ 400 million, which are determined by the Senior Secured Leverage Ratio.
+Added: (1) Applicable margins do not reflect potential step ups and downs of Other Term Loan B and Revolver, $ 400 million, which are determined by the Senior Secured Leverage Ratio.
See below for additional information.
−Removed: (2) Term Loan A, Term Loan B, and Revolver, $ 400 million, are subject to a 0 % floor.
+Added: (2) Term Loan B, and the Revolver, $ 400 million, are subject to a 0 % floor, while the Other Term Loan B is subject to a 0.75 % floor.
Applicable margins for the Term Loan B are 2.00 % per annum for Eurocurrency rate loans and 1.00 % per annum for base rate loans over the life of the loan and are not dependent on the Senior Secured Leverage Ratio.
−Removed: Applicable margins for the Term Loan A and the Revolver step up by 25 basis points for any quarter if the Senior Secured Leverage Ratio is greater than or equal to 3.00 to 1.0.
−Removed: Applicable margins for the Term Loan A and the Revolver under the Amended and Restated Credit Agreement step down 25 basis points for any quarter if the Senior Secured Leverage Ratio is less than 2.25 to 1.0.
+Added: Applicable margins for the Other Term Loan B and the Revolver step up by 25 basis points for any quarter if the Senior Secured Leverage Ratio is greater than or equal to 3.00 to 1.0.
+Added: Applicable margins for the Other Term Loan B and the Revolver under the Amended and Restated Credit Agreement step down 25 basis points for any quarter if the Senior Secured Leverage Ratio is less than 2.25 to 1.0.
In addition, we are required to pay a quarterly commitment fee of 0.250 % per annum for unused Revolver commitments.
The commitment fee may increase to 0.375 % per annum if the Senior Secured Leverage Ratio is greater than or equal to 3.00 to 1.0.
+Added: The Eurocurrency rate is based on LIBOR.
+Added: In July 2017, the Financial Conduct Authority announced its intention to phase out LIBOR by the end of 2021, and subsequently extended the phase-out date to June 30, 2023.
+Added: If a published U.S.
+Added: dollar LIBOR rate is unavailable, the interest rates on our debt indexed to LIBOR will be determined using various alternative methods set forth in our Amended and Restated Credit Agreement, any of which could result in interest obligations that are more than or that do not otherwise correlate over time with the payments that would have been made on this debt if U.S.
+Added: dollar LIBOR were available in its current form.
+Added: We anticipate amending our Amended and Restated Credit Agreement prior to the phaseout of LIBOR to provide for a Eurocurrency rate alternative to LIBOR.
Our effective interest rates on borrowings under the Amended and Restated Credit Agreement for the years ended December 31, 2020, 2019 and 2018, inclusive of amounts charged to interest expense, are as follows:
4 unchanged sentences
Senior Secured Notes due 2025
−Removed: In April 2015, we issued $ 530 million senior secured notes due in April 2023 with a stated interest rate of 5.375 % and received proceeds of $ 522 million, net of underwriting fees and commissions.
−Removed: In November 2015, we issued $ 500 million senior secured notes due in November 2023 with a stated interest rate of 5.25 % and received net proceeds of $ 494 million, net of underwriting fees and commissions.
−Removed: The senior secured notes due 2023 were issued by Sabre GLBL and are guaranteed by Sabre Holdings and each of Sabre GLBL’s existing and subsequently acquired or organized subsidiaries that are borrowers under or guarantors of our senior secured credit facilities.
−Removed: The senior secured notes due 2023 are secured by a first priority security interest in substantially all present and after acquired property and assets of Sabre GLBL and the guarantors of the notes, which also constitutes collateral securing indebtedness under our senior secured facilities on a first priority basis.
+Added: 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”).
+Added: 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.
+Added: The September 2025 Notes bear interest at a rate of 7.375 % per annum and interest
+Added: payments are due semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021.
+Added: The September 2025 Notes mature on September 1, 2025.
+Added: The net proceeds of $ 839 million received from the sale of the September 2025 Notes, net of underwriting fees and commissions, plus cash on hand, was used to:
+Added: (1) repay approximately $ 319 million principal amount of debt under the Term Loan A;
+Added: (2) redeem all of our $ 530 million outstanding 5.375 % senior secured notes due April 2023;
+Added: and (3) repay approximately $ 3 million principal amount of debt under the Term Loan B.
+Added: We recognized a loss on extinguishment of debt of $ 10 million during the year ended December 31, 2020 in connection with these transactions which consisted of a redemption premium of $ 7 million and the write-off of unamortized debt issuance costs of $ 3 million.
+Added: On April 17, 2020, Sabre GLBL entered into a new debt agreement consisting of $ 775 million aggregate principal amount of 9.250 % senior secured notes due 2025 (the “April 2025 Notes”).
+Added: The April 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.
+Added: The April 2025 Notes bear interest at a rate of 9.250 % per annum and interest payments are due semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2020.
+Added: The April 2025 Notes mature on April 15, 2025.
+Added: The net proceeds received from the sale of the April 2025 Notes of $ 763 million, net of underwriting fees and commissions, are being used for general corporate purposes.
+Added: Exchangeable Notes
+Added: On April 17, 2020, Sabre GLBL entered into a new debt agreement consisting of $ 345 million aggregate principal amount of 4.000 % senior exchangeable notes due 2025 (the “Exchangeable Notes”).
+Added: The Exchangeable Notes are senior, unsecured obligations of Sabre GLBL, accrue interest payable semi-annually in arrears and mature on April 15, 2025, unless earlier repurchased or exchanged in accordance with specified circumstances and terms of the indenture governing the Exchangeable Notes.
+Added: Under the terms of indenture, the notes are exchangeable into common stock of Sabre Corporation (referred to as "our common stock" herein) at the following times or circumstances:
+Added: • during any calendar quarter commencing after the calendar quarter ended June 30, 2020, if the last reported sale price per share of our common stock exceeds 130 % of the exchange price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
+Added: • during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the "Measurement Period") if the trading price per $1,000 principal amount of Exchangeable Notes, as determined following a request by their holder in accordance with the procedures in the indenture, for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the exchange rate on such trading day;
+Added: • upon the occurrence of certain corporate events or distributions on our common stock, including but not limited to a “Fundamental Change” (as defined in the indenture governing the notes);
+Added: • upon the occurrence of specified corporate events;
+Added: • on or after October 15, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, April 15, 2025.
+Added: With certain exceptions, upon a Change of Control or other Fundamental Change (both as defined in the indenture governing the Exchangeable Notes), the holders of the Exchangeable Notes may require us to repurchase all or part of the principal amount of the Exchangeable Notes at a repurchase price equal to 100 % of the principal amount of the Exchangeable Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date.
+Added: Due to the price of our common stock during the 30 days preceding December 31, 2020, the first condition above has been met as of December 31, 2020 and the Exchangeable Notes are exchangeable by the holders at any time during the first quarter of 2021.
+Added: As of December 31, 2020 , the if-converted value of the Exchangeable Notes exceeds the outstanding principal amount by $ 181 million.
+Added: The Exchangeable Notes are convertible at their holder’s election into shares of our common stock based on an initial conversion rate of 126.9499 shares of common stock per $1,000 principal amount of the Exchangeable Notes, which is equivalent to an initial conversion price of approximately $ 7.88 per share.
+Added: The exchange rate is subject to anti-dilution and other adjustments.
+Added: Upon conversion, Sabre GLBL will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of common stock, at our election.
+Added: If a “Make-Whole Fundamental Change” (as defined in the Exchangeable Notes Indenture) occurs with respect to any Exchangeable Note and the exchange date for the exchange of such Exchangeable Note occurs during the related “Make-Whole Fundamental Change Exchange Period” (as defined in the Exchangeable Notes Indenture), then, subject to the provisions set forth in the Exchangeable Notes Indenture, the exchange rate applicable to such exchange will be increased by a number of shares set forth in the table contained in the Exchangeable Notes Indenture, based on a function of the time since origination and our stock price on the date of the occurrence of such Make-Whole Fundamental Change.
+Added: The net proceeds received from the sale of the Exchangeable Notes of $ 336 million, net of underwriting fees and commissions, are being used for general corporate purposes.
+Added: We allocated the proceeds of the Exchangeable Notes between long-term debt and equity.
+Added: The allocation to the long-term debt component was based on an estimated fair value of a similar debt instrument that does not contain features permitting exchange into common stock (a Level 2 input, as defined in Note 11.
+Added: Value Measurements).
+Added: We determined the fair value of the long-term debt component as the present value of contractual future cash flows.
+Added: The carrying amount of the equity component was calculated by deducting the fair value of the long-term debt component from the initial proceeds of the Exchangeable Notes.
+Added: Accordingly, at issuance, we allocated $ 255 million to long-term debt and $ 90 million to additional paid-in capital.
+Added: We recorded a net deferred tax liability of $ 20 million in connection with the debt discount and issuance costs associated with the Exchangeable Notes that is recorded in deferred income taxes on the consolidated balance sheets.
+Added: The difference between the face value of the Exchangeable Notes and the long-term debt component is accounted for as a debt discount, which is amortized, along with debt issuance costs, to interest expense over the term of the Exchangeable Notes ending April 15, 2025 using an effective interest rate of approximately 12 %.
+Added: The following table sets forth the carrying value of the Exchangeable Notes as of December 31, 2020 (in thousands):
+Added: December 31, 2020
+Added: Liability Component:
+Added: Principal $ 345,000
+Added: Unamortized debt discount 80,446
+Added: Net carrying value (1)
+Added: Equity component:
+Added: Conversion feature $ 90,500
+Added: Equity portion of debt issuance costs 3,167
+Added: Deferred tax liability 19,457
+Added: Net carrying value $ 67,876
+Added: _____________________________
+Added: (1) Excludes net unamortized debt issuance costs of $ 8 million as of December 31, 2020.
+Added: The following table sets forth interest expense recognized related to the Exchangeable Notes for year ended December 31, 2020 (in thousands):
+Added: December 31, 2020
+Added: Contractual interest expense $ 9,698
+Added: Amortization of debt discount and issuance costs 10,834
Aggregate Maturities
4 unchanged sentences
2025 1,976,370
+Added: Thereafter 605,152
Total $ 4,807,505
7 unchanged sentences
Conversely, when the dollar weakens, the increase in the present value of future foreign currency expense is offset by gains in the fair value of the forward contracts.
+Added: Due to the uncertainty driven by the COVID-19 pandemic on our foreign currency exposures, we have paused entering into new cash flow hedges of forecasted foreign currency cash flows until we have more clarity regarding the recovery trajectory and its impacts on net exposures.
We enter into interest rate swap agreements to manage interest rate risk exposure.
1 unchanged sentence
These agreements involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreements without an exchange of the underlying principal amount.
−Removed: For derivative instruments that are designated and qualify as cash flow hedges, the effective portion and ineffective portions of the gain or loss on the derivative instruments, and the hedge components excluded from the assessment of effectiveness, are reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.
+Added: For derivative instruments that are designated and qualify as cash flow hedges, the effective portions and ineffective portions of the gain or loss on the derivative instruments, and the hedge components excluded from the assessment of effectiveness, are reported as a component of other comprehensive income (loss) (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.
Derivatives not designated as hedging instruments are carried at fair value with changes in fair value reflected in Other, net in the consolidated statement of operations.
−Removed: Forward Contracts - In order to hedge our operational expenditures' exposure to foreign currency movements, we are a party to certain foreign currency forward contracts that extend until December 2020.
+Added: Forward Contracts —In order to hedge our operational expenditures' exposure to foreign currency movements, we have been a party to certain foreign currency forward contracts that extended until December 31, 2020.
We have designated these instruments as cash flow hedges.
−Removed: No hedging ineffectiveness was recorded in earnings relating to the forward contracts during the years ended December 31, 2019, 2018 and 2017.
−Removed: As of December 31, 2019, we estimate that $ 2 million in gains will be reclassified from other comprehensive income (loss) to earnings over the next 12 months.
−Removed: As of December 31, 2019 and 2018, we had the following unsettled purchased foreign currency forward contracts that were entered into to hedge our operational exposure to foreign currency movements (in thousands, except for average contract rates):
−Removed: Outstanding Notional Amounts as of December 31, 2019
−Removed: Buy Currency Sell Currency Foreign Amount USD Amount Average Contract
−Removed: Polish Zloty US Dollar 265,000 68,971 0.2603
−Removed: Indian Rupee US Dollar 4,485,000 61,708 0.0138
−Removed: Singapore Dollar US Dollar 63,500 46,759 0.7364
−Removed: British Pound Sterling US Dollar 18,400 24,109 1.3103
−Removed: Australian Dollar US Dollar 16,500 11,521 0.6982
−Removed: Swedish Krona US Dollar 38,100 4,106 0.1075
−Removed: Outstanding Notional Amount as of December 31, 2018
−Removed: Buy Currency Sell Currency Foreign Amount USD Amount Average Contract
−Removed: Polish Zloty US Dollar 232,500 64,281 0.2765
−Removed: Singapore Dollar US Dollar 59,800 44,504 0.7442
−Removed: Indian Rupee US Dollar 2,880,000 39,956 0.0139
−Removed: British Pound Sterling US Dollar 19,600 26,525 1.3533
−Removed: Australian Dollar US Dollar 23,950 17,674 0.7379
−Removed: Swedish Krona US Dollar 48,250 5,678 0.1177
−Removed: Brazilian Real US Dollar 14,300 3,753 0.2615
+Added: No hedging ineffectiveness was recorded in earnings relating to the forward contracts in the years ended December 31, 2020 and 2019.
+Added: As of December 31, 2020, we have no unsettled forward contracts and no material losses are expected to be reclassified from other comprehensive (loss) income to earnings over the next 12 months.
Interest Rate Swap Contracts — Interest rate swaps outstanding at December 31, 2020 and matured during the years ended December 31, 2020, 2019 and 2018 are as follows:
3 unchanged sentences
$ 750 million 1 month LIBOR (1)
−Removed: 1.15 % March 31, 2017 December 31, 2017
−Removed: $ 750 million 1 month LIBOR (2)
1.65 % December 29, 2017 December 31, 2018
5 unchanged sentences
2.81 % December 31, 2020 December 31, 2021
−Removed: Not Designated as Hedging Instrument (1)
−Removed: $ 750 million 1 month LIBOR (3)
−Removed: 2.19 % December 30, 2016 December 29, 2017
−Removed: $ 750 million 1.18 % 1 month LIBOR March 31, 2017 December 31, 2017
−Removed: $ 750 million 1 month LIBOR (3)
−Removed: 2.61 % December 29, 2017 December 31, 2018
−Removed: $ 750 million 1.67 % 1 month LIBOR December 29, 2017 December 31, 2018
____________________
(1) Subject to a 1 % floor.
−Removed: (2) Subject to a 0 % floor.
−Removed: (3) As of February 22, 2017.
−Removed: In connection with the 2017 Term Facility Amendment, we entered into new forward starting interest rate swaps effective March 31, 2017 to hedge the interest payments associated with $ 750 million of the floating-rate 2017 Term Loan B.
−Removed: The total notional amount outstanding is $ 750 million for the full years 2018 and 2019.
−Removed: In September 2017, we entered into new forward starting interest rate swaps to hedge the interest payments associated with $ 750 million of the floating-rate Term Loan B.
+Added: In connection with the 2017 Term Facility Amendment, we entered into forward starting interest rate swaps effective March 31, 2017 to hedge the interest payments associated with $ 750 million of the floating-rate 2017 Term Loan B.
+Added: The total notional amount outstanding of $ 750 million became effective December 31, 2018 and extended through the full year 2019.
+Added: In September 2017, we entered into forward starting interest rate swaps to hedge the interest payments associated with $ 750 million of the floating-rate Term Loan B.
The total notional outstanding of $ 750 million became effective December 31, 2019 and extends through the full year 2020.
−Removed: In April 2018, we entered into new forward starting interest rate swaps to hedge the interest payments associated with $ 600 million, $ 300 million and $ 450 million of the floating-rate Term Loan B related to full year 2019, 2020 and 2021, respectively.
−Removed: In December 2018, we entered into new forward starting interest rate swaps to hedge the interest payments associated with $ 150 million of the floating-rate Term Loan B for the full years 2020 and 2021.
+Added: In April 2018, we entered into forward starting interest rate swaps to hedge the interest payments associated with $ 600 million, $ 300 million and $ 450 million of the floating-rate Term Loan B related to years 2019, 2020 and 2021, respectively.
+Added: In December 2018, we entered into forward starting interest rate swaps to hedge the interest payments associated with $ 150 million of the floating-rate Term Loan B for the years 2020 and 2021.
We have designated these swaps as cash flow hedges.
4 unchanged sentences
Foreign exchange contracts Prepaid expenses and other current assets $ — $ 1,953
−Removed: Foreign exchange contracts Other accrued liabilities — ( 4,285 )
−Removed: Interest rate swaps Prepaid expenses and other current assets — 3,674
−Removed: Interest rate swaps Other assets, net — 295
Interest rate swaps Other accrued liabilities ( 16,038 ) ( 7,020 )
13 unchanged sentences
Derivatives in Cash Flow Hedging Relationships Income Statement Location 2020 2019 2018
−Removed: Foreign exchange contracts Cost of revenue $ 5,351 $ ( 322 ) $ ( 3,001 )
+Added: Foreign exchange contracts Cost of revenue, excluding technology costs $ 2,992 $ 5,351 $ ( 322 )
Interest rate swaps Interest expense, net 14,898 156 3,999
17 unchanged sentences
December 31, 2020 Level 1 Level 2 Level 3
−Removed: Foreign currency forward contracts $ 1,953 $ — $ 1,953 $ —
+Added: Derivatives (1) :
Interest rate swap contracts $ ( 16,038 ) $ — $ ( 16,038 ) $ —
2 unchanged sentences
December 31, 2019 Level 1 Level 2 Level 3
+Added: Derivatives (1) :
Foreign currency forward contracts $ 1,953 $ — $ 1,953 $ —
1 unchanged sentence
Total $ ( 12,985 ) $ — $ ( 12,985 ) $ —
+Added: ____________________
+Added: (1) See Note 10.
+Added: Derivatives for further detail.
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the years ended December 31, 2020 and 2019.
3 unchanged sentences
In addition, goodwill, property and equipment and intangible assets are reviewed for impairment if events and circumstances indicate that their carrying amounts may not be recoverable.
+Added: Due to the impacts of the COVID-19 pandemic on our current and projected future results of operations, we identified a triggering event requiring an interim quantitative assessment on our goodwill in the first quarter of 2020.
+Added: We utilized Level 3 inputs based on management's best estimates and assumptions in performing our quantitative assessment as of March 31, 2020.
+Added: Our interim impairment assessment as of March 31, 2020 determined that our goodwill was not impaired.
+Added: We updated our goodwill assessment quarterly on a qualitative basis during 2020 and determined that our goodwill was not impaired at any reporting date in 2020.
+Added: Goodwill and Intangible Assets for additional information
Other Financial Instruments
The carrying value of our financial instruments including cash and cash equivalents, and accounts receivable approximates their fair values.
−Removed: The fair values of our senior secured notes due 2023 and term loans under our Amended and Restated Credit Agreement are determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input.
−Removed: The following table presents the fair value and carrying value of all our notes and term loans under our Amended and Restated Credit Agreement as of December 31, 2019 and 2018 (in thousands):
+Added: The fair values of our senior exchangeable notes due 2025, senior secured notes due 2025, and term loans under our Amended and Restated Credit Agreement are determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input.
+Added: The following table presents the fair value and carrying value of all our senior notes and borrowings under our senior secured credit facilities as of December 31, 2020 and 2019 (in thousands):
Fair Value at December 31, Carrying Value (1) at December 31,
2 unchanged sentences
Term Loan B 1,785,843 1,856,100 1,821,016 1,838,741
+Added: Other Term Loan B 639,389 — 630,663 —
+Added: Revolver, $ 400 million
+Added: 375,000 — 375,000 —
5.375 % senior secured notes due 2023
+Added: — 543,536 — 530,000
5.25 % senior secured notes due 2023
— 514,670 — 500,000
+Added: 9.25 % senior secured notes due 2025
+Added: 925,610 — 775,000 —
+Added: 7.375 % senior secured notes due 2025
+Added: 925,030 — 850,000 —
+Added: 4.000 % senior exchangeable notes due 2025
+Added: 610,907 — 264,554 —
+Added: _____________________
(1) Excludes net unamortized debt issuance costs.
−Removed: In the first quarter of 2019, we adopted Accounting Standards Codification ("ASC") 842, Leases, which replaced the previous accounting standard.
+Added: In the first quarter of 2019, we adopted ASC 842, Leases, which replaced the previous accounting standard on leases.
The new lease standard is a right-of-use model, requiring most lessee agreements to be recorded on the balance sheet.
6 unchanged sentences
There was no impact to retained deficit from adoption of the new standard.
−Removed: The following table presents the components of lease expense (in thousands):
−Removed: December 31, 2019
+Added: For the year ended December 31, 2018, we recognized rent expense of $ 30 million.
+Added: The following table presents the components of lease expense for the years ended December 31, 2020 and 2019 (in thousands):
+Added: Year Ended December 31,
Operating lease cost $ 25,442 $ 27,035
4 unchanged sentences
The following table presents supplemental cash flow information related to leases (in thousands):
−Removed: December 31, 2019
+Added: Year Ended December 31,
Supplemental Cash Flow Information
7 unchanged sentences
The following table presents supplemental balance sheet information related to leases (in thousands):
−Removed: Year Ended 12/31/2019
Operating Leases
11 unchanged sentences
The following table presents other supplemental information related to leases:
−Removed: December 31, 2019
Weighted Average Remaining Lease Term (in years)
4 unchanged sentences
Finance leases 4.0 % 4.9 %
+Added: Sale and Leaseback Transaction
+Added: During the fourth quarter of 2020, we completed the sale of our two headquarters buildings for aggregate receipts, net of closing costs, of $ 69 million.
+Added: Our carrying value for the buildings approximated the proceeds from the sale.
+Added: Contemporaneously with the closing of the sale, we entered into two leases pursuant to which we leased back the properties for initial terms of 12 years and 18 months, respectively, with renewal options up to 10 years in certain circumstances.
+Added: Both leases entered into as a result of the sale and leaseback transaction are classified as operating leases.
+Added: In connection with these leases, lease liabilities representing the fair value of future lease payments of $ 46 million were recorded within the consolidated balance sheet as of December 31, 2020 and a non-cash net gain on sale of $ 10 million was recorded to Other, net, resulting in right-of-use assets of $ 56 million recorded within the consolidated balance sheet as of December 31, 2020.
+Added: The net proceeds from the sale will be used for general operating purposes.
Lease Commitments
We lease certain facilities under long term operating leases.
+Added: Collectively, we lease approximately 1.3 million square feet of office space in 70 locations in 38 countries.
Certain of our lease agreements contain renewal options, early termination options and/or payment escalations based on fixed annual increases, local consumer price index changes or market rental reviews.
We recognize rent expense with fixed rate increases and/or fixed rent reductions on a straight line basis over the term of the lease.
−Removed: We lease approximately 1.6 million square feet of office space in 93 locations in 48 countries.
−Removed: For the years ended December 31, 2019, 2018 and 2017, we recognized rent expense of $ 29 million, $ 30 million and $ 32 million, respectively.
−Removed: Our leases have remaining minimum terms that range between one and nine years .
−Removed: Some of our leases include options to extend for up to five additional years;
−Removed: others include options to terminate the agreement within three years .
+Added: Our leases have remaining minimum terms that range between one and twelve years .
+Added: Some of our leases include options to extend for up to ten additional years;
+Added: others include options to terminate the agreement within two years .
Future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows (in thousands):
3 unchanged sentences
2023 17,062 —
+Added: 2024 15,615 —
+Added: 2025 11,051 —
Thereafter 60,670 —
2 unchanged sentences
Total $ 135,295 $ 889
−Removed: In addition to the above, as of December 31, 2019, we have entered into an additional operating lease with future lease payments of $ 39 million that will commence in 2020 with a lease term of 10 years.
Stock and Stockholders’ Equity
−Removed: Secondary Public Offerings and Share Repurchases
−Removed: During the year ended December 31, 2018, certain of our stockholders sold an aggregate of 69,304,636 shares of our common stock through secondary public offerings.
−Removed: We did not offer any shares or receive any proceeds from these secondary public offerings.
−Removed: Following the secondary public offering of approximately 23,304,636 shares of common stock during the fourth quarter of 2018, existing stockholders affiliated with TPG and Silver Lake no longer held any shares of our common stock .
−Removed: In February 2017, we announced the approval of a multi-year share repurchase program to purchase up to $ 500 million of Sabre's common stock outstanding.
−Removed: Repurchases under the program may take place in the open market or privately negotiated transactions.
−Removed: We repurchased 3,673,768 shares totaling $ 78 million, 1,075,255 shares totaling $ 26 million, and 5,779,769 shares totaling $ 109 million of our common stock during the years ended December 31, 2019, 2018, and 2017, respectively.
−Removed: Common Stock Dividends
+Added: Preferred Stock
+Added: On August 24, 2020, we completed an offering 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 for use as general corporate purposes.
+Added: The Preferred Stock accumulates cumulative dividends at a rate per annum equal to 6.50 % of the liquidation preference of $ 100 per share (equivalent to $ 6.50 annually per share) payable in cash or, subject to certain limitations, by delivery of shares of our common stock or any combination of cash and shares of our common stock, at our election;
+Added: provided, however, that any undeclared and unpaid dividends will continue to accumulate.
+Added: 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,
+Added: September 1 and December 1 of each year, beginning on December 1, 2020 and ending on, and including, September 1, 2023.
+Added: 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.
+Added: Subject to limited exceptions, no dividends may be declared or paid on shares of our common stock, unless all accumulated dividends have been paid or set aside for payment on all outstanding shares of our Preferred Stock for all past completed dividend periods.
+Added: In the event of our voluntary or involuntary liquidation, dissolution or winding-up, no distribution of our assets may be made to holders of our common stock until we have paid to holders of our Preferred Stock a liquidation preference equal to $ 100 per share plus accumulated and unpaid dividends.
+Added: We recorded $ 8 million of preferred stock dividends in our consolidated results of operations for the year ended December 31, 2020.
+Added: During the year ended December 31, 2020, we paid cash dividends on our preferred stock of $ 6 million.
+Added: On February 3, 2021, the Board of Directors declared a dividend of $ 1.625 per share on Preferred Stock payable on March 1, 2021 to holders of record of the Preferred Stock on February 15, 2021.
+Added: Unless earlier converted, each outstanding share of Preferred Stock will automatically convert, on the mandatory conversion date, which is expected to be September 1, 2023 into shares of our common stock at a rate between 11.9048 and 14.2857 , subject to customary anti-dilution adjustments.
+Added: The number of shares of our common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of our common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately before September 1, 2023.
+Added: The number of shares issued at conversion based on the unadjusted conversion rates will be between 40 million and 48 million shares.
+Added: Holders of the Preferred Stock have the right to convert all or any portion of their shares at any time until the close of business on the mandatory conversion date.
+Added: Early conversions that are not in connection with a “Make-Whole Fundamental Change” (as defined in the Certificate of Designations governing the Preferred Stock) will be settled at the minimum conversion rate of 11.9048 .
+Added: If a Make-Whole Fundamental Change occurs, holders of the Preferred Stock will, in certain circumstances, be entitled to convert their shares at an increased conversion rate for a specified period of time and receive an amount to compensate them for certain unpaid accumulated dividends and any remaining future scheduled dividend payments.
+Added: The Preferred Stock is not be redeemable at our election before the mandatory conversion date.
+Added: The holders of the Preferred Stock do not have any voting rights, with limited exceptions.
+Added: In the event that Preferred Stock dividends have not been declared and paid in an aggregate amount corresponding to six or more dividend periods, whether or not consecutive, the holders of the Preferred Stock will have the right to elect two new directors until all accumulated and unpaid Preferred Stock dividends have been paid in full, at which time that right will terminate.
+Added: On August 24, 2020, we completed an offering of 41,071,429 shares of our common stock which generated net proceeds of approximately $ 275 million for use as general corporate purposes.
We paid a quarterly cash dividend on our common stock of $ 0.14 per share, totaling $ 39 million, $ 0.14 per share, totaling $ 154 million, and $ 0.14 per share, totaling $ 154 million, during the years ended December 31, 2020, 2019 and 2018, respectively.
−Removed: Our board of directors has declared a cash dividend of $ 0.14 per share of our common stock, which will be paid on March 30, 2020 to stockholders of record as of March 20, 2020.
+Added: Given the impacts of COVID-19, we suspended the payment of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment.
+Added: Share Repurchase Program
+Added: In February 2017, we announced the approval of a multi-year share repurchase program (the "Share Repurchase Program") to purchase up to $ 500 million of Sabre's common stock outstanding.
+Added: Repurchases under the Share Repurchase Program may take place in the open market or privately negotiated transactions.
+Added: For the year ended December 31, 2020, we did no t repurchase any shares pursuant to the Share Repurchase Program.
+Added: For the years ended December 31, 2019 and 2018, we repurchased 3,673,768 shares totaling $ 78 million and 1,075,255 shares totaling $ 26 million pursuant to the Share Repurchase Program, respectively.
+Added: On March 16, 2020, we announced the suspension of share repurchases under the Share Repurchase Program in conjunction with certain cash management measures we are undertaking as a result of the market conditions caused by COVID-19.
+Added: Approximately $ 287 million remains authorized for repurchases under the Share Repurchase Program as of December 31, 2020.
Equity-Based Awards
3 unchanged sentences
Our 2019 Omnibus Plan serves as a successor to the 2016 Omnibus Plan, the 2014 Omnibus Plan, the Sovereign MEIP and Sovereign 2012 MEIP and provides for the issuance of stock options, restricted shares, restricted stock units (“RSUs”), performance-based RSU awards (“PSUs”), cash incentive compensation and other stock-based awards.
−Removed: Our 2019 Director Plan provides for the issuance of RSUs, Deferred Stock Units ("DSUs"), and stock options to non-employee Directors.
+Added: Our 2019 Director Plan provides for the issuance of RSUs, Deferred Stock Units ("DSUs"), and stock options to non-
+Added: employee Directors.
Outstanding awards under the 2016 Omnibus Plan, the 2014 Omnibus Plan, the Sovereign MEIP and Sovereign 2012 MEIP continue to be subject to the terms and conditions of their respective plan.
We initially reserved 12,500,000 shares of our common stock for issuance under our 2019 Omnibus Plan and 500,000 shares of our common stock for issuance under our 2019 Director Plan.
−Removed: We added 6,720,911 shares that were reserved but not issued under the Sovereign MEIP, Sovereign 2012 MEIP, 2014 Omnibus, and 2016 Omnibus Plans to the 2019 Omnibus Plan reserves, for a total of 19,220,911 authorized shares of common stock for issuance.
−Removed: Time-based options granted under the 2019, 2016, and 2014 Omnibus Plans generally vest over a four year period with 25 % vesting at the end of year one and the remaining vesting quarterly thereafter.
−Removed: RSUs generally vest over a four year period with 25 % vesting annually.
−Removed: PSUs generally vest over a four year period with 25 % vesting annually dependent upon the achievement of certain company-based performance measures.
−Removed: Each reporting period, we assess the probability of achieving the performance measure and, if there is an adjustment, record the cumulative effect of the adjustment in the current reporting period.
+Added: We added 10,687,275 shares that were reserved but not issued under the Sovereign MEIP, Sovereign 2012 MEIP, 2014 Omnibus, and 2016 Omnibus Plans to the 2019 Omnibus Plan reserves, for a total of 23,187,275 authorized shares of common stock for issuance under the 2019 Omnibus Plan.
+Added: Time-based options granted under the 2019, 2016, and 2014 Omnibus Plans prior to 2020 generally vest over a four year period with 25 % vesting at the end of year one and the remaining vesting quarterly thereafter.
+Added: Time-based options granted under the 2019 Omnibus Plan in 2020 vest over a three-year period, vesting in equal annual installments.
+Added: Options granted prior to fiscal year 2020 vested over a four-year period.
Options granted are exercisable for up to 10 years.
−Removed: Stock-based compensation expense totaled $ 67 million, $ 57 million and $ 45 million for the years ended December 31, 2019, 2018 and 2017, respectively.
−Removed: The fair value of the stock options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
+Added: RSUs generally vest over a four year period with 25 % vesting annually.
+Added: PSUs granted prior to 2020 generally vest over a four year period with 25 % vesting annually.
+Added: During 2020, we granted PSUs that vest over a three year period in equal annual installments, as well as PSUs that cliff vest at the end of one , two, or three years , depending on the terms of the grant.
+Added: Vesting of PSUs is dependent upon the achievement of certain company-based performance measures.
+Added: Stock-based compensation expense for all awards totaled $ 70 million, $ 67 million and $ 57 million for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: The fair value of the stock options granted was estimated at the date of grant using the Black-Scholes option pricing model.
+Added: For further details on these assumptions, see Note 1.
+Added: Summary of Business and Significant Accounting Policies.
+Added: The following table summarizes the weighted-average assumptions used:
Year Ended December 31,
3 unchanged sentences
Expected life (in years) 6.00 6.11 6.11
−Removed: Implied volatility 26.32 % 23.17 % 22.02 %
+Added: Expected volatility 36.41 % 26.32 % 23.17 %
Dividend yield 5.11 % 2.62 % 2.46 %
8 unchanged sentences
Cancelled ( 1,857,337 ) 22.86
+Added: Forfeited ( 433,620 ) 16.96
+Added: Expired ( 890,613 ) 20.26
Outstanding at December 31, 2020 3,300,256 $ 13.59 7.9 $ 7,401
2 unchanged sentences
(1) Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options awards and the closing price of our common stock of $ 12.02 on December 31, 2020.
−Removed: For the years ended December 31, 2019, 2018 and 2017, the total intrinsic value of stock options exercised totaled $ 4 million, $ 6 million and $ 19 million, respectively.
+Added: The total intrinsic value of stock options exercised was immaterial for the year ended December 31, 2020.
+Added: For the years ended December 31, 2019 and 2018, the total intrinsic value of stock options exercised was $ 4 million and $ 6 million, respectively.
The weighted-average fair values of options granted were $ 1.71 , $ 4.55 , and $ 4.58 during the years ended December 31, 2020, 2019 and 2018, respectively.
6 unchanged sentences
Cancelled ( 295,024 ) 8.47
+Added: Forfeited ( 1,231,719 ) 16.67
Unvested at December 31, 2020 12,309,646 $ 12.07
6 unchanged sentences
Vested ( 667,460 ) 20.29
−Removed: Cancelled ( 331,428 ) 22.25
+Added: Forfeited ( 337,694 ) 15.55
Unvested at December 31, 2020 2,846,795 $ 14.18
1 unchanged sentence
The recognition of compensation expense associated with PSUs is contingent upon the achievement of annual company-based performance measures.
−Removed: As of December 31, 2019, unrecognized compensation expense associated with PSUs totaled $ 14 million, $ 12 million and $ 6 million for the annual measurement periods ending December 31, 2020, 2021 and 2022, respectively.
+Added: During the year ended December 31, 2020, we amended the 2020 performance metrics associated with PSUs that vest in March 2021 due to the impact of COVID-19 on our performance and these awards became subject to variable accounting based on the fair value at the end of each period with the cumulative effect of changes in fair value recorded each reporting period.
+Added: During the years ended December 31, 2019 and 2018, we assessed the probability of achieving the performance measures associated with PSU awards each reporting period and, if there was an adjustment, recorded the cumulative effect of the adjustment in that respective reporting period.
+Added: As of December 31, 2020, unrecognized compensation expense associated with PSUs expected to vest totaled $ 14 million and $ 8 million for the annual measurement periods ending December 31, 2021 and 2022, respectively.
Earnings Per Share
2 unchanged sentences
2020 2019 2018
−Removed: Income from continuing operations $ 164,312 $ 340,921 $ 249,576
−Removed: Net income attributable to noncontrolling interests 3,954 5,129 5,113
−Removed: Net income from continuing operations available to common stockholders, basic and diluted $ 160,358 $ 335,792 $ 244,463
+Added: (Loss) income from continuing operations $ ( 1,274,332 ) $ 164,312 $ 340,921
+Added: Net income attributable to non-controlling interests 1,200 3,954 5,129
+Added: Preferred stock dividends 7,659 — —
+Added: Net (loss) income from continuing operations available to common stockholders, basic and diluted $ ( 1,283,191 ) $ 160,358 $ 335,792
Basic weighted-average common shares outstanding 289,855 274,168 275,235
4 unchanged sentences
Diluted $ ( 4.43 ) $ 0.58 $ 1.21
−Removed: Basic earnings per share are based on the weighted-average number of common shares outstanding during each period.
−Removed: Diluted earnings per share are based on the weighted-average number of common shares outstanding plus the effect of all dilutive common stock equivalents during each period.
−Removed: The calculation of diluted weighted-average shares excludes the impact of 3 million, 3 million and 5 million of anti-dilutive common stock equivalents for the years ended December 31, 2019 , 2018 and 2017, respectively.
+Added: Basic earnings per share is computed by dividing net income from continuing operations available to common stockholders by the weighted-average number of common shares outstanding during each period.
+Added: Diluted earnings per share is computed by dividing net income from continuing operations available to common stockholders by the weighted-average number of common shares outstanding plus the effect of all dilutive common stock equivalents during each period.
+Added: The diluted weighted-
+Added: average common shares outstanding calculation excludes 2 million of dilutive stock options and restricted stock awards for the year ended December 31, 2020 as their effect would be anti-dilutive given the net loss incurred in the period.
+Added: The calculation of diluted weighted-average shares excludes the impact of 3 million of anti-dilutive common stock equivalents for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: As we expect to settle the principal amount of the outstanding Exchangeable Notes in shares of our common stock, we have used the if-converted method for calculating any potential dilutive effect of these notes on our diluted net income per share.
+Added: Under the if-converted method, the Exchangeable Notes are assumed to be converted at the beginning of the period and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period being presented and interest expense, net of tax, recorded in connection with the Exchangeable Notes is added back to the numerator, only in the periods in which such effect is dilutive.
+Added: The approximately 44 million resulting common shares related to the Exchangeable Notes are not included in the dilutive weighted-average common shares outstanding calculation for the year ended December 31, 2020, respectively, as their effect would be anti-dilutive given the net loss incurred in the period.
+Added: Likewise, the potential dilutive effect of our Preferred Stock outstanding during the period was calculated using the if converted method assuming the conversion as of the earliest period reported or at the date of issuance, if later.
+Added: The approximately 40 million resulting common shares related to the Preferred Stock are not included in the dilutive weighted-average common shares outstanding calculation for the year ended December 31, 2020, respectively, as their effect would be anti-dilutive given the net loss incurred in the period.
Pension and Other Postretirement Benefit Plans
2 unchanged sentences
We make a matching contribution equal to 100 % of each pre-tax dollar contributed by the participant on the first 6 % of eligible compensation.
+Added: During 2020, we temporarily suspended our 401(k) match program for US-based employees in connection with our cost reduction efforts in response to market conditions as the result of the COVID-19 pandemic.
We recognized expenses related to the 401(k) Plan of approximately $ 7 million, $ 23 million and $ 22 million for the years ended December 31, 2020, 2019 and 2018, respectively.
12 unchanged sentences
( 14,675 ) ( 18,324 )
−Removed: Actuarial (loss) gain, net
−Removed: ( 47,632 ) 18,529
+Added: Actuarial loss, net ( 53,831 ) ( 47,632 )
Benefits paid
18,476 30,736
+Added: Lump sum settlement 44,450 —
Benefit obligation at December 31
8 unchanged sentences
( 18,476 ) ( 30,736 )
+Added: Lump sum settlement ( 44,450 ) —
Fair value of assets at December 31
2 unchanged sentences
The actuarial loss, net of $ 54 million for the year ended December 31, 2020 is attributable to a decrease in the discount rate.
−Removed: The actuarial gain, net of $ 19 million for the year ended December 31, 2018, is attributable to an increase in the discount rate.
+Added: The actuarial loss, net of $ 48 million for the year ended December 31, 2019, is attributable to a decrease in the discount rate, form of payment assumptions, and updates to certain plan participant assumptions.
+Added: During the year ended December 31, 2020, lump sum settlements occurred within our defined benefit pension plan which resulted in a loss of $ 18 million recorded to Other, net.
The net benefit obligation of $ 124 million and $ 125 million as of December 31, 2020 and 2019, respectively, is included in other noncurrent liabilities in our consolidated balance sheets.
2 unchanged sentences
Prior service credit 9,099 10,210
+Added: Pension settlement 14,005 —
Accumulated other comprehensive loss
7 unchanged sentences
Amortization of actuarial loss 8,622 6,516 7,362
+Added: Net periodic benefit $ 6,445 $ 4,898 $ 4,230
+Added: Settlement charge 18,071 — —
Net cost $ 24,516 $ 4,898 $ 4,230
6 unchanged sentences
5.00 % 5.75 % 5.75 %
+Added: ________________________________
+Added: (1) As of August 31, 2020, 2.76 % discount rate due to the settlement charge.
The following table provides the pre-tax amounts recognized in other comprehensive income (loss), including the amortization of the actuarial loss and prior service credit, associated with the LPP for the years ended December 31, 2020, 2019 and 2018 (in thousands):
Obligations Recognized in Year Ended December 31,
−Removed: Other Comprehensive Income 2019 2018 2017
+Added: Other Comprehensive Income (Loss) 2020 2019 2018
Net actuarial loss $ 15,225 $ 11,196 $ 25,595
+Added: Pension settlement ( 18,071 ) — —
Amortization of actuarial loss ( 8,611 ) ( 6,516 ) ( 7,362 )
Amortization of prior service credit 1,432 1,432 1,432
−Removed: Total loss (income) recognized in other comprehensive income $ 6,112 $ 19,665 $ ( 4,406 )
−Removed: Total recognized in net periodic benefit cost and other comprehensive income
+Added: Total (income) loss recognized in other comprehensive income (loss) $ ( 10,025 ) $ 6,112 $ 19,665
+Added: Total recognized in net periodic benefit cost and other comprehensive income (loss)
$ 14,491 $ 11,010 $ 23,895
7 unchanged sentences
The basis for the selected target asset allocation included consideration of the demographic profile of plan participants, expected future benefit obligations and payments, projected funded status of the plan and other factors.
−Removed: The target allocations for LPP assets are 40 % global equities, 15 % real estate assets, 15 % diversified credit and 30 % liability hedging fixed income.
+Added: The target allocations for LPP assets are 38 % global equities, 14 % real estate assets, 18 % diversified credit and 27 % liability hedging assets, and 2 % cash.
It is recognized that the investment management of the LPP assets has a direct effect on the achievement of its goal.
6 unchanged sentences
Common collective trusts:
−Removed: Global equity securities $ — $ 323,810 $ — $ 323,810
+Added: Foreign equity securities $ — $ 263,244 $ — $ 263,244
+Added: equity securities — 65,257 — 65,257
Money market mutual fund 8,017 — — 8,017
+Added: Limited partnership interest:
Real estate — — 8,735 8,735
5 unchanged sentences
Common collective trusts:
−Removed: Fixed income securities $ — $ 181,156 $ — $ 181,156
−Removed: Global equity securities — 108,152 — 108,152
+Added: Foreign equity securities $ — $ 265,495 $ — $ 265,495
+Added: equity securities — 58,315 — 58,315
Money market mutual fund 4,506 — — 4,506
+Added: Limited partnership interest:
Real estate — — 9,948 9,948
27 unchanged sentences
In the ordinary course of business, we make various commitments in connection with the purchase of goods and services from specific suppliers.
−Removed: We have outstanding commitments of approximately $ 2.6 billion, which includes commitments outstanding as of December 31, 2019 and a commitment entered into in January 2020.
+Added: We have outstanding commitments of approximately $ 2.9 billion.
These purchase commitments extend through 2030.
25 unchanged sentences
In April 2017, we filed an appeal with the United States Court of Appeals for the Second Circuit seeking a reversal of the judgment.
−Removed: US Airways also filed a counter-appeal challenging earlier court orders, including the above-referenced orders dismissing and/or issuing summary judgment as to portions of its claims and damages.
+Added: US Airways also filed a counter-appeal challenging earlier court orders, including the above-referenced orders
+Added: dismissing and/or issuing summary judgment as to portions of its claims and damages.
In connection with this appeal, we posted an appellate bond equal to the aggregate amount of the $ 15 million judgment entered plus interest, which stayed the judgment pending the appeal.
5 unchanged sentences
The lawsuit has been remanded to federal court in the Southern District of New York for further proceedings.
−Removed: Currently, no trial date has been set.
+Added: The trial court has scheduled the trial to begin on April 25, 2022.
As a result of the Second Circuit’s opinion, we believe that the claims associated with this case are not probable;
5 unchanged sentences
Depending on the outcome of the litigation, any of these consequences could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Department of Justice Lawsuit on Farelogix Acquisition
−Removed: On August 20, 2019, the DOJ filed a complaint in federal court in the District of Delaware, seeking a permanent injunction to prevent Sabre from acquiring Farelogix, Inc.
−Removed: ("Farelogix"), alleging that the proposed acquisition is likely to substantially lessen competition in violation of federal antitrust law.
−Removed: Sabre disputes the government's allegations and believes the acquisition is pro-competitive and ultimately will be completed.
−Removed: The trial concluded on February 6, 2020 and the trial court has not yet issued its decision.
−Removed: Sabre and Farelogix have extended the termination date of their acquisition agreement to April 30, 2020, allowing time to resolve the challenge by the DOJ.
−Removed: In addition, the CMA has referred its review of the acquisition for a Phase 2 investigation and has published its provisional findings of competition concerns.
−Removed: Under the acquisition agreement, as amended, we have agreed to advance certain attorneys’ fees incurred by Farelogix in responding to certain governmental reviews of the acquisition and in defending against certain antitrust proceedings, which have totaled $ 20 million for the year ended December 31, 2019.
−Removed: These advances will be applied against the purchase price upon closing.
−Removed: The acquisition agreement, as amended, contains certain customary termination rights, including the right of either party to terminate the acquisition agreement if the acquisition
−Removed: has not occurred by April 30, 2020.
−Removed: We could be obligated to pay Farelogix up to an additional $ 25 million, either in the form of additional advances or in the form of a termination fee depending on the circumstances.
European Commission’s Directorate-General for Competition ("EC") Investigation
23 unchanged sentences
The DIT appealed those decisions to the Delhi High Court, which found in our favor on July 19, 2010.
−Removed: The DIT has appealed the decision to the Supreme Court of India.
−Removed: Our case has been listed for hearing with the Supreme Court, and it has not yet been presented.
+Added: The DIT has appealed the decision to the Supreme Court of India and our case is currently pending before that court.
We have appealed the tax assessments for the assessment years ended March 2013 to March 2016 with the ITAT and no trial date has been set for these subsequent years.
4 unchanged sentences
The ITAT ruled in SAPPL’s favor, finding that no income would be chargeable to tax for assessment years ending March 2000 through March 2005.
−Removed: The DIT appealed those decisions to the Delhi High Court.
−Removed: No hearing date has been set.
−Removed: The DIT also assessed taxes on a similar basis for assessment years ending March 2006 through March 2016 and appeals for assessment years ending March 2006 through 2016 are pending before the ITAT.
+Added: The DIT appealed those decisions to the Bombay High Court and our case is pending before that court.
+Added: The DIT also assessed taxes on a similar basis plus some additional issues for
+Added: assessment years ending March 2006 through March 2016 and appeals for assessment years ending March 2006 through 2016 are pending before the ITAT or the High Court depending on the year.
If the DIT were to fully prevail on every claim against us, including SAPPL, we could be subject to taxes, interest and penalties of approximately $ 45 million as of December 31, 2020.
10 unchanged sentences
We do not believe that any of these routine proceedings will have a material impact on the business or our financial condition.
−Removed: In November 2017, in connection with Air Berlin’s insolvency proceedings, we requested that Air Berlin make an election under the German Insolvency Act on whether to perform or terminate its contract with us.
−Removed: In January 2018, Air Berlin notified us by letter that it was exercising its right under the German Insolvency Act to terminate its contract with us.
−Removed: In addition, Air Berlin’s letter alleged various breaches by us of the contract and asserted that it had suffered a significant amount of damages associated with its claims.
−Removed: Air Berlin has not commenced any formal action with respect to its claims.
−Removed: We believe that losses associated with these claims are neither probable nor estimable and therefore have not accrued any losses as of December 31, 2019.
−Removed: We may incur significant fees, costs and expenses for as long as this matter is ongoing.
−Removed: We intend to vigorously defend against these claims.
SynXis Central Reservation System
14 unchanged sentences
We took successful measures to ensure this unauthorized access to the HS Central Reservation System was stopped and is no longer possible.
−Removed: There is no indication that any of our systems beyond the HS Central Reservation System, such as Sabre’s Airline Solutions and Travel Network platforms, were affected or accessed by the unauthorized party.
+Added: There is no indication that any of our systems beyond the HS Central Reservation System, such as Sabre’s Travel Solutions platforms, were affected or accessed by the unauthorized party.
We notified law enforcement and the payment card brands and engaged a payment card industry data ("PCI") forensic investigator to investigate this incident at the payment card brands' request.
We have notified customers and other companies that use or interact with, directly or indirectly, the HS Central Reservation System about the incident.
−Removed: We are also cooperating with various governmental authorities that are investigating this incident.
+Added: In December 2020, we entered into settlement agreements with certain state Attorneys General to resolve their investigation into this incident.
+Added: As part of the settlement with these states, we paid $ 2 million to the states represented by the Attorneys General in the first quarter of 2021 and agreed to implement certain security controls and processes.
Separately, in November 2017, Sabre Hospitality Solutions observed a pattern of activity that, after further investigation, led it to believe that an unauthorized party improperly obtained access to certain hotel user credentials for purposes of accessing the HS Central Reservation System.
2 unchanged sentences
We have not found any evidence of a breach of the network security of the HS Central Reservation System, and we believe that the number of affected reservations represents only a fraction of 1 % of the bookings in the HS Central Reservation System.
−Removed: Although the costs related to these incidents, including any associated penalties assessed by any governmental authority or payment card brand or indemnification obligations to our customers, as well as any other impacts or remediation related to this incident, may be material, it is not possible at this time to determine whether we will incur, or to reasonably estimate the amount of, any liabilities in connection with them.
−Removed: We maintain insurance that covers certain aspects of cyber risks, and we continue to work with our insurance carriers in these matters.
+Added: Although the costs related to these incidents, including any associated penalties assessed by any other governmental authority or payment card brand or indemnification obligations to our customers, as well as any other impacts or remediation related to this incident, may be material, it is not possible at this time to determine whether we will incur, or to reasonably estimate the amount of, any liabilities in connection with them, with the exception of the payment related to the settlement agreements as described above.
+Added: We maintain insurance that covers certain aspects of cyber risks, including the payment related to the settlement agreements, and we continue to work with our insurance carriers in these matters.
Other Tax Matters
3 unchanged sentences
For example, in most countries we pay and collect Value Added Tax (“VAT”) when procuring goods and services, or providing services, within the normal course of business.
−Removed: VAT receivables are established in jurisdictions where VAT paid exceeds VAT collected and are recoverable through the filing of refund claims.
+Added: VAT receivables are established in jurisdictions where VAT paid exceeds VAT collected and are recoverable through the filing of
+Added: refund claims.
These receivables have inherent audit and collection risks unique to the specific jurisdictions that evaluate our refund claims.
2 unchanged sentences
Although we have paid these amounts and believe we are entitled to a refund, the Greek tax authorities have challenged our position.
+Added: In the second quarter of 2020, we received notice that the tax court has accepted our arguments to dismiss certain claims by the Greek tax authorities;
+Added: however, this ruling has been appealed.
In Greece, as in other jurisdictions, we intend to vigorously defend our positions against any claims that are not insignificant, including through litigation when necessary.
8 unchanged sentences
and overall materiality considerations.
−Removed: Effective the first quarter of 2018, our business has three reportable segments:
−Removed: (i) Travel Network, (ii) Airline Solutions and (iii) Hospitality Solutions.
−Removed: In conjunction with this change, we have modified the methodology we have historically used to allocate shared corporate technology costs.
−Removed: Each segment now reflects a portion of our shared corporate costs that historically were not allocated to a business unit, based on relative consumption of shared technology infrastructure costs and defined revenue metrics.
−Removed: These changes have no impact on our consolidated results of operations, but result in a decrease of individual segment profitability only.
−Removed: Our CODM utilizes Adjusted Gross Profit, Adjusted Operating Income and Adjusted EBITDA as the measures of profitability to evaluate performance of our segments and allocate resources.
−Removed: Corporate includes a technology organization that provides development and support activities to our segments.
−Removed: The majority of costs associated with our technology organization are allocated to the segments primarily based on the segments' usage of resources.
+Added: We now operate our business and present our results through two business segments effective the third quarter of 2020 (i) Travel Solutions, our global travel solutions for travel suppliers and travel buyers, including a broad portfolio of software technology products and solutions for airlines, and (ii) Hospitality Solutions, an extensive suite of software solutions for hoteliers.
+Added: 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 which aligns with information that our Chief Operating Decision Maker utilizes beginning in the third quarter of 2020 to evaluate segment performance and allocate resources.
+Added: These changes did not impact the historical Hospitality Solutions reporting segment's revenue and expenses.
+Added: Our CODM utilizes Adjusted Operating (Loss) Income as the measures of profitability to evaluate performance of our segments and allocate resources which is not a recognized term under GAAP.
+Added: Our uses of Adjusted Operating (Loss) Income has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.
+Added: 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.
+Added: 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.
+Added: Our CODM does not review total assets by segment as operating evaluations and resource allocation decisions are not made on the basis of total assets by segment.
+Added: Certain of our costs associated with our technology organization are allocated to the segments based on the segments' usage of resources.
Benefit expenses, facility costs and depreciation expense on the corporate headquarters building are allocated to the segments based on headcount.
1 unchanged sentence
We account for significant intersegment transactions as if the transactions were with third parties, that is, at estimated current market prices.
−Removed: The majority of the intersegment revenues and cost of revenues are fees charged by Travel Network to Hospitality Solutions for airline trips booked through our GDS.
−Removed: Our CODM does not review total assets by segment as operating evaluations and resource allocation decisions are not made on the basis of total assets by segment.
−Removed: The performance of our segments is evaluated primarily on Adjusted Gross Profit, Adjusted Operating Income and Adjusted EBITDA which are not recognized terms under GAAP.
−Removed: Our uses of Adjusted Gross Profit, Adjusted Operating Income and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.
−Removed: We define Adjusted Gross Profit as operating income 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 compensation, and stock-based compensation included in cost of revenue.
−Removed: We define Adjusted Operating Income as operating income 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.
−Removed: We define Adjusted EBITDA as income from continuing operations adjusted for impairment and related charges, depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, amortization of upfront incentive consideration, interest expense, net, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation and provision for income taxes.
+Added: The majority of the intersegment revenues and cost of revenues are fees charged by Travel Solutions to Hospitality Solutions for hotel stays booked through our GDS.
Segment information for the years ended December 31, 2020, 2019 and 2018 is as follows (in thousands):
1 unchanged sentence
2020 2019 2018
−Removed: Travel Network $ 2,882,662 $ 2,806,194 $ 2,550,470
−Removed: Airline Solutions 840,338 822,747 816,008
+Added: Travel Solutions $ 1,176,694 $ 3,723,000 $ 3,628,941
Hospitality Solutions 174,628 292,880 273,079
1 unchanged sentence
Total revenue $ 1,334,100 $ 3,974,988 $ 3,866,956
−Removed: Adjusted Gross Profit (Loss) (a)
−Removed: Travel Network $ 1,016,695 $ 1,098,052 $ 1,071,249
−Removed: Airline Solutions 326,610 355,079 366,255
−Removed: Hospitality Solutions 64,842 83,333 88,477
−Removed: Corporate ( 16,341 ) ( 15,056 ) ( 25,795 )
−Removed: Total $ 1,391,806 $ 1,521,408 $ 1,500,186
−Removed: Adjusted Operating Income (Loss) (b)
−Removed: Travel Network $ 648,838 $ 755,811 $ 746,625
−Removed: Airline Solutions 80,428 111,146 137,932
−Removed: Hospitality Solutions ( 21,632 ) 12,881 9,670
−Removed: Corporate ( 194,226 ) ( 178,406 ) ( 188,078 )
−Removed: Total $ 513,408 $ 701,432 $ 706,149
−Removed: Adjusted EBITDA (c)
−Removed: Travel Network $ 852,856 $ 951,709 $ 923,615
−Removed: Airline Solutions 251,442 293,577 296,437
+Added: Adjusted Operating (Loss) Income (a)
+Added: Travel Solutions $ ( 523,122 ) $ 729,266 $ 866,957
Hospitality Solutions ( 63,915 ) ( 21,632 ) 12,881
−Removed: Total segments 1,135,764 1,298,110 1,262,836
Corporate ( 158,237 ) ( 194,226 ) ( 178,406 )
1 unchanged sentence
Depreciation and amortization
−Removed: Travel Network $ 121,083 $ 118,276 $ 109,579
−Removed: Airline Solutions 171,014 182,431 158,505
+Added: Travel Solutions $ 250,540 $ 292,097 $ 300,707
Hospitality Solutions 42,789 53,098 39,943
3 unchanged sentences
Capital Expenditures
−Removed: Travel Network $ 15,580 $ 64,943 $ 90,881
−Removed: Airline Solutions 37,062 98,374 116,948
+Added: Travel Solutions $ 23,481 $ 52,642 $ 163,317
Hospitality Solutions 3,177 11,324 39,160
2 unchanged sentences
Total $ 65,420 $ 115,166 $ 283,940
−Removed: (a) The following table sets forth the reconciliation of Adjusted Gross Profit to operating income in our statement of operations (in thousands):
−Removed: Year Ended December 31,
−Removed: 2019 2018 2017
−Removed: Adjusted Gross Profit $ 1,391,806 $ 1,521,408 $ 1,500,186
−Removed: Less adjustments:
−Removed: Selling, general and administrative 576,568 513,526 510,075
−Removed: Impairment and related charges (7)
−Removed: Cost of revenue adjustments:
−Removed: Depreciation and amortization (1)
−Removed: 340,889 341,653 317,812
−Removed: Amortization of upfront incentive consideration (2)
−Removed: 82,935 77,622 67,411
−Removed: Restructuring and other costs (4)
−Removed: Stock-based compensation
−Removed: 27,997 26,591 17,732
−Removed: Operating income $ 363,417 $ 562,016 $ 493,440
−Removed: (b) The following table sets forth the reconciliation of Adjusted Operating Income to operating income in our statement of operations (in thousands):
−Removed: Year Ended December 31,
−Removed: 2019 2018 2017
−Removed: Adjusted Operating income $ 513,408 $ 701,432 $ 706,149
−Removed: Less adjustments:
−Removed: Joint venture equity income 2,044 2,556 2,580
−Removed: Impairment and related charges (7)
−Removed: Acquisition-related amortization (1c)
−Removed: 64,604 68,008 95,860
−Removed: Restructuring and other costs (4)
−Removed: Acquisition-related costs (5)
−Removed: 41,037 3,266 —
−Removed: Litigation costs, net (6)
−Removed: ( 24,579 ) 8,323 ( 35,507 )
−Removed: Stock-based compensation
−Removed: 66,885 57,263 44,689
−Removed: Operating income $ 363,417 $ 562,016 $ 493,440
−Removed: (c) The following table sets forth the reconciliation of Adjusted EBITDA to income from continuing operations in our statement of operations (in thousands):
+Added: (a) The following table sets forth the reconciliation of operating (loss) income in our statement of operations to Adjusted Operating (Loss) Income (in thousands):
Year Ended December 31,
2020 2019 2018
−Removed: Adjusted EBITDA $ 946,360 $ 1,124,390 $ 1,078,571
−Removed: Less adjustments:
+Added: Operating (loss) income $ ( 988,039 ) $ 363,417 $ 562,016
+Added: Equity method (loss) income ( 2,528 ) 2,044 2,556
Impairment and related charges (1)
−Removed: Depreciation and amortization of property and equipment (1a)
−Removed: 310,573 303,612 264,880
−Removed: Amortization of capitalized implementation costs (1b)
−Removed: 39,444 41,724 40,131
−Removed: Acquisition-related amortization (1c)
−Removed: 64,604 68,008 95,860
−Removed: Amortization of upfront incentive consideration (2)
−Removed: 82,935 77,622 67,411
−Removed: Interest expense, net
−Removed: 156,391 157,017 153,925
−Removed: Loss on extinguishment of debt
−Removed: Other, net (3)
+Added: Acquisition-related amortization (2)
65,998 64,604 68,008
6 unchanged sentences
69,946 66,885 57,263
−Removed: Provision for income taxes (8)
−Removed: 35,326 57,492 128,037
−Removed: Income from continuing operations $ 164,312 $ 340,921 $ 249,576
−Removed: ________________________
−Removed: (1) Depreciation and amortization expenses (see Note 1.
−Removed: Summary of Business and Significant Accounting Policies for associated asset lives):
−Removed: (a) Depreciation and amortization of property and equipment includes software developed for internal use as well as amortization of contract acquisition costs.
−Removed: (b) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
−Removed: (c) 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.
−Removed: (2) 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.
−Removed: This consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty.
−Removed: 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.
−Removed: 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.
−Removed: (3) 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.
−Removed: In 2018, we recognized an expense of $ 5 million related to our liability under the TRA offset by a gain of $ 8 million on the sale of an investment.
−Removed: 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.
−Removed: corporate income tax rate (see Note 7.
−Removed: Income Taxes), offset by a loss of $ 15 million related to debt modification costs associated with a debt refinancing.
−Removed: 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.
−Removed: (4) 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.
−Removed: We recorded $ 25 million in charges associated with an announced action to reduce our workforce in 2017.
−Removed: These reductions aligned our operations with business needs and implemented an ongoing cost and organizational structure consistent with our expected growth needs and opportunities.
−Removed: (5) Acquisition-related costs represent fees and expenses incurred associated with the 2019 acquisition of Radixx and the 2018 agreement to acquire Farelogix, which is anticipated to close in 2020.
−Removed: Acquisitions.
−Removed: (6) Litigation costs, net represent charges associated with antitrust and other foreign non-income tax contingency matters.
−Removed: In 2019, we recognized the reversal of our previously accrued loss related to US Airways legal matter for $ 32 million.
+Added: Adjusted Operating (loss) income $ ( 745,274 ) $ 513,408 $ 701,432
+Added: (1) Impairment and related charges represents $ 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.
+Added: (2) 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.
+Added: (3) 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.
+Added: Restructuring Activities for further details.
+Added: (4) 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.
+Added: Acquisitions for further information.
+Added: (5) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters.
+Added: In 2020, we reversed the previously accrued non-income tax expense of $ 4 million due to success in our claims.
+Added: 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.
−Removed: 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.
−Removed: Commitments and Contingencies.
−Removed: (7) Impairment and related charges represents an $ 81 million impairment charge recorded in 2017 associated with net capitalized contract costs related to an Airline Solutions' customer based on our analysis of the recoverability of such amounts.
−Removed: Impairment and Related Charges for additional information.
−Removed: (8) 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.
−Removed: In 2017, provision for income taxes includes a provisional impact of $ 47 million recognized as a result of the enactment of the TCJA in December 2017.
−Removed: Income Taxes.
+Added: Commitments and Contingencies for further information.
A significant portion of our revenue is generated through transaction-based fees that we charge to our customers.
−Removed: For Travel Network, this fee is in the form of a transaction fee for bookings on our GDS;
−Removed: for Airline Solutions and Hospitality Solutions, this fee is a recurring usage-based fee for the use of our SaaS and hosted systems, as well as implementation fees and professional service fees.
−Removed: Transaction-based revenue accounted for approximately 94 %, 95 % and 95 % of our Travel Network revenue for each of the years ended December 31, 2019, 2018 and 2017.
−Removed: Transaction-based revenue accounted for approximately 80 %, 81 % and 74 % for the years ended December 31, 2019, 2018 and 2017, respectively, of our Airline Solutions revenue.
+Added: For Travel Solutions, we generate revenue from our distribution activities through transaction fees for bookings on our GDS, and from our IT solutions through recurring usage-based fees for the use of our SaaS and hosted systems, as well as upfront fees and professional services fees.
+Added: 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.
+Added: Transaction-based revenue accounted for approximately 79 %, 91 % and 92 % of our Travel Solutions revenue for each of the years ended December 31, 2020, 2019 and 2018.
Transaction-based revenue accounted for approximately 68 %, 80 % and 81 % for the years ended December 31, 2020, 2019 and 2018, respectively, of our Hospitality Solutions revenue.
−Removed: All joint venture equity income relates to Travel Network.
+Added: All joint venture equity income relates to Travel Solutions.
Our revenues and long-lived assets, excluding goodwill and intangible assets, by geographic region are summarized below.
−Removed: Revenue of our Travel Network business is attributed to countries based on the location of the travel supplier.
−Removed: For Airline Solutions and Hospitality Solutions, revenue is attributed to countries based on the location of the customer.
+Added: Distribution revenue for the Travel Solutions business is attributed to countries based on the location of the travel supplier and IT Solutions revenue is based on the location of the customer.
+Added: For Hospitality Solutions, revenue is attributed to countries based on the location of the customer.
The majority of our revenues and long-lived assets are derived from the United States, Europe, and Asia-Pacific ("APAC") as follows (in thousands):
2 unchanged sentences
United States $ 636,854 $ 1,306,450 $ 1,346,895
−Removed: $ 1,306,450 $ 1,346,895 $ 1,340,893
Europe 287,421 913,245 928,533
2 unchanged sentences
Total $ 1,334,100 $ 3,974,988 $ 3,866,956
−Removed: ________________________
−Removed: (1) United States includes revenue related to Canada and Mexico in 2018 and 2017 that is reflected in 'All Other' in 2019.
As of December 31,
1 unchanged sentence
United States $ 417,070 $ 622,034
−Removed: $ 622,034 $ 773,739
Europe 39,160 1,594
2 unchanged sentences
Total $ 488,601 $ 641,722
−Removed: ________________________
−Removed: (1) United States includes long-lived assets related to Canada and Mexico in 2018 and 2017 that is reflected in 'All Other' in 2019.
−Removed: Quarterly Financial Information (Unaudited)
−Removed: A summary of our quarterly financial results for the years ended December 31, 2019 and 2018 is presented below (in thousands):
−Removed: Year Ended December 31, 2019
−Removed: First Quarter Second Quarter Third Quarter Fourth Quarter
−Removed: Revenue $ 1,049,361 $ 1,000,006 $ 984,199 $ 941,422
−Removed: Operating income 110,407 81,913 113,460 57,637
−Removed: Income from continuing operations 59,214 28,094 65,180 11,824
−Removed: (Loss) income from discontinued operations, net of tax ( 1,452 ) 1,350 ( 596 ) ( 1,068 )
−Removed: Net income 57,762 29,444 64,584 10,756
−Removed: Net income attributable to common stockholders 56,850 27,838 63,813 10,091
−Removed: Net income per share attributable to common stockholders:
−Removed: Basic $ 0.20 $ 0.10 $ 0.24 $ 0.04
−Removed: Diluted $ 0.20 $ 0.10 $ 0.23 $ 0.04
−Removed: Year Ended December 31, 2018
−Removed: First Quarter Second Quarter Third Quarter Fourth Quarter
−Removed: Revenue $ 988,369 $ 984,376 $ 970,283 $ 923,928
−Removed: Operating income 165,401 138,833 136,763 121,019
−Removed: Income from continuing operations 90,449 92,565 70,879 87,028
−Removed: (Loss) income from discontinued operations, net of tax ( 1,207 ) 760 3,664 ( 1,478 )
−Removed: Net income 89,242 93,325 74,543 85,550
−Removed: Net income attributable to common stockholders 87,880 92,246 73,005 84,400
−Removed: Net income per share attributable to common stockholders:
−Removed: Basic $ 0.32 $ 0.33 $ 0.26 $ 0.31
−Removed: Diluted $ 0.32 $ 0.33 $ 0.26 $ 0.30
−Removed: Subsequent Events
−Removed: The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus (COVID-19) in January 2020, especially as it relates to air travel to and from Asia.
−Removed: We expect a material impact to our consolidated financial results in the first quarter of 2020.
−Removed: Given the uncertainties surrounding the duration of the outbreak and its impact on global travel, we cannot reasonably estimate the related financial impact to our full-year 2020 financial results;
−Removed: however, we expect the impact will be material.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
1 unchanged sentence
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.