What changed in this filing

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Item 1A. Risk Factors

2022-11-02 compared with 2022-08-02 · 52 added, 47 removed, 528 unchanged (16% of the section changed)

13 unchanged sentences

Our financial results and prospects are largely dependent on these transaction volumes.

Although it is impossible to accurately predict the ultimate impact of these developments on our business, our financial results for the years ended December 31, 2020 and 2021 and for the first six months of 2022 (excluding the gain impacts from disposition activity) have been significantly and negatively impacted, with a material decline in total revenues, net income, cash flow from operations and Adjusted EBITDA as compared to 2019.

Although it is impossible to accurately predict the ultimate impact of these developments on our business, our financial results for the years ended December 31, 2020 and 2021 and for the first nine months of 2022 (excluding the gain impacts from disposition activity) have been significantly and negatively impacted, with a material decline in total revenues, net income, cash flow from operations and Adjusted EBITDA as compared to 2019.

This downward trend could continue for an unpredictable period.

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and increases in cash outlays to refund travel service providers for cancelled bookings.

We did not record any material impairments in 2021 or in the first six months of 2022;

We did not record any material impairments in 2021 or in the first nine months of 2022 as a result of the COVID-19 pandemic;

however, future changes in our expected cash flows or other factors as a result of the COVID-19 pandemic may cause our goodwill or other assets to be impaired, resulting in a non-cash charge.

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These include, but are not limited to, the severity, extent and duration of the global pandemic and its impact on the travel industry and consumer spending more broadly;

actions taken by national, state and local governments to contain the disease or treat its impact, including travel restrictions and bans, required closures of non-essential businesses, vaccination levels and aid and economic stimulus efforts;

the effect of the

changes in hiring levels and remote working arrangements that we have implemented on our operations, including the health, productivity, retention, and morale of management and our employees, and our ability to maintain our financial reporting processes and related controls;

actions taken by national, state and local governments to contain the disease or treat its impact, including travel restrictions and

bans, required closures of non-essential businesses, vaccination levels and aid and economic stimulus efforts;

the effect of the changes in hiring levels and remote working arrangements that we have implemented on our operations, including the health, productivity, retention, and morale of management and our employees, and our ability to maintain our financial reporting processes and related controls;

the impact on the financial condition on our partners, and any potential restructurings or bankruptcies of our partners;

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Adapting to new technological and marketplace developments may require substantial expenditures and lead time and we cannot guarantee that projected future increases in business volume will actually materialize.

We may experience difficulties that

could delay or prevent the successful development, marketing and implementation of enhancements, upgrades and additions.

We may experience difficulties that could delay or prevent the successful development, marketing and implementation of enhancements, upgrades and additions.

Moreover, we may fail to maintain, upgrade or introduce new products, services, technologies and systems as quickly as our competitors or in a cost-effective manner.

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We also derive revenue from hotels, car rental brands, rail carriers, cruise lines, tour operators and other suppliers in the travel and tourism industries.

Adverse changes

in any of these relationships or the inability to enter into new relationships could negatively impact the demand for and competitiveness of our travel products and services.

Adverse changes in any of these relationships or the inability to enter into new relationships could negatively impact the demand for and competitiveness of our travel products and services.

For example, a lack of liquidity in the capital markets or weak economic performance, including as a result of the impacts of COVID-19, may cause our travel suppliers to increase the time they take to pay, or to default, on their payment obligations, which could lead to a higher provision for expected credit losses and negatively affect our results.

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Our business could be materially adversely affected by our inability, or the inability of our vendors who receive personal data from us, to comply with legal obligations regarding the use of personal data, new data handling or localization requirements that conflict with or negatively impact our business practices.

Russia is also contemplating the adoption of legislation and related regulations that would require activities related to the development, creation and operation of information systems to process air transportation to be conducted by Russian residents or legal entities.

If adopted, we could be prohibited from providing these services in Russia, which would negatively impact our revenue and results.

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

In addition, our agreements with customers may also require that we indemnify the customer for liability arising from data incidents under the terms of our agreements with these customers.

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We may not be able to reduce or eliminate protracted installation or significant additional costs.

Significant delays or unsuccessful

customer implementation projects could result in cancellation or renegotiation of existing agreements, claims from customers, harm our reputation and negatively impact our operating results.

Significant delays or unsuccessful customer implementation projects could result in cancellation or renegotiation of existing agreements, claims from customers, harm our reputation and negatively impact our operating results.

Our Travel Solutions business depends on relationships with travel buyers.

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The cost of compliance with PCI DSS is significant and may increase as the requirements change.

tested periodically for assurance and successfully completed our last annual assessment in November 2021.

Compliance does not guarantee a completely secure environment and notwithstanding the results of this assessment there can be no assurance that payment card brands will not request further compliance assessments or set forth additional requirements to maintain access to credit card processing services.

We are tested periodically for assurance and successfully completed our last annual assessment in October 2022.

Compliance does not guarantee a completely secure environment and notwithstanding the results of this assessment there can be no assurance that

payment card brands will not request further compliance assessments or set forth additional requirements to maintain access to credit card processing services.

See “—Security incidents expose us to liability and could damage our reputation and our business.” Compliance is an ongoing effort and the requirements evolve as new threats are identified.

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Although US Airways was only awarded $1.00 in single damages with respect to this verdict, and we believe the applicable limitations period for similar claims has expired, other parties might nevertheless likewise seek to benefit from this judgment by threatening to bring or actually bringing their own claims against us on the same or similar grounds or utilizing the litigation to seek more favorable contract terms.

Additionally, on June 29, 2021, American Airlines filed suit against us in state district court in Tarrant County, Texas, alleging that our New Airline Storefront, a modern retailing experience designed to enhance comparison shopping of airline offers in the GDS, and a new value-based incentive model with agencies breach our contract with American Airlines.

American Airlines sought a temporary and is seeking a permanent injunction preventing the alleged breach of contract.

We strongly deny the allegations and have filed our response denying American Airlines’ allegations and seeking a declaratory judgment that, among other things, New Airline Storefront does not violate the contract and that the contract does not prohibit Sabre’s value-based fee arrangements.

In October 2021, the court heard arguments to determine whether to grant a temporary injunction preventing the alleged breach of contract, and on October 27, 2021, the court issued a ruling denying the temporary injunction.

The court also denied American Airlines’ subsequent motion seeking reconsideration of the court’s denial of the temporary injunction.

If we cannot resolve this matter favorably, we could be limited in our ability to develop and use innovative new displays and make the value-based incentive payments until our contract with American Airlines terminates.

Furthermore, if this dispute were to result in the termination of our distribution contract with American Airlines, we may be unable to negotiate a new contract with American Airlines on as favorable terms or at all, which could have a material adverse effect on our business, financial condition and results of operations.

Depending on the outcome of any of these matters, and the scope of the outcome, the manner in which our airline distribution business is operated could be affected and could potentially force changes to the existing airline distribution business model.

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These sanctions are administered by the Office of Foreign Assets Control (“OFAC”) and are typically known as the OFAC regulations.

These regulations are extensive and

complex, and they differ from one sanctions regime to another.

These regulations are extensive and complex, and they differ from one sanctions regime to another.

Failure to comply with these regulations could subject us to legal and reputational consequences, including civil and criminal penalties.

5 unchanged sentences

We note, however, that OFAC regulations and related interpretive guidance are complex and subject to varying interpretations.

Due to this complexity, OFAC’s interpretation of its own regulations and guidance vary on a case to case basis.

Due to this complexity, OFAC’s interpretation of its own regulations and guidance vary on a case by case basis.

As a result, we cannot provide any guarantees that OFAC will not challenge any of our activities in the future, which could have a material adverse effect on our results of operations.

In Europe, GDS regulations or interpretations thereof may increase our cost of doing business or lower our revenues, limit our ability to sell marketing data, impact relationships with travel buyers, airlines, rail carriers or others, impair the enforceability of existing agreements with travel buyers and other users of our system, prohibit or limit us from offering services or products, or limit our ability to establish or change fees.

Although regulations specifically governing GDSs have been lifted in the United States, they remain subject to general regulation regarding unfair trade practices by the U.S.

Although regulations specifically governing GDSs have been lifted in the United

States, they remain subject to general regulation regarding unfair trade practices by the U.S.

Department of Transportation (“DOT”).

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We do not currently maintain a central database of all regulatory requirements affecting our worldwide operations and, as a result, the risk of non-compliance with the laws and regulations described above is heightened.

Our failure to comply with these laws and regulations may subject us to fines, penalties and potential criminal violations.

Our failure to comply with these laws and regulations could subject us to fines, penalties and potential criminal violations.

Any changes to these laws or regulations or any new laws or regulations may make it more difficult for us to operate our business.

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Any of these sanctions, export controls and related items, as well as actions taken by us or others in response to them or otherwise in connection with the military conflict, could adversely impact our business, results of operations and financial condition.

Russia has recently adopted legislation and related regulations, effective October 30, 2022, that require activities related to the development, creation and operation of automated information systems for processing domestic air transportation within the Russian Federation to be owned and operated by Russian residents or legal entities with no updates from or connection with systems abroad.

This legislation and these regulations are expected to significantly restrict or prohibit our ability to provide these services in Russia, which is expected to negatively impact our revenue and results.

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

As noted, the regulations and sanctions described above, as well as other sanctions regimes, are complex, and, while we have a compliance program in place to help us address these items, there can be no assurance that we will be able to consistently address them in an effective manner.

Any failure to comply with these sanctions, export controls and related items may subject us to fines, penalties and potential criminal violations.

In the third quarter of 2022, we identified elements of our sanctions compliance program that were not functioning as we intended, which we are addressing.

It is possible that our enhanced program will identify items that do not comply with these regulatory or sanction requirements.

The amount of any penalties and other impacts, costs or remediations related to these items may adversely impact our results.

We recently became aware that we received payments that were not material in amount from an air carrier in Russia for GDS services, and the receipt of these payments may be in violation of U.K.

We have voluntarily disclosed the receipt of these payments to the U.K.

Office of Financial Sanctions Implementation (OFSI).

If OFSI were to impose a penalty, we believe that it would not be material;

however, there can be no assurance of the amount of any such penalty.

We are exposed to risks associated with acquiring or divesting businesses or business operations.

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Copyrights of U.S.

origin must be registered

before the copyright owner may bring an infringement suit in the United States.

origin must be registered before the copyright owner may bring an infringement suit in the United States.

Accordingly, if one of our unregistered copyrights of U.S.

origin is infringed by a third party, we will need to register the copyright before we can file an infringement suit in the United States, and our remedies in any such infringement suit may be limited.

origin is infringed by a third party, we will need to register the copyright before we can file an infringement suit in the United States, and our remedies

in any such infringement suit may be limited.

We use reasonable efforts to protect our trade secrets.

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Any unfavorable economic, political or regulatory developments in these regions could negatively affect our business, such as delays in payment or non-payment of contracts, delays in contract implementation or signing, carrier control issues and increased costs from regulatory changes particularly as parts of our growth strategy involve expanding our presence in these emerging markets.

example, markets that have traditionally had a high level of exports to China, or that have commodities-based economies, have continued to experience slowing or deteriorating economic conditions.

For example, markets that have traditionally had a high level of exports to China, or that have commodities-based economies, have continued to experience slowing or deteriorating economic conditions.

These adverse economic conditions may negatively impact our business results in those regions.

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and in EMEA, which may negatively impact our business results in those regions.

In addition, the terms of the U.K.’s withdrawal from the E.U.

In addition, the terms of the U.K.’s

withdrawal from the E.U.

could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions, including our ability to obtain Value Added Tax ("VAT") refunds on transactions between the U.K.

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We have a significant amount of indebtedness.

As of June 30, 2022, we had $4.7 billion of indebtedness outstanding.

As of September 30, 2022, we had $4.7 billion of indebtedness outstanding.

Our substantial level of indebtedness increases the possibility that we may not generate enough cash flow from operations to pay, when due, the principal of, interest on or other amounts due in respect of, these obligations.

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(6) make investments in entities that we do not control, including equity method investments and joint ventures;

(7) enter into certain asset sale transactions, including

divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries;

(7) enter into certain asset sale transactions, including divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries;

(8) enter into certain transactions with affiliates;

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These covenants may limit our ability to effectively operate our businesses or maximize stockholder value.

Any failure to comply with the restrictions of our Amended and Restated Credit Agreement or any agreement governing our other indebtedness may result in an event of default under those agreements.

Any failure to comply with the restrictions of our Amended and Restated Credit Agreement or any agreement governing our other indebtedness may result in an event of default under those

Such default may allow the creditors to accelerate the related debt, which may trigger cross-acceleration or cross-default provisions in other debt.

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Our ability to arrange financing and the cost of such financing are dependent on numerous factors, including but not limited to general economic and capital market conditions, the availability of credit from banks or other lenders, investor confidence in us, and our results of operations.

There can be no assurance that financing will be available on terms favorable to us or at all, which could force us to delay, reduce or abandon our growth strategy, increase our financing costs, or both.

Additional funding from debt financings may make it more difficult for us to operate our business because a portion of our cash generated from internal operations would be used to make principal and interest payments on the indebtedness and we may be obligated to abide by restrictive covenants contained in the debt financing agreements, which may, among other things, limit our ability to make business decisions and further limit our ability to pay dividends.

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Depending on the size of the exposures and the relative movements of interest rates, if we choose not to hedge or fail to effectively hedge our exposure, we could experience a material adverse effect on our results of operations and financial condition.

As of June 30, 2022, we had outstanding approximately $2.2 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of Term Loan B for $1.2 billion, Term Loan B-1 for $399 million and Term Loan B-2 for $633 million.

As of September 30, 2022, we had outstanding approximately $1.6 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of Term Loan B for $536 million, Term Loan B-1 for $398 million and Term Loan B-2 for $631 million.

In July 2017, the Financial Conduct Authority announced its intention to phase out LIBOR by the end of 2021, and subsequently extended the phase-out date to June 30, 2023.

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If any such acquisition or investment is significant, the number of shares of common stock or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial and may result in additional dilution to our stockholders.

We may also grant registration rights covering shares of our common stock

or other securities that we may issue in connection with any such acquisitions and investments.

We may also grant registration rights covering shares of our common stock or other securities that we may issue in connection with any such acquisitions and investments.

To the extent that any of us, our executive officers or directors sell, or indicate an intent to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline significantly.

We may recognize impairments on long-lived assets, including goodwill and other intangible assets, or recognize impairments on our equity method investments.

Our consolidated balance sheets at June 30, 2022 contained goodwill and intangible assets, net totaling $2.9 billion.

Our consolidated balance sheets at September 30, 2022 contained goodwill and intangible assets, net totaling $3.0 billion.

Future acquisitions that result in the recognition of additional goodwill and intangible assets would cause an increase in these types of assets.

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Although we believe our tax estimates are reasonable, the final determination of tax audits could be materially different from our historical income tax provisions and accruals.

Our effective tax rate may change from year to year based on changes in the mix of activities and income allocated or earned among various jurisdictions, tax laws in these jurisdictions, tax treaties between countries, our eligibility for benefits under those tax treaties, and

the estimated values of deferred tax assets and liabilities, including the estimation of valuation allowances.

Such changes could result in an increase or decrease in the effective tax rate applicable to all or a portion of our income or losses which would impact our profitability.

We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of June 30, 2022, and, accordingly, have not provided deferred taxes on any outside basis differences for most subsidiaries.

We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of September 30, 2022, and, accordingly, have not provided deferred taxes on any outside basis differences for most subsidiaries.

We establish reserves for our potential liability for U.S.

taxes, including sales, occupancy and VAT, consistent with applicable accounting principles and considering all current facts and circumstances.

We also establish reserves when required relating to the collection of refunds related to value-added taxes, which are subject to audit and collection risks in various countries.

We also establish reserves

when required relating to the collection of refunds related to value-added taxes, which are subject to audit and collection risks in various countries.

Historically our right to recover certain value-added tax receivables associated with our European businesses has been questioned by tax authorities.

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New, changed, modified or newly interpreted or applied laws could also increase our compliance, operating and other costs, as well as the costs of our products and services.

Several countries, primarily in Europe, and the European Commission have proposed or adopted taxes on revenue earned by multinational corporations in certain "digital economy" sectors from activities linked to the user-based activity of their residents.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022, which includes a minimum tax equal to 15% of the adjusted financial statement income of certain corporations as well as a 1% excise tax on share buybacks, effective for tax years beginning in 2023.

When effective, it is possible that the minimum tax could result in an additional tax liability over the regular federal corporate tax liability in a given year based on differences between book and taxable income (including as a result of temporary differences).

Given its recent pronouncement, it is unclear at this time what, if any, impact the Inflation Reduction Act of 2022 will have on the Company's tax rate and financial results.

We will continue to evaluate its impact as further information becomes available.

Additionally, several countries, primarily in Europe, and the European Commission have proposed or adopted taxes on revenue earned by multinational corporations in certain "digital economy" sectors from activities linked to the user-based activity of their residents.

These proposals have generally been labeled as "digital services taxes" ("DSTs").

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

What changed 10-Q

Item 1A. Risk Factors