Use these links to rapidly review the documentINDEX SABRE HOLDINGS CORPORATION

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|ý                                             | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Quarterly Period Ended June 30, 2002.
|OR                                           
|o                                             | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From  To

Commission file number 1-12175.

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GRAPHICSABRE HOLDINGS CORPORATION(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of incorporation or organization)

75-2662240(I.R.S. Employer Identification No.)3150 Sabre Drive Southlake, Texas(Address of principal executive offices)

76092(Zip Code)


Registrant's telephone number, including area code(682) 605-1000

Not Applicable(Former name, former address and former fiscal year, if changed since last report)

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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 during the
preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class A
Common Stock, $.01 par value144,871,129 as of August 8, 2002

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INDEX  SABRE HOLDINGS CORPORATION



|PART I:   | FINANCIAL INFORMATION                                                                   |  | 3 
|--------- | --------------------------------------------------------------------------------------- |  | --
|Item 1.   | Financial Statements (Unaudited)                                                        |  | 3 
|          | Consolidated Balance SheetsJune 30, 2002 and December 31, 2001                         |  | 3 
|          | Consolidated Statements of IncomeThree and six months ended June 30, 2002 and 2001     |  | 4 
|          | Condensed Consolidated Statement of Stockholders' EquitySix months ended June 30, 2002 |  | 5 
|          | Consolidated Statements of Cash FlowsSix months ended June 30, 2002 and 2001           |  | 6 
|          | Notes to Consolidated Financial Statements                                              |  | 7 
|Item 2.   | Management's Discussion and Analysis of Financial Condition and Results of Operations   |  | 28
|PART II:  | OTHER INFORMATION                                                                       |  | 40
|Item 1.   | Legal Proceedings                                                                       |  | 40
|Item 4.   | Submission of Matters to a Vote of Security Holders                                     |  | 40
|Item 5.   | Other Information                                                                       |  | 41
|Item 6.   | Exhibits and Reports on Form 8-K                                                        |  | 42
|SIGNATURE |                                                                                         |  | 43

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SABRE HOLDINGS CORPORATION  CONSOLIDATED BALANCE SHEETS  (Unaudited) (In thousands)

|                                           |                                                                                                                                                                  | June 30,
2002                              |         | December 31, 2001 |          
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | ---------
|Assets                                     |                                                                                                                                                                  |                                            |         |                   |          
|Current assets                             |                                                                                                                                                                  |                                            |         |                   |          
|                                           | Cash                                                                                                                                                             |                                            | $       | 20,297            |          
|                                           | Marketable securities                                                                                                                                            |                                            |         | 872,533           |          
|                                           | Accounts receivable, net                                                                                                                                         |                                            |         | 363,089           |          
|                                           | Prepaid expenses                                                                                                                                                 |                                            |         | 78,840            |          
|                                           | Deferred income taxes                                                                                                                                            |                                            |         | 31,964            |          
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  | Total current assets                       |         |                   | 1,366,723
|Property and equipment                     |                                                                                                                                                                  |                                            |         |                   |          
|                                           | Buildings and leasehold improvements                                                                                                                             |                                            |         | 154,803           |          
|                                           | Furniture, fixtures and equipment                                                                                                                                |                                            |         | 40,685            |          
|                                           | Computer equipment                                                                                                                                               |                                            |         | 197,444           |          
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  |                                            | 392,932 |                   |          
|                                           | Less accumulated depreciation and amortization                                                                                                                   |                                            |         | (167,437          | )        
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  | Total property and equipment               |         |                   | 225,495  
|Deferred income taxes                      |                                                                                                                                                                  |                                            | 1,672   |                   |          
|Investments in joint ventures              |                                                                                                                                                                  |                                            | 175,203 |                   |          
|Goodwill and intangible assets, net        |                                                                                                                                                                  |                                            | 871,334 |                   |          
|Other assets, net                          |                                                                                                                                                                  |                                            | 153,013 |                   |          
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  | Total assets                               |         | $                 | 2,793,440
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|Liabilities and stockholders' equity       |                                                                                                                                                                  |                                            |         |                   |          
|Current liabilities                        |                                                                                                                                                                  |                                            |         |                   |          
|                                           | Accounts payable                                                                                                                                                 |                                            | $       | 184,383           |          
|                                           | Accrued compensation and related benefits                                                                                                                        |                                            |         | 54,317            |          
|                                           | Accrued subscriber incentives                                                                                                                                    |                                            |         | 83,397            |          
|                                           | Deferred revenues                                                                                                                                                |                                            |         | 45,781            |          
|                                           | Other accrued liabilities                                                                                                                                        |                                            |         | 218,375           |          
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  | Total current liabilities                  |         |                   | 586,253  
|Pensions and other postretirement benefits |                                                                                                                                                                  |                                            | 78,500  |                   |          
|Notes payable                              |                                                                                                                                                                  |                                            | 409,703 |                   |          
|Other liabilities                          |                                                                                                                                                                  |                                            | 59,187  |                   |          
|Minority interests                         |                                                                                                                                                                  |                                            | 10,555  |                   |          
|Commitments and contingencies              |                                                                                                                                                                  |                                            |         |                   |          
|Stockholders' equity                       |                                                                                                                                                                  |                                            |         |                   |          
|                                           | Preferred stock: $0.01 par value; 20,000 shares authorized; no shares
    issued                                                                                 |                                            |         |                  |          
|                                           | Class A common stock, $0.01 par value; 250,000 shares authorized;
    144,690 and 133,911 shares issued at June 30, 2002
    and December 31, 2001, respectively |                                            |         | 1,447             |          
|                                           | Additional paid-in capital                                                                                                                                       |                                            |         | 1,267,694         |          
|                                           | Retained earnings                                                                                                                                                |                                            |         | 383,338           |          
|                                           | Accumulated other comprehensive income                                                                                                                           |                                            |         | 6,242             |          
|                                           | Less treasury stock at cost: 384 and 384 shares, respectively                                                                                                    |                                            |         | (9,479            | )        
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  | Total stockholders' equity                 |         |                   | 1,649,242
|                                           |                                                                                                                                                                  |                                            |         |                   |          
|                                           |                                                                                                                                                                  | Total liabilities and stockholders' equity |         | $                 | 2,793,440
|                                           |                                                                                                                                                                  |                                            |         |                   |          

See Notes to Consolidated Financial Statements

3

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SABRE HOLDINGS CORPORATION  CONSOLIDATED STATEMENTS OF INCOME  (Unaudited) (In thousands, except per share amounts)

|                                                                                                     |                                                  | Three Months Ended June 30,  |         | Six Months Ended June 30, |        
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ---------------------------- | ------- | ------------------------- | -------
|
|Revenues                                                                                             |                                                  | $                            | 532,729 |                           | $      
|Operating expenses                                                                                   |                                                  |                              |         |                           |        
|                                                                                                     | Cost of revenues                                 |                              |         | 283,945                   |        
|                                                                                                     | Selling, general and administrative              |                              |         | 131,216                   |        
|                                                                                                     | Amortization of goodwill and intangible assets   |                              |         | 13,264                    |        
|                                                                                                     |                                                  |                              |         |                           |        
|                                                                                                     |                                                  | Total operating expenses     |         |                           | 428,425
|Operating income                                                                                     |                                                  |                              | 104,304 |                           |        
|Other income (expense)                                                                               |                                                  |                              |         |                           |        
|                                                                                                     | Interest income                                  |                              |         | 7,565                     |        
|                                                                                                     | Interest expense                                 |                              |         | (5,580                    | )      
|                                                                                                     | Other, net                                       |                              |         | 1,165                     |        
|                                                                                                     |                                                  |                              |         |                           |        
|                                                                                                     |                                                  | Total other income (expense) |         |                           | 3,150  
|Minority interests                                                                                   |                                                  |                              | (888    | )                         |        
|                                                                                                     |                                                  |                              |         |                           |        
|Income from continuing operations before
    income taxes                                            |                                                  |                              | 106,566 |                           |        
|Provision for income taxes                                                                           |                                                  |                              | 38,601  |                           |        
|                                                                                                     |                                                  |                              |         |                           |        
|Income from continuing operations                                                                    |                                                  |                              | 67,965  |                           |        
|Income from discontinued operations, net                                                             |                                                  |                              |        |                           |        
|                                                                                                     |                                                  |                              |         |                           |        
|Income before cumulative effect of change in
    accounting method                                   |                                                  |                              | 67,965  |                           |        
|Cumulative effect of change in accounting
    method, net of minority interests and
    income taxes |                                                  |                              |        |                           |        
|                                                                                                     |                                                  |                              |         |                           |        
|Net earnings                                                                                         |                                                  | $                            | 67,965  |                           | $      
|                                                                                                     |                                                  |                              |         |                           |        
|Earnings per common sharebasic                                                                      |                                                  |                              |         |                           |        
|                                                                                                     | Income from continuing operations                |                              | $       | .48                       |        
|                                                                                                     | Income from discontinued operations              |                              |         |                          |        
|                                                                                                     | Cumulative effect of change in accounting method |                              |         |                          |        
|                                                                                                     |                                                  |                              |         |                           |        
|                                                                                                     | Net earnings                                     |                              | $       | .48                       |        
|                                                                                                     |                                                  |                              |         |                           |        
|Earnings per common sharediluted                                                                    |                                                  |                              |         |                           |        
|                                                                                                     | Income from continuing operations                |                              | $       | .47                       |        
|                                                                                                     | Income from discontinued operations              |                              |         |                          |        
|                                                                                                     | Cumulative effect of change in accounting method |                              |         |                          |        
|                                                                                                     |                                                  |                              |         |                           |        
|                                                                                                     | Net earnings                                     |                              | $       | .47                       |        
|                                                                                                     |                                                  |                              |         |                           |        

See Notes to Consolidated Financial Statements

4

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SABRE HOLDINGS CORPORATION  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY  SIX MONTHS ENDED JUNE 30, 2002  (Unaudited) (In thousands)

|                                                                                                                                           |                                                                                             | Class A
Common
Stock |       | Additional
Paid-in
Capital |   | Retained
Earnings |   | Accumulated Other
Comprehensive Income |         | Treasury
Stock |   | Total |      
|------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------- | -------------------- | ----- | -------------------------- | - | ----------------- | - | -------------------------------------- | ------- | -------------- | - | ----- | -----
|Balance at December 31, 2001                                                                                                               |                                                                                             | $                    | 1,351 |                            | $ | 818,742           |   | $                                      | 227,986 |                | $ | 3,176 |      
|Issuance of 1,237 shares of Class A
    common stock pursuant to stock
    option, restricted stock incentive
    and stock purchase plans |                                                                                             |                      | 12    |                            |   | 33,267            |   |                                        |        |                |   |      |      
|Issuance of 9,430 shares of Class A
    common stock in an underwritten
    public offering                                                |                                                                                             |                      | 94    |                            |   | 399,884           |   |                                        |        |                |   |      |      
|Cancellation of warrants issued in
    connection with business
    combinations                                                           |                                                                                             |                      |      |                            |   | (15,972           | ) |                                        |        |                |   |      |      
|Conversion of vested employee
    options pursuant to the acquisition
    of the Travelocity minority interest                             |                                                                                             |                      |      |                            |   | 14,209            |   |                                        |        |                |   |      |      
|Tax benefit from exercise of
    employee stock options                                                                                    |                                                                                             |                      |      |                            |   | 9,246             |   |                                        |        |                |   |      |      
|Stock based compensation for
    employees                                                                                                 |                                                                                             |                      |      |                            |   | 8,146             |   |                                        |        |                |   |      |      
|Comprehensive income:                                                                                                                      |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |      
|                                                                                                                                           | Net earnings                                                                                |                      |       |                           |   |                   |  |                                        |         | 155,352        |   |       |     
|                                                                                                                                           | Unrealized gain on foreign
    currency forward contracts, net
    of deferred income taxes |                      |       |                           |   |                   |  |                                        |         |               |   |       | 3,696
|                                                                                                                                           | Unrealized loss on investments,
    net of deferred income taxes                            |                      |       |                           |   |                   |  |                                        |         |               |   |       | (734 
|                                                                                                                                           | Unrealized foreign currency
    translation gain                                            |                      |       |                           |   |                   |  |                                        |         |               |   |       | 104  
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |      
|Total comprehensive income                                                                                                                 |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |      
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |      
|Other                                                                                                                                      |                                                                                             |                      | (10   | )                          |   | 172               |   |                                        |        |                |   |      |      
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |      
|Balance at June 30, 2002                                                                                                                   |                                                                                             | $                    | 1,447 |                            | $ | 1,267,694         |   | $                                      | 383,338 |                | $ | 6,242 |      
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |      

See Notes to Consolidated Financial Statements.

5

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SABRE HOLDINGS CORPORATION  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited) (In thousands)

|                                                                               |                                                       | Six Months Ended June 30,                      |           
|------------------------------------------------------------------------------ | ----------------------------------------------------- | ---------------------------------------------- | ----------
|
|Operating Activities                                                           |                                                       |                                                |           
|Net earnings                                                                   |                                                       | $                                              | 155,352   
|Adjustments to reconcile net earnings to cash provided by operating activities |                                                       |                                                |           
|                                                                               | Depreciation and amortization                         |                                                |           
|                                                                               | Stock compensation                                    |                                                |           
|                                                                               | Deferred income taxes                                 |                                                |           
|                                                                               | Gain on sale of former headquarters building          |                                                |           
|                                                                               | Minority interests                                    |                                                |           
|                                                                               | Tax benefit from exercise of stock options            |                                                |           
|                                                                               | Cumulative effect of change in accounting method, net |                                                |           
|                                                                               | Other                                                 |                                                |           
|                                                                               | Changes in operating assets and liabilities           |                                                |           
|                                                                               |                                                       | Accounts receivable                            |           
|                                                                               |                                                       | Prepaid expenses                               |           
|                                                                               |                                                       | Other assets                                   |           
|                                                                               |                                                       | Accrued compensation and related benefits      |           
|                                                                               |                                                       | Accounts payable and other accrued liabilities |           
|                                                                               |                                                       | Pensions and other postretirement benefits     |           
|                                                                               |                                                       | Other liabilities                              |           
|                                                                               |                                                       |                                                |           
|                                                                               | Cash provided by operating activities                 |                                                |           
|Investing Activities                                                           |                                                       |                                                |           
|Additions to property and equipment                                            |                                                       |                                                | (28,675   
|Business combinations, net of cash acquired                                    |                                                       |                                                | (477,330  
|Sale of securities acquired upon exercise of warrants                          |                                                       |                                                |          
|Proceeds from exercise of Travelocity.com stock options                        |                                                       |                                                | 33,658    
|Proceeds from sale of former headquarters building                             |                                                       |                                                | 80,000    
|Proceeds from sale of minority interest in Sabre Pacific                       |                                                       |                                                | 23,466    
|Purchases of marketable securities                                             |                                                       |                                                | (1,617,380
|Sales of marketable securities                                                 |                                                       |                                                | 1,392,790 
|Other investing activities, net                                                |                                                       |                                                | 25,876    
|                                                                               |                                                       |                                                |           
|                                                                               | Cash used for investing activities                    |                                                |           
|Financing Activities                                                           |                                                       |                                                |           
|Proceeds from issuance of common stock                                         |                                                       |                                                | 433,257   
|Other financing activities, net                                                |                                                       |                                                | (16,234   
|                                                                               |                                                       |                                                |           
|                                                                               | Cash provided by financing activities                 |                                                |           
|Increase in cash                                                               |                                                       |                                                | 1,442     
|Cash at beginning of period                                                    |                                                       |                                                | 18,855    
|                                                                               |                                                       |                                                |           
|Cash at end of period                                                          |                                                       | $                                              | 20,297    
|                                                                               |                                                       |                                                |           

See Notes to Consolidated Financial Statements

6

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SABRE HOLDINGS CORPORATION  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)

1.    General Information



2.    Summary of Significant Accounting Policies



7

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Three Months Ended
June 30,

Six Months Ended
June 30,2002

2001

2002

2001Reported income from continuing operations

$
67,965

$
5,051

$
155,352

$
5,464Add back goodwill and indefinite lived intangible
    assets amortization, net of tax





53,309





104,427Adjusted income from continuing operations

$
67,965

$
58,360

$
155,352

$
109,891Reported net earnings

$
67,965

$
27,724

$
155,352

$
44,872Add back goodwill and indefinite lived intangible
    assets amortization, net of tax





53,309





104,427Adjusted net earnings

$
67,965

$
81,033

$
155,352

$
149,299Earnings per shareBasic:Reported income from continuing operations

$
0.48

$
0.04

$
1.13

$
0.04Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.40





0.79Adjusted income from continuing operations

$
0.48

$
0.44

$
1.13

$
.83Reported net earnings

$
0.48

$
0.21

$
1.13

$
0.34Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.40





0.79Adjusted net earnings

$
0.48

$
0.61

$
1.13

$
1.13Diluted:Reported income from continuing operations

$
0.47

$
0.04

$
1.10

$
0.04Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.39





0.78Adjusted income from continuing operations

$
0.47

$
0.43

$
1.10

$
.82Reported net earnings

$
0.47

$
0.20

$
1.10

$
.33Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.39





0.78Adjusted net earnings

$
0.47

$
0.59

$
1.10

$
1.11


8

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June 30, 2002

December 31, 2001Weighted Average Useful Lives

Gross Carrying
Amount, at Cost

Accumulated Amortization

Gross Carrying
Amount, at Cost

Accumulated AmortizationNot subject to amortization:Goodwill



$
815,650

$


$
626,785

$
Tradenames/trademarks




21,980





7,682


837,630





634,467


Subject to amortization:Purchased technology

4 years


127,603


(52,608
)

125,146


(36,592
)Acquired customer relationships

7 years


36,366


(7,650
)

32,820


(4,950
)Non-compete agreements

4 years


17,059


(9,967
)

17,059


(4,971
)Acquired contracts

1 year


25,179


(8,201
)

8,261


(5,018
)206,207


(78,426
)

183,286


(51,531
)Total



$
1,043,837

$
(78,426
)
$
817,753

$
(51,531
)




2002

$
24,3482003


45,1692004


37,6072005


10,0352006


4,192




Travel Marketing and Distribution

Travelocity.com

GetThere

Airline
Solutions

TotalSix months ended
    June 30, 2002:Balance at beginning
    of period

$
123,719

$
97,602

$
401,740

$
3,724

$
626,785Goodwill acquired





195,777








195,777Goodwill adjustments








(6,841
)

(71
)

(6,912
)Balance at end of period

$
123,719

$
293,379

$
394,899

$
3,653

$
815,650




9

---



3.    Discontinued Operations



Three Months Ended
June 30, 2001

Six Months Ended
June 30, 2001Revenues

$
188,734

$
370,007Income before provision for income taxes

$
36,836

$
59,060Provision for income taxes


14,163


22,755Income from discontinued operations

$
22,673

$
36,305


4.    Significant Events

Tender Offer for Travelocity.com Common Stock



10

---



Minority interest assumed

$
258,064Deferred income tax asset, net


24,056Distributor agreements (weighted average life of 3 years)


8,863Supplier agreements (weighted average life of 2.5 years)


7,155Proprietary software (weighted average life of 2 years)


2,256Customer database (weighted average life of 10 years)


3,545Trademark, tradename and domain name (indefinite life)


13,698Goodwill


152,991Total purchase price

$
470,628




Acquisition of Site59



11

---



Working capital acquired

$
1,770Property and equipment and other non-current assets


824Software


1,352Non-current liabilities


(76
)Supplier agreements (weighted average life of 1.5 years)


900Trademark, tradename and domain name (indefinite life)


600Goodwill


37,322Total Purchase Price

$
42,692




Pro forma Statement of Operations Data



Three Months Ended June 30,

Six Months Ended June 30,2002

2001

2002

2001Revenues

$
532,729

$
582,035

$
1,072,096

$
1,155,449Income from continuing operations

$
76,763

$
(934
)
$
160,903

$
(16,069
)Income before cumulative effect of change
    in accounting method

$
76,763

$
21,739

$
160,903

$
20,236Net earnings

$
76,763

$
21,739

$
160,903

$
24,669Earnings per common sharebasic:Income from continuing operations

$
.54

$
.00

$
1.17

$
(.12
)Net earnings

$
.54

$
.16

$
1.17

$
.19Earnings per common sharediluted:Income from continuing operations

$
.53

$
.00

$
1.14

$
(.12
)Net earnings

$
.53

$
.16

$
1.14

$
.18


12

---

Equity Offering



Events of September 11, 2001



Yahoo! Agreement



2002

$
14,0002003


28,0002004


29,0002005


29,000$
100,000




Workforce Reduction



13

---



Severance

Other

TotalOriginal estimate of liability

$
19,945

$
8,245

$
28,190Amounts paid in 2001


(3,055
)

(513
)

(3,568
)Remaining accrual December 31, 2001


16,890


7,732


24,622Amounts paid in 2002


(10,291
)

(1,081
)

(11,372
)Revisions of estimates





(3,508
)

(3,508
)Remaining accrual June 30, 2002

$
6,599

$
3,143

$
9,742


Sale of Previous Headquarters



5.    Income Taxes



Three Months Ended
June 30,

Six Months Ended
June 30,2002

2001

2002

2001Income tax provision at statutory federal
    income tax rate

$
37,298

$
12,693

$
87,015

$
23,287State income taxes, net of federal benefit


3,681


819


7,989


2,598Foreign tax credit


(1,623
)

(413
)

(2,441
)

(1,788
)Nondeductible goodwill amortization





17,432





34,847Other, net


(755
)

685


698


2,127Total provision for income taxes

$
38,601

$
31,216

$
93,261

$
61,071


14

---

6.    Derivatives



15

---



Asset/(Liability)
June 30,2002

2001Hotels.com warrants

$
1,486

$
1,500Foreign currency forwards


6,341


(2,011
)Interest rate swaps


12,071


$
19,898

$
(511
)




7.    Earnings Per Share



Three Months Ended
June 30,

Six Months Ended
June 30,2002

2001

2002

2001Denominator for basic earnings per common
    shareweighted-average shares

142,595

132,301

138,068

131,578Dilutive effect of stock awards and options

2,711

3,718

2,933

2,925Denominator for diluted earnings per common
    shareadjusted weighted-average shares

145,306

136,019

141,001

134,503


8.    Segment Reporting



16

---



Three Months Ended
June 30,

Six Months Ended
June 30,2002

2001

2002

2001Revenues from external customers:Travel Marketing and Distribution

$
404,005

$
453,847

$
818,821

$
910,387Travelocity.com


59,960


64,381


118,140


119,555GetThere


12,917


10,857


24,547


21,838Airline Solutions


51,767


46,337


104,095


92,947Total

$
528,649

$
575,422

$
1,065,603

$
1,144,727Intersegment revenues:Travel Marketing and Distribution

$
6,618

$
6,478

$
12,642

$
12,799Travelocity.com


17,723


17,963


34,039


35,640GetThere


238





399


Airline Solutions





777





2,852Total

$
24,579

$
25,218

$
47,080

$
51,291Equity in net income of equity
    method investees:Travel Marketing and Distribution

$
5,463

$
6,613

$
8,707

$
10,722Travelocity.com


(1,383
)




(2,214
)

Total

$
4,080

$
6,613

$
6,493

$
10,722Total consolidated revenues:Travel Marketing and Distribution

$
416,086

$
466,938

$
840,170

$
933,908Travelocity.com


76,300


82,344


149,965


155,195GetThere


13,155


10,857


24,946


21,838Airline Solutions


51,767


47,114


104,095


95,799Elimination of intersegment revenues


(24,579
)

(25,218
)

(47,080
)

(51,291
)Total

$
532,729

$
582,035

$
1,072,096

$
1,155,449Segment operating income (loss)
    excluding special items:Travel Marketing and Distribution

$
136,337

$
132,835

$
272,749

$
259,942Travelocity.com


(3,722
)

2,895


2,309


3,320GetThere


(7,106
)

(15,063
)

(16,279
)

(31,625
)Airline Solutions


7,924


2,047


14,882


6,439Net corporate allocations


175


(11,983
)

452


(12,171
)Total

$
133,608

$
110,731

$
274,113

$
225,905


17

---



Three Months Ended
June 30,

Six Months Ended
June 30,2002

2001

2002

2001Travel Marketing and Distribution:Goodwill and other intangibles
    amortization

$
1,927

$
2,615

$
6,482

$
3,841Total Travel Marketing and Distribution


1,927


2,615


6,482


3,841Travelocity.com:Goodwill and other intangibles
    amortization


2,691


21,401


3,351


42,561Stock compensation


18,574


362


18,867


781Tender offer expenses


335





7,111


Total Travelocity.com


21,600


21,763


29,329


43,342GetThere:Goodwill and other intangibles amortization


6,606


43,736


13,212


85,171Stock compensation


925


1,665


989


3,330Severance and integration expenses











1,386Total GetThere


7,531


45,401


14,201


89,887Corporate:Goodwill and other intangibles
    amortization


1,608


2,105


3,023


4,712Restructuring charge


(3,508
)




(3,508
)

Stock compensation


146


399


288


814Total Corporate


(1,754
)

2,504


(197
)

5,526Total special items

$
29,304

$
72,283

$
49,815

$
142,596Consolidated operating income (loss):Travel Marketing and Distribution

$
134,410

$
130,220

$
266,267

$
256,101Travelocity.com


(25,322
)

(18,868
)

(27,020
)

(40,022
)GetThere


(14,637
)

(60,464
)

(30,480
)

(121,512
)Airline Solutions


7,924


2,047


14,882


6,439Corporate Allocations


1,929


(14,487
)

649


(17,697
)Total

$
104,304

$
38,448

$
224,298

$
83,309


9.    Supplemental Guarantor/Non-Guarantor Financial Information



18

---



19

---



UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
JUNE 30, 2002
(in thousands)

|                                               |                                                | Sabre
Holdings            |           | Sabre Inc. |           | Non-
Guarantor
Subsidiaries |            | Eliminating Entries |           | Sabre
Consolidated
|---------------------------------------------- | ---------------------------------------------- | ------------------------- | --------- | ---------- | --------- | --------------------------- | ---------- | ------------------- | --------- | ------------------
|Assets                                         |                                                |                           |           |            |           |                             |            |                     |           |                   
|Current assets                                 |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               | Cash and marketable securities                 |                           | $         |           |           | $                           | 742,122    |                     | $         | 150,708           
|                                               | Accounts receivabletrade, net                 |                           |           |           |           |                             | 255,561    |                     |           | 107,528           
|                                               | Intercompany accounts receivable
    (payable) |                           |           | 1,521,485  |           |                             | (2,051,992 | )                   |           | 530,507           
|                                               | Prepaid expenses                               |                           |           |           |           |                             | 37,070     |                     |           | 41,770            
|                                               | Deferred income taxes                          |                           |           |           |           |                             | 31,733     |                     |           | 231               
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               |                                                | Total current assets      |           |            | 1,521,485 |                             |            | (985,506            | )         |                   
|Property and equipment, net                    |                                                |                           |          |            |           | 175,244                     |            |                     | 50,251    |                   
|Deferred income taxes                          |                                                |                           |          |            |           | (7,569                      | )          |                     | 9,241     |                   
|Investments in joint ventures                  |                                                |                           |          |            |           | 12,069                      |            |                     | 163,134   |                   
|Goodwill and intangible assets, net            |                                                |                           |          |            |           | 8,929                       |            |                     | 862,405   |                   
|Investments in subsidiaries                    |                                                |                           | 531,316   |            |           | 1,789,489                   |            |                     |          |                   
|Other assets, net                              |                                                |                           | 14,982    |            |           | 93,085                      |            |                     | 44,946    |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Total assets                                   |                                                | $                         | 2,067,783 |            | $         | 1,085,741                   |            | $                   | 1,960,721 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Liabilities and stockholders' equity           |                                                |                           |           |            |           |                             |            |                     |           |                   
|Current liabilities                            |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               | Accounts payable                               |                           | $         | 209        |           | $                           | 157,822    |                     | $         | 26,352            
|                                               | Accrued compensation and related
    benefits  |                           |           |           |           |                             | 41,882     |                     |           | 12,435            
|                                               | Other accrued liabilities                      |                           |           | 7,445      |           |                             | 259,650    |                     |           | 80,458            
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               |                                                | Total current liabilities |           |            | 7,654     |                             |            | 459,354             |           |                   
|Deferred income taxes                          |                                                |                           |          |            |           |                            |            |                     |          |                   
|Pensions and other postretirement
    benefits |                                                |                           |          |            |           | 77,576                      |            |                     | 924       |                   
|Other liabilities                              |                                                |                           | 1,184     |            |           | 17,495                      |            |                     | 40,508    |                   
|Minority interests                             |                                                |                           |          |            |           |                            |            |                     | 10,555    |                   
|Notes payable                                  |                                                |                           | 409,703   |            |           |                            |            |                     |          |                   
|Stockholders' equity                           |                                                |                           | 1,649,242 |            |           | 531,316                     |            |                     | 1,789,489 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Total liabilities and stockholders'
    equity |                                                | $                         | 2,067,783 |            | $         | 1,085,741                   |            | $                   | 1,960,721 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   

20

---

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2001
(in thousands)

|                                               |                                                | Sabre
Holdings            |           | Sabre Inc. |           | Non-
Guarantor
Subsidiaries |            | Eliminating Entries |           | Sabre
Consolidated
|---------------------------------------------- | ---------------------------------------------- | ------------------------- | --------- | ---------- | --------- | --------------------------- | ---------- | ------------------- | --------- | ------------------
|Assets                                         |                                                |                           |           |            |           |                             |            |                     |           |                   
|Current assets                                 |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               | Cash and marketable securities                 |                           | $         |           |           | $                           | 543,196    |                     | $         | 123,691           
|                                               | Accounts receivabletrade, net                 |                           |           |           |           |                             | 238,747    |                     |           | 89,069            
|                                               | Intercompany accounts receivable
    (payable) |                           |           | 1,074,130  |           |                             | (1,406,885 | )                   |           | 332,755           
|                                               | Prepaid expenses                               |                           |           |           |           |                             | 18,120     |                     |           | 33,445            
|                                               | Deferred income taxes                          |                           |           |           |           |                             | 45,740     |                     |           | 230               
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               |                                                | Total current assets      |           |            | 1,074,130 |                             |            | (561,082            | )         |                   
|                                               | Property and equipment, net                    |                           |           |           |           |                             | 232,434    |                     |           | 56,015            
|                                               | Investments in joint ventures                  |                           |           |           |           |                             | 12,353     |                     |           | 157,596           
|                                               | Goodwill and intangible assets, net            |                           |           |           |           |                             | 9,626      |                     |           | 662,519           
|                                               | Investments in subsidiaries                    |                           |           | 372,556    |           |                             | 1,132,522  |                     |           |                  
|                                               | Other assets, net                              |                           |           | 5,845      |           |                             | 76,545     |                     |           | 70,846            
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Total assets                                   |                                                | $                         | 1,452,531 |            | $         | 902,398                     |            | $                   | 1,526,166 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Liabilities and stockholders' equity           |                                                |                           |           |            |           |                             |            |                     |           |                   
|Current liabilities                            |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               | Accounts payable                               |                           | $         |           |           | $                           | 136,608    |                     | $         | 22,231            
|                                               | Accrued compensation and related
    benefits  |                           |           |           |           |                             | 59,184     |                     |           | 14,090            
|                                               | Other accrued liabilities                      |                           |           | 9,347      |           |                             | 219,651    |                     |           | 103,345           
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               |                                                | Total current liabilities |           |            | 9,347     |                             |            | 415,443             |           |                   
|Pensions and other postretirement
    benefits |                                                |                           |          |            |           | 88,362                      |            |                     | 394       |                   
|Other liabilities                              |                                                |                           | 1,033     |            |           | 26,037                      |            |                     | 33,868    |                   
|Minority interests                             |                                                |                           |          |            |           |                            |            |                     | 219,716   |                   
|Notes payable                                  |                                                |                           | 400,375   |            |           |                            |            |                     |          |                   
|Stockholders' equity                           |                                                |                           | 1,041,776 |            |           | 372,556                     |            |                     | 1,132,522 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Total liabilities and stockholders'
    equity |                                                | $                         | 1,452,531 |            | $         | 902,398                     |            | $                   | 1,526,166 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   

21

---

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(in thousands)

|                                  |                          | Sabre
Holdings               |         | Sabre Inc. |         | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |       
|--------------------------------- | ------------------------ | ---------------------------- | ------- | ---------- | ------- | --------------------------- | ------- | ------------------- | ------- | ------------------ | ------
|Revenues                          |                          | $                            |        |            | $       | 842,092                     |         | $                   | 440,564 |                    | $     
|Operating expenses                |                          |                              | 1,198   |            |         | 651,148                     |         |                     | 406,012 |                    |       
|                                  |                          |                              |         |            |         |                             |         |                     |         |                    |       
|Operating income (loss)           |                          |                              | (1,198  | )          |         | 190,944                     |         |                     | 34,552  |                    |       
|Other income (expense)            |                          |                              |         |            |         |                             |         |                     |         |                    |       
|                                  | Interest income          |                              |         | 22,981     |         |                             | 11,623  |                     |         | 11,663             |       
|                                  | Interest expense         |                              |         | (9,664     | )       |                             | (32,110 | )                   |         | (1,190             | )     
|                                  | Income from subsidiaries |                              |         | 147,369    |         |                             | 33,314  |                     |         |                   |       
|                                  | Other, net               |                              |         |           |         |                             | 17,382  |                     |         | 3,671              |       
|                                  |                          |                              |         |            |         |                             |         |                     |         |                    |       
|                                  |                          | Total other income (expense) |         |            | 160,686 |                             |         | 30,209              |         |                    | 14,144
|Minority interests                |                          |                              |        |            |         |                            |         |                     | (41     | )                  |       
|                                  |                          |                              |         |            |         |                             |         |                     |         |                    |       
|Income (loss) before income taxes |                          |                              | 159,488 |            |         | 221,153                     |         |                     | 48,655  |                    |       
|Provision for income taxes        |                          |                              | 4,136   |            |         | 73,784                      |         |                     | 15,341  |                    |       
|                                  |                          |                              |         |            |         |                             |         |                     |         |                    |       
|Net income (loss)                 |                          | $                            | 155,352 |            | $       | 147,369                     |         | $                   | 33,314  |                    | $     
|                                  |                          |                              |         |            |         |                             |         |                     |         |                    |       

22

---

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(in thousands)

|                                                                                                     |                          | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |      
|---------------------------------------------------------------------------------------------------- | ------------------------ | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                                                                                             |                          | $                            |       |            | $      | 896,297                     |         | $                   | 443,559 |                    | $    
|Operating expenses                                                                                   |                          |                              | 1,111  |            |        | 772,046                     |         |                     | 484,577 |                    |      
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income (loss)                                                                              |                          |                              | (1,111 | )          |        | 124,251                     |         |                     | (41,018 | )                  |      
|Other income (expense)                                                                               |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                                                                                     | Interest income          |                              |        | 17,936     |        |                             | 4,930   |                     |         | 13,983             |      
|                                                                                                     | Interest expense         |                              |        |           |        |                             | (57,222 | )                   |         | (718               | )    
|                                                                                                     | Income from subsidiaries |                              |        | 33,788     |        |                             | (45,458 | )                   |         |                   |      
|                                                                                                     | Other, net               |                              |        |           |        |                             | (2,001  | )                   |         | (5,853             | )    
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                                                                                     |                          | Total other income (expense) |        |            | 51,724 |                             |         | (99,751             | )       |                    | 7,412
|Minority interests                                                                                   |                          |                              |       |            |        |                            |         |                     | 12,171  |                    |      
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) from continuing operations
    before income taxes                                     |                          |                              | 50,613 |            |        | 24,500                      |         |                     | (21,435 | )                  |      
|Provision for income taxes                                                                           |                          |                              | 5,741  |            |        | 25,689                      |         |                     | 29,641  |                    |      
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) from continuing operations                                                             |                          |                              | 44,872 |            |        | (1,189                      | )       |                     | (51,076 | )                  |      
|Income (loss) from discontinued operations                                                           |                          |                              |       |            |        | 34,977                      |         |                     | 2,515   |                    |      
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) before cumulative effect
    of change in accounting method                            |                          |                              | 44,872 |            |        | 33,788                      |         |                     | (48,561 | )                  |      
|Cumulative effect of change in accounting
    method, net of minority interests and
    income taxes |                          |                              |       |            |        |                            |         |                     | 3,103   |                    |      
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                                                                                    |                          | $                            | 44,872 |            | $      | 33,788                      |         | $                   | (45,458 | )                  | $    
|                                                                                                     |                          |                              |        |            |        |                             |         |                     |         |                    |      

23

---

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2002
(in thousands)

|                                  |                          | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |      
|--------------------------------- | ------------------------ | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                          |                          | $                            |       |            | $      | 416,600                     |         | $                   | 227,827 |                    | $    
|Operating expenses                |                          |                              | 860    |            |        | 322,659                     |         |                     | 216,604 |                    |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income (loss)           |                          |                              | (860   | )          |        | 93,941                      |         |                     | 11,223  |                    |      
|Other income (expense)            |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                  | Interest income          |                              |        | 14,445     |        |                             | 5,901   |                     |         | 6,414              |      
|                                  | Interest expense         |                              |        | (4,640     | )      |                             | (19,393 | )                   |         | (742               | )    
|                                  | Income from subsidiaries |                              |        | 62,073     |        |                             | 13,036  |                     |         |                   |      
|                                  | Other, net               |                              |        |           |        |                             | 976     |                     |         | 189                |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                  |                          | Total other income (expense) |        |            | 71,878 |                             |         | 520                 |         |                    | 5,861
|Minority interests                |                          |                              |       |            |        |                            |         |                     | (888    | )                  |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) before income taxes |                          |                              | 71,018 |            |        | 94,461                      |         |                     | 16,196  |                    |      
|Provision for income taxes        |                          |                              | 3,053  |            |        | 32,388                      |         |                     | 3,160   |                    |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                 |                          | $                            | 67,965 |            | $      | 62,073                      |         | $                   | 13,036  |                    | $    
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      

24

---

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2001
(in thousands)

|                                                                 |                          | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |      
|---------------------------------------------------------------- | ------------------------ | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                                                         |                          | $                            |       |            | $      | 443,925                     |         | $                   | 235,663 |                    | $    
|Operating expenses                                               |                          |                              | 939    |            |        | 389,861                     |         |                     | 249,453 |                    |      
|                                                                 |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income (loss)                                          |                          |                              | (939   | )          |        | 54,064                      |         |                     | (13,790 | )                  |      
|Other income (expense)                                           |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                                                 | Interest income          |                              |        | 9,293      |        |                             | 2,676   |                     |         | 6,770              |      
|                                                                 | Interest expense         |                              |        |           |        |                             | (26,805 | )                   |         | (353               | )    
|                                                                 | Income from subsidiaries |                              |        | 22,220     |        |                             | (17,628 | )                   |         |                   |      
|                                                                 | Other, net               |                              |        |           |        |                             |        |                     |         | 1,854              |      
|                                                                 |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                                                 |                          | Total other income (expense) |        |            | 31,513 |                             |         | (41,757             | )       |                    | 8,271
|Minority interests                                               |                          |                              |       |            |        |                            |         |                     | 4,384   |                    |      
|                                                                 |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) from continuing operations
    before income taxes |                          |                              | 30,574 |            |        | 12,307                      |         |                     | (1,135  | )                  |      
|Provision for income taxes                                       |                          |                              | 2,850  |            |        | 10,001                      |         |                     | 18,365  |                    |      
|                                                                 |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) from continuing operations                         |                          |                              | 27,724 |            |        | 2,306                       |         |                     | (19,500 | )                  |      
|Income (loss) from discontinued
    operations, net              |                          |                              |       |            |        | 19,914                      |         |                     | 1,872   |                    |      
|                                                                 |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                                                |                          | $                            | 27,724 |            | $      | 22,220                      |         | $                   | (17,628 | )                  | $    
|                                                                 |                          |                              |        |            |        |                             |         |                     |         |                    |      

25

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UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(in thousands)

|                     |                                                                                         | Sabre
Holdings                                       |   | Sabre Inc. |          | Non-
Guarantor
Subsidiaries |            | Eliminating Entries |   | Sabre
Consolidated |         
|-------------------- | --------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ---------- | -------- | --------------------------- | ---------- | ------------------- | - | ------------------ | --------
|Operating Activities |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     | Net earnings                                                                            |                                                      | $ | 155,352    |          | $                           | 147,369    |                     | $ | 33,314             |         
|                     | Adjustments to reconcile net earnings
    to cash provided by operating
    activities: |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     |                                                                                         | Depreciation and amortization                        |   |            |         |                             |            | 19,256              |   |                    | 37,917  
|                     |                                                                                         | Stock compensation                                   |   |            |         |                             |            |                    |   |                    | 22,355  
|                     |                                                                                         | Deferred income taxes                                |   |            |         |                             |            | 41,330              |   |                    | 14,815  
|                     |                                                                                         | Tax benefit from exercise of stock options           |   |            | 9,246    |                             |            |                    |   |                    |        
|                     |                                                                                         | Minority interests                                   |   |            |         |                             |            |                    |   |                    | 41      
|                     |                                                                                         | (Income) loss from subsidiaries                      |   |            | (147,369 | )                           |            | (33,314             | ) |                    |        
|                     |                                                                                         | Gain on sale of certain assets                       |   |            |         |                             |            | (18,308             | ) |                    |        
|                     |                                                                                         | Other                                                |   |            | 12,484   |                             |            | (13,436             | ) |                    | (11,381 
|                     |                                                                                         | Changes in operating assets and
    liabilities      |   |            | (451,579 | )                           |            | 577,430             |   |                    | (243,508
|                     |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     | Cash provided by (used for)
    operating activities                                    |                                                      |   | (421,866   | )        |                             | 720,327    |                     |   | (146,447           | )       
|Investing Activities |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     | Additions to property and equipment                                                     |                                                      |   |           |          |                             | (19,422    | )                   |   | (9,253             | )       
|                     | Purchases of marketable securities                                                      |                                                      |   |           |          |                             | (1,313,871 | )                   |   | (303,509           | )       
|                     | Sales of marketable securities                                                          |                                                      |   |           |          |                             | 1,112,018  |                     |   | 280,772            |         
|                     | Investments in subsidiaries, net                                                        |                                                      |   | (11,391    | )        |                             | (623,653   | )                   |   |                   |         
|                     | Business combinations, net of
    cash acquired                                         |                                                      |   |           |          |                             |           |                     |   | (477,330           | )       
|                     | Proceeds from exercise of Travelocity.com
    stock options                             |                                                      |   |           |          |                             |           |                     |   |                   |         
|                     | Proceeds from sale of former
    headquarters building                                  |                                                      |   |           |          |                             | 80,000     |                     |   |                   |         
|                     | Proceeds from sale of subsidiary                                                        |                                                      |   |           |          |                             |           |                     |   | 23,466             |         
|                     | Other investing activities, net                                                         |                                                      |   |           |          |                             | 30,284     |                     |   | (4,408             | )       
|                     |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     |                                                                                         | Cash provided by (used for)
    investing activities |   |            | (11,391  | )                           |            | (734,644            | ) |                    | (490,262
|Financing Activities |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     | Contributions from affiliates                                                           |                                                      |   |           |          |                             | 11,391     |                     |   | 623,653            |         
|                     | Proceeds from issuance of
    common stock                                              |                                                      |   | 433,257    |          |                             |           |                     |   | 33,658             |         
|                     | Other financing activities, net                                                         |                                                      |   |           |          |                             |           |                     |   | (16,234            | )       
|                     |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     |                                                                                         | Cash provided by (used for)
    financing activities |   |            | 433,257  |                             |            | 11,391              |   |                    | 641,077 
|                     | Increase (decrease) in cash                                                             |                                                      |   |           |          |                             | (2,926     | )                   |   | 4,368              |         
|                     | Cash at beginning of the period                                                         |                                                      |   |           |          |                             | 8,642      |                     |   | 10,213             |         
|                     |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         
|                     | Cash at end of the period                                                               |                                                      | $ |           |          | $                           | 5,716      |                     | $ | 14,581             |         
|                     |                                                                                         |                                                      |   |            |          |                             |            |                     |   |                    |         

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UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(in thousands)

|                     |                                                                                         | Sabre
Holdings                                       |   | Sabre Inc. |          | Non-
Guarantor
Subsidiaries |          | Eliminating Entries |   | Sabre
Consolidated |        
|-------------------- | --------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ---------- | -------- | --------------------------- | -------- | ------------------- | - | ------------------ | -------
|Operating Activities |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     | Net earnings                                                                            |                                                      | $ | 44,872     |          | $                           | 33,788   |                     | $ | (45,458            | )      
|                     | Adjustments to reconcile net earnings
    to cash provided by operating
    activities: |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     |                                                                                         | Depreciation and amortization                        |   |            |         |                             |          | 98,376              |   |                    | 167,449
|                     |                                                                                         | Deferred income taxes                                |   |            |         |                             |          | 4,625               |   |                    | (11,924
|                     |                                                                                         | Minority interests                                   |   |            |         |                             |          |                    |   |                    | (12,171
|                     |                                                                                         | Tax benefit from exercise of
    stock options       |   |            | 14,330   |                             |          |                    |   |                    |       
|                     |                                                                                         | (Income) loss from subsidiaries                      |   |            | (33,788  | )                           |          | 45,458              |   |                    |       
|                     |                                                                                         | Cumulative effect of accounting
    change, net      |   |            |         |                             |          |                    |   |                    | (3,103 
|                     |                                                                                         | Other                                                |   |            | 29,971   |                             |          | (24,661             | ) |                    | (4,901 
|                     |                                                                                         | Changes in operating assets
    and liabilities      |   |            | (109,750 | )                           |          | 82,580              |   |                    | (13,172
|                     |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     | Cash provided by (used for)
    operating activities                                    |                                                      |   | (54,365    | )        |                             | 240,166  |                     |   | 76,720             |        
|Investing Activities |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     | Additions to property and equipment                                                     |                                                      |   |           |          |                             | (85,565  | )                   |   | (23,570            | )      
|                     | Purchases of marketable securities                                                      |                                                      |   |           |          |                             | (974,838 | )                   |   | (219,755           | )      
|                     | Sales of marketable securities                                                          |                                                      |   |           |          |                             | 813,133  |                     |   | 181,525            |        
|                     | Sale of securities acquired upon
    exercise of warrants                               |                                                      |   |           |          |                             |         |                     |   | 36,600             |        
|                     | Investments in subsidiaries, net                                                        |                                                      |   | (13,154    | )        |                             | (6,130   | )                   |   |                   |        
|                     | Business combinations, net of
    cash acquired                                         |                                                      |   |           |          |                             |         |                     |   | (45,956            | )      
|                     | Other investing activities, net                                                         |                                                      |   |           |          |                             | 627      |                     |   | (8,301             | )      
|                     |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     |                                                                                         | Cash provided by (used for)
    investing activities |   |            | (13,154  | )                           |          | (252,773            | ) |                    | (79,457
|Financing Activities |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     | Contributions from affiliates                                                           |                                                      |   |           |          |                             | 13,154   |                     |   | 6,130              |        
|                     | Proceeds from issuance of common stock                                                  |                                                      |   | 67,519     |          |                             |         |                     |   |                   |        
|                     |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     |                                                                                         | Cash provided by (used for)
    financing activities |   |            | 67,519   |                             |          | 13,154              |   |                    | 6,130  
|                     | Increase (decrease) in cash                                                             |                                                      |   |           |          |                             | 547      |                     |   | 3,393              |        
|                     | Cash at beginning of the period                                                         |                                                      |   |           |          |                             | 1,582    |                     |   | 6,196              |        
|                     |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        
|                     | Cash at end of the period                                                               |                                                      | $ |           |          | $                           | 2,129    |                     | $ | 9,589              |        
|                     |                                                                                         |                                                      |   |            |          |                             |          |                     |   |                    |        

27

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

SABRE HOLDINGS CORPORATION

RESULTS OF OPERATIONS



Three Months Ended June 30, 2002 and 2001



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29

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Six Months Ended June 30, 2002 and 2001



30

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SABRE HOLDINGS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES



32

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33

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OUTLOOK FOR THE REMAINDER OF 2002



34

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SABRE HOLDINGS CORPORATION
CAUTIONARY STATEMENT



Risk Factors



WE
FACE COMPETITION FROM ESTABLISHED AND EMERGING TRAVEL DISTRIBUTION CHANNELS.



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MANY
OF OUR COMPETITORS IN THE TRAVEL MARKETING AND DISTRIBUTION BUSINESS ARE WELL FUNDED AND HAVE MAJOR TRAVEL SUPPLIERS AS SIGNIFICANT SHAREHOLDERS.



SUPPLIER
COST SAVINGS EFFORTS COULD ADVERSELY AFFECT US



INDUSTRY
CONSOLIDATION AND INCREASED COMPETITION FOR TRAVEL AGENCY SUBSCRIBERS MAY RESULT IN INCREASED EXPENSES, REDUCED REVENUE AND MARKET POSITION, AND GREATER FINANCIAL LEVERAGE.



AIRLINES
THAT ARE DIVESTING THEIR OWNERSHIP OF GLOBAL DISTRIBUTION SYSTEMS MIGHT LIMIT THEIR PARTICIPATION IN OUR TRAVEL MARKETING AND DISTRIBUTION SERVICES.



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REGULATORY
DEVELOPMENTS COULD LIMIT OUR ABILITY TO COMPETE.



RAPID
TECHNOLOGICAL CHANGES AND NEW DISTRIBUTION CHANNELS MAY RENDER OUR TECHNOLOGY OBSOLETE OR DECREASE THE ATTRACTIVENESS OF OUR SERVICES TO CUSTOMERS.



OUR
SYSTEMS MAY SUFFER FAILURES, CAPACITY CONSTRAINTS AND BUSINESS INTERRUPTIONS, WHICH COULD INCREASE OUR OPERATING COSTS AND CAUSE US TO LOSE CUSTOMERS.



37

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OUR
REVENUES ARE HIGHLY DEPENDENT ON THE TRAVEL AND TRANSPORTATION INDUSTRIES, AND PARTICULARLY ON THE AIRLINES, AND A PROLONGED SUBSTANTIAL DECREASE IN TRAVEL BOOKINGS VOLUMES COULD ADVERSELY AFFECT
US.



WE
FACE TRADE BARRIERS OUTSIDE OF NORTH AMERICA THAT LIMIT OUR ABILITY TO COMPETE.



OUR
INTERNATIONAL OPERATIONS ARE SUBJECT TO OTHER RISKS, WHICH MAY IMPEDE OUR ABILITY TO GROW INTERNATIONALLY.



38

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WE
MAY NOT SUCCESSFULLY MAKE AND INTEGRATE BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES.



39

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings

Worldspan Dispute



Travelocity.com Shareholder Litigation



Item 4. Submission of Matters to a Vote of Security Holders



40

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Item 5. Other Information



41

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Item 6. Exhibits and Reports on Form 8-K

|Exhibit Number |  | Description of Exhibit                                                                   
|-------------- |  | -----------------------------------------------------------------------------------------
|3.1            |  | Restated Certificate of Incorporation of Sabre Holdings Corporation.(1)                  
|3.2            |  | Restated Bylaws of Sabre Holdings Corporation.(2)                                        
|12.1           |  | Computation of ratio of earnings to fixed charges for the six months ended June 30, 2002.

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On
April 4, 2002, Sabre Holdings Corporation filed a report on Form 8-K to file copies of the underwriting agreement, legal opinion and consents relating to its offering of
8,200,000 shares of its Class A Common Stock, par value $.01 per share.

On
April 11, 2002, Sabre Holdings Corporation filed a report on Form 8-K reporting (a) the completion of its tender offer for all the outstanding shares of
Travelocity.com, Inc. and (b) the subsequent merger of Travelocity with and into a wholly owned subsidiary of Sabre Holdings Corporation. We also reported on financial results for the
first quarter of 2002.

Pursuant
to General Instruction B.2. of Form 8-K, the Forms 8-K listed below contained only Item 9 disclosures, and consequently such Forms 8-K are not
incorporated into this Form 10-Q or into any other form or report filed with the Commission into which this Form 10-Q would be incorporated by reference.

On
May 17, 2002, Sabre Holdings Corporation filed a report on Form 8-K announcing the publication of its investment community newsletter.

On
June 4, 2002, Sabre Holdings Corporation filed a report on Form 8-K reporting that Sabre and Travelocity.com have entered into a long term strategic alliance with Yahoo!.
The report also discussed the effect of the alliance on Sabre's earnings.

On
June 20, 2002, Sabre Holdings Corporation filed a report on Form 8-K reporting on April and May 2002 Media Metrix Home/Work measurement figures for Travelocity.com,
including traffic from all portal partners. This report was amended on June 21, 2002.

42

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Signature

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|                      |  | SABRE HOLDINGS CORPORATION
|--------------------- |  | --------------------------
|                      |  | By:                       
|Date: August 14, 2002 |  |                           

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