United States securities and exchange commission logo
December 10, 2020
Douglas E. Barnett
Chief Financial Officer
Sabre Corp
3150 Sabre Drive
Southlake, TX 76092
Re: Sabre Corp
Form 10-K for the
Fiscal Year Ended December 31, 2019
Filed February 26,
2020
Form 10-Q for the
Quarter Ended September 30, 2020
Filed November 6,
2020
File No. 001-36422
Dear Mr. Barnett:
We have reviewed your October 13, 2020 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
September 28, 2020 letter.
Form 10-Q for the Quarter Ended September 30, 2020
1. General Information, page 6
1. Per your disclosure,
technology costs include (in part) expensed research and
development labor costs
associated with (y)our development teams responsible for the
maintenance and
enhancement of (y)our existing products and the development of new
products and services.
As defined, technology costs appear to combine research and
development costs with
certain costs of revenue. Please tell us how you considered
presenting research and
development costs separately pursuant to ASC 730-10-50-1 and
Rules 10-01 and
5-03(b)(3) of Regulation S-X.
Douglas E. Barnett
FirstName
Sabre CorpLastNameDouglas E. Barnett
Comapany10,
December NameSabre
2020 Corp
December
Page 2 10, 2020 Page 2
FirstName LastName
2. We note your disclosure on page 3 of your Form 10-K for the year ended
December 31,
2019, that a variety of products and services run on your technology
infrastructure
providing travel applications between customers and travel suppliers.
In this regard, please
tell us why Technology costs, exclusive of research and development
costs, are not
included in cost of revenue pursuant to Rule 5-03(b)(2) of Regulation
S-X.
3. We note your response to comment four, explaining how you combined the
Travel
Network and Airline Solutions segments and their respective reporting
units into a new
combined segment and reporting unit. Provide analysis supporting
aggregation of your
reporting units and address in your response ASC 350-20-35, paragraphs
33 to 38,
specifically considering ASC 280-10-50-11.
2. Revenue from Contracts with Customers
Revenue, page 8
4. We note your response to comment three. Please tell us how you
considered disclosing:
your method for estimating variable consideration in light of the
change in your
estimation of cancellations reserves from a historical view
approach. Refer to ASC
606-10-32-8.
whether the estimate of future cancelled bookings was adjusted
from historical rates
to also consider the impact of the mix between corporate and
leisure bookings and
related incentive consideration (in addition to the mix of
cancellations between
domestic and international bookings).
whether your cancellation reserve is calculated and reported net
of reduction in
incentives. In this regard, we note your statement in your second
quarter earnings
call that "half of the impact of cancellations is offset by
reductions in incentives."
15. Segment Information, page 25
5. We note that your CODM utilizes Adjusted Gross Profit (Loss), Adjusted
Operating Loss
(Income) and Adjusted EBITDA as the measures of profitability to
evaluate segment
performance and allocate resources. If the CODM uses more than one
measure of a
segment's profit or loss, the reported measures shall be those that
management believes
are determined in accordance with the measurement principles most
consistent with those
used in measuring the corresponding amount in your consolidated
financial
statements. Refer to ASC 280-10-50-28 and please tell us your
consideration of disclosing
more than one measure of segment profit or loss.
Definitions of Non-GAAP Financial Measures, page 32
6. We note your response to prior comment 5. It appears that upfront
incentive consideration
and capitalized implementation costs comprise costs of revenue
directly associated with
your contracts with customers. Please explain why it is appropriate to
exclude either or
both of these direct costs from non-GAAP performance measures. We
refer you to
Question 100.04 of the Non-GAAP Compliance & Disclosure
Interpretations.
Douglas E. Barnett
FirstName
Sabre CorpLastNameDouglas E. Barnett
Comapany10,
December NameSabre
2020 Corp
December
Page 3 10, 2020 Page 3
FirstName LastName
7. We note on page 36 that you reconcile Adjusted Net (Loss) Income from
continuing
operations to Net (loss) income attributable to common shareholders
which is its most
comparable GAAP measure. However, you reconcile Adjusted EBITDA and
Adjusted
Operating (Loss) Income to Adjusted Net (Loss) Income from Continuing
Operations and
Adjusted EBITDA respectively, which are non-GAAP measures. Please
provide separate
reconciliations of Adjusted EBITDA and Adjusted Operating (Loss)
Income to their most
directly comparable GAAP measures. Refer to Item 10(e)(1)(i)(B) of
Regulation S-K.
8. On pages 37 to 39, you present Adjusted Gross Profit (Loss). Please
reconcile Adjusted
Gross Profit (Loss) to a GAAP Gross Profit which is the most directly
comparable GAAP
measure.
Liquidity and Capital Resources, page 46
9. In future filings, please quantify and summarize the significant cash
outflows that have
impacted your liquidity for the current period and those items that
will entail any other
known significant future uses of cash. In this regard, we note in your
third quarter 2020
earnings call, that in addition to $20 million in severance payments
during the period and
$13 million net cash outflows to carriers resulting from previous
booking cancellations,
your fourth quarter free cash flow will be negatively impacted by
approximately $90
million due to "seasonality of cash interest payments, employee cash
benefits which will
now be paid in Q4 2020, and additional severance payments "to conclude
the bulk of the
severance payments associated with the actions taken in 2020." Please
consider a
discussion of such items under "Operating Activities" on page 50 in
lieu of a recitation of
the changes in the statements of cash flows.
Critical Accounting Estimates, page 51
10. We note your response to comment six. Please explain to us:
how you considered revising your March 31, 2020 Travel Network's
forecasts
underlying the discounted cash flows used to determine fair value
in view of
subsequent period actual revenues and trends known to management as
of September
30, 2020.
the basis for your assumption of a "reduced level of risk",
resulting in a lower risk-
adjusted discount rate of 11% within the sensitivity analysis of
the Airline Solutions
reporting unit in the wake of the Covid-19 epidemic. Please tell us
the basis for the
change in the assumed longer recovery periods and lower growth
rates in the post-
recovery periods and the appropriateness of those assumptions
through the period
ended September 30, 2020.
11. In future filings, please consider disclosure of the following in
connection with your
estimates of the fair values of your reporting units,
your assumptions regarding the magnitude and duration of the
impact of COVID-19
on revenues and operations,
the duration of the recovery period and changes in the growth
rates,
Douglas E. Barnett
Sabre Corp
December 10, 2020
Page 4
your assumptions regarding the discount and terminal growth
rates,
results of your sensitivity analysis, including your
risk-reduction strategies where
applicable,
your basis for determining your market capitalization during
the measurement period,
the assumptions and methods used to support the market
capitalization to fair value
reconciliation of your reporting units,
changes in your estimates, assumptions and methods during each
subsequent
reporting period.
If reasonably likely changes in your assumptions would have a material
effect on the
financial condition or operating performance of the company, please
disclose and quantify
the impact that could result, given the range of reasonably likely
outcomes. Refer to the
CF Disclosure Guidance Topic 9A Coronavirus (COVID-19) Disclosure
Considerations Regarding Operations, Liquidity, and Capital Resources
and Section V.
Critical Accounting Estimates, Release No. 33-8350 "Interpretation:
Commission
Guidance Regarding Management's Discussion and Analysis of Financial
Condition and
Results of Operations."
You may contact Kathryn Jacobson, Senior Staff Accountant at (202)
551-3365 or Craig
Wilson, Senior Adviser at (202) 551-3226 if you have questions regarding
comments on the
financial statements and related matters.
FirstName LastNameDouglas E. Barnett Sincerely,
Comapany NameSabre Corp
Division of
Corporation Finance
December 10, 2020 Page 4 Office of
Technology
FirstName LastName