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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Sabre Corporation
(Exact name of registrant as specified in its charter)
  
Delaware001-3642220-8647322
(State or other jurisdiction of
incorporation or organization)
(Commission File Number)(I.R.S. Employer
Identification No.)
3150 Sabre Drive
Southlake, TX 76092
(Address, including zip code, of principal executive offices)
(682)-605-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par valueSABRThe NASDAQ Stock Market LLC
6.50% Series A Mandatory Convertible Preferred StockSABRPThe NASDAQ Stock Market LLC
(Title of each class)(Trading Symbol)(Name of each exchange on which registered)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes      No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No 
As of July 29, 2021, 322,657,316 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.




SABRE CORPORATION
TABLE OF CONTENTS
 
  
Page No.
    Item 1. 
 
 
 
 
 
     Item 2.
     Item 3.
     Item 4.
 
 
     Item 1.
     Item 1A.
     Item 2.
     Item 6.
We may use our website, our Twitter account (@Sabre_Corp) and other social media channels as additional means of disclosing information to the public. The information disclosed through those channels may be considered to be material and may not be otherwise disseminated by us, so we encourage investors to review our website, Twitter account and other social media channels. The contents of our website or social media channels referenced herein are not incorporated by reference into this Quarterly Report on Form 10-Q.



PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS

SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited) 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Revenue $419,668 $83,044 $747,152 $742,021 
Cost of revenue, excluding technology costs179,821 61,227 326,582 342,642 
Technology costs261,217 282,103 513,880 607,475 
Selling, general and administrative159,000 123,784 289,613 327,385 
Operating loss(180,370)(384,070)(382,923)(535,481)
Other income (expense):  
Interest expense, net(64,272)(55,931)(128,373)(93,373)
Equity method income (loss)630 (499)(281)(1,185)
Other, net(3,199)(6,098)8,432 (53,584)
Total other expense, net(66,841)(62,528)(120,222)(148,142)
Loss from continuing operations before income taxes(247,211)(446,598)(503,145)(683,623)
(Benefit) provision for income taxes(1,897)(4,629)2,100 (31,883)
Loss from continuing operations(245,314)(441,969)(505,245)(651,740)
Loss from discontinued operations, net of tax(81)(672)(344)(2,798)
Net loss(245,395)(442,641)(505,589)(654,538)
Net income (loss) attributable to noncontrolling interests459 (71)943 712 
Net loss attributable to Sabre Corporation(245,854)(442,570)(506,532)(655,250)
Preferred stock dividends5,428  10,856  
Net loss attributable to common stockholders$(251,282)$(442,570)$(517,388)$(655,250)
Basic net loss per share attributable to common stockholders:
Loss from continuing operations$(0.79)$(1.60)$(1.62)$(2.37)
Loss from discontinued operations   (0.01)
Net loss per common share$(0.79)$(1.60)$(1.62)$(2.38)
Diluted net loss per share attributable to common stockholders:  
Loss from continuing operations$(0.79)$(1.60)$(1.62)$(2.37)
Loss from discontinued operations   (0.01)
Net loss per common share$(0.79)$(1.60)$(1.62)$(2.38)
Weighted-average common shares outstanding:  
Basic319,755 275,693 318,700 274,865 
Diluted319,755 275,693 318,700 274,865 
See Notes to Consolidated Financial Statements.
1


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net loss$(245,395)$(442,641)$(505,589)$(654,538)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments ("CTA")1,110 2,087 (3,730)293 
Retirement-related benefit plans:
Net actuarial gain, net of taxes of $(6,153), $, $(6,153), $(1,206)
21,347  21,347 4,141 
Pension settlement, net of taxes of $(973), $, $(973), $
3,374  3,374  
Amortization of prior service credits, net of taxes of $80, $80, $160, $160
(278)(278)(556)(556)
Amortization of actuarial losses, net of taxes of $(488), $(561), $(969), $(926)
1,688 1,942 3,363 3,206 
Net change in retirement-related benefit plans, net of tax26,131 1,664 27,528 6,791 
Derivatives:
Unrealized (losses) gains, net of taxes of $29, $(262), $30, $6,185
(101)1,012 (104)(22,806)
Reclassification adjustment for realized losses, net of taxes of $(916), $(1,787), $(1,815), $(2,302)
3,189 6,559 6,316 8,394 
Net change in derivatives, net of tax3,088 7,571 6,212 (14,412)
Share of other comprehensive loss of equity method investments(758)(145)(224)(798)
Other comprehensive income (loss)29,571 11,177 29,786 (8,126)
Comprehensive loss(215,824)(431,464)(475,803)(662,664)
Less: Comprehensive (income) loss attributable to noncontrolling interests(459)71 (943)(712)
Comprehensive loss attributable to Sabre Corporation$(216,283)$(431,393)$(476,746)$(663,376)
 
See Notes to Consolidated Financial Statements.
2




SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 June 30, 2021December 31, 2020
Assets  
Current assets  
Cash and cash equivalents$1,122,114 $1,499,665 
Accounts receivable, net of allowance for credit losses of $84,829 and $96,150
330,355 255,468 
Prepaid expenses and other current assets146,757 132,972 
Total current assets1,599,226 1,888,105 
Property and equipment, net of accumulated depreciation of $2,007,560 and $1,995,409
293,488 363,491 
Equity method investments23,063 24,265 
Goodwill2,625,628 2,636,546 
Acquired customer relationships, net of accumulated amortization of $772,320 and $761,335
273,548 289,150 
Other intangible assets, net of accumulated amortization of $732,525 and $714,095
202,712 222,216 
Deferred income taxes18,615 24,181 
Other assets, net572,169 629,768 
Total assets$5,608,449 $6,077,722 
Liabilities and stockholders’ (deficit) equity  
Current liabilities  
Accounts payable$85,912 $115,229 
Accrued compensation and related benefits118,072 86,830 
Accrued subscriber incentives146,332 100,963 
Deferred revenues103,755 99,470 
Other accrued liabilities179,683 193,383 
Current portion of debt26,032 26,068 
Total current liabilities659,786 621,943 
Deferred income taxes64,014 72,196 
Other noncurrent liabilities342,268 380,621 
Long-term debt4,702,173 4,717,808 
Commitments and contingencies (Note 13)
Stockholders’ (deficit) equity  
Preferred stock, $0.01 par value, 225,000 authorized, 3,340 issued and outstanding as of June 30, 2021 and December 31, 2020; aggregate liquidation value of $334,000 as of June 30, 2021 and December 31, 2020
33 33 
Common Stock: $0.01 par value; 1,000,000 authorized shares; 345,210 and 338,662 shares issued, 322,365 and 317,297 shares outstanding at June 30, 2021 and December 31, 2020, respectively
3,452 3,387 
Additional paid-in capital3,049,156 2,985,077 
Treasury Stock, at cost, 22,845 and 21,365 shares at June 30, 2021 and December 31, 2020, respectively
(497,221)(474,790)
Accumulated deficit(2,617,012)(2,099,624)
Accumulated other comprehensive loss(106,171)(135,957)
Non-controlling interest7,971 7,028 
Total stockholders’ (deficit) equity(159,792)285,154 
Total liabilities and stockholders’ (deficit) equity$5,608,449 $6,077,722 

See Notes to Consolidated Financial Statements.    
3



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months Ended June 30,
 20212020
Operating Activities
Net loss$(505,589)$(654,538)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization140,653 189,815 
Stock-based compensation expense53,904 26,339 
Amortization of upfront incentive consideration30,168 37,289 
Gain on sale of investment(14,532) 
Deferred income taxes(7,292)(44,704)
Amortization of debt discount and issuance costs6,060 3,795 
Pension settlement charge4,347  
Provision for expected credit losses(3,914)47,727 
Dividends received from equity method investments698 1,652 
Loss from discontinued operations344 2,798 
Other238 2,408 
Acquisition termination fee 24,811 
Changes in operating assets and liabilities:
Accounts and other receivables(82,477)178,063 
Prepaid expenses and other current assets(7,301)2,727 
Capitalized implementation costs(9,105)(5,698)
Upfront incentive consideration(2,453)(25,198)
Other assets535 20,096 
Accrued compensation and related benefits30,924 16,784 
Accounts payable and other accrued liabilities25,157 (240,231)
Deferred revenue including upfront solution fees1,175 21,029 
Cash used in operating activities(338,460)(395,036)
Investing Activities
Proceeds from disposition of investments and assets24,874  
Additions to property and equipment(17,240)(39,333)
Other investing activities (4,413)
Cash provided by (used in) investing activities7,634 (43,746)
Financing Activities
Net payment on the settlement of equity-based awards(22,016)(5,241)
Payments on borrowings from lenders(12,590)(37,905)
Dividends paid on preferred stock(10,856) 
Debt prepayment fees and issuance costs (29,473)
Proceeds of borrowings from lenders 1,495,000 
Payments on Tax Receivable Agreement (71,958)
Cash dividends paid to common shareholders (38,544)
Other financing activities842 (3,686)
Cash (used in) provided by financing activities(44,620)1,308,193 
Cash Flows from Discontinued Operations
Cash used in operating activities(1,158)(1,802)
Cash used in discontinued operations(1,158)(1,802)
Effect of exchange rate changes on cash and cash equivalents(947)2,503 
(Decrease) increase in cash and cash equivalents(377,551)870,112 
Cash and cash equivalents at beginning of period1,499,665 436,176 
Cash and cash equivalents at end of period$1,122,114 $1,306,288 
See Notes to Consolidated Financial Statements.
4


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(In thousands, except share data)
 Stockholders’ Equity (Deficit)
 Preferred StockCommon StockAdditional
Paid in
Capital
Treasury StockRetained
Earnings
(Deficit)
Accumulated
Other
Comprehensive Loss
Noncontrolling
Interest
Total
Stockholders'
Equity (Deficit)
 SharesAmountSharesAmountSharesAmount
Balance at December 31, 20203,340,000 $33 338,661,960 $3,387 $2,985,077 21,365,227 $(474,790)$(2,099,624)$(135,957)$7,028 $285,154 
Comprehensive loss— — — — — — — (260,678)215 484 (259,979)
Preferred stock dividends(1)
— — — — — — — (5,428)— — (5,428)
Settlement of stock-based awards— — 2,900,693 29 148 764,947 (12,611)— — — (12,434)
Stock-based compensation expense— — — — 24,426 — — — — — 24,426 
Balance at March 31, 20213,340,000 $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— — — — — — — (245,854)29,571 459 (215,824)
Preferred stock dividends(1)
— — — — — — — (5,428)(5,428)
Settlement of stock-based awards— — 2,377,690 24 214 714,622 (9,820)— — (9,582)
Stock-based compensation expense— — — — 29,478 — — — — — 29,478 
Issuance of common stock upon conversion of exchangeable notes— — 1,269,497 12 9,813 — — — — — 9,825 
Balance at June 30, 20213,340,000 $33 345,209,840 $3,452 $3,049,156 22,844,796 $(497,221)$(2,617,012)$(106,171)$7,971 $(159,792)
(1) Our mandatory convertible preferred stock accumulates cumulative dividends at an annual rate of 6.50%.

 Preferred StockCommon StockAdditional
Paid in
Capital
Treasury StockRetained
Earnings
(Deficit)
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interest
Total
Stockholders'
Equity
 SharesAmountSharesAmountSharesAmount
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 loss— — — — — — — (212,680)(19,303)783 (231,200)
Common stock dividends(1)
— — — — — — — (38,544)— — (38,544)
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 loss— — — — — — — (442,570)11,177 (71)(431,464)
Settlement of stock-based awards— — 587,232 6 168 29,664 (215)— — — (41)
Stock-based compensation expense— — — — 8,762 — — — — — 8,762 
Balance at June 30, 2020 $ 297,130,702 $2,971 $2,344,101 21,258,581 $(474,105)$(1,464,867)$(157,432)$9,300 $259,968 
(1) A quarterly cash dividend of $0.14 per share on our common stock.


See Notes to Consolidated Financial Statements.
5


SABRE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1. General Information
Sabre Corporation is a Delaware corporation formed in December 2006. On March 30, 2007, Sabre Corporation acquired Sabre Holdings Corporation (“Sabre Holdings”). Sabre Holdings is the sole subsidiary of Sabre Corporation. Sabre GLBL Inc. ("Sabre GLBL") is the principal operating subsidiary and sole direct subsidiary of Sabre Holdings. Sabre GLBL or its direct or indirect subsidiaries conduct all of our businesses. 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.
Recent Events—The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus ("COVID-19"), as well as by government directives that have been enacted to slow the spread of the virus. As expected, this pandemic has continued to have a material impact on our consolidated financial results in the second quarter of 2021. 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 second quarter of 2021. Domestic bookings continue to exceed international bookings, however, negatively impacting revenue. With the continued increase in volumes, our incentive consideration costs are also increasing significantly compared to the prior year.
The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates. Our air booking cancellation reserve totaled $18 million as of June 30, 2021, which is consistent with our reserve as of December 31, 2020. Additionally, our allowance for credit losses at June 30, 2021 was $86 million, a decrease of $12 million from December 31, 2020. The provision for credit losses for the six months ended June 30, 2021 decreased $52 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. See Note 5. Credit Losses. Given the uncertainties surrounding the duration and effects of COVID-19, including any variants, 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 and the impacts could be material on our cancellation reserves, credit loss provisions and results of operations.
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 and six months ended June 30, 2021. See Note 8. 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 $1.1 billion as of June 30, 2021, 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.
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: (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. 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. 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. 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. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. 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 six months ended June 30, 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
6


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. No entities are consolidated due to control through operating agreements, financing agreements or as the primary beneficiary of a variable interest entity.
The consolidated financial statements include our accounts after elimination of all significant intercompany balances and transactions. All dollar amounts in the financial statements and the tables in the notes, except per share amounts, are stated in thousands of U.S. dollars unless otherwise indicated. All amounts in the notes reference results from continuing operations unless otherwise indicated.
Use of Estimates—The preparation of these interim financial statements in conformity with GAAP requires that certain amounts be recorded based on estimates and assumptions made by management. Actual results could differ from these estimates and assumptions. Our accounting policies that utilize significant estimates and assumptions include: (i) estimation for revenue recognition and multiple performance obligation arrangements, (ii) determination of the fair value of assets and liabilities acquired in a business combination, (iii) the evaluation of the recoverability of the carrying value of long-lived assets and goodwill, (iv) assumptions utilized to test recoverability of capitalized implementation costs and customer and subscriber advances, (v) judgments in capitalization of software developed for internal use, (vi) the evaluation of uncertainties surrounding the calculation of our tax assets and liabilities, (vii) estimation of the air booking cancellation reserve, and (viii) the evaluation of the allowance for credit losses. 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. Given the uncertainties surrounding the duration and effects of COVID-19, including any variants, we cannot provide assurance that the assumptions used in our estimates will be accurate and the impacts could be material on our cancellation reserves, credit loss provisions and results of operations.
Adoption of New Accounting Standards
In March 2020, the Financial Accounting Standards Board ("FASB") issued updated guidance which provides optional expedients and exceptions for applying U.S. 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. 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 six months ended June 30, 2021 as a result of the adoption of these standards. Our current hedging contracts do not extend past December 31, 2021.
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 recognized within equity in connection with the debt discount and issuance costs was also derecognized. The debt issuance costs that were originally allocated to equity were reclassified to debt and amortized using an effective interest rate of approximately 5%. As a result of derecognizing the net deferred tax liability of $18 million related to the debt discount, the valuation allowance associated with the deferred tax asset increased by $17 million for the year ended December 31, 2020. The impact of the adoption of the guidance on our consolidated statements of operations for the three and six months ended June 30, 2020 was a decrease in interest expense, net of $3 million, and a decrease in benefit for income taxes of $1 million, which decreased our net loss attributable to common stockholders by $2 million. There was a $0.01 increase in earnings per share for the three and six months ended June 30, 2020 as a result of the adoption. The impacts to our consolidated balance sheets as of December 31, 2020 are shown below (in thousands):
December 31, 2020
As ReportedAdjustmentsRecast
Deferred income taxes$72,744 $(548)$72,196 
Long-term debt4,639,782 78,026 4,717,808 
Additional paid-in capital3,052,953 (67,876)2,985,077 
Accumulated deficit(2,090,022)(9,602)(2,099,624)
Total stockholders’ equity362,632 (77,478)285,154 
Total liabilities and stockholders’ equity6,077,722  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
7


consistency among reporting entities. We adopted this standard prospectively in the first quarter of 2021. There was no material impact to our consolidated financial statements for the six months ended June 30, 2021 as a result of this guidance.

2. Revenue from Contracts with Customers
Contract Balances
Revenue recognition for a significant portion of our revenue coincides with normal billing terms, including our transactional revenues, Software-as-a-Service ("SaaS") revenues, and hosted revenues. Timing differences among revenue recognition, unconditional rights to bill, and receipt of contract consideration may result in contract assets or contract liabilities.
The following table presents our assets and liabilities with customers as of June 30, 2021 and December 31, 2020 (in thousands):
AccountConsolidated Balance Sheet LocationJune 30, 2021December 31, 2020
Contract assets and customer advances and discounts(1)
Prepaid expenses and other current assets / other assets, net$82,890 $88,850 
Trade and unbilled receivables, netAccounts receivable, net327,837 253,511 
Long-term trade unbilled receivables, netOther assets, net31,770 38,156 
Contract liabilitiesDeferred revenues / other noncurrent liabilities174,355 176,956 
________________________________

(1) Includes contract assets of $10 million and $8 million for June 30, 2021 and December 31, 2020, respectively.
During the six months ended June 30, 2021, we recognized revenue of approximately $28 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. We evaluate collectability of our accounts receivable based on a combination of factors and record reserves as described further in Note 5. Credit Losses.
Revenue
The following table presents our revenues disaggregated by business (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Distribution$218,245 $(47,949)$370,026 $346,589 
IT Solutions155,140 104,211 292,234 317,261 
Total Travel Solutions373,385 56,262 662,260 663,850 
SynXis Software and Services44,530 26,749 83,260 77,480 
Other6,221 2,253 9,706 10,759 
Total Hospitality Solutions50,751 29,002 92,966 88,239 
Eliminations(4,468)(2,220)(8,074)(10,068)
Total Sabre Revenue$419,668 $83,044 $747,152 $742,021 
In the first and second quarters of 2020, the airline industry experienced an unprecedented number of airline travel reservation cancellations as a result of COVID-19. Revenue for the second quarter of 2020 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. Our air booking cancellation reserve totaled $18 million as of June 30, 2021, which is consistent with our reserve as of December 31, 2020.
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 six months ended June 30, 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
8


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.

3. Restructuring Activities
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 associated with our workforce and leased office space. The strategic realignment and related actions are substantially complete. We do not expect additional restructuring charges associated with these activities to be significant.
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 and six months ended June 30, 2021, adjustments to restructuring charges were immaterial. During the three months ended June 30, 2020, we incurred $48 million in connection with these restructuring activities, of which $17 million is recorded within cost of revenue, excluding technology costs, $20 million is recorded within technology costs and $11 million is recorded within selling, general and administrative costs within our consolidated statement of operations. During the six months ended June 30, 2020, we incurred $73 million in connection with these restructuring activities, of which $22 million is recorded within cost of revenue, excluding technology costs, $31 million is recorded within technology costs and $20 million is recorded within selling, general and administrative costs within our consolidated statement of operations.
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):
Six Months Ended
June 30, 2021
Balance as of December 31, 2020$23,253 
Cash Payments(10,906)
Non-cash adjustments(5,049)
Balance as of June 30, 2021$7,298 

4. Income Taxes
For the six months ended June 30, 2021, we recognized $2 million of income tax expense, representing a negative effective tax rate less than 1%, compared to an income tax benefit of $32 million, representing an effective tax rate of 5% for the six months ended June 30, 2020. The decrease in the effective tax rate for the six months ended June 30, 2021 as compared to the same period in 2020 was primarily due to a higher percent of valuation allowance generated in the six month period on earnings related to the impact of COVID-19 on our results of operations and various discrete items recorded in each of the respective six month periods. The difference between our effective tax rates and the U.S. 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. 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 benefit of its deferred tax assets. On the basis of this evaluation, as of June 30, 2021, a cumulative valuation allowance of $356 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.
We recognize liabilities when we believe that an uncertain tax position may not be fully sustained upon examination by the tax authorities. This evaluation requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. 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 $83 million and $73 million as of June 30, 2021 and December 31, 2020, respectively.
5. Credit Losses
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. We develop and document our methodology used in determining the allowance for credit losses at the portfolio segment level. Within the travel portfolio segment, we identify airlines, hoteliers and travel agencies as each presenting unique risk characteristics associated with historical credit loss patterns
9


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.
We evaluate the collectability of our receivables based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, such as bankruptcy filings or failure to pay amounts due to us or others, we specifically reserve for bad debts against amounts due to reduce the recorded receivable to the amount we reasonably believe will be collected. For all other customers, we record reserves for receivables, including unbilled receivables and contract assets, based on historical experience and the length of time the receivables are past due. 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.
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.