What changed in this filing

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Item 1. Financial Statements

2021-05-04 compared with 2020-11-06 · 260 added, 541 removed, 559 unchanged (59% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

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

2020 2019 2020 2019

Three Months Ended March 31,

Revenue $ 327,484 $ 658,977

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

Cost of revenue, excluding technology costs 146,761 281,415

Technology costs 252,663 325,372

Selling, general and administrative 130,613 203,601

Operating (loss) income ( 233,049 ) 113,460 ( 768,530 ) 305,780

Operating loss ( 202,553 ) ( 151,411 )

Other income (expense):

Interest expense, net ( 64,101 ) ( 37,442 )

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

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

Equity method loss ( 911 ) ( 686 )

Other, net 11,631 ( 47,486 )

Total other expense, net ( 53,381 ) ( 85,614 )

(Loss) income from continuing operations before income taxes ( 329,924 ) 72,975 ( 1,016,197 ) 184,271

Loss from continuing operations before income taxes ( 255,934 ) ( 237,025 )

Provision for income taxes 3,997 ( 27,254 )

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

Loss from continuing operations ( 259,931 ) ( 209,771 )

Loss from discontinued operations, net of tax ( 263 ) ( 2,126 )

Net (loss) income ( 310,093 ) 64,584 ( 966,192 ) 151,790

Net loss ( 260,194 ) ( 211,897 )

Net income attributable to noncontrolling interests 484 783

Net (loss) income attributable to Sabre Corporation ( 310,218 ) 63,813 ( 967,029 ) 148,501

Net loss attributable to Sabre Corporation ( 260,678 ) ( 212,680 )

Preferred stock dividends 5,428 —

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

Basic net (loss) income per share attributable to common stockholders:

(Loss) income from continuing operations $ ( 1.07 ) $ 0.24 $ ( 3.44 ) $ 0.54

Net loss attributable to common stockholders $ ( 266,106 ) $ ( 212,680 )

Basic net loss per share attributable to common stockholders:

Loss from continuing operations $ ( 0.84 ) $ ( 0.77 )

Loss from discontinued operations — ( 0.01 )

Net (loss) income per common share $ ( 1.07 ) $ 0.24 $ ( 3.45 ) $ 0.54

Diluted net (loss) income per share attributable to common stockholders:

(Loss) income from continuing operations $ ( 1.07 ) $ 0.23 $ ( 3.44 ) $ 0.54

Net loss per common share $ ( 0.84 ) $ ( 0.78 )

Diluted net loss per share attributable to common stockholders:

Loss from continuing operations $ ( 0.84 ) $ ( 0.77 )

Loss from discontinued operations — ( 0.01 )

Net (loss) income per common share $ ( 1.07 ) $ 0.23 $ ( 3.45 ) $ 0.54

Net loss per common share $ ( 0.84 ) $ ( 0.78 )

Weighted-average common shares outstanding:

1 unchanged sentence

Diluted 317,634 274,037

Dividends per common share $ — $ 0.14 $ 0.14 $ 0.42

See Notes to Consolidated Financial Statements .

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

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

2020 2019 2020 2019

Net (loss) income $ ( 310,093 ) $ 64,584 $ ( 966,192 ) $ 151,790

Three Months Ended March 31,

Net loss $ ( 260,194 ) $ ( 211,897 )

Other comprehensive income (loss), net of tax:

1 unchanged sentence

Retirement-related benefit plans:

Net actuarial loss, net of taxes of $ 3,524 , $ — , $ 2,318 , and $ —

( 12,101 ) — ( 7,960 ) —

Pension settlement, net of taxes of $( 3,055 ), $ — , $( 3,055 ), and $ —

10,488 — 10,488 —

Net actuarial gain, net of taxes of $ — , $( 1,206 )

Amortization of prior service credits, net of taxes of $ 80 , and $ 80

1 unchanged sentence

Amortization of actuarial losses, net of taxes of $( 481 ), and $( 365 )

1,799 1,713 5,005 4,157

Net change in retirement-related benefit plans, net of tax 1,396 5,127

Unrealized gains (losses), net of taxes of $( 544 ), $ 1,633 , $ 5,641 , and $ 5,875

2,224 ( 6,356 ) ( 20,582 ) ( 20,939 )

Reclassification adjustment for realized gains, net of taxes of $( 1,283 ), $( 267 ), $( 3,585 ), and $( 907 )

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

( 3 ) ( 23,818 )

Reclassification adjustment for realized losses, net of taxes of $( 899 ), and $( 515 )

Net change in derivatives, net of tax 3,125 ( 21,983 )

1 unchanged sentence

Other comprehensive income (loss) 215 ( 19,303 )

Comprehensive (loss) income ( 298,764 ) 56,374 ( 962,989 ) 131,888

Comprehensive loss (income) attributable to noncontrolling interests ( 125 ) ( 771 ) ( 837 ) ( 3,289 )

Comprehensive (loss) income attributable to Sabre Corporation $ ( 298,889 ) $ 55,603 $ ( 963,826 ) $ 128,599

Comprehensive loss ( 259,979 ) ( 231,200 )

Comprehensive income attributable to noncontrolling interests ( 484 ) ( 783 )

Comprehensive loss attributable to Sabre Corporation $ ( 260,463 ) $ ( 230,417 )

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Current assets

23 unchanged sentences

Current portion of debt 26,050 26,068

Tax Receivable Agreement — 71,911

Total current liabilities 641,974 621,943

4 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.01 par value, 225,000 authorized, 3,340 and no shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively;

aggregate liquidation value of $ 334,000 and $ — as of September 30, 2020 and December 31, 2019, respectively

Preferred stock, $ 0.01 par value, 225,000 authorized, 3,340 issued and outstanding as of March 31, 2021 and December 31, 2020;

aggregate liquidation value of $ 334,000 as of March 31, 2021 and December 31, 2020

Common Stock:

1 unchanged sentence

1,000,000 authorized shares;

338,499 and 294,319 shares issued, 317,233 and 273,733 shares outstanding at September 30, 2020 and December 31, 2019, respectively

341,563 and 338,662 shares issued, 319,433 and 317,297 shares outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 3,009,651 2,985,077

Treasury Stock, at cost, 21,266 and 20,587 shares at September 30, 2020 and December 31, 2019, respectively

Treasury Stock, at cost, 22,130 and 21,365 shares at March 31, 2021 and December 31, 2020, respectively

( 487,401 ) ( 474,790 )

Retained deficit ( 1,778,877 ) ( 763,482 )

Accumulated deficit ( 2,365,730 ) ( 2,099,624 )

Accumulated other comprehensive loss ( 135,742 ) ( 135,957 )

6 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

Net (loss) income $ ( 966,192 ) $ 151,790

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

Net loss $ ( 260,194 ) $ ( 211,897 )

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

Depreciation and amortization 73,223 95,861

Allowance for credit losses 58,375 16,746

Deferred income taxes ( 67,130 ) ( 26,622 )

Amortization of upfront incentive consideration 56,733 59,825

Stock-based compensation expense 24,426 17,577

Acquisition termination fee 24,811 —

Pension settlement charge 13,543 —

Amortization of debt discount and debt issuance costs 12,661 2,979

Loss on extinguishment of debt 10,333 —

Amortization of upfront incentive consideration 15,825 18,213

Gain on sale of investment ( 14,532 ) —

Amortization of debt discount and issuance costs 2,853 993

Provision for expected credit losses ( 2,226 ) 36,359

Deferred income taxes ( 2,004 ) ( 41,732 )

Loss from discontinued operations 263 2,126

Dividends received from equity method investments 1,691 1,352

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

Acquisition termination fee — 24,811

Other 1,396 ( 1,858 )

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Investing Activities

Proceeds from sale of investment 14,840 —

Additions to property and equipment ( 6,435 ) ( 28,437 )

Other investing activities — ( 4,413 )

Cash used in investing activities ( 52,634 ) ( 108,482 )

Cash provided by (used in) investing activities 8,405 ( 32,850 )

Financing Activities

Proceeds of borrowings from lenders 2,345,000 45,000

Proceeds from issuance of preferred stock, net 322,885 —

Proceeds from issuance of common stock, net 275,003 —

Net payment on the settlement of equity-based awards ( 12,434 ) ( 5,200 )

Payments on borrowings from lenders ( 6,295 ) ( 18,953 )

Dividends paid on preferred stock ( 5,428 ) —

Proceeds of borrowings from lenders — 375,000

Payments on Tax Receivable Agreement — ( 71,958 )

Debt prepayment fees and issuance costs ( 54,158 ) —

Cash dividends paid to common shareholders — ( 38,544 )

Net payment on the settlement of equity-based awards ( 5,298 ) ( 5,738 )

Repurchase of common stock — ( 77,636 )

Other financing activities ( 64 ) ( 2,199 )

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

Cash (used in) provided by financing activities ( 24,221 ) 238,146

Cash Flows from Discontinued Operations

2 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 1,247 ) 3,566

Increase (decrease) in cash and cash equivalents 1,232,176 ( 35,837 )

(Decrease) increase in cash and cash equivalents ( 214,747 ) 248,296

Cash and cash equivalents at beginning of period 1,499,665 436,176

14 unchanged sentences

Comprehensive loss — — — — — — — ( 260,678 ) 215 484 ( 259,979 )

Common stock dividends (¹)

Preferred stock dividends (1)

— — — — — — — ( 5,428 ) — — ( 5,428 )

1 unchanged sentence

Stock-based compensation expense — — — — 24,426 — — — — — 24,426

Adoption of New Accounting Standards — — — — — — — ( 7,591 ) — — ( 7,591 )

Balance at March 31, 2021 3,340,000 $ 33 341,562,653 $ 3,416 $ 3,009,651 22,130,174 $ ( 487,401 ) $ ( 2,365,730 ) $ ( 135,742 ) $ 7,512 $ 31,739

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

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

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

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

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

Comprehensive loss — — — — — — — ( 310,218 ) 11,329 125 ( 298,764 )

Issuance of preferred stock, net 3,340,000 33 — — 322,852 — — — — — 322,885

Issuance of common stock, net — — 41,071,429 411 274,592 — — — — — 275,003

Accrued preferred stock dividend (2)

— — — — — — — ( 2,231 ) — — ( 2,231 )

Settlement of stock-based awards — — 297,150 3 — 7,278 ( 60 ) — — — ( 57 )

Stock-based compensation expense — — — — 18,566 — — — — — 18,566

Balance at September 30, 2020 3,340,000 $ 33 338,499,281 $ 3,385 $ 3,027,726 21,265,859 $ ( 474,165 ) $ ( 1,778,877 ) $ ( 146,103 ) $ 9,425 $ 641,424

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

(1) Our mandatory convertible preferred stock accumulates cumulative dividends at an annual rate of 6.50 %.

The first cash dividend of $ 1.7514 per share is payable on December 1, 2020.

Stockholders’ Equity (Deficit)

Common Stock Additional

Preferred Stock Common Stock Additional

Capital Treasury Stock Retained

1 unchanged sentence

Comprehensive

Income (Loss) Noncontrolling

Loss Noncontrolling

Interest Total

Stockholders'

Shares Amount Shares Amount

Shares Amount Shares Amount Shares Amount

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

Comprehensive income — — — — — 56,850 ( 4,528 ) 894 53,216

Comprehensive loss — — — — — — — ( 212,680 ) ( 19,303 ) 783 ( 231,200 )

Common stock dividends (1)

— — — — — — — ( 38,544 ) — — ( 38,544 )

Repurchase of common stock — — — 1,491,521 ( 32,146 ) — — — ( 32,146 )

Settlement of stock-based awards — — 2,224,053 22 50 642,065 ( 5,272 ) — — — ( 5,200 )

Stock-based compensation expense — — — — 17,577 — — — — — 17,577

Adoption of New Accounting Standards — — — — — — — ( 7,591 ) — — ( 7,591 )

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

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

Common stock dividends (1)

— — — — — ( 38,281 ) — — ( 38,281 )

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

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

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

Dividends paid to non-controlling interest on subsidiary common stock — — — — — — — ( 2,553 ) ( 2,553 )

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

Comprehensive income — — — — — 63,813 ( 8,210 ) 771 56,374

Common stock dividends (1)

— — — — — ( 38,310 ) — — ( 38,310 )

Settlement of stock-based awards 266,676 2 2,397 47,815 ( 1,134 ) — — — 1,265

Stock-based compensation expense — — 17,094 — — — — — 17,094

Balance at September 30, 2019 294,426,240 $ 2,944 $ 2,301,486 20,575,627 $ ( 468,366 ) $ ( 735,250 ) $ ( 152,626 ) $ 7,923 $ 956,111

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

10 unchanged sentences

In these consolidated financial statements, references to “Sabre,” the “Company,” “we,” “our,” “ours” and “us” refer to Sabre Corporation and its consolidated subsidiaries unless otherwise stated or the context otherwise requires.

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

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

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

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

As a result of our strategic realignment, we now operate our business and present our results through two business segments:

(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 leading software solutions for hoteliers.

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

Additionally, we have reclassified expenses on our statement of operations to provide additional clarification on our costs by separating technology costs from cost of revenue and moving certain expenses previously classified as cost of revenue to selling, general and administrative to align with the current leadership and operational organizational structure.

Within our segments and results of operations, cost of revenue 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, and transactional-related costs, including travel agency incentive consideration for reservations made on our global distribution system ("GDS") for Travel Solutions and GDS transaction fees for Hospitality Solutions.

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

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

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

Additionally, for the three months ended September 30, 2019, we reclassified $ 34 million from cost of revenue to selling, general and administrative.

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

Additionally, for the nine months ended September 30, 2019, we reclassified $ 96 million from cost of revenue to selling, general and administrative.

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

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

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

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

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

Debt and Note 11.

Stock and Stockholders' Equity for further information.

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

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

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.

During the nine months ended September 30, 2020, we recorded a charge of $ 74 million in connection with these restructuring activities.

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

As expected, this pandemic continued to have a material impact to our consolidated financial results in the first quarter of 2021, resulting in a material decrease in transaction-based revenue across both of our business units compared to the prior year.

Lower global distribution system ("GDS") volumes have continued to result in a material decline in incentive consideration costs, as expected.

Despite the continued negative impacts of the COVID-19 pandemic on our business and global travel volumes, as COVID-19 vaccines have continued to be administered, we have seen some continued improvement in our key volume metrics during the first quarter of 2021, led by our Hospitality Solutions business.

Domestic bookings continue to exceed international bookings, however, which has negatively impacted revenue.

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

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

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

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

During the third quarter of 2020, our estimated reserve decreased due to actual cancellations being less than expected as of the end of the second quarter, and a decrease in new bookings during the third quarter.

The combination of reduced new bookings, estimates for bookings expected to travel, continued mix toward domestic bookings and consumed cancellations during the quarter resulted in a decline in the cancellation reserve from $ 60 million as of June 30, 2020 to $ 33 million as of September 30, 2020 .

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.

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

Additionally, our provision for expected credit losses for the nine months ended September 30, 2020 was $ 58 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.

Our air booking cancellation reserve totaled $ 18 million as of March 31, 2021, which is consistent with our reserve as of December 31, 2020.

Additionally, our allowance for credit losses at March 31, 2021 was $ 93 million, a decrease of $ 5 million from December 31, 2020.

The provision for credit losses for the three months ended March 31, 2021 decreased $ 39 million from the same period in the prior year, primarily related to fully reserving for aged balances of certain customers in the prior year and an overall improvement in our forecasted credit losses in the current year given the start of the global economic recovery from the COVID-19 pandemic.

Credit Losses.

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

We updated our goodwill assessment on a qualitative basis and reviewed our other long-lived assets including intangible assets as of September 30, 2020, and did not identify any material impairments.

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

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

We have not identified any triggering events or changes in circumstances since the performance of our annual goodwill impairment test that would require us to perform another goodwill impairment test and we did not record any goodwill impairment charges for the three months ended March 31, 2021.

Fair Value Measurements for further information.

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.

Given the liquidity measures we enacted during 2020 and our ending cash balance of $ 1.3 billion as of March 31, 2021, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months;

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

As a result of our strategic realignment, we now operate our business and present our results through two business segments:

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

There were no changes to the historical Hospitality Solutions reporting segment.

Financial information for all periods presented has been updated to reflect these reclassifications.

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

1 unchanged sentence

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

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

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

Operating results for the three months ended March 31, 2021 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2021.

The accompanying interim financial statements should be read in conjunction with the

consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 25, 2021 .

We consolidate all majority-owned subsidiaries and companies over which we exercise control through majority voting rights.

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Our use of estimates and the related accounting policies are discussed in the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 25, 2021.

Additionally, see Note 2.

Revenue from Contracts with Customers for additional information on the use of significant estimates and assumptions in recognizing revenue and Note 6.

Credit Losses for additional information regarding the use of significant estimates and assumptions related to the allowance for credit losses.

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.

2 unchanged sentences

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

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

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

In January 2021, the FASB issued additional clarification related to reference rate reform, permitting entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and calculating price alignment interest in connection with reference rate reform activities under way in global financial markets.

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

There was no impact to our consolidated financial statements for the three months ended March 31, 2021 as a result of the adoption of these standards.

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.

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.

Under this updated standard, a customer in a cloud-computing arrangement that is a service contract is required to follow guidance on software developed for internal use to determine which implementation costs to capitalize as assets or expense as incurred.

This standard aligns the accounting for implementation costs for hosting arrangements, regardless of whether they convey a license to the hosted software.

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

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

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.

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.

Credit Losses for more information on the impacts from adoption and ongoing considerations.

Recent Accounting Pronouncements

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

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

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

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

The standard provides for the option of full retrospective transition on January 1, 2021.

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.

As a result, we anticipate long-term debt to increase approximately $ 88 million, additional paid-in capital to decrease $ 68 million, and deferred taxes to decrease by $ 20 million on January 1, 2021 and we will retrospectively reduce pre-tax interest expense.

In August 2020, the FASB issued updated guidance limiting the accounting models for convertible instruments, which requires the senior exchangeable notes due 2025 (the "Exchangeable Notes") entered into April 2020 to be accounted for as a single liability measured at amortized cost.

We elected to early adopt this standard on January 1, 2021 using the full retrospective method, which requires us to restate each prior reporting period presented.

As a result of adoption, the component of the Exchangeable Notes originally bifurcated as equity was derecognized and accounted for as a liability.

The net deferred tax liability originally established in connection with the debt discount and issuance costs within equity was also removed and the debt issuance costs which were allocated to equity were reclassified to debt and amortized using an effective interest rate of approximately 5 %.

As a result of removing the net deferred tax liability related to the debt discount, the valuation allowance increased by $ 17 million for the year ended December 31, 2020.

Because the Exchangeable Notes were entered into during the second quarter of 2020, there was no impact to our consolidated statements of operations or earnings per share for the three months ended March 31, 2020 as a result of the adoption of this standard.

The impacts to our consolidated balance sheets as of December 31, 2020 are shown below (in thousands):

December 31, 2020

As Reported Adjustments Recast

Deferred income taxes $ 72,744 $ ( 548 ) $ 72,196

Long-term debt 4,639,782 78,026 4,717,808

Additional paid-in capital 3,052,953 ( 67,876 ) 2,985,077

Accumulated deficit ( 2,090,022 ) ( 9,602 ) ( 2,099,624 )

Total stockholders’ equity 362,632 ( 77,478 ) 285,154

Total liabilities and stockholders’ equity 6,077,722 — 6,077,722

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

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

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

We adopted this standard prospectively in the first quarter of 2021.

There was no material impact to our consolidated financial statements for the three months ended March 31, 2021 as a result of this guidance.

Revenue from Contracts with Customers

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

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

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

The following table presents our assets and liabilities with customers as of March 31, 2021 and December 31, 2020 (in thousands):

Account Consolidated Balance Sheet Location March 31, 2021 December 31, 2020

Contract assets and customer advances and discounts (1)

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________________________________

(1) Includes contract assets of $ 8 million and $ 6 million for September 30, 2020 and December 31, 2019, respectively.

During the nine months ended September 30, 2020, we recognized revenue of approximately $ 21 million from contract liabilities that existed as of January 1, 2020.

(1) Includes contract assets of $ 8 million for March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021, we recognized revenue of approximately $ 12 million from contract liabilities that existed as of January 1, 2021.

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

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

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

2020 2019 2020 2019

Three Months Ended March 31,

Distribution $ 151,781 $ 394,538

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Total Sabre Revenue $ 327,484 $ 658,977

Travel Solutions generates distribution revenue for bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")).

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.

Distribution revenue associated with car rental, hotel transactions and other travel providers is recognized at the time the reservation is used by the customer.

Distribution revenue associated with airline travel reservations is recognized at the time of booking of the reservation, net of estimated future cancellations.

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

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

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

Actual cancellations during the third quarter were fewer than expected as of the end of the second quarter and new bookings remained down significantly during the third quarter.

This combination of actual cancellation activity and fewer bookings resulted in a reduction in the cancellation reserve to $ 33 million as of September 30, 2020 .

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.

Approximately $ 18 million of revenue was recognized in the third quarter of 2020 resulting from less cancellation activity on bookings scheduled to depart during the third quarter than estimated as of June 30, 2020.

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.

Reservation system revenue is primarily generated based on the number of passengers boarded.

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.

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.

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

We also directly license certain software to customers associated with our commercial and operations products in which the customer obtains control of a 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.

Fees for ongoing software maintenance are recognized ratably over the life of the contract.

Hospitality Solutions generates revenue from technology solutions provided to hotels primarily in a SaaS or hosted environment based on the number of central reservation system transactions.

Upfront solutions fees are recognized primarily on a straight-line basis over the relevant contract term, upon cut-over of the primary SaaS solution.

Customers are normally charged an upfront solutions fee and a recurring usage-based fee for the use of the software, which represents a stand-ready performance obligation.

Contracts with the same customer which are entered into at or around the same period are analyzed for revenue recognition purposes on a combined basis which can impact timing of revenue recognition.

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

For the three months ended March 31, 2021, the impact on revenue recognized in the current period, from performance obligations partially or fully satisfied in the previous period, is immaterial.

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.

We have not disclosed the performance obligation related to contracts containing minimum transaction volume, as it represents a subset of our business, and therefore would not be meaningful in understanding the total future revenues expected to be earned from our long-term contracts.

On August 20, 2019, the U.S.

Department of Justice ("DOJ") filed a complaint in federal court in the District of Delaware, seeking a permanent injunction to prevent Sabre from acquiring Farelogix, Inc.

("Farelogix"), alleging that the proposed acquisition is likely to substantially lessen competition in violation of federal antitrust law.

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

On April 9, 2020, the U.K.

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

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

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

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

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

During the third quarter of 2020, we recorded immaterial measurement period adjustments to deferred income taxes and goodwill and completed the purchase price allocation for the Radixx acquisition.

Restructuring Activities

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

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

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

During the nine months ended September 30, 2020, we incurred $ 74 million in connection with these restructuring activities, of which $ 22 million is recorded within cost of revenue, $ 32 million is recorded within technology costs and $ 20 million is recorded within selling, general and administrative costs within our consolidated statement of operations.

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

This strategic realignment and related actions are substantially complete.

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

As a result of this strategic realignment, we incurred restructuring costs beginning in the first quarter of 2020.

The strategic realignment and related actions are substantially complete.

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

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

Nine Months Ended

September 30, 2020

Balance as of January 1, 2020 $ —

Charges 73,934

Since the first quarter of 2020, we have incurred $ 80 million in connection with these restructuring activities, of which $ 18 million is recorded within cost of revenue, excluding technology costs, $ 30 million is recorded within technology costs and $ 32 million is recorded within selling, general and administrative costs in our consolidated statement of operations.

For the three months ended March 31, 2021, adjustments to restructuring charges were immaterial.

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):

Three Months Ended

March 31, 2021

Balance as of December 31, 2020 $ 23,253

Cash Payments ( 8,035 )

Balance as of September 30, 2020 $ 40,501

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

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

Non-cash adjustments ( 4,194 )

Balance as of March 31, 2021 $ 11,024

For the three months ended March 31, 2021, we recognized $ 4 million income tax expense, representing a negative effective tax rate of 2 %, compared to an income tax benefit of $ 27 million, representing an effective tax rate of 11 % for the three months ended March 31, 2020.

The decrease in the effective tax rate for the three months ended March 31, 2021 as compared to the same period in 2020 was primarily due to an increase in the valuation allowance generated in the current quarter related to the impact of COVID-19 on our results of operations and various discrete items recorded in each of the respective three month periods.

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

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

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

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

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

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

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

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

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

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

On the basis of this evaluation, as of September 30, 2020, a valuation allowance of $ 139 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized.

On the basis of this evaluation, as of March 31, 2021, a valuation allowance of $ 311 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized.

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

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

Our net unrecognized tax benefits, excluding interest and penalties, included in our consolidated balance sheets, were $ 67 million and $ 65 million as of September 30, 2020 and December 31, 2019, respectively.

Tax Receivable Agreement

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

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 our January 2020 payment of $ 72 million.

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

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

Our net unrecognized tax benefits, excluding interest and penalties, included in our consolidated balance sheets, were $ 74 million and $ 73 million as of March 31, 2021 and December 31, 2020, respectively.

Credit Losses

In the first quarter of 2020, we adopted the updated guidance within Accounting Standards Codification ("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.

Under this updated standard, the previous "incurred loss" approach is replaced with an "expected loss" model for instruments measured at amortized cost.

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.

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.

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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.

The majority of our receivables are trade receivables due in less than one year.

In addition to our short-term trade and unbilled receivables, our receivables also include contract assets and long-term trade unbilled receivables.

Revenue from Contracts with Customers for more information about these financial assets.

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.

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.

We monitor our ongoing credit exposure for these carriers through active review of customer balances against contract terms and due dates with account management.

Our activities include established collection processes, account reconciliations, dispute resolution and payment confirmations.

We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

We generally do not require security or collateral from our customers as a condition of sale.

We evaluate the collectability of our receivables based on a combination of factors.

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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.

Receivables are considered to be delinquent when contractual payment terms are exceeded.

All receivables aged over twelve months are fully reserved.

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.

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

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

Nine Months Ended

September 30, 2020

Our allowance for credit losses for the three months ended March 31, 2021 for our portfolio segment is summarized as follows (in thousands):

Three Months Ended

March 31, 2021

Balance at December 31, 2020 $ 97,568

Cumulative-effect adjustment upon adoption 9,868

Provision for expected credit losses ( 2,226 )

Write-offs ( 1,639 )

Balance at September 30, 2020 $ 113,030

Our provision for expected credit losses totaled $ 11 million and $ 58 million for the three and nine months ended September 30, 2020, respectively.

For the nine months ended September 30, 2020, we made a decision to fully reserve for certain aged balances related to particular customers due to heightened uncertainty regarding collectability, including uncertainty related to bankruptcy filings by several of our customers during the nine months ended September 30, 2020.

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

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.

Other ( 1,038 )

Balance at March 31, 2021 $ 92,665

Our provision for expected credit losses for the three months ended March 31, 2021 decreased $ 39 million from $ 36 million in the same period in the prior year, primarily related to fully reserving for aged balances of certain customers in the prior year and an overall improvement in our forecasted credit losses in the current year given the start of the global economic recovery from the COVID-19 pandemic.

For the three months ended March 31, 2020, we made a decision to fully reserve for certain aged balances related to particular customers due to heightened uncertainty regarding collectability, including uncertainty related to bankruptcy filings by several of our customers during the three months ended March 31, 2020.

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

Macro-economic factors, including the economic downturn, 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 continue to result in restructuring or bankruptcy of additional customers.

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

As of September 30, 2020 and December 31, 2019, our outstanding debt included in our consolidated balance sheets totaled $ 4,673 million and $ 3,343 million, respectively, which are net of debt issuance costs of $ 48 million and $ 15 million, respectively, and unamortized discounts of $ 89 million and $ 6 million, respectively.

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

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

Rate Maturity September 30, 2020 December 31, 2019

As of March 31, 2021 and December 31, 2020, our outstanding debt included in our consolidated balance sheets totaled $ 4,741 million and $ 4,744 million, respectively, which are net of debt issuance costs of $ 51 million and $ 54 million, respectively, and unamortized discounts of $ 9 million and $ 10 million, respectively.

The following table sets forth the face values of our outstanding debt as of March 31, 2021 and December 31, 2020 (in thousands):

Rate Maturity March 31, 2021 December 31, 2020

Senior secured credit facilities:

Term Loan A (1)

August 2023 $ 133,995 $ 484,500

Term Loan B L + 2.00 %

February 2024 $ 1,819,913 $ 1,824,616

Other Term Loan B L + 4.00 %

December 2027 635,408 637,000

Revolver, $ 400 million (1)

August 2023 375,000 —

5.375 % senior secured notes due 2023 (3)

5.375 % April 2023 — 530,000

5.25 % senior secured notes due 2023

November 2023 375,000 375,000

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(1) Pursuant to the August 27, 2020 refinancing, the interest rate on Term Loan A was increased from L+ 2.50 % to L+ 2.75 % and the maturity was extended from July 2022 to August 2023.

Subject to certain "springing" maturity conditions, the maturity may extend to February 2024 at the latest.

(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 August 2023.

Subject to certain "springing" maturity conditions, the maturity may extend to February 2024 at the latest.

(3) Extinguished on August 27, 2020 using proceeds from the 7.375 % senior secured notes due 2025.

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

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

(1) Pursuant to the August 27, 2020 refinancing, subject to certain "springing" maturity conditions, the maturity may extend to February 2024 at the latest.

We had $ 375 million outstanding under the Revolver as of March 31, 2021 and December 31, 2020.

We had outstanding letters of credit totaling $ 10 million as of March 31, 2021 and December 31, 2020, which reduced our overall credit capacity under the Revolver.

Senior Secured Credit Facilities

Refinancing Transactions

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 our Amended and Restated Credit Agreement, and Second Revolving Facility Refinancing Amendment to our Amended and Restated Credit Agreement (the “2017 Refinancing”).

The 2017 Refinancing included a $ 400 million revolving credit facility ("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”).

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.

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.

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.

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

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

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

to an earlier "springing" maturity date of August 16, 2023.

The 2017 Refinancing included a $ 400 million revolving credit facility ("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”).

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.

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

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

In addition 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 $ 300 million on a monthly basis, which was lowered in December 2020 from $ 450 million.

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

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

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

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.

These interest rate spreads for the Revolver were increased by 0.25 %, during covenant suspension, in connection with the 2020 Refinancing.

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.

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 rate, respectively.

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.

Additionally, on December 17, 2020, Sabre GLBL entered into a Pro Rata Amendment and the Refinancing Amendment which reduced the minimum liquidity requirement to $ 300 million.

We incurred no material additional indebtedness as a result of these transactions, other than amounts for certain interest, fees and expenses.

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.

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

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

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

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

As of September 30, 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.

Secured Notes

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”).

The September 2025 Notes are jointly and severally, irrevocably and unconditionally guaranteed by Sabre Holdings and all of Sabre GLBL’s restricted subsidiaries that guarantee Sabre GLBL’s credit facility.

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

The September 2025 Notes mature on September 1, 2025.

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

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

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

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

We recognized a loss on extinguishment of debt of $ 10 million during the nine months ended September 30, 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.

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”).

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.

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.

The April 2025 Notes mature on April 15, 2025.

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.

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 occurred in the first quarter of 2021.

As such, the leverage ratio covenant has been suspended for the first and second quarters of 2021.

As of March 31, 2021, 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.

Exchangeable Notes

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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:

not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

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

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

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

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

As of September 30, 2020, the value of the Exchangeable Notes does not exceed the outstanding principal amount.

Due to the price of our common stock during the 30 trading days preceding March 31, 2021, the first condition above has been met as of March 31, 2021 and the Exchangeable Notes are exchangeable by the holders at any time during the second quarter of 2021.

As of March 31, 2021, the if-converted value of the Exchangeable Notes exceeds the outstanding principal amount by $ 304 million.

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.

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

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

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

Fair Value Measurements).

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

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

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

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

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

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

September 30, 2020

Liability component:

As the result of the adoption of a new accounting standard on January 1, 2021, using the full retrospective method, the Exchangeable Notes are presented as a single liability measured at amortized cost.

As presented in Note 1.

General Information, the component of the Exchangeable Notes originally bifurcated as equity was derecognized and accounted for as a liability.

The following table sets forth the carrying value of the Exchangeable Notes as of March 31, 2021 and December 31, 2020, as recast (in thousands):

March 31, 2021 December 31, 2020

Principal $ 345,000 $ 345,000

Unamortized debt discount ( 84,082 )

Net Carrying Value (1)

Equity component:

Conversion feature $ 90,500

Equity portion of debt issuance costs ( 3,167 )

Deferred tax liability ( 19,718 )

Unamortized debt issuance costs 9,892 10,443

Net Carrying Value $ 335,108 $ 334,557

______________________

1) Excludes net unamortized debt issuance costs of $ 8 million as of September 30, 2020.

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

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

The following table sets forth interest expense recognized related to the Exchangeable Notes for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Contractual interest expense $ 3,450 $ —

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We have designated these instruments as cash flow hedges.

No hedging ineffectiveness was recorded in earnings relating to the forward contracts during the three and

nine months ended September 30, 2020 and 2019.

As of September 30, 2020, no material losses are expected to be reclassified from other comprehensive (loss) income to earnings over the next 12 months.

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

Outstanding Notional Amounts as of September 30, 2020

Buy Currency Sell Currency Foreign Amount USD Amount Average

Contract Rate

Polish Zloty US Dollar 54,000 14,105 0.2612

Singapore Dollar US Dollar 12,000 8,899 0.7416

Indian Rupee US Dollar 550,000 7,475 0.0136

British Pound Sterling US Dollar 3,900 5,118 1.3123

Australian Dollar US Dollar 3,000 2,097 0.6990

Swedish Krona US Dollar 5,000 531 0.1078

Outstanding Notional Amounts as of December 31, 2019

Buy Currency Sell Currency Foreign Amount USD Amount Average

Contract Rate

Polish Zloty US Dollar 265,000 68,971 0.2603

Indian Rupee US Dollar 4,485,000 61,708 0.0138

Singapore Dollar US Dollar 63,500 46,759 0.7364

British Pound Sterling US Dollar 18,400 24,109 1.3103

Australian Dollar US Dollar 16,500 11,521 0.6982

Swedish Krona US Dollar 38,100 4,106 0.1075

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

No hedging ineffectiveness was recorded in earnings relating to the forward contracts during the three months ended March 31, 2021 and 2020.

As of March 31, 2021, we had 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 during the three months ended March 31, 2021 and 2020 are as follows:

Notional Amount Interest Rate

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2.81 % December 31, 2020 December 31, 2021

$ 600 million 1 month LIBOR (1)

2.81 % December 31, 2020 December 31, 2021

______________________

(1) Subject to a 0 % floor.

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.

The total notional amount outstanding of $ 750 million became effective December 31, 2018 and extended through the full year 2019.

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.

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.

The total notional outstanding of $ 750 million became effective December 31, 2019 and extended through the full year 2020.

In April 2018, we entered into forward starting interest rate swaps to hedge the interest payments associated with $ 300 million and $ 450 million of the floating-rate Term Loan B related to years 2020 and 2021, respectively.

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.

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

The estimated fair values of our derivatives designated as hedging instruments as of March 31, 2021 and December 31, 2020 are as follows (in thousands):

Derivative Assets (Liabilities)

Fair Value as of

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

Foreign exchange contracts Prepaid expenses and other $ — $ 1,953

Foreign exchange contracts Other accrued liabilities ( 258 ) —

Derivatives Designated as Hedging Instruments Consolidated Balance Sheet Location March 31, 2021 December 31, 2020

Interest rate swaps Other accrued liabilities $ ( 12,121 ) $ ( 16,038 )

Interest rate swaps Other noncurrent liabilities ( 3,368 ) ( 7,918 )

Total $ ( 12,121 ) $ ( 16,038 )

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

The effects of derivative instruments, net of taxes, on OCI for the three months ended March 31, 2021 and 2020 are as follows (in thousands):

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

Effective Portion

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

Three Months Ended March 31,

Derivatives in Cash Flow Hedging Relationships 2021 2020

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

Derivatives in Cash Flow Hedging Relationships Income Statement Location Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Foreign exchange contracts Cost of revenue $ ( 319 ) $ 981 $ 2,904 $ 4,547

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

Foreign exchange contracts Cost of revenue, excluding technology costs $ — $ 621

Interest rate swaps Interest expense, net 3,128 1,214

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Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

Foreign Currency Forward Contracts —The fair value of the foreign currency forward contracts is estimated based upon pricing models that utilize Level 2 inputs derived from or corroborated by observable market data such as currency spot and forward rates.

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

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

The following tables present our (liabilities) assets that are required to be measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 (in thousands):

Fair Value at Reporting Date Using

September 30, 2020 Level 1 Level 2 Level 3

March 31, 2021 Level 1 Level 2 Level 3

Derivatives (1)

Foreign currency forward contracts $ ( 258 ) $ — $ ( 258 ) $ —

Interest rate swap contracts $ ( 12,121 ) $ — $ ( 12,121 ) $ —

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Derivatives (1)

Foreign currency forward contracts $ 1,953 $ — $ 1,953 $ —

Interest rate swap contracts $ ( 16,038 ) $ — $ ( 16,038 ) $ —

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Derivatives for further detail.

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

There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three months ended March 31, 2021.

Other Financial Instruments

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

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

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

The carrying value of our financial instruments including cash and cash equivalents, and accounts receivable, approximates their fair values due to the short term nature of these instruments.

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.

The following table presents the fair value and carrying value of our senior notes and borrowings under our senior secured credit facilities as of March 31, 2021 and December 31, 2020 (in thousands):

Fair Value at Carrying Value at (1)

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

Term Loan A $ 128,970 $ 485,106 $ 133,290 $ 483,317

Financial Instrument March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

Term Loan B $ 1,798,302 $ 1,785,843 $ 1,816,585 $ 1,821,016

Other Term Loan B 642,953 639,389 629,270 630,663

Revolver, $ 400 million

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928,260 925,030 850,000 850,000

9.25 % senior secured notes due 2025

854,294 — 775,000 —

7.375 % senior secured notes due 2025

856,783 — 850,000 —

4.00 % senior exchangeable notes due 2025

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(1) Excludes net unamortized debt issuance costs.

Goodwill Quantitative Assessment

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

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

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

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

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

As a result of our strategic realignment, our historical Travel Network and Airline Solutions business segments have been combined into a new business segment, Travel Solutions.

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.

There was no change to our historical Hospitality Solutions reporting unit.

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 September 30, 2020, and determined that our goodwill was no t impaired for any reporting unit at either date.

Assets that are Measured at Fair Value on a Nonrecurring Basis

We assess goodwill and other intangible assets with indefinite lives for impairment annually or more frequently if indicators arise.

We continually monitor events and changes in circumstances such as changes in market conditions, near and long-term demand and other relevant factors, that could indicate that the fair value of any one of our reporting units may more likely than not have fallen below its respective carrying amount.

We have not identified any triggering events or changes in circumstances since the performance of our annual goodwill impairment test that would require us to perform another goodwill impairment test and we did no t record any goodwill impairment charges for the three months ended March 31, 2021.

Accumulated Other Comprehensive Loss

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

September 30, 2020 December 31, 2019

As of March 31, 2021 and December 31, 2020, the components of accumulated other comprehensive loss, net of related deferred income taxes, are as follows (in thousands):

March 31, 2021 December 31, 2020

Defined benefit pension and other post-retirement benefit plans $ ( 134,200 ) $ ( 135,596 )

Unrealized foreign currency translation gain 8,481 4,289

Unrealized loss on foreign currency forward contracts and interest rate swaps ( 9,712 ) ( 12,837 )

Unrealized foreign currency translation gain 8,170 12,476

Total accumulated other comprehensive loss, net of tax $ ( 135,742 ) $ ( 135,957 )

The amortization of actuarial losses and periodic service credits associated with our retirement-related benefit plans is primarily included in Other, net in the consolidated statements of operations.

During the three months ended September 30, 2020, a settlement occurred within our defined benefit pension plan which resulted in a loss of $ 14 million recorded to Other, net.

On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which modified funding requirements for single-employer defined benefit pension plans by restarting and extending the amortization of funding shortfalls and extending and enhancing interest rate stabilization percentages.

We are examining the short-term impact of these measures on our 2021 pension plan contributions, including the reduction, or potential elimination of, minimum funding requirements, as well as the possible long-term effects of fully funding the plan over a longer period of time if we were to take advantage of the extended amortization relief.

Derivatives, for information on the income statement line items affected as the result of reclassification adjustments associated with derivatives.

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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.

We recorded $ 2 million of accrued preferred stock dividends in our consolidated results of operations for the three and nine months ended September 30, 2020.

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

We recorded $ 5 million of accrued preferred stock dividends in our consolidated results of operations for the three months ended March 31, 2021.

During the three months ended March 31, 2021, we paid cash dividends on our preferred stock of $ 5 million.

On April 28, 2021, the Board of Directors declared a dividend of $ 1.625 per share on Preferred Stock payable on June 1, 2021 to holders of record of the Preferred Stock on May 15, 2021.

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.

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The number of shares issued at conversion based on the unadjusted conversion rates will be between 40 million and 48 million shares.

We expect to settle the principal amount of the outstanding Exchangeable Notes in shares of our common stock.

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.

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The holders of the Preferred Stock will not have any voting rights, with limited exceptions.

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.

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.

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.

Share Repurchase Program

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

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

For the three months ended March 31, 2021, we did no t repurchase any shares pursuant to the Share Repurchase Program.

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

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

Approximately $ 287 million remains authorized for repurchases under the Share Repurchase Program as of March 31, 2021.

Earnings Per Share

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

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

2020 2019 2020 2019

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

Three Months Ended March 31,

Loss from continuing operations $ ( 259,931 ) $ ( 209,771 )

Net income attributable to non-controlling interests 484 783

Preferred stock dividends 5,428 —

Net (loss) income from continuing operations available to common stockholders, basic and diluted $ ( 311,916 ) $ 64,409 $ ( 965,929 ) $ 149,199

Net loss from continuing operations available to common stockholders, basic and diluted $ ( 265,843 ) $ ( 210,554 )

Basic weighted-average common shares outstanding 317,634 274,037

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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.

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

The calculation of diluted weighted-average shares excludes the impact of 6 million and 3 million of anti-dilutive common stock equivalents for each of the three and nine months ended September 30, 2020, respectively, and 3 million of anti-dilutive common stock equivalents for each of the three and nine months ended September 30, 2019.

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.

The diluted weighted-average common shares outstanding calculation excludes 6 million and 2 million of dilutive stock options and restricted stock awards for the three months ended March 31, 2021 and 2020, respectively, as their effect would be anti-dilutive given the net loss incurred in the periods.

The calculation of diluted weighted-average shares excludes the impact of 1 million of anti-dilutive common stock equivalents for the three months ended March 31, 2021.

We have used the if-converted method for calculating any potential dilutive effect of the Exchangeable Notes on our diluted net income per share.

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

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

The approximately 44 million resulting common shares related to the Exchangeable Notes are not included in the dilutive weighted-average common shares outstanding calculation for the three months ended March 31, 2021 as their effect would be anti-dilutive given the net loss incurred in the period.

There was no impact to our earnings per share for the three months ended March 31, 2020 as a result of the full retrospective adoption on January 1, 2021 of updated guidance affecting the accounting for the Exchangeable Notes.

General Information for further information.

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.

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 three and nine months ended September 30, 2020, respectively, as their effect would be anti-dilutive given the net loss incurred in the period.

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 three months ended March 31, 2021 as their effect would be anti-dilutive given the net loss incurred in the period.

We lease certain facilities under long-term operating leases.

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

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

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

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

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental Cash Flow Information

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Operating Leases

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Total operating lease liabilities $ 126,476 $ 135,295

Our leases have remaining minimum terms that range between one and ten years .

Some of our leases include options to extend for up to five additional years;

others include options to terminate the agreement within three years .

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

Our leases have remaining minimum terms that range between one and twelve years .

Some of our leases include options to extend for up to ten additional years;

others include options to terminate the agreement within two years .

Future minimum lease payments under non-cancellable operating leases as of March 31, 2021 are as follows (in thousands):

Year Ending December 31, Operating Leases

2021 $ 29,292

Thereafter 60,670

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The jury rejected US Airways' claim alleging a conspiracy with the other GDSs.

We continue to believe that our business practices and contract terms are lawful.

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

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

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

As such, it filed a motion

seeking approximately $ 125 million in attorneys’ fees and costs, the amount of which we strongly dispute.

In January 2018, the court denied US Airways' motion seeking attorneys' fees and costs, without prejudice.

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The lawsuit has been remanded to federal court in the Southern District of New York for further proceedings.

Currently, no trial date has been set.

The trial court has scheduled the trial to begin on April 25, 2022.

We continue to believe that our business practices and contract terms are lawful.

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

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

therefore, in the third quarter of 2019, we reversed our previously accrued loss of $ 32 million and do no t have any losses accrued for this matter as of March 31, 2021.

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

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We are fully cooperating with the DOJ investigation and are unable to make any prediction regarding its outcome.

The DOJ is also investigating other companies that own GDSs and has sent CIDs

to other companies in the travel industry.

The DOJ is also investigating other companies that own GDSs and has sent CIDs to other companies in the travel industry.

Based on its findings in the investigation, the DOJ may (i) close the file, (ii) seek a consent decree to remedy issues it believes violate the antitrust laws, or (iii) file suit against us for violating the antitrust laws, seeking injunctive relief.

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The DIT appealed those decisions to the Delhi High Court, which found in our favor on July 19, 2010.

The DIT has appealed the decision to the Supreme Court of India and our case is currently pending before that court.

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 2018 with the ITAT and no trial date has been set for these subsequent years.

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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.

The DIT appealed those decisions to the Delhi High Court and our case is pending before that court.

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

If the DIT were to fully prevail on every claim against us, including SAPPL, we could be subject to taxes, interest and penalties of approximately $ 44 million as of September 30, 2020.

The DIT appealed those decisions to the Bombay High Court and our case is pending before that court.

The DIT also assessed taxes on a similar basis plus some additional issues for assessment years ending March 2006 through March 2018 and appeals for assessment years ending March 2006 through 2016 and March 2018 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 March 31, 2021.

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

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The unauthorized party was also able, in some cases, to access certain information such as guest name(s), email, phone number, address, and other information if provided to the HS Central Reservation System.

Information such as Social Security, passport, or driver’s license number was

not accessed.

Information such as Social Security, passport, or driver’s license number was not accessed.

The investigation did not uncover forensic evidence that the unauthorized party removed any information from the system, but it is a possibility.

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We have notified customers and other companies that use or interact with, directly or indirectly, the HS Central Reservation System about the incident.

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

In December 2020, we entered into settlement agreements with certain state Attorneys General to resolve their investigation into this incident.

As part of these settlement agreements, 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.

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

We also notified the payment card brands, and at their request, we have engaged a PCI forensic investigator to investigate this incident.

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.

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, with the exception of an immaterial amount recorded to our results of operations associated with the governmental investigation described above.

We maintain insurance that covers certain aspects of cyber risks, and we continue to work with our insurance carriers in these matters.

We also notified the payment card brands, and at their request, we engaged a PCI forensic investigator to investigate this incident.

We did not find any evidence of a breach of the network security of the HS Central Reservation System, and we believe that the number of affected reservations represented only a fraction of 1 % of the bookings in the HS Central Reservation System.

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

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

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Our most significant VAT receivable is in Greece.

As of September 30, 2020, we have approximately $ 23 million in VAT receivables for which refund claims have been filed with the Greek government.

As of March 31, 2021, we have approximately $ 9 million in VAT receivables for which refund claims have been filed with the Greek government.

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

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

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

As of March 31, 2021, we do not believe that an adverse outcome is probable with respect to the claims of the Greek tax authorities or any other jurisdiction;

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

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the manner in which our operations are managed;

the criteria used by our Chief Executive Officer, who is our Chief Operating Decision Maker, to evaluate segment performance;

the criteria used by our Chief Executive Officer, who is our Chief Operating Decision Maker ("CODM"), to evaluate segment performance;

the availability of separate financial information;

and overall materiality considerations.

As discussed in Note 1.

General Information , 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.

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 ("CODM") utilizes beginning in the third quarter of 2020 to evaluate segment performance and allocate resources.

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.

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 CODM utilizes beginning in the third quarter of 2020 to evaluate segment performance and allocate resources.

These changes did not impact the historical Hospitality Solutions reporting segment's revenue and expenses.

Our CODM utilizes Adjusted Gross Profit (Loss), Adjusted Operating (Loss) Income and Adjusted EBITDA as the measures of profitability to evaluate performance of our segments and allocate resources which are not recognized terms under GAAP.

Our uses of Adjusted Gross Profit (Loss), Adjusted Operating (Loss) 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.

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

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

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

As a result of our 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.

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

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

General Information for further details on our reclassifications.

Our CODM utilizes Adjusted Operating Loss as the measure of profitability to evaluate performance of our segments and allocate resources which is not a recognized term under GAAP.

Our uses of Adjusted Operating Loss 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.

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

As a result of the strategic realignment in the third quarter of 2020, 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.

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.

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.

Benefit expenses, facility and lease costs and associated depreciation expense are allo cated to the segments based on headcount.

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

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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.

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

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

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

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

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

2020 2019 2020 2019

Segment information for the three months ended March 31, 2021 and 2020 is as follows (in thousands):

Three Months Ended March 31,

Travel Solutions $ 288,875 $ 607,588

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Total revenue $ 327,484 $ 658,977

Adjusted Gross Profit (Loss) (a)

Travel Solutions $ 168,971 $ 561,372 $ 612,869 $ 1,703,704

Hospitality Solutions 24,507 35,762 61,590 104,676

Corporate ( 646 ) ( 508 ) ( 2,402 ) ( 1,246 )

Total $ 192,832 $ 596,626 $ 672,057 $ 1,807,134

Adjusted Operating (Loss) Income (b)

Travel Solutions $ ( 146,337 ) $ 183,582 $ ( 408,584 ) $ 574,635

Hospitality Solutions ( 12,609 ) ( 4,008 ) ( 48,475 ) ( 15,471 )

Corporate ( 37,747 ) ( 46,500 ) ( 119,313 ) ( 143,375 )

Total $ ( 196,693 ) $ 133,074 $ ( 576,372 ) $ 415,789

Adjusted EBITDA (c)

Adjusted Operating Loss (a)

Travel Solutions $ ( 106,133 ) $ ( 10,607 )

Hospitality Solutions ( 13,587 ) ( 16,457 )

Total segments ( 67,772 ) 286,869 ( 174,895 ) 879,306

Corporate ( 46,782 ) ( 45,806 )

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______________________________

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

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

2020 2019 2020 2019

Adjusted Gross Profit $ 192,832 $ 596,626 $ 672,057 $ 1,807,134

Less adjustments:

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

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

Cost of revenue adjustments:

Depreciation and amortization (1)

9,264 9,425 27,846 29,705

Restructuring and other costs (6)

( 237 ) — 21,492 —

Amortization of upfront incentive consideration (2)

19,444 20,851 56,733 59,825

Stock-based compensation 1,422 1,536 3,668 4,758

Operating (loss) income $ ( 233,049 ) $ 113,460 $ ( 768,530 ) $ 305,780

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

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

2020 2019 2020 2019

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

Less adjustments:

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

Acquisition-related amortization (1c)

16,465 15,976 49,775 47,971

Restructuring and other costs (6)

947 — 74,229 —

Acquisition-related costs (5)

591 9,696 22,791 30,337

Litigation costs, net (4)

247 ( 24,179 ) 2,103 ( 21,355 )

Stock-based compensation 18,566 17,094 44,905 51,083

Operating (loss) income $ ( 233,049 ) $ 113,460 $ ( 768,530 ) $ 305,780

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

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

2020 2019 2020 2019

Adjusted EBITDA $ ( 104,370 ) $ 241,564 $ ( 290,255 ) $ 739,548

Less adjustments:

Depreciation and amortization of property and equipment (1a)

63,733 78,060 201,274 232,617

Amortization of capitalized implementation costs (1b)

9,146 9,579 28,110 31,317

Acquisition-related amortization (1c)

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

Three Months Ended March 31,

Operating loss $ ( 202,553 ) $ ( 151,411 )

Equity method loss ( 911 ) ( 686 )

Acquisition-related amortization (1)

16,221 16,801

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( 5,135 ) 25,281

Amortization of upfront incentive consideration (2)

19,444 20,851 56,733 59,825

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

Other, net (3)

18,431 1,769 72,015 6,118

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

Acquisition-related costs (3)

591 9,696 22,791 30,337

Litigation costs, net (4)

247 ( 24,179 ) 2,103 ( 21,355 )

Stock-based compensation 24,426 17,577

Provision for income taxes ( 20,364 ) 7,795 ( 53,336 ) 31,783

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

______________________________________________________

(1) Depreciation and amortization expenses:

(a) Depreciation and amortization of property and equipment includes software developed for internal use as well as amortization of

contract acquisition costs

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

(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.

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

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

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

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

(3) Other, net during the nine months ended September 30, 2020 i ncludes a $ 46 million charge related to termination payments incurred in the first quarter of 2020 in connection with the now-terminated acquisition of Farelogix and a $ 14 million pension settlement charge recorded in the third quarter of 2020, as well as foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.

Acquisitions for further detail regarding the Farelogix acquisition and Note 10.

Accumulated Other Comprehensive Loss for discussion of the pension settlement.

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

Contingencies.

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

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

Adjusted Operating Loss $ ( 166,502 ) $ ( 72,870 )

(1) 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.

(2) Restructuring and other costs represent charges, and adjustments to those charges, associated with business restructuring and associated changes, as well as other measures to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.

Restructuring Activities for further details.

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

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

Contingencies.

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

What changed 10-Q

Item 1. Financial Statements