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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 March 31, 2023
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 April 28, 2023, 332,054,875 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 March 31,
 20232022
Revenue $742,695 $584,910 
Cost of revenue, excluding technology costs307,042 223,034 
Technology costs271,438 273,730 
Selling, general and administrative164,428 167,678 
Operating loss(213)(79,532)
Other (expense) income:  
Interest expense, net(99,784)(61,058)
Loss on extinguishment of debt (3,533)
Equity method income (loss)423 (170)
Other, net2,407 191,241 
Total other (expense) income, net(96,954)126,480 
(Loss) income from continuing operations before income taxes(97,167)46,948 
Provision (benefit) for income taxes2,199 (596)
(Loss) income from continuing operations(99,366)47,544 
(Loss) income from discontinued operations, net of tax(403)134 
Net (loss) income(99,769)47,678 
Net (loss) income attributable to noncontrolling interests(835)272 
Net (loss) income attributable to Sabre Corporation(98,934)47,406 
Preferred stock dividends5,346 5,346 
Net (loss) income attributable to common stockholders$(104,280)$42,060 
Basic net (loss) income per share attributable to common stockholders:
(Loss) income from continuing operations$(0.32)$0.13 
Net (loss) income per common share$(0.32)$0.13 
Diluted net (loss) income per share attributable to common stockholders:  
(Loss) income from continuing operations$(0.32)$0.12 
Net (loss) income per common share$(0.32)$0.12 
Weighted-average common shares outstanding:  
Basic328,928 323,658 
Diluted328,928 409,378 
See Notes to Consolidated Financial Statements.
1


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
 Three Months Ended March 31,
 20232022
Net (loss) income$(99,769)$47,678 
Other comprehensive income, net of tax:
Foreign currency translation adjustments ("CTA")1,576 (1,287)
Retirement-related benefit plans:
Net actuarial gain, net of taxes of $, $
 1,671 
Amortization of prior service credits, net of taxes of $, $
(358)(358)
Amortization of actuarial losses, net of taxes of $, $
1,621 1,783 
Net change in retirement-related benefit plans, net of tax1,263 3,096 
Derivatives:
Unrealized gains, net of taxes of $, $
(296) 
Reclassification adjustment for realized (gains) losses, net of taxes of $, $
(989) 
Net change in derivatives, net of tax(1,285) 
Share of other comprehensive (loss) income of equity method investments(302)655 
Other comprehensive income1,252 2,464 
Comprehensive (loss) income(98,517)50,142 
Less: Comprehensive loss (income) attributable to noncontrolling interests835 (272)
Comprehensive (loss) income attributable to Sabre Corporation$(97,682)$49,870 
 
See Notes to Consolidated Financial Statements.
2



SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 March 31, 2023December 31, 2022
Assets  
Current assets  
Cash and cash equivalents$817,075 $794,888 
Restricted cash21,035 21,035 
Accounts receivable, net of allowance for credit losses of $47,632 and $38,815
414,458 353,587 
Prepaid expenses and other current assets189,811 191,979 
Total current assets1,442,379 1,361,489 
Property and equipment, net of accumulated depreciation of $1,908,866 and $1,939,215
230,759 229,419 
Equity method investments22,524 22,401 
Goodwill2,543,251 2,542,087 
Acquired customer relationships, net of accumulated amortization of $809,170 and $803,026
232,726 238,756 
Other intangible assets, net of accumulated amortization of $775,426 and $771,611
167,927 171,498 
Deferred income taxes38,378 38,892 
Other assets, net348,064 358,333 
Total assets$5,026,008 $4,962,875 
Liabilities and stockholders’ deficit  
Current liabilities  
Accounts payable$192,306 $171,068 
Accrued compensation and related benefits88,575 122,022 
Accrued subscriber incentives235,970 218,761 
Deferred revenues67,983 66,503 
Other accrued liabilities255,342 213,737 
Current portion of debt23,480 23,480 
Total current liabilities863,656 815,571 
Deferred income taxes28,093 38,629 
Other noncurrent liabilities251,813 264,411 
Long-term debt4,831,430 4,717,091 
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests15,564  
Stockholders’ deficit  
Preferred stock, $0.01 par value, 225,000 authorized, 3,290 issued and outstanding as of March 31, 2023 and December 31, 2022; aggregate liquidation value of $329,000 as of March 31, 2023 and December 31, 2022
33 33 
Common Stock: $0.01 par value; 1,000,000 authorized shares; 358,108 and 353,436 shares issued, 331,909 and 328,542 shares outstanding at March 31, 2023 and December 31, 2022, respectively
3,581 3,534 
Additional paid-in capital3,215,580 3,198,580 
Treasury Stock, at cost, 26,199 and 24,895 shares at March 31, 2023 and December 31, 2022, respectively
(519,504)(514,215)
Accumulated deficit(3,610,808)(3,506,528)
Accumulated other comprehensive loss(64,479)(65,731)
Noncontrolling interest11,049 11,500 
Total stockholders’ deficit(964,548)(872,827)
Total liabilities and stockholders’ deficit$5,026,008 $4,962,875 

See Notes to Consolidated Financial Statements.    
3


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended March 31,
 20232022
Operating Activities
Net (loss) income$(99,769)$47,678 
Adjustments to reconcile net (loss) income to cash used in operating activities:
Depreciation and amortization40,319 50,108 
Deferred income taxes(19,219)(2,570)
Stock-based compensation expense17,005 27,605 
Amortization of upfront incentive consideration8,969 11,325 
Provision for expected credit losses8,937 1,997 
Amortization of debt discount and issuance costs5,216 3,438 
Loss on investment fair value adjustment960  
Other419 (485)
Income from discontinued operations403 (134)
Gain on sale of assets and investments (192,151)
Loss on extinguishment of debt 3,533 
Changes in operating assets and liabilities:
Accounts and other receivables(73,769)(106,655)
Prepaid expenses and other current assets5,512 (20,631)
Capitalized implementation costs(2,326)(4,481)
Upfront incentive consideration(1,338)(700)
Other assets1,387 23,353 
Accrued compensation and related benefits(31,563)(59,748)
Accounts payable and other accrued liabilities63,835 72,890 
Deferred revenue including upfront solution fees2,613 6,545 
Cash used in operating activities(72,409)(139,083)
Investing Activities
Additions to property and equipment(18,110)(17,403)
Net proceeds from dispositions 392,268 
Cash (used in) provided by investing activities(18,110)374,865 
Financing Activities
Proceeds from borrowings under AR Facility115,000  
Proceeds from sale of redeemable shares in subsidiary16,000  
Payments on borrowings from lenders(5,870)(625,296)
Dividends paid on preferred stock(5,346)(5,346)
Net payment on the settlement of equity-based awards(5,294)(10,309)
Debt prepayment fees and issuance costs(2,253)(10,185)
Other financing activities(298)301 
Proceeds of borrowings from lenders 625,000 
Cash provided by (used in) financing activities111,939 (25,835)
Cash Flows from Discontinued Operations
Cash provided by (used in) operating activities52 (1,680)
Cash provided by (used in) discontinued operations52 (1,680)
Effect of exchange rate changes on cash, cash equivalents and restricted cash715 (205)
Increase in cash, cash equivalents and restricted cash22,187 208,062 
Cash, cash equivalents and restricted cash at beginning of period815,923 999,391 
Cash, cash equivalents and restricted cash at end of period$838,110 $1,207,453 
Non-cash additions to property and equipment$5,999 $2,392 
See Notes to Consolidated Financial Statements.
4


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(In thousands, except share data)
 Stockholders’ Deficit
 Preferred StockCommon StockAdditional
Paid in
Capital
Treasury StockRetained DeficitAccumulated
Other
Comprehensive Loss
Noncontrolling
Interest
Total
Stockholders'
Equity (Deficit)
 SharesAmountSharesAmountSharesAmount
Balance at December 31, 20223,290,000 $33 353,436,503 $3,534 $3,198,580 24,894,998 $(514,215)$(3,506,528)$(65,731)$11,500 $(872,827)
Comprehensive loss— — — — — — — (98,934)1,252 (451)(98,133)
Preferred stock dividends(1)
— — — — — — — (5,346)(5,346)
Settlement of stock-based awards— — 4,671,781 47 (5)1,304,145 (5,289)— — — (5,247)
Stock-based compensation expense— — — — 17,005 — — — — — 17,005 
Balance at March 31, 20233,290,000 $33 358,108,284 $3,581 $3,215,580 26,199,143 $(519,504)$(3,610,808)$(64,479)$11,049 $(964,548)

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

Stockholders’ Equity (Deficit)
 Preferred StockCommon StockAdditional
Paid in
Capital
Treasury StockRetained DeficitAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interest
Total
Stockholders'
Equity (Deficit)
 SharesAmountSharesAmountSharesAmount
Balance at December 31, 20213,290,000 $33 346,430,421 $3,464 $3,115,719 22,929,668 $(498,141)$(3,049,695)$(80,287)$9,190 $(499,717)
Comprehensive income— — — — — — — 47,406 2,464 272 50,142 
Preferred stock dividends(1)
— — — — — — — (5,346)— — (5,346)
Settlement of stock-based awards— — 3,883,688 39 (9)1,077,178 (10,300)— — — (10,270)
Stock-based compensation expense— — — — 27,605 — — — — — 27,605 
Other— — — — — — — — — (119)(119)
Balance at March 31, 20223,290,000 $33 350,314,109 $3,503 $3,143,315 24,006,846 $(508,441)$(3,007,635)$(77,823)$9,343 $(437,705)

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

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 direct 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, including variants ("COVID-19"). The travel ecosystem has shifted over the past few years, including through the COVID-19 pandemic, resulting in the changing needs of our airline, hotel and agency customers. This pandemic has resulted in continued material headwinds for our consolidated financial results in 2022 and through the first quarter of 2023. Despite the continued impacts of the COVID-19 pandemic on our business and global travel volumes, as travel restrictions have been relaxed and travel patterns return, we have seen gradual improvement in our key volume metrics during 2022 and through the first quarter of 2023. With the continued increase in volumes, our incentive consideration costs are also increasing significantly compared to previous periods.
We believe our cash position and the liquidity measures we have taken will continue to provide flexibility as we manage through the global economic recovery from the COVID-19 pandemic. As a result, 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.
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 months ended March 31, 2023 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2023. 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 17, 2023.
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 17, 2023. 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.
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Adoption of New Accounting Standards
In March 2022, the Financial Accounting Standards Board ("FASB") issued updated guidance on derivatives and hedging which allows entities to apply fair value hedging to closed portfolios of prepayable financial assets without having to consider prepayment risk or credit risk when measuring the assets. The amendments allow multiple hedged layers to be designated for a single closed portfolio for financial assets or one or more beneficial interests secured by a portfolio of financial instruments. As a result, an entity can achieve hedge accounting for hedges of a greater proportion of the interest rate risk inherent in the assets included in the closed portfolio, further aligning hedge accounting with risk management strategies. The standard is effective for public entities for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted this standard in the first quarter of 2022, which did not have a material impact on our consolidated financial statements.
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 March 31, 2023 and December 31, 2022 (in thousands).
AccountConsolidated Balance Sheet LocationMarch 31, 2023December 31, 2022
Contract assets and customer advances and discounts(1)
Prepaid expenses and other current assets / other assets, net$52,869 $55,473 
Trade and unbilled receivables, netAccounts receivable, net412,349 352,214 
Long-term trade unbilled receivables, netOther assets, net16,624 16,129 
Contract liabilitiesDeferred revenues / other noncurrent liabilities117,764 115,151 
______________________
(1) Includes contract assets of $13 million and $12 million for March 31, 2023 and December 31, 2022, respectively.
During the three months ended March 31, 2023, we recognized revenue of approximately $15 million from contract liabilities that existed as of January 1, 2023. Our long-term trade unbilled receivables, net relate to fixed license fees billed 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 6. Credit Losses.
Revenue
The following table presents our revenues disaggregated by business (in thousands):
Three Months Ended March 31,
20232022
Distribution$525,886 $342,888 
IT Solutions151,555 191,110 
Total Travel Solutions677,441 533,998 
SynXis Software and Services66,514 49,734 
Other7,298 6,270 
Total Hospitality Solutions73,812 56,004 
Eliminations(8,558)(5,092)
Total Sabre Revenue$742,695 $584,910 
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, 2022, the impact on revenue recognized in the current period from performance obligations partially or fully satisfied in the previous period is $24 million, which is primarily due to the recognition of revenue that was previously deferred but became recognizable due to a change in facts and circumstances associated with an IT Solutions customer located in Russia. It is no longer considered probable that this revenue will be reversed and this amount was fully paid by the customer.
Our air booking cancellation reserve totaled $13 million and $11 million as of March 31, 2023, and December 31, 2022, respectively.
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
7


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. Acquisitions and Dispositions
Conferma
In August 2022, we completed the acquisition of Conferma Limited ("Conferma"), a virtual payments technology company, to expand our investment in technology for the payments ecosystem in the travel industry. We acquired all of the outstanding stock and ownership interest of Conferma through the exercise of a call option, for net cash of $62 million and the conversion of a pre-existing loan receivable into share capital of $11 million. We recognized a gain of approximately $4 million upon conversion of the loan for the difference between the carrying value and fair value of the loan, which is recorded to Other, net within our results of operations. Conferma is part of our Travel Solutions segment. The accounting related to tax liabilities remains subject to finalization due to ongoing analysis as of March 31, 2023. In February 2023, we sold 19% of the share capital of the direct parent company of Conferma to a third party for proceeds of $16 million resulting in a non-controlling interest from that date. See Note 4. Redeemable Noncontrolling Interest for further details.
AirCentre Disposition
On October 28, 2021, we announced that we entered into an agreement with a third party to sell our suite of flight and crew management and optimization solutions, which represents our AirCentre airline operations portfolio. The assets and liabilities associated with the AirCentre portfolio are presented as held for sale on our consolidated balance sheets as of December 31, 2021. On February 28, 2022, we completed the sale of AirCentre to a third party for net cash proceeds of $392 million. The operating results of AirCentre are included within Travel Solutions for all periods presented through the date of sale. The net assets of AirCentre disposed of primarily included goodwill of $146 million, working capital of $34 million, and other assets, net of $25 million. We recorded a pre-tax gain on sale of approximately $192 million (after-tax $121 million) in Other, net in our consolidated statements of operations for the three months ended March 31, 2022, which was subsequently adjusted in the second quarter of 2022 by $12 million due to contingencies identified in connection with the sale.

4. Redeemable Noncontrolling Interest
On February 1, 2023, Sabre sold common shares, representing a 19% interest in Conferma’s direct parent (referred to as “Conferma”), to a third party for cash consideration of $16 million. In connection with the sale, we entered into a governing agreement which requires us under limited conditions to redeem the 19% interest in Conferma, if requested, for the original purchase price of $16 million. We currently do not believe it is probable that the noncontrolling interest will become redeemable, given the remote likelihood of the applicable conditions being satisfied.
As the common shares are redeemable upon the occurrence of conditions not solely within our control, we recorded the noncontrolling interest as redeemable and classified it as temporary equity within our consolidated balance sheet initially at fair value. The noncontrolling interest is adjusted each reporting period for loss or income attributable to the noncontrolling interest. As of March 31, 2023, the redeemable noncontrolling interest is $16 million.
The following table shows the changes in redeemable noncontrolling interest in temporary equity of consolidated subsidiary during the period ended March 31, 2023 (in thousands):
Three Months Ended
March 31, 2023
Proceeds from sale of redeemable noncontrolling interest$16,000 
Net loss attributable to redeemable noncontrolling interest(436)
Redeemable noncontrolling interest, end of period$15,564 
5. Income Taxes

    For the three months ended March 31, 2023, we recognized a $2 million income tax expense, representing an effective tax rate of less than 1%, compared to an income tax benefit of $1 million, representing an effective tax rate of less than 1% for the three months ended March 31, 2022. The effective tax rate remained relatively flat for the three months ended March 31, 2023 as compared to the same period in 2022 primarily due to an increase in valuation allowance recorded in the current period 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 valuation allowances, our geographic mix of taxable income in various tax jurisdictions, tax permanent differences and tax credits.
8


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 March 31, 2023, a cumulative valuation allowance of $499 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 $70 million and $76 million as of March 31, 2023 and December 31, 2022, respectively.
6. 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, 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. Our allowance for credit losses for the three months ended March 31, 2023 for our portfolio segment is summarized as follows (in thousands):
Three Months Ended
March 31, 2023
Balance at December 31, 2022$38,815 
Provision for expected credit losses8,937 
Write-offs(242)
Other122 
Balance at March 31, 2023$47,632 
Our provision for expected credit losses for the three months ended March 31, 2023 increased $7 million to a provision of $9 million from a provision of $2 million in the same period in the prior year. 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 actual write-offs may vary from our estimates.
9


7. Debt
As of March 31, 2023 and December 31, 2022, our outstanding debt included in our consolidated balance sheets totaled $4,855 million and $4,741 million, respectively, which are net of debt issuance costs of $41 million and $44 million, respectively, and unamortized discounts of $52 million and $54 million, respectively. The following table sets forth the face values of our outstanding debt as of March 31, 2023 and December 31, 2022 (in thousands):

 RateMaturityMarch 31, 2023December 31, 2022
Senior secured credit facilities:    
2021 Term Loan B-1
L + 3.50%
December 2027$396,930 $397,940 
2021 Term Loan B-2
L + 3.50%
December 2027632,730 634,340 
2022 Term Loan B-1
S(1) + 4.25%
June 2028618,750 620,313 
2022 Term Loan B-2
S(1) + 5.00%
June 2028671,625 673,313 
AR Facility(2)
S(1) + 2.25%
January 2025115,000  
9.25% senior secured notes due 2025
9.25%April 2025775,000 775,000 
7.375% senior secured notes due 2025
7.375%September 2025850,000 850,000 
4.00% senior exchangeable notes due 2025
4.00%April 2025333,220 333,220 
11.25% senior secured notes due 2027
11.25%December 2027555,000 555,000 
Face value of total debt outstanding  4,948,255 4,839,126 
Less current portion of debt outstanding(23,480)(23,480)
Face value of long-term debt outstanding  $4,924,775 $4,815,646 
______________________
(1) Represents the Secured Overnight Financing Rate ("SOFR").
(2)The AR Facility (as defined below) is subject to certain "springing" maturity conditions; the maturity may extend to February 2026 at the latest.
We had outstanding letters of credit totaling $11 million and $12 million as of March 31, 2023 and December 31, 2022, respectively, which were secured by a $20 million cash collateral deposit account.
Senior Secured Credit Facilities
Refinancing Transactions
On March 9, 2022, we entered into an amendment to refinance another portion of our then-outstanding Term Loan B facility (the "March 2022 Refinancing"). Our Senior Secured Credit Facility is governed by the Amended and Restated Credit Agreement including the Sixth Term A Loan Refinancing and Incremental Amendments entered into in December 2020 and all preceding amendments. We incurred no additional indebtedness as a result of the March 2022 Refinancing, other than amounts covering discounts and certain fees and expenses. The March 2022 Refinancing included the application of the proceeds of a new $625 million term loan “B” facility (the “2022 Term Loan B-1 Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $623 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement. The remaining proceeds, net of a discount of $1 million, were used to pay $1 million in other fees and expenses. We incurred an additional discount of $5 million and other fees of $3 million which were funded with cash on hand. We recognized a loss on extinguishment of debt in connection with the March 2022 Refinancing during the year ended December 31, 2022, of $4 million and debt modification costs for financing fees of $1 million recorded to Other, net. The 2022 Term Loan B-1 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-1 Facility after 12 months or to prepay or repay at a 101 premium before that date. The interest rates on the 2022 Term Loan B-1 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.
On August 15, 2022, we entered into an amendment to refinance a portion of the Term Loan B facility (the "August 2022 Refinancing"). We incurred no additional indebtedness as a result of the August 2022 Refinancing, other than amounts covering discounts and certain fees and expenses. The August 2022 Refinancing included the application of the proceeds of a new $675 million term loan “B” facility (the “2022 Term Loan B-2 Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $647 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement. The remaining proceeds, net of a discount of $25 million, were used to pay $3 million in other fees and expenses. We incurred an additional discount of $9 million and other fees of $2 million which were funded with cash on hand. We recognized debt modification costs for financing fees in connection with the August 2022 Refinancing during the year ended December 31, 2022, of $5 million recorded to Other, net. No loss on extinguishment of debt was recorded as a result of the August 2022 Refinancing. The 2022 Term Loan B-2 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-2 Facility after 12 months or to prepay or repay at a 101 premium before that date. The interest rates on the 2022 Term Loan B-2 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.
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On December 6, 2022, we used the proceeds of the December 2027 Notes issuance to redeem the remaining principal balance on the Term Loan B of $536 million, plus $1 million of accrued interest (the “December 2022 Refinancing”). We recognized a loss on extinguishment of debt of $1 million during the year ended December 31, 2022 in connection the December 2022 Refinancing, which consisted of the write-off of unamortized debt issuance costs and discount of $1 million.
Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends. We are further required to pay down the term loans with proceeds from certain asset sales, if not reinvested into the business within 15 months, as defined in the Amended and Restated Credit Agreement. As of March 31, 2023, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.
Senior Secured Notes
On December 6, 2022, Sabre GLBL entered into a new debt agreement consisting of $555 million aggregate principal amount of 11.250% senior secured notes due 2027 (the “December 2027 Notes”). The December 2027 Notes were issued at a discount of 1.866%. The December 2027 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 December 2027 Notes bear interest at a rate of 11.250% per annum and interest payments are due semi-annually in arrears on June 15 and December 15 of each year, beginning June 15, 2023. The December 2027 Notes mature on December 15, 2027. The net proceeds of $545 million received from the sale of the December 2027 Notes, net of a discount of $10 million, were used to repay approximately $536 million principal amount of debt under the Term Loan B, plus $1 million of accrued interest. The remaining proceeds of $8 million, plus cash on hand, were used to pay $10 million in underwriting fees and commissions, and other expenses.
AR Facility
On February 14, 2023, Sabre Securitization, LLC, our indirect, consolidated subsidiary and a special purpose entity (“Sabre Securitization”), entered into a three-year committed accounts receivable securitization facility (the “AR Facility”) of up to $200 million with PNC Bank, N.A. On March 30, 2023, we borrowed $115 million under the AR Facility. These proceeds are being used for general corporate purposes.
The amount available for borrowings at any one time under the AR Facility is limited to a borrowing base calculated based on the outstanding balance of eligible receivables, subject to certain reserves. Borrowings under the AR Facility bear interest at a rate equal to SOFR, subject to a 0% floor, plus a drawn fee, initially in the amount of 2.25%. The drawn fee varies based on our leverage, and Sabre Securitization also pays a fee on the undrawn committed amount of the AR Facility. Interest and fees payable by Sabre Securitization under the AR Facility are due monthly. Net debt issuance costs related to our AR Facility are $2 million and are recorded in other assets, net in our consolidated financial statements.
The AR Facility is scheduled to terminate on February 13, 2026, unless extended in accordance with its terms. The AR Facility is subject to a springing maturity date should certain events occur in relation to material indebtedness (as defined in the AR Facility) of ours, Sabre Securitization and certain other subsidiaries.
In connection with the AR Facility, certain of our subsidiaries (the “Originators”) have sold and contributed, and will continue to sell or contribute, substantially all of their accounts receivable and certain related assets (collectively, the "Receivables") to Sabre Securitization to be held as collateral for borrowings under the AR Facility. Sabre Securitization’s assets are not available to satisfy the obligations of Sabre Corporation or any of its affiliates. Under the terms of the AR Facility, the lenders under the AR Facility would have a senior priority claim to the assets of Sabre Securitization, which will primarily consist of the Receivables of the Originators participating in the AR Facility. As of March 31, 2023, $415 million of Receivables are held as assets by Sabre Securitization, consisting of $401 million of accounts receivable, net of allowance for credit losses and $14 million of other assets, net in our consolidated balance sheet.
The AR Facility is accounted for as a secured borrowing on a consolidated basis, rather than a sale of assets; as a result, (i) Receivables balances pledged as collateral are presented as assets and the borrowings are presented as liabilities on our consolidated balance sheets, (ii) our consolidated statements of operations reflect the associated charges for bad debt expense (a component of general and administrative expenses) related to the pledged Receivables and interest expense associated with the AR Facility and (iii) receipts from customers related to the underlying Receivables are reflected as operating cash flows and borrowings and repayments under the AR Facility are reflected as financing cash flows within our consolidated statements of cash flows. The receivables and other assets of Sabre Securitization are not available to satisfy creditors of any entity other than Sabre Securitization.
The AR Facility contains certain customary representations, warranties, affirmative covenants, and negative covenants, subject to certain cure periods in some cases, including the eligibility of the Receivables being sold by the Originators and securing the loans made by the lenders, as well as customary reserve requirements, events of default, termination events, and servicer defaults. As of March 31, 2023, we were in compliance with and expect to be in compliance with the financial covenants of the AR Facility for at least the next twelve months.
Exchangeable Notes
On April 17, 2020, Sabre GLBL entered into a new debt agreement consisting of $345 million aggregate principal amount of 4.000% senior exchangeable notes due 2025 (the “Exchangeable Notes”). The Exchangeable Notes are senior, unsecured
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obligations of Sabre GLBL, accrue interest payable semi-annually in arrears and mature on April 15, 2025, unless earlier repurchased or exchanged in accordance with specified circumstances and terms of the indenture governing the Exchangeable Notes. During the year ended December 31, 2021, a certain holder elected to exchange $10 million of the Exchangeable Notes for 1,269,497 shares of common stock, which we elected to settle in shares of our common stock. Additionally, certain holders elected to exchange $2 million of the Exchangeable Notes for $3 million in cash, which we elected to settle in cash. As of March 31, 2023, we have $333 million aggregate principal amount of Exchangeable Notes outstanding.
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:
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;
upon the occurrence of certain corporate events or distributions on our common stock, including but not limited to a “Fundamental Change” (as defined in the indenture governing the notes);
upon the occurrence of specified corporate events; or
on or after October 15, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, April 15, 2025.
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 March 31, 2023, none of the conditions allowing holders of the Exchangeable Notes to exchange have been met.
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. The exchange rate is subject to anti-dilution and other adjustments. Upon conversion, Sabre GLBL will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of common stock, at our election. If a “Make-Whole Fundamental Change” (as defined in the Exchangeable Notes Indenture) occurs with respect to any Exchangeable Note and the exchange date for the exchange of such Exchangeable Note occurs during the related “Make-Whole Fundamental Change Exchange Period” (as defined in the Exchangeable Notes Indenture), then, subject to the provisions set forth in the Exchangeable Notes Indenture, the exchange rate applicable to such exchange will be increased by a number of shares set forth in the table contained in the Exchangeable Notes Indenture, based on a function of the time since origination and our stock price on the date of the occurrence of such Make-Whole Fundamental Change. 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.
The following table sets forth the carrying value of the Exchangeable Notes as of March 31, 2023 and December 31, 2022, (in thousands):
March 31, 2023December 31, 2022
Principal$333,220 $333,220 
Less: Unamortized debt issuance costs5,056 5,642 
Net carrying value$328,164 $327,578 

The following table sets forth interest expense recognized related to the Exchangeable Notes for the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended March 31,
20232022
Contractual interest expense$3,332 $3,332 
Amortization of issuance costs586 559 

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8. Derivatives
Hedging Objectives—We are exposed to certain risks relating to ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk and interest rate risk. Forward contracts on various foreign currencies are entered into to manage the foreign currency exchange rate risk on operational expenditures' exposure denominated in foreign currencies. Interest rate swaps are entered into to manage interest rate risk associated with our floating-rate borrowings.
In accordance with authoritative guidance on accounting for derivatives and hedging, we designate foreign currency forward contracts as cash flow hedges on operational exposure and interest rate swaps as cash flow hedges of floating-rate borrowings.
Cash Flow Hedging Strategy—To protect against the reduction in value of forecasted foreign currency cash flows, we hedge portions of our revenues and expenses denominated in foreign currencies with forward contracts. For example, when the dollar strengthens significantly against the foreign currencies, the decline in present value of future foreign currency expense is offset by losses in the fair value of the forward contracts designated as hedges. Conversely, when the dollar weakens, the increase in the present value of future foreign currency expense is offset by gains in the fair value of the forward contracts. Due to the uncertainty driven by the COVID-19 pandemic on our foreign currency exposures, we have paused entering into new cash flow hedges of forecasted foreign currency cash flows until we have more clarity regarding the recovery trajectory and its impacts on net exposures.
We enter into interest rate swap agreements to manage interest rate risk exposure. The interest rate swap agreements modify our exposure to interest rate risk by converting floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense and net earnings. These agreements involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreements without an exchange of the underlying principal amount.
For derivative instruments that are designated and qualify as cash flow hedges, the effective portions and ineffective portions of the gain or loss on the derivative instruments, and the hedge components excluded from the assessment of effectiveness, are reported as a component of other comprehensive income (loss) (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. Cash flow hedges are classified in the same category in the consolidated statements of cash flows as the items being hedged and gains and losses on the derivative financial instruments are reported in cash provided by (used in) operating activities within the consolidated statements of cash flows. Derivatives not designated as hedging instruments are carried at fair value with changes in fair value reflected in Other, net in the consolidated statements of operations.
Forward Contracts—In order to hedge our operational expenditures' exposure to foreign currency movements, we were a party to certain foreign currency forward contracts that extended until December 31, 2020. We designated these instruments as cash flow hedges. As of March 31, 2023 and December 31, 2022, we had no unsettled forward contracts.
Interest Rate Swap Contracts—We had no interest rate swaps outstanding during the three months ended March 31, 2022. Interest rate swaps outstanding during the three months ended March 31, 2023, are as follows:
Notional AmountInterest Rate
Received
Interest Rate PaidEffective DateMaturity Date
Designated as Hedging Instrument
$200 million
1 month SOFR(1)
1.71%(2)
April 30, 2022December 31, 2023
$150 million
1 month SOFR(1)
2.79%(3)
June 30, 2022December 31, 2023
______________________
(1)    Subject to a 0.5% floor.
(2)    Fixed fee of 1.71% effective April 30, 2022, and expiring December 30, 2022, and 3.09% effective December 31, 2022, and expiring December 31, 2023.
(3)    Fixed fee of 2.79% effective June 30, 2022, and expiring December 30, 2022, and 3.98% effective December 31, 2022, and expiring December 31, 2023.

In April 2022, we entered into an interest rate swap to hedge the interest payments associated with $200 million of the floating-rate 2022 Term Loan B-1 for the years 2022 and 2023. In June 2022, we entered into an interest rate swap to hedge the interest payments associated with $150 million of the floating-rate 2022 Term Loan B-1 for the years 2022 and 2023. We designated these swaps as cash flow hedges.
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The estimated fair values of our derivatives designated as hedging instruments as of March 31, 2023 and December 31, 2022 are as follows (in thousands):
 Derivative Assets
  Fair Value as of
Derivatives Designated as Hedging InstrumentsConsolidated Balance Sheet LocationMarch 31, 2023December 31, 2022
Interest rate swaps