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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 September 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142,677,179 as of November 7, 2002

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INDEX
SABRE HOLDINGS CORPORATION



|PART I:        | FINANCIAL INFORMATION                                                                         |    | 3 
|-------------- | --------------------------------------------------------------------------------------------- | -- | --
|Item 1.        | Financial Statements (Unaudited)                                                              |    | 3 
|               | Consolidated Balance SheetsSeptember 30, 2002 and December 31, 2001                          |    | 3 
|               | Consolidated Statements of IncomeThree and nine months ended September 30, 2002 and 2001     |    | 4 
|               | Condensed Consolidated Statement of Stockholders' EquityNine months ended September 30, 2002 |    | 5 
|               | Consolidated Statements of Cash FlowsNine months ended September 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         |    | 29
|Item 4.        | Controls and Procedures                                                                       |    | 44
|PART II:       | OTHER INFORMATION                                                                             |    | 44
|Item 1.        | Legal Proceedings                                                                             |    | 44
|Item 5.        | Other Information                                                                             |    | 44
|Item 6.        | Exhibits and Reports on Form 8-K                                                              |    | 46
|SIGNATURE      |                                                                                               | 47
|Certifications |                                                                                               | 48

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

|                                           |                                                                                                                                                                       | September 30,
2002                         |         | December 31,
2001 |          
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | ---------
|Assets                                     |                                                                                                                                                                       |                                            |         |                   |          
|Current assets                             |                                                                                                                                                                       |                                            |         |                   |          
|                                           | Cash                                                                                                                                                                  |                                            | $       | 31,786            |          
|                                           | Marketable securities                                                                                                                                                 |                                            |         | 824,997           |          
|                                           | Accounts receivable, net                                                                                                                                              |                                            |         | 347,451           |          
|                                           | Prepaid expenses and other current assets                                                                                                                             |                                            |         | 98,815            |          
|                                           | Deferred income taxes                                                                                                                                                 |                                            |         | 15,019            |          
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       | Total current assets                       |         |                   | 1,318,068
|Property and equipment                     |                                                                                                                                                                       |                                            |         |                   |          
|                                           | Buildings and leasehold improvements                                                                                                                                  |                                            |         | 157,549           |          
|                                           | Furniture, fixtures and equipment                                                                                                                                     |                                            |         | 42,492            |          
|                                           | Computer equipment                                                                                                                                                    |                                            |         | 208,994           |          
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       |                                            | 409,035 |                   |          
|                                           | Less accumulated depreciation and amortization                                                                                                                        |                                            |         | (181,139          | )        
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       | Total property and equipment               |         |                   | 227,896  
|Deferred income taxes                      |                                                                                                                                                                       |                                            |        |                   |          
|Investments in joint ventures              |                                                                                                                                                                       |                                            | 183,681 |                   |          
|Goodwill and intangible assets, net        |                                                                                                                                                                       |                                            | 864,939 |                   |          
|Other assets, net                          |                                                                                                                                                                       |                                            | 180,779 |                   |          
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       | Total assets                               |         | $                 | 2,775,363
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|Liabilities and stockholders' equity       |                                                                                                                                                                       |                                            |         |                   |          
|Current liabilities                        |                                                                                                                                                                       |                                            |         |                   |          
|                                           | Accounts payable                                                                                                                                                      |                                            | $       | 174,096           |          
|                                           | Accrued compensation and related benefits                                                                                                                             |                                            |         | 57,449            |          
|                                           | Accrued subscriber incentives                                                                                                                                         |                                            |         | 74,328            |          
|                                           | Deferred revenues                                                                                                                                                     |                                            |         | 45,905            |          
|                                           | Other accrued liabilities                                                                                                                                             |                                            |         | 175,944           |          
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       | Total current liabilities                  |         |                   | 527,722  
|Deferred income taxes                      |                                                                                                                                                                       |                                            | 6,936   |                   |          
|Pensions and other postretirement benefits |                                                                                                                                                                       |                                            | 82,598  |                   |          
|Notes payable                              |                                                                                                                                                                       |                                            | 435,109 |                   |          
|Other liabilities                          |                                                                                                                                                                       |                                            | 52,709  |                   |          
|Minority interests                         |                                                                                                                                                                       |                                            | 10,904  |                   |          
|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;
    144,907 and 133,911 shares issued at September 30, 2002 and
    December 31, 2001, respectively |                                            |         | 1,449             |          
|                                           | Additional paid-in capital                                                                                                                                            |                                            |         | 1,275,443         |          
|                                           | Retained earnings                                                                                                                                                     |                                            |         | 441,259           |          
|                                           | Accumulated other comprehensive income                                                                                                                                |                                            |         | 4,596             |          
|                                           | Less treasury stock at cost: 2,509 and 384 shares, respectively                                                                                                       |                                            |         | (63,362           | )        
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       | Total stockholders' equity                 |         |                   | 1,659,385
|                                           |                                                                                                                                                                       |                                            |         |                   |          
|                                           |                                                                                                                                                                       | Total liabilities and stockholders' equity |         | $                 | 2,775,363
|                                           |                                                                                                                                                                       |                                            |         |                   |          

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
September 30, |         | Nine Months Ended
September 30, |        
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------ | -------------------------------- | ------- | ------------------------------- | -------
|
|Revenues                                                                                             |                                                  | $                                | 510,645 |                                 | $      
|Operating expenses                                                                                   |                                                  |                                  |         |                                 |        
|                                                                                                     | Cost of revenues                                 |                                  |         | 290,305                         |        
|                                                                                                     | Selling, general and administrative              |                                  |         | 119,650                         |        
|                                                                                                     | Amortization of goodwill and intangible assets   |                                  |         | 13,216                          |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|                                                                                                     |                                                  | Total operating expenses         |         |                                 | 423,171
|Operating income                                                                                     |                                                  |                                  | 87,474  |                                 |        
|Other income (expense)                                                                               |                                                  |                                  |         |                                 |        
|                                                                                                     | Interest income                                  |                                  |         | 7,159                           |        
|                                                                                                     | Interest expense                                 |                                  |         | (5,633                          | )      
|                                                                                                     | Other, net                                       |                                  |         | 1,920                           |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|                                                                                                     |                                                  | Total other income               |         |                                 | 3,446  
|Minority interests                                                                                   |                                                  |                                  | (349    | )                               |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|Income from continuing operations before
    income taxes                                            |                                                  |                                  | 90,571  |                                 |        
|Provision for income taxes                                                                           |                                                  |                                  | 32,650  |                                 |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|Income from continuing operations                                                                    |                                                  |                                  | 57,921  |                                 |        
|Income from discontinued operations, net                                                             |                                                  |                                  |        |                                 |        
|Gain on sale of discontinued operations, net                                                         |                                                  |                                  |        |                                 |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|Income before cumulative effect of change in
    accounting method                                   |                                                  |                                  | 57,921  |                                 |        
|Cumulative effect of change in accounting
    method, net of minority interests and
    income taxes |                                                  |                                  |        |                                 |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|Net earnings                                                                                         |                                                  | $                                | 57,921  |                                 | $      
|                                                                                                     |                                                  |                                  |         |                                 |        
|Earnings per common sharebasic                                                                      |                                                  |                                  |         |                                 |        
|                                                                                                     | Income from continuing operations                |                                  | $       | .40                             |        
|                                                                                                     | Income from discontinued operations              |                                  |         |                                |        
|                                                                                                     | Cumulative effect of change in accounting method |                                  |         |                                |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|                                                                                                     | Net earnings                                     |                                  | $       | .40                             |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|Earnings per common sharediluted                                                                    |                                                  |                                  |         |                                 |        
|                                                                                                     | Income from continuing operations                |                                  | $       | .40                             |        
|                                                                                                     | Income from discontinued operations              |                                  |         |                                |        
|                                                                                                     | Cumulative effect of change in accounting method |                                  |         |                                |        
|                                                                                                     |                                                  |                                  |         |                                 |        
|                                                                                                     | Net earnings                                     |                                  | $       | .40                             |        
|                                                                                                     |                                                  |                                  |         |                                 |        

See Notes to Consolidated Financial Statements

4

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SABRE HOLDINGS CORPORATION  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY  NINE MONTHS ENDED SEPTEMBER 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 1,358 shares of Class A
    common stock pursuant to stock
    option, restricted stock incentive
    and stock purchase plans |                                                                                             |                      | 14    |                            |   | 36,048            |   |                                        |        |                |   |      |       
|Issuance of 9,430 shares of Class A
    common stock in an underwritten
    public offering                                                |                                                                                             |                      | 94    |                            |   | 399,884           |   |                                        |        |                |   |      |       
|Purchase of treasury shares                                                                                                                |                                                                                             |                      |      |                            |   |                  |   |                                        |        |                |   |      |       
|Settlement 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                                                                                    |                                                                                             |                      |      |                            |   | 9,686             |   |                                        |        |                |   |      |       
|Stock based compensation for
    employees                                                                                                 |                                                                                             |                      |      |                            |   | 12,870            |   |                                        |        |                |   |      |       
|Comprehensive income:                                                                                                                      |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |       
|                                                                                                                                           | Net earnings                                                                                |                      |       |                           |   |                   |  |                                        |         | 213,273        |   |       |      
|                                                                                                                                           | Unrealized gain on foreign
    currency forward contracts, net
    of deferred income taxes |                      |       |                           |   |                   |  |                                        |         |               |   |       | 3,085 
|                                                                                                                                           | Unrealized loss on investments,
    net of deferred income taxes                            |                      |       |                           |   |                   |  |                                        |         |               |   |       | (1,793
|                                                                                                                                           | Unrealized foreign currency
    translation gain                                            |                      |       |                           |   |                   |  |                                        |         |               |   |       | 128   
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |       
|Total comprehensive income                                                                                                                 |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |       
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |       
|Other                                                                                                                                      |                                                                                             |                      | (10   | )                          |   | (24               | ) |                                        |        |                |   |      |       
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |       
|Balance at September 30, 2002                                                                                                              |                                                                                             | $                    | 1,449 |                            | $ | 1,275,443         |   | $                                      | 441,259 |                | $ | 4,596 |       
|                                                                                                                                           |                                                                                             |                      |       |                            |   |                   |   |                                        |         |                |   |       |       

See Notes to Consolidated Financial Statements.

5

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

|                                                                                |                                                       | Nine Months Ended September 30,                |           
|------------------------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------------------------- | ----------
|
|Operating Activities                                                            |                                                       |                                                |           
|Net earnings                                                                    |                                                       | $                                              | 213,273   
|Adjustments to reconcile net earnings to cash provided by operating activities: |                                                       |                                                |           
|                                                                                | Depreciation and amortization                         |                                                |           
|                                                                                | Stock compensation                                    |                                                |           
|                                                                                | Deferred income taxes                                 |                                                |           
|                                                                                | Tax benefit from exercise of stock options            |                                                |           
|                                                                                | Minority interests                                    |                                                |           
|                                                                                | Gain on sale of former headquarters building          |                                                |           
|                                                                                | Gain on sale of discontinued operations, net          |                                                |           
|                                                                                | Gain on sale of Equant shares                         |                                                |           
|                                                                                | 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                                             |                                                       |                                                | (43,119   
|Business combinations, net of cash acquired                                     |                                                       |                                                | (483,426  
|Proceeds from exercise of Travelocity.com stock options                         |                                                       |                                                | 33,658    
|Proceeds from sale of former headquarters building                              |                                                       |                                                | 80,000    
|Purchase of data center facility from lessor                                    |                                                       |                                                | (92,092   
|Proceeds from sale of data center facility                                      |                                                       |                                                | 68,464    
|Proceeds from sale of minority interest in Sabre Pacific                        |                                                       |                                                | 23,466    
|Proceeds from sale of discontinued operations                                   |                                                       |                                                |          
|Purchases of marketable securities                                              |                                                       |                                                | (3,279,509
|Sales of marketable securities                                                  |                                                       |                                                | 3,102,936 
|Proceeds from sales of investments                                              |                                                       |                                                | 4,444     
|Other investing activities, net                                                 |                                                       |                                                | 17,398    
|                                                                                |                                                       |                                                |           
|                                                                                | Cash used for investing activities                    |                                                |           
|Financing Activities                                                            |                                                       |                                                |           
|Proceeds from issuance of common stock                                          |                                                       |                                                | 438,767   
|Proceeds from issuance of notes payable                                         |                                                       |                                                |          
|Purchases of treasury stock                                                     |                                                       |                                                | (56,610   
|Payment of notes payable                                                        |                                                       |                                                |          
|Other financing activities, net                                                 |                                                       |                                                | (90       
|                                                                                |                                                       |                                                |           
|                                                                                | Cash provided by (used for) financing activities      |                                                |           
|Increase in cash                                                                |                                                       |                                                | 12,931    
|Cash at beginning of period                                                     |                                                       |                                                | 18,855    
|                                                                                |                                                       |                                                |           
|Cash at end of period                                                           |                                                       | $                                              | 31,786    
|                                                                                |                                                       |                                                |           

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

---



Three Months Ended
September 30,

Nine Months Ended
September 30,2002

2001

2002

2001Reported income from continuing operations

$
57,921

$
17,290

$
213,273

$
22,754Add back goodwill and indefinite lived
    intangible assets amortization,
    net of tax





53,932





158,359Adjusted income from continuing operations

$
57,921

$
71,222

$
213,273

$
181,113Reported net earnings

$
57,921

$
56,062

$
213,273

$
100,934Add back goodwill and indefinite lived
    intangible assets amortization,
    net of tax





53,932





158,359Adjusted net earnings

$
57,921

$
109,994

$
213,273

$
259,293Earnings per shareBasic:Reported income from continuing
    operations

$
0.40

$
0.13

$
1.53

$
0.17Add back goodwill and indefinite lived
    intangible assets amortization,
    net of tax





0.41





1.20Adjusted income from continuing
    operations

$
0.40

$
0.54

$
1.53

$
1.37Reported net earnings

$
0.40

$
0.42

$
1.53

$
0.76Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.41





1.20Adjusted net earnings

$
0.40

$
0.83

$
1.53

$
1.96Diluted:Reported income from continuing
    operations

$
0.40

$
0.13

$
1.50

$
0.17Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.40





1.18Adjusted income from continuing
    operations

$
0.40

$
0.53

$
1.50

$
1.35Reported net earnings

$
0.40

$
0.42

$
1.50

$
.75Add back goodwill and indefinite lived
    intangible assets amortization, net
    of tax





0.40





1.18Adjusted net earnings

$
0.40

$
0.82

$
1.50

$
1.93


8

---



Travel Marketing and
Distribution

Travelocity.com

GetThere

Airline
Solutions

TotalNine months ended
    September 30, 2002:Balance at beginning of period

$
123,719

$
97,602

$
401,740

$
3,724

$
626,785Goodwill acquired





198,015








198,015Goodwill adjustments








(6,811
)

100


(6,711
)Balance at end of period

$
123,719

$
295,617

$
394,929

$
3,824

$
818,089




9

---



3.    Discontinued Operations



Nine Months Ended
September 30, 2001Revenues

$
370,007Income before provision for income taxes

$
59,060Provision for income taxes


22,755Income from discontinued operations

$
36,305


4.    Significant Events

Tender Offer for Travelocity.com Common Stock



10

---



Minority interest assumed

$
252,597Deferred income tax asset, net


21,665Distributor agreements (weighted average life of 3 years)


18,016Supplier agreements (weighted average life of 3 years)


2,192Proprietary software (weighted average life of 3 years)


2,256Customer database (weighted average life of 7 years)


3,739Trademark, tradename and domain name (indefinite life)


13,698Goodwill


160,110Total purchase price

$
474,273




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


37,905Total purchase price

$
43,275




Pro Forma Statement of Operations Data



Three Months Ended
September 30,

Nine Months Ended
September 30,2002

2001

2002

2001Revenues

$
510,645

$
524,829

$
1,582,741

$
1,680,278Income from continuing operations

$
57,921

$
11,546

$
219,752

$
(4,523
)Income before cumulative effect of change
    in accounting method

$
57,921

$
50,318

$
219,752

$
70,554Net earnings

$
57,921

$
50,318

$
219,752

$
74,987Earnings per common sharebasic:Income from continuing operations

$
.40

$
.09

$
1.57

$
(.03
)Net earnings

$
.40

$
.38

$
1.57

$
.57Earnings per common sharediluted:Income from continuing operations

$
.40

$
.09

$
1.54

$
(.03
)Net earnings

$
.40

$
.37

$
1.54

$
.56


Equity Offering



12

---

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


(11,063
)

(1,651
)

(12,714
)Revisions of estimates





(3,508
)

(3,508
)Remaining accrual September 30, 2002

$
5,827

$
2,573

$
8,400


Sale of Previous Headquarters



Sale of Data Center Facility



5.    Income Taxes



Three Months Ended September 30,

Nine Months Ended September 30,2002

2001

2002

2001Income tax provision at statutory federal
    income tax rate

$
31,699

$
19,943

$
118,714

$
43,230State income taxes, net of federal benefit


1,412


2,560


9,401


4,014Foreign tax credit


(806
)




(3,247
)

Nondeductible goodwill amortization





21,457





59,350Other, net


345


(4,271
)

1,043


(5,834
)Total provision for income taxes

$
32,650

$
39,689

$
125,911

$
100,760


14

---

6.    Derivatives



15

---



Asset/(Liability)
September 30,2002

2001Hotels.com warrants

$
4,149

$
714Foreign currency forwards


5,255


935Interest rate swaps


20,322


13,538$
29,726

$
15,187




7.    Earnings Per Share



Three Months Ended
September 30,

Nine Months Ended
September 30,2002

2001

2002

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

143,096

133,110

139,762

132,092Dilutive effect of stock awards and options

1,794

1,966

2,550

2,519Denominator for diluted earnings per common
    shareadjusted weighted-average shares

144,890

135,076

142,312

134,611


8.    Segment Reporting



16

---



17

---



Three Months Ended
September 30,

Nine Months Ended
September 30,2002

2001

2002

2001Revenues from external customers:Travel Marketing and Distribution

$
378,735

$
389,546

$
1,197,556

$
1,299,933Travelocity.com


64,963


61,174


183,103


180,729GetThere


13,704


11,312


38,251


33,150Airline Solutions


50,417


57,002


154,512


149,949Total

$
507,819

$
519,034

$
1,573,422

$
1,663,761Intersegment revenues:Travel Marketing and Distribution

$
7,430

$
6,751

$
20,072

$
19,550Travelocity.com


18,883


17,286


52,922


52,926GetThere


264


54


663


54Airline Solutions











2,852Total

$
26,577

$
24,091

$
73,657

$
75,382Equity in net income (loss)
    of equity method investees:Travel Marketing and Distribution

$
3,658

$
5,795

$
12,365

$
16,517Travelocity.com


(832
)




(3,046
)

Total

$
2,826

$
5,795

$
9,319

$
16,517Total consolidated revenues:Travel Marketing and Distribution

$
389,823

$
402,092

$
1,229,993

$
1,336,000Travelocity.com


83,014


78,460


232,979


233,655GetThere


13,968


11,366


38,914


33,204Airline Solutions


50,417


57,002


154,512


152,801Elimination of intersegment revenues


(26,577
)

(24,091
)

(73,657
)

(75,382
)Total

$
510,645

$
524,829

$
1,582,741

$
1,680,278Segment operating income (loss)
    excluding special items:Travel Marketing and Distribution

$
109,454

$
89,899

$
382,203

$
349,841Travelocity.com


(4,781
)

3,658


(2,472
)

6,978GetThere


(4,806
)

(10,847
)

(21,085
)

(42,472
)Airline Solutions


3,493


2,178


18,375


8,617Net corporate allocations


343


(3,483
)

795


(15,654
)Total

$
103,703

$
81,405

$
377,816

$
307,310


18

---



Three Months Ended
September 30,

Nine Months Ended
September 30,2002

2001

2002

2001Travel Marketing and Distribution:Goodwill and other intangibles amortization

$
1,994

$
3,269

$
8,476

$
7,110Expenses related to write-off of
    software which will not be utilized





5,975





5,975Total Travel Marketing and Distribution


1,994


9,244


8,476


13,085Travelocity.com:Goodwill and other intangibles amortization


2,860


21,286


6,211


63,847Stock compensation


2,450


574


21,317


1,355Tender offer expenses








7,111


Total Travelocity.com


5,310


21,860


34,639


65,202GetThere:Goodwill and other intangibles amortization


6,607


44,155


19,819


129,326Stock compensation


863


1,665


1,852


4,995Severance and integration expenses











1,386Total GetThere


7,470


45,820


21,671


135,707Corporate:Goodwill and other intangibles amortization


1,345


2,065


4,368


6,777Restructuring charge








(3,508
)

Stock compensation


110


311


398


1,125Total Corporate


1,455


2,376


1,258


7,902Total special items

$
16,229

$
79,300

$
66,044

$
221,896Consolidated operating income (loss):Travel Marketing and Distribution

$
107,460

$
80,655

$
373,727

$
336,756Travelocity.com


(10,091
)

(18,202
)

(37,111
)

(58,224
)GetThere


(12,276
)

(56,667
)

(42,756
)

(178,179
)Airline Solutions


3,493


2,178


18,375


8,617Corporate Allocations


(1,112
)

(5,859
)

(463
)

(23,556
)Total

$
87,474

$
2,105

$
311,772

$
85,414


9.    Supplemental Guarantor/Non-Guarantor Financial Information



19

---



20

---

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

|                                               |                                                | Sabre
Holdings            |           | Sabre Inc. |           | Non-
Guarantor
Subsidiaries |            | Eliminating Entries |           | Sabre
Consolidated
|---------------------------------------------- | ---------------------------------------------- | ------------------------- | --------- | ---------- | --------- | --------------------------- | ---------- | ------------------- | --------- | ------------------
|Assets                                         |                                                |                           |           |            |           |                             |            |                     |           |                   
|Current assets                                 |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               | Cash and marketable securities                 |                           | $         |           |           | $                           | 840,015    |                     | $         | 16,768            
|                                               | Accounts receivabletrade, net                 |                           |           |           |           |                             | 245,000    |                     |           | 102,451           
|                                               | Intercompany accounts receivable
    (payable) |                           |           | 1,516,472  |           |                             | (2,047,519 | )                   |           | 531,047           
|                                               | Prepaid expenses                               |                           |           |           |           |                             | 47,150     |                     |           | 51,665            
|                                               | Deferred income taxes                          |                           |           |           |           |                             | 14,789     |                     |           | 230               
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               |                                                | Total current assets      |           |            | 1,516,472 |                             |            | (900,565            | )         |                   
|Property and equipment, net                    |                                                |                           |          |            |           | 177,916                     |            |                     | 49,980    |                   
|Deferred income taxes                          |                                                |                           |          |            |           | (13,770                     | )          |                     | 13,770    |                   
|Investments in joint ventures                  |                                                |                           |          |            |           | 12,385                      |            |                     | 171,296   |                   
|Goodwill and intangible assets, net            |                                                |                           |          |            |           | 8,689                       |            |                     | 856,250   |                   
|Investments in subsidiaries                    |                                                |                           | 558,689   |            |           | 1,649,702                   |            |                     |          |                   
|Other assets, net                              |                                                |                           | 23,282    |            |           | 109,155                     |            |                     | 48,342    |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Total assets                                   |                                                | $                         | 2,098,443 |            | $         | 1,043,512                   |            | $                   | 1,841,799 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Liabilities and stockholders' equity           |                                                |                           |           |            |           |                             |            |                     |           |                   
|Current liabilities                            |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               | Accounts payable                               |                           | $         | 17         |           | $                           | 129,624    |                     | $         | 44,455            
|                                               | Accrued compensation and related
    benefits  |                           |           |           |           |                             | 45,053     |                     |           | 12,396            
|                                               | Other accrued liabilities                      |                           |           | 3,345      |           |                             | 211,196    |                     |           | 81,636            
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|                                               |                                                | Total current liabilities |           |            | 3,362     |                             |            | 385,873             |           |                   
|Deferred income taxes                          |                                                |                           |          |            |           |                            |            |                     | 6,936     |                   
|Pensions and other postretirement
    benefits |                                                |                           |          |            |           | 81,678                      |            |                     | 920       |                   
|Other liabilities                              |                                                |                           | 587       |            |           | 17,272                      |            |                     | 34,850    |                   
|Minority interests                             |                                                |                           |          |            |           |                            |            |                     | 10,904    |                   
|Notes payable                                  |                                                |                           | 435,109   |            |           |                            |            |                     |          |                   
|Stockholders' equity                           |                                                |                           | 1,659,385 |            |           | 558,689                     |            |                     | 1,649,702 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   
|Total liabilities and stockholders'
    equity |                                                | $                         | 2,098,443 |            | $         | 1,043,512                   |            | $                   | 1,841,799 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   

21

---

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 |                   
|                                               |                                                |                           |           |            |           |                             |            |                     |           |                   

22

---

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

|                                  |                                 | Sabre
Holdings               |         | Sabre Inc. |         | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |       
|--------------------------------- | ------------------------------- | ---------------------------- | ------- | ---------- | ------- | --------------------------- | ------- | ------------------- | ------- | ------------------ | ------
|Revenues                          |                                 | $                            |        |            | $       | 1,229,465                   |         | $                   | 677,368 |                    | $     
|Operating expenses                |                                 |                              | 1,096   |            |         | 974,360                     |         |                     | 619,605 |                    |       
|                                  |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Operating income (loss)           |                                 |                              | (1,096  | )          |         | 255,105                     |         |                     | 57,763  |                    |       
|Other income (expense)            |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|                                  | Interest income                 |                              |         | 70,926     |         |                             | 17,392  |                     |         | 17,249             |       
|                                  | Interest expense                |                              |         | (14,348    | )       |                             | (84,431 | )                   |         | (1,959             | )     
|                                  | Income (loss) from subsidiaries |                              |         | 176,724    |         |                             | 51,632  |                     |         |                   |       
|                                  | Other, net                      |                              |         |           |         |                             | 18,405  |                     |         | 4,568              |       
|                                  |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|                                  |                                 | Total other income (expense) |         |            | 233,302 |                             |         | 2,998               |         |                    | 19,858
|Minority interests                |                                 |                              |        |            |         |                            |         |                     | (390    | )                  |       
|                                  |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Income (loss) before income taxes |                                 |                              | 232,206 |            |         | 258,103                     |         |                     | 77,231  |                    |       
|Provision for income taxes        |                                 |                              | 18,933  |            |         | 81,379                      |         |                     | 25,599  |                    |       
|                                  |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Net income (loss)                 |                                 | $                            | 213,273 |            | $       | 176,724                     |         | $                   | 51,632  |                    | $     
|                                  |                                 |                              |         |            |         |                             |         |                     |         |                    |       

23

---

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

|                                                                                             |                                 | Sabre
Holdings               |         | Sabre Inc. |         | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |       
|-------------------------------------------------------------------------------------------- | ------------------------------- | ---------------------------- | ------- | ---------- | ------- | --------------------------- | ------- | ------------------- | ------- | ------------------ | ------
|Revenues                                                                                     |                                 | $                            |        |            | $       | 1,299,375                   |         | $                   | 651,437 |                    | $     
|Operating expenses                                                                           |                                 |                              | 978     |            |         | 1,143,190                   |         |                     | 722,417 |                    |       
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Operating income (loss)                                                                      |                                 |                              | (978    | )          |         | 156,185                     |         |                     | (70,980 | )                  |       
|Other income (expense)                                                                       |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|                                                                                             | Interest income                 |                              |         | 28,510     |         |                             | 11,353  |                     |         | 21,160             |       
|                                                                                             | Interest expense                |                              |         | (3,656     | )       |                             | (74,962 | )                   |         | (1,279             | )     
|                                                                                             | Income (loss) from subsidiaries |                              |         | 85,205     |         |                             | (73,118 | )                   |         |                   |       
|                                                                                             | Other, net                      |                              |         |           |         |                             | 45,305  |                     |         | (5,540             | )     
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|                                                                                             |                                 | Total other income (expense) |         |            | 110,059 |                             |         | (91,422             | )       |                    | 14,341
|Minority interests                                                                           |                                 |                              |        |            |         |                            |         |                     | 17,209  |                    |       
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Income (loss) from continuing operations
    before income taxes                             |                                 |                              | 109,081 |            |         | 64,763                      |         |                     | (39,430 | )                  |       
|Provision for income taxes                                                                   |                                 |                              | 8,147   |            |         | 53,930                      |         |                     | 38,683  |                    |       
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Income (loss) from continuing operations                                                     |                                 |                              | 100,934 |            |         | 10,833                      |         |                     | (78,113 | )                  |       
|Income (loss) from discontinued operations                                                   |                                 |                              |        |            |         | 36,164                      |         |                     | 1,328   |                    |       
|Gain on sale of discontinued operations, net                                                 |                                 |                              |        |            |         | 38,208                      |         |                     | 564     |                    |       
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Income (loss) before cumulative effect of change in accounting method                        |                                 |                              | 100,934 |            |         | 85,205                      |         |                     | (76,221 | )                  |       
|Cumulative effect of change in accounting method, net of minority interests and income taxes |                                 |                              |        |            |         |                            |         |                     | 3,103   |                    |       
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       
|Net income (loss)                                                                            |                                 | $                            | 100,934 |            | $       | 85,205                      |         | $                   | (73,118 | )                  | $     
|                                                                                             |                                 |                              |         |            |         |                             |         |                     |         |                    |       

24

---

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

|                                  |                          | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |      
|--------------------------------- | ------------------------ | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                          |                          | $                            |       |            | $      | 387,373                     |         | $                   | 236,804 |                    | $    
|Operating expenses                |                          |                              | (102   | )          |        | 323,212                     |         |                     | 213,593 |                    |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income                  |                          |                              | 102    |            |        | 64,161                      |         |                     | 23,211  |                    |      
|Other income (expense)            |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                  | Interest income          |                              |        | 47,945     |        |                             | 5,769   |                     |         | 5,586              |      
|                                  | Interest expense         |                              |        | (4,684     | )      |                             | (52,321 | )                   |         | (769               | )    
|                                  | Income from subsidiaries |                              |        | 29,355     |        |                             | 18,318  |                     |         |                   |      
|                                  | Other, net               |                              |        |           |        |                             | 1,023   |                     |         | 897                |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|                                  |                          | Total other income (expense) |        |            | 72,616 |                             |         | (27,211             | )       |                    | 5,714
|Minority interests                |                          |                              |       |            |        |                            |         |                     | (349    | )                  |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) before income taxes |                          |                              | 72,718 |            |        | 36,950                      |         |                     | 28,576  |                    |      
|Provision for income taxes        |                          |                              | 14,797 |            |        | 7,595                       |         |                     | 10,258  |                    |      
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                 |                          | $                            | 57,921 |            | $      | 29,355                      |         | $                   | 18,318  |                    | $    
|                                  |                          |                              |        |            |        |                             |         |                     |         |                    |      

25

---

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

|                                                                 |                                 | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating Entries |         | Sabre
Consolidated |      
|---------------------------------------------------------------- | ------------------------------- | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                                                         |                                 | $                            |       |            | $      | 403,078                     |         | $                   | 207,878 |                    | $    
|Operating expenses                                               |                                 |                              | (133   | )          |        | 371,144                     |         |                     | 237,840 |                    |      
|                                                                 |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income (loss)                                          |                                 |                              | 133    |            |        | 31,934                      |         |                     | (29,962 | )                  |      
|Other income (expense)                                           |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|                                                                 | Interest income                 |                              |        | 10,574     |        |                             | 6,423   |                     |         | 7,177              |      
|                                                                 | Interest expense                |                              |        | (3,656     | )      |                             | (17,740 | )                   |         | (561               | )    
|                                                                 | Income (loss) from subsidiaries |                              |        | 51,417     |        |                             | (27,660 | )                   |         |                   |      
|                                                                 | Other, net                      |                              |        |           |        |                             | 47,306  |                     |         | 313                |      
|                                                                 |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|                                                                 |                                 | Total other income (expense) |        |            | 58,335 |                             |         | 8,329               |         |                    | 6,929
|Minority interests                                               |                                 |                              |       |            |        |                            |         |                     | 5,038   |                    |      
|                                                                 |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) from continuing operations
    before income taxes |                                 |                              | 58,468 |            |        | 40,263                      |         |                     | (17,995 | )                  |      
|Provision for income taxes                                       |                                 |                              | 2,406  |            |        | 28,241                      |         |                     | 9,042   |                    |      
|                                                                 |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) from continuing operations                         |                                 |                              | 56,062 |            |        | 12,022                      |         |                     | (27,037 | )                  |      
|Income (loss) from discontinued
    operations, net              |                                 |                              |       |            |        | 1,187                       |         |                     | (1,187  | )                  |      
|Gain on sale of discontinued operations, net                     |                                 |                              |       |            |        | 38,208                      |         |                     | 564     |                    |      
|                                                                 |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                                                |                                 | $                            | 56,062 |            | $      | 51,417                      |         | $                   | (27,660 | )                  | $    
|                                                                 |                                 |                              |        |            |        |                             |         |                     |         |                    |      

26

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

|                     |                                                                                         | Sabre
Holdings                                       |         | Sabre Inc. |          | Non-
Guarantor
Subsidiaries |            | Eliminating Entries |        | Sabre
Consolidated |         
|-------------------- | --------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------- | ---------- | -------- | --------------------------- | ---------- | ------------------- | ------ | ------------------ | --------
|Operating Activities |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|Net earnings         |                                                                                         | $                                                    | 213,273 |            | $        | 176,724                     |            | $                   | 51,632 |                    | $       
|                     | Adjustments to reconcile net earnings
    to cash provided by operating
    activities: |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     |                                                                                         | Depreciation and amortization                        |         |            |         |                             |            | 29,718              |        |                    | 56,456  
|                     |                                                                                         | Stock compensation                                   |         |            |         |                             |            |                    |        |                    | 27,079  
|                     |                                                                                         | Deferred income taxes                                |         |            |         |                             |            | 64,801              |        |                    | 14,156  
|                     |                                                                                         | Tax benefit from exercise of stock options           |         |            | 9,686    |                             |            |                    |        |                    |        
|                     |                                                                                         | Minority interests                                   |         |            |         |                             |            |                    |        |                    | 390     
|                     |                                                                                         | (Income) loss from subsidiaries                      |         |            | (176,724 | )                           |            | (51,632             | )      |                    |        
|                     |                                                                                         | Gain on sale of former headquarters building         |         |            |         |                             |            | (18,308             | )      |                    |        
|                     |                                                                                         | Other                                                |         |            | 10,955   |                             |            | (15,199             | )      |                    | (12,252 
|                     |                                                                                         | Changes in operating assets and
    liabilities      |         |            | (447,351 | )                           |            | 480,185             |        |                    | (214,945
|                     |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     |                                                                                         | Cash provided by (used for)
    operating activities |         |            | (390,161 | )                           |            | 666,289             |        |                    | (77,484 
|Investing Activities |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     | Additions to property and equipment                                                     |                                                      |         |           |          |                             | (29,413    | )                   |        | (13,706            | )       
|                     | Purchases of marketable securities                                                      |                                                      |         |           |          |                             | (2,958,197 | )                   |        | (321,312           | )       
|                     | Sales of marketable securities                                                          |                                                      |         |           |          |                             | 2,668,483  |                     |        | 434,453            |         
|                     | Investments in subsidiaries, net                                                        |                                                      |         | (9,409     | )        |                             | (465,548   | )                   |        |                   |         
|                     | Business combinations, net of
    cash acquired                                         |                                                      |         |           |          |                             | 29,541     |                     |        | (512,967           | )       
|                     | Proceeds from exercise of Travelocity.com
    stock options                             |                                                      |         |           |          |                             |           |                     |        |                   |         
|                     | Proceeds from sale of former
    headquarters building                                  |                                                      |         |           |          |                             | 80,000     |                     |        |                   |         
|                     | Purchase of data center facility from lessor                                            |                                                      |         |           |          |                             | (92,092    | )                   |        |                   |         
|                     | Proceeds from sale of data center facility                                              |                                                      |         |           |          |                             | 68,464     |                     |        |                   |         
|                     | Proceeds from sale of minority interest in Sabre
    Pacific                            |                                                      |         |           |          |                             |           |                     |        | 23,466             |         
|                     | Other investing activities, net                                                         |                                                      |         |           |          |                             | 29,968     |                     |        | (8,126             | )       
|                     |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     |                                                                                         | Cash provided by (used for)
    investing activities |         |            | (9,409   | )                           |            | (668,794            | )      |                    | (398,192
|Financing Activities |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     | Contributions from affiliates                                                           |                                                      |         |           |          |                             | 9,409      |                     |        | 465,548            |         
|                     | Proceeds from issuance of
    common stock                                              |                                                      |         | 438,767    |          |                             |           |                     |        | 33,658             |         
|                     | Purchases of treasury stock                                                             |                                                      |         | (56,610    | )        |                             |           |                     |        |                   |         
|                     | Other financing activities, net                                                         |                                                      |         | 17,413     |          |                             |           |                     |        | (17,503            | )       
|                     |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     |                                                                                         | Cash provided by (used for)
    financing activities |         |            | 399,570  |                             |            | 9,409               |        |                    | 481,703 
|                     | Increase in cash                                                                        |                                                      |         |           |          |                             | 6,904      |                     |        | 6,027              |         
|                     | Cash at beginning of period                                                             |                                                      |         |           |          |                             | 8,642      |                     |        | 10,213             |         
|                     |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         
|                     | Cash at end of period                                                                   |                                                      | $       |           |          | $                           | 15,546     |                     | $      | 16,240             |         
|                     |                                                                                         |                                                      |         |            |          |                             |            |                     |        |                    |         

27

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

|                     |                                                                                         | Sabre
Holdings                                            |   | Sabre Inc. |          | Non-
Guarantor
Subsidiaries |            | Eliminating Entries |   | Sabre
Consolidated |        
|-------------------- | --------------------------------------------------------------------------------------- | --------------------------------------------------------- | - | ---------- | -------- | --------------------------- | ---------- | ------------------- | - | ------------------ | -------
|Operating Activities |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     | Net earnings                                                                            |                                                           | $ | 100,934    |          | $                           | 85,205     |                     | $ | (73,118            | )      
|                     | Adjustments to reconcile net earnings
    to cash provided by operating
    activities: |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     |                                                                                         | Depreciation and amortization                             |   |            |         |                             |            | 104,602             |   |                    | 246,574
|                     |                                                                                         | Stock compensation                                        |   |            |         |                             |            |                    |   |                    | 5,844  
|                     |                                                                                         | Deferred income taxes                                     |   |            |         |                             |            | (74,365             | ) |                    | (11,964
|                     |                                                                                         | Minority interests                                        |   |            |         |                             |            |                    |   |                    | (17,209
|                     |                                                                                         | Gain on sale of discontinued
    operations, net          |   |            |         |                             |            | (38,208             | ) |                    | (564   
|                     |                                                                                         | Gain on sale of Equant shares                             |   |            |         |                             |            |                    |   |                    | (47,303
|                     |                                                                                         | Tax benefit from exercise of
    stock options            |   |            | 17,472   |                             |            |                    |   |                    |       
|                     |                                                                                         | (Income) loss from subsidiaries                           |   |            | (85,205  | )                           |            | 73,118              |   |                    |       
|                     |                                                                                         | Cumulative effect of change in accounting
    method, net |   |            |         |                             |            |                    |   |                    | (3,103 
|                     |                                                                                         | Other                                                     |   |            | 10,885   |                             |            | (26,942             | ) |                    | 16,780 
|                     |                                                                                         | Changes in operating assets
    and liabilities           |   |            | (504,194 | )                           |            | 823,272             |   |                    | (84,618
|                     |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     |                                                                                         | Cash provided by (used for)
    operating activities      |   |            | (460,108 | )                           |            | 946,682             |   |                    | 31,319 
|Investing Activities |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     | Additions to property and equipment                                                     |                                                           |   |           |          |                             | (98,715    | )                   |   | (34,516            | )      
|                     | Purchases of marketable securities                                                      |                                                           |   |           |          |                             | (2,363,230 | )                   |   | (387,632           | )      
|                     | Sales of marketable securities                                                          |                                                           |   |           |          |                             | 1,771,371  |                     |   | 304,431            |        
|                     | Proceeds from sales of investments                                                      |                                                           |   |           |          |                             |           |                     |   | 83,907             |        
|                     | Investments in subsidiaries, net                                                        |                                                           |   | (24,226    | )        |                             | 372        |                     |   |                   |        
|                     | Business combinations, net of
    cash acquired                                         |                                                           |   |           |          |                             |           |                     |   | (45,956            | )      
|                     | Proceeds from sale of discontinued
    operations                                       |                                                           |   |           |          |                             | 607,432    |                     |   | 53,331             |        
|                     | Other investing activities, net                                                         |                                                           |   |           |          |                             | (28,771    | )                   |   | 50                 |        
|                     |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     |                                                                                         | Cash provided by (used for)
    investing activities      |   |            | (24,226  | )                           |            | (111,541            | ) |                    | (26,385
|Financing Activities |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     | Contributions from affiliates                                                           |                                                           |   |           |          |                             | 24,226     |                     |   | (372               | )      
|                     | Proceeds from issuance of notes payable                                                 |                                                           |   | 397,391    |          |                             |           |                     |   |                   |        
|                     | Proceeds from issuance of common stock                                                  |                                                           |   | 93,904     |          |                             |           |                     |   |                   |        
|                     | Payment of notes payable                                                                |                                                           |   |           |          |                             | (859,000   | )                   |   |                   |        
|                     | Purchases of treasury stock                                                             |                                                           |   | (6,410     | )        |                             |           |                     |   |                   |        
|                     |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     |                                                                                         | Cash provided by (used for)
    financing activities      |   |            | 484,885  |                             |            | (834,774            | ) |                    | (372   
|                     | Increase in cash                                                                        |                                                           |   | 551        |          |                             | 367        |                     |   | 4,562              |        
|                     | Cash at beginning of period                                                             |                                                           |   |           |          |                             | 1,582      |                     |   | 6,196              |        
|                     |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        
|                     | Cash at end of period                                                                   |                                                           | $ | 551        |          | $                           | 1,949      |                     | $ | 10,758             |        
|                     |                                                                                         |                                                           |   |            |          |                             |            |                     |   |                    |        

10.  Subsequent Events

In
October 2002, we announced plans for a fourth quarter 2002 reduction in workforce of approximately 5% to 7% to reduce costs as a result of the continued decline in travel and
general economic downturn after the September 11, 2001 terrorist attacks. The financial impact of the reduction has not yet been determined.

On
November 12, 2002, the United States Department of Transportation issued a notice of proposed rule-making to revise the existing regulations governing air travel
distribution through computer reservations systems. If those rules were to become final in their current form, we could be adversely affected. In particular, the rules could facilitate efforts by the
airline owners of Orbitz and Worldspan to divert travel bookings to distribution channels that they own and control. See the discussion of regulatory developments below under
"Risk Factors".

28

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

SABRE HOLDINGS CORPORATION

RESULTS OF OPERATIONS



29

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Three Months Ended September 30, 2002 and 2001



30

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31

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Nine Months Ended September 30, 2002 and 2001



32

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33

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34

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SABRE HOLDINGS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES



35

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36

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37

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OUTLOOK FOR THE REMAINDER OF 2002



38

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SABRE HOLDINGS CORPORATION
CAUTIONARY STATEMENT



Risk Factors

GENERAL



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.



39

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WE
FACE COMPETITION FROM ESTABLISHED AND EMERGING TRAVEL DISTRIBUTION CHANNELS, WHICH COULD DIVERT CUSTOMERS TO OUR COMPETITORS AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.



MANY
OF OUR COMPETITORS IN THE TRAVEL MARKETING AND DISTRIBUTION BUSINESS ARE WELL FUNDED AND HAVE MAJOR TRAVEL SUPPLIERS AS SIGNIFICANT SHAREHOLDERS, WHICH GIVES THESE COMPETITORS A COMPETITIVE
ADVANTAGE THAT COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.



SUPPLIER
COST SAVINGS EFFORTS COULD CAUSE US TO REDUCE THE FEES WE CHARGE TO SUPPLIERS OR INCREASE THE INCENTIVES WE OFFER TO TRAVEL AGENCIES, THEREBY ADVERSELY AFFECTING OUR RESULTS OF OPERATIONS.



40

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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, WHICH WOULD ADVERSELY AFFECT OUR BOOKING
FEE REVENUE AND OUR RESULTS OF OPERATIONS.



REGULATORY
DEVELOPMENTS COULD LIMIT OUR ABILITY TO COMPETE BY RESTRICTING OUR FLEXIBILITY TO RESPOND TO COMPETITIVE CONDITIONS, WHICH COULD CAUSE OUR CUSTOMERS TO BE DIVERTED TO OUR COMPETITORS AND
ADVERSELY AFFECT OUR REVENUE AND RESULTS OF OPERATIONS.



41

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RAPID
TECHNOLOGICAL CHANGES AND NEW DISTRIBUTION CHANNELS MAY RENDER OUR TECHNOLOGY OBSOLETE OR DECREASE THE ATTRACTIVENESS OF OUR SERVICES TO CUSTOMERS, WHICH COULD CAUSE US TO INCREASE EXPENDITURES
TO UPGRADE OUR TECHNOLOGY OR DEVELOP COMPETING PRODUCTS IN NEW DISTRIBUTION CHANNELS.



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



WE
FACE TRADE BARRIERS OUTSIDE OF NORTH AMERICA THAT LIMIT OUR ABILITY TO COMPETE, WHICH COULD REQUIRE US TO INCREASE INCENTIVES, REDUCE PRICES, INCREASE SPENDING ON MARKETING OR PRODUCT DEVELOPMENT,
OR OTHERWISE TO TAKE ACTIONS THAT COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.



42

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





WE
MAY NOT SUCCESSFULLY MAKE AND INTEGRATE BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES, WHICH COULD RESULT IN INCREASED EXPENDITURES OR CAUSE US TO FAIL TO ACHIEVE ANTICIPATED COST SAVINGS OR
REVENUE GROWTH.



43

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Item 4. Controls and Procedures



We
may not be able to identify suitable candidates for business combinations and strategic investments, obtain financing or acceptable terms for such business combinations and strategic
investments or otherwise make such business combinations and strategic investments on acceptable terms.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

Travelocity.com Shareholder Litigation



Item 5. Other Information



44

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Direct Connect Availability 3-Year Pricing Option



45

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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 nine months ended September 30, 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
August 14, 2002, Sabre Holdings Corporation submitted a report on Form 8-K stating that it had delivered to the SEC statements in writing, under oath, of each of the
principal executive officer and the principal financial officer of Sabre Holdings Corporation pursuant to the SEC's June 27, 2002 Order Requiring the Filing of Sworn Statements Pursuant to
Section 21(a)(1) of the Securities Exchange Act of 1934, File No. 4-460, and in the form of Exhibit A thereto.

On
August 14, 2002, Sabre Holdings Corporation submitted a report on Form 8-K stating that it had delivered to the SEC statements in writing, under oath, of each of the
principal executive officer and
the principal financial officer of Sabre Holdings Corporation pursuant to Title 18 United States Code Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002.

On
September 9, 2002, Sabre Holdings Corporation submitted a report on Form 8-K stating that it had repurchased 2,234,400 shares of its Common Stock, par value $.01 per share
and stating its approximate cash and marketable securities at August 31, 2002.

On
September 10, 2002, Sabre Holdings Corporation submitted an amended report on Form 8-K/A correcting the statement made in its report on September 9, 2002 about its
approximate cash and marketable securities at August 31, 2002.

On
October 22, 2002, Sabre Holdings Corporation submitted a report on Form 8-K announcing a new multi-year offering for airlines in its Participating Carrier
Agreement for Direct Connect Availability.

On
October 23, 2002, Sabre Holdings Corporation submitted an amended report on Form 8-K/A amending and restating its report of October 22, 2002 about the new
multi-year offering for airlines in its Participating Carrier Agreement for Direct Connect Availability.

46

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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: November 14, 2002 |  |                           

47

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CERTIFICATIONS

I,
William J. Hannigan, certify that:



Date:
November 14, 2002

/s/
William J. Hannigan

William
J. Hannigan
Chairman of the Board, President
and Chief Executive Officer

48

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I,
Jeffery M. Jackson, certify that:



Date:
November 14, 2002

/s/
Jeffery M. Jackson

Jeffery
M. Jackson
Executive Vice President and
Chief Financial Officer

49

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