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

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FORM 10-K

|/x/ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required]
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For the fiscal year ended December 31, 2001.

OR

|/ / | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required]
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Commission file number 1-12175

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LOGO

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

Delaware(State or other jurisdiction of
incorporation or ogranization)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each classClass A common stock, par value $.01 per share

Name of exchange on which registeredNew York Stock Exchange


NONE(Title of Class)

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/    No / /

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /x/

The
aggregate market value of the voting stock held by non-affiliates of the registrant as of February 21, 2002 was approximately $5,671,219,601, based on the closing
price per share of Class A common stock of $42.12 on such date. As of February 21, 2002, 134,644,340 shares of the registrant's Class A common stock were outstanding.

DOCUMENTS
INCORPORATED BY REFERENCE

Part
III of this Form 10-K incorporates by reference certain information from the Proxy Statement for the Annual Meeting of Stockholders to be held May 14, 2002.

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PART I

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In this Annual Report on Form 10-K, the words "Sabre", "company", "we", "our", "ours" and "us" refer to Sabre Holdings Corporation and its
consolidated subsidiaries unless otherwise stated or the context otherwise requires.

ITEM 1.    BUSINESS

We are the world leader in the marketing and distribution of travel through ourSabre®1
computer reservations system ("theSabresystem"). In addition, we are a leading provider of software solutions to the travel and transportation
industries.

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Sabre
Holdings Corporation is a holding company incorporated in Delaware on June 25, 1996. Pursuant to a reorganization consummated on July 2, 1996 (the "Reorganization"),
we became the successor to the businesses of The Sabre Group which were formerly operated as divisions or subsidiaries of American Airlines, Inc. ("American") or AMR Corporation ("AMR"). On
October 17, 1996, we completed an initial public offering (the "Offering") of 23,230,000 shares of our Class A common stock, par value $.01 per share, constituting approximately 17.8% of
the economic interest of our outstanding common equity. On March 15, 2000, AMR distributed its entire ownership interest in Sabre to AMR shareholders as a stock dividend. Effective on
July 1, 2001, we completed the sale of our information technology infrastructure outsourcing business including outsourcing contracts, Web hosting contracts, and IT infrastructure assets and
related real estate to Electronic Data Systems Corporation ("EDS").

We
operate through four business segments: Travel Marketing and Distribution ("TM&D"), Travelocity.com, GetThere, and Airline Solutions and Emerging Businesses. The TM&D segment
distributes travel services to travel agencies. Through our global distribution system, subscribers can access information about and book reservations with airlines and other providers of travel and
travel-related products and services. The Travelocity.com segment distributes travel services to individual consumers. Through the Travelocity.com Web site, individual consumers can compare prices,
make travel reservations and obtain destination information online. GetThere distributes travel services online directly to businesses. GetThere operates one of the world's largest Internet
marketplaces focused on online corporate travel services and powers online travel sites for leading airlines. The Airline Solutions and Emerging Businesses segment primarily provides software
development and consulting solutions and other products and services to airlines and other travel providers. Each of these segments is discussed in greater detail below.

Travel Marketing and Distribution

TheSabresystem and other global distribution systems are the principal means of air travel distribution in the
United States and in many international regions. Through theSabresystem, travel agencies, corporate travel departments and individual consumers
("subscribers") can access information about and book reservations with airlines and other providers of travel and travel-related products and services ("associates"). As of December 31, 2001,
travel agencies with approximately 66,000 locations in over 112 countries on six continents subscribed to theSabresystem, which enabled these
subscribers to make reservations with approximately 405 airlines, 52 car rental companies, 229 tour operators, 9 cruise lines, 33 railroads and 244 hotel companies covering approximately 53,000 hotel
properties worldwide.

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During
2001, more airline bookings in North America, Latin America and Asia were made through theSabresystem than through any other
global distribution system. Approximately 77.5%, 82.5% and 84.7% of our revenue from continuing operations in 2001, 2000 and 1999, respectively, was generated by the marketing and distribution of
travel, primarily through booking fees paid by associates.

TheSabreGlobal Distribution System

TheSabresystem, like other global distribution systems, creates an electronic marketplace where travel providers
display information about their products and warehouse and manage inventory. Subscribersprincipally travel agencies but also corporate travel departments and individual consumers (via
Travelocity.com and other online agencies that subscribe toSabre)access information and purchase travel products and services using the Sabresystem. In 2001, over 930 associates displayed information about their products and services through the Sabresystem, and we estimate that more than $67 billion of travel-related products and
services were sold through the Sabresystem.

In
addition to providing information to subscribers about airlines and other travel-related vendors, theSabresystem reports to the
travel providers transaction data about subscriber-generated reservations, allowing vendors to better manage inventory and revenues. TheSabresystem
also allows travel agency subscribers to print airline tickets, boarding passes and itineraries. Additionally, theSabresystem provides subscribers
with travel information on matters such as currency, medical and visa requirements, weather and sightseeing. By accessing theSabresystem, a subscriber
can, from a single source, obtain schedules, availability and pricing information from multiple travel providers for complex travel itineraries.

Associate Participation

We derive our travel marketing and distribution revenues primarily from booking fees paid by associates for reservations made through the Sabresystem for their products and services. In addition to airlines, associates include car rental companies, hotel companies, railroads, tour
operators, ferry companies and cruise lines.

Airlines
and other associates can display, warehouse, manage and sell their inventory in theSabresystem. The booking fee paid by an
associate depends upon several factors, including the associate's level of participation in theSabresystem and the type of products or services
provided by the associate. Airlines are offered a wide range of participation levels. The lowest level of participation for airlines, theSabre® Basic Booking
RequestSMparticipation level, provides schedules and electronic booking
functionality only. Higher levels of participation for airlines, such as theSabre® Direct Connect® Availabilityparticipation
level, provide greater levels of communication with theSabresystem, giving subscribers more detailed information and associates improved inventory
management. For an associate selecting one of the higher levels of participation, theSabresystem provides subscribers with a direct connection to the
associate's internal reservation system, allowing theSabresystem to provide real-time information and allowing the associate to optimize
revenue for each flight. Car rental companies and hotel operators are provided with similar levels of participation from which to select. We also provide associates, upon request, marketing data (in
the form of anonymous, aggregated data from which all personal information has been deleted) derived from theSabresystem bookings for fees that vary
depending on the amount and type of information provided.

Subscriber Access

Access to theSabresystem enables subscribers to electronically locate, price, compare and purchase travel
products and services provided by associates. We tailor the interface and functionality of theSabresystem to the needs of our different types of
subscribers. Marketing is targeted to travel agencies, travel suppliers, corporations and individual consumers.

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We
provide travel agents with the hardware, software, technical support and other services needed to use theSabresystem, in return for
fees that typically vary inversely with the travel agency's productivity, as measured by the number of bookings generated. Such fees are payable over the term of the travel agent's agreement with us,
generally five years in the United States and Latin America, three years in Canada, and one year in Europe.

Because
travel agencies have differing needs, we have modified theSabresystem interface to meet the specific needs of different
categories of travel agents. For example,Turbo Sabre®software is an advanced point-of-sale interface and
application development tool that enables advanced functionality such as customized screens, automated quality control and database integration, and eliminates complex commands, reducing keystrokes
and training requirements. In addition, we offerSabre eVoya® Webtop,a Web-based travel agency portal combining the breadth of the Internet
with the power of Sabre. It provides access to Sabre's traditional format based booking tool, as well as Web-based booking tools for cruises, restaurants, ground transportation, theatre,
local events and theme parks.

We
provide bookings solutions to serve the specific online needs of travel agencies and associate customers, including Web site development, business logic middleware and backend
processing. The end consumer accesses the agency and associate-specific Web sites via the Internet to locate, price, compare and purchase travel products and services. Travel agent and associate
product offerings range from off-the-shelf applications to fully customized solutions. License, consulting and Web hosting fees are recovered from the subscribers and vary with the level of
customization and volume generated by the site. We currently provide Web hosting services for over 1,000 sites.

TheSabresystem interfaces are available in English, Spanish, Portuguese, French, German, Italian and Japanese. In addition, we offer
travel agencies back-office accounting systems and further support to travel agencies by offering a simplified method to develop and place their own marketing presence on the Internet.

GetThere

GetThere, Inc. ("GetThere") provides Web-based travel booking systems designed for corporate travelers, travel arrangers and travel managers.
Through our GetThere system, corporations provide employees with a convenient way to make travel and meeting reservations via their company intranet, while significantly reducing costs to the
corporation by enabling lower service fees, better policy adherence, and providing lower average ticket prices and real-time data on spending. Many corporations save more than 20% on
travel costs, often representing millions of dollars in bottom-line savings. Through major agency and supplier partners, GetThere is delivering sophisticated corporate travel features to
small and medium-sized companies that make up a significant percentage of the industry's business travel expenditures. As of December 31, 2001 more than 800 large corporations, including over
half of the Fortune 200, use GetThere technology.

GetThere
also enables trip reservations on airline Web sites, providing value to travelers while reducing the suppliers' cost of selling tickets. Suppliers can also incorporate
value-added services to promote loyalty, such as complete air, car and hotel reservations, awards programs and redemption, and flight status alerts and information. GetThere provides
Web-based booking systems to more than 10 major airlines including Alitalia, All Nippon Airways, America West, British Airways, Cathay Pacific, United Airlines and US Airways.

We
receive fees for transactions booked through GetThere's travel booking systems and also recognize revenue for certain up-front fees, such as implementation, franchise and
license fees over the term of the related contract.

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Travelocity.com

We own an approximate 70% economic interest in Travelocity.com Inc. ("Travelocity.com"), a leading provider of online travel services to consumers.
Travelocity.com operates Travelocity.com and other Web sites, which have approximately 32 million registered members, the highest in its industry.

In
2000, we merged our subsidiary Travelocity.com with Preview Travel, Inc. ("Preview"), an independent publicly-traded company engaged in consumer direct travel distribution over
the Internet. Shares of stock of Travelocity.com Inc., the surviving entity, now trade under the symbol "TVLY" on the NASDAQ National Market. On February 19, 2002, we announced a tender
offer for the publicly traded shares of common stock of Travelocity.com (See Note 19 of the Consolidated Financial Statements).

Through
the Travelocity.com Web site and certain co-branded sites operated in conjunction with other Web sites, individual
leisure and business travelers can compare prices, make travel reservations online and obtain destination information. This product is generally available to individual consumers free of charge.

The
Travelocity.com Web site is accessible through the Internet and computer online services such as AOL. They feature booking and
purchase capability for airline, car rental agencies, hotel companies and cruise and vacation providers, and offer access to a database of information regarding specific destinations and other
information of interest to travelers. During 2001, members purchased approximately $3.1 billion in travel services from associates through the Travelocity.com Web site.

In
addition to Travelocity.com's main U.S. Web site, it operates multiple Web sites tailored to customers in the United Kingdom, Canada and Germany. Travelocity.com is the exclusive
provider of travel booking services for various America Online, Inc. services, including AOL, AOL.com, Netscape, CompuServe and Digital City in the United States and Canada. Travelocity.com is
also an exclusive provider of some of the travel booking services on Web sites operated by Yahoo!, Inc. in the United States and Canada. In 2001, Travelocity.com announced that following
approval from the European Commission, Travelocity and Otto, a global leader in direct marketing and Europe's top direct marketing firm, consummated plans to launch Travelocity Europe, a new
multi-channel travel company, making Travelocity Europe one of the leading European online agencies. Finally, Travelocity.com also launchedTravelocity.ca en
francaisfor its Canadian customers, providing the most comprehensive French and English language online planning and buying choices across air, car, hotel, rail and vacation
travels.

We
receive booking fees and commissions from travel providers for purchases of their travel products and services pursuant to reservations made through the
Travelocity.com Web site. In addition, we receive advertising revenues from the delivery of advertising impressions on the
Travelocity.com Web site.

Airline Solutions and Emerging Businesses

Software Development and Licensing.Our suite of software products provides industry-specific applications that help airlines
and other travel providers streamline their operations, improve workflow and raise productivity. Some of the most popular products support planning and scheduling, flight operations, pricing and
revenue management, crew management, cargo tracking, passenger systems and frequent flyer programs. We currently provide both custom and off-the-shelf software solutions to more than 145 airlines.

We
began expanding our existing software products and solutions in 2000 by launchingSabre® eMergoTMWeb-enabled solutions,
 a new
application service provider offering that simplifies delivery options and positions us for growth into new market segments. We are in the process of integrating over 25 products into the eMergoenvironment. The offering allows carriers access to our leading technological solutions that feature delivery through shorter implementations,
24-hour data center support, and fewer complications than running an internal system. Most products offered withineMergoare
Web-enabled and provide users with secure access for a pre-defined, usage-based fee.

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Reservations Hosting.We are a leading provider of airline reservations hosting services. These services involve maintaining
and storing an airline's schedules, fares and inventory for the primary purpose of creating reservations for the airline's customers. These services also support airport check-in,
ticketing, car and hotel reservations and the airline's frequent flyer program. The reservations hosting services allow our airline clients to support and expand upon these fundamental airline
functions. In addition, we have designed our reservations hosting services to easily integrate with many of our other software solutions so that airline customers using our reservations hosting
services can readily access the benefits offered by these other solutions. Each hosted airline has a unique and secured partition that contains data and reservations for that airline. We currently
provide reservations hosting services to over 60 airlines worldwide, boarding over 300 million passengers annually.

Consulting Services.Our consulting services assist businesses in the travel and transportation industries in collecting and
analyzing operational and aggregated customer data in order to improve internal operations and product distribution in the marketplace. These services enable airlines, airports and other
travel-related businesses to improve operations and optimally distribute their fares, schedules and inventories through all available channels with a special emphasis on distribution through computer
reservations and global distribution systems. We offer consulting services covering several areas related to the airline and travel industries, including revenue management, distribution strategy,
maintenance and engineering, electronic business solutions, crew contract negotiations, network profitability and airline start-up assistance.

We
distribute our software solutions and consulting services through a sales and marketing organization that spans four continents, with primary sales offices in Dallas, London, Hong
Kong and Sydney. We also maintain agency relationships to support sales efforts in key markets, including India, China and the Middle East.

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International Marketing

We are actively involved in marketing theSabresystem internationally either directly or through joint venture or
distributorship arrangements. Our global marketing partners principally include foreign airlines that have strong relationships with travel agents in such airlines' primary markets, and entities that
operate smaller global distribution systems ("GDS") or other travel-related network services.

We
have long-term agreements with ABACUS International Holdings Ltd., which created ABACUS International Ltd, a Singapore-based joint venture company that
manages travel distribution in the Asia/Pacific region. We own 35% of the joint venture and provide it with transaction processing and product development services on the Sabresystem. Sabre also
provides distribution products and services to Infini and Axess, Japan's two largest GDS travel agency marketing companies.
Infini is owned 35% by ABACUS and 65% by All Nippon Airways. Axess is owned 25% by Sabre and 75% by Japan Airlines.

Competition

Although distribution through traditional travel agents continues to be the primary method of travel distribution, new channels of direct online distribution to
businesses and consumers are developing rapidly. The adoption of these tools is currently quite low, but it is growing quickly. We believe that our products and services offered through GetThere and
Travelocity.com are well positioned to effectively compete in these emerging distribution channels.

The
global market to attract and retain agency subscribers is intensely competitive. Factors affecting competitive success of global distribution systems include depth and breadth of
information, ease of use, reliability, service and incentives to travel agents and range of products available to travel providers, travel agents and consumers. We compete in travel marketing and
distribution primarily against other large and well-established global distribution systems. Our principal competitors in marketing to travel agents include Amadeus Global Travel
Distribution SA, Galileo International Inc. and Worldspan, L.P. Each of these competitors offers many products and services substantially similar to ours.

We
potentially face many new competitors as new travel distribution channels develop, including new Internet-based online corporate and online consumer channels. Many of these channels
will continue to require services from a GDS such as theSabresystem. We have and will continue to offer transaction processing and other services to
parties that compete directly with the Travelocity.com Web site and GetThere as such parties require access to our offerings. For example, we provide transaction processing services to Cheap Tickets,
Lowestfare.com and Hotwire.com even though they directly compete against Travelocity.com. For the provision of these services, we receive booking fees for bookings made through these and other
travel-related Web sites.

We
market theSabresystem to corporations through GetThere. The market for Internet-based travel procurement and supply services is new,
highly competitive and rapidly evolving. Our main competitors in the online corporate channel in marketing to corporations include providers of online travel products and services, such as Amadeus
Global Travel Distribution SA and Amadeus' E-Travel, Galileo's Highwire, and Datalex PLC, and online providers of indirect goods and services including Ariba and Commerce One.

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We
offer our online consumer channel primarily through the Travelocity.com Web site. The main competitors of the Travelocity.com Web site in marketing to consumers include Orbitz (owned
primarily by several U.S. airlines), Expedia (owned primarily by USA Networks, Inc.), Priceline.com, Hotwire.com, Cheaptickets.com and Lowestfare.com. Increasingly, many travel suppliers are
developing their own Web sites, some of which offer an array of products and services, that directly target consumers. Various major airlines have recently launched or announced their intention to
launch Internet Web sites in the United States, Europe and Asia to provide booking services for airline travel, hotel accommodations and other travel services offered by multiple vendors. Several
hotels have announced plans for similar multi-vendor Web sites. Certain owners of these sites do (or appear to have the intention to) make certain discounted fares and prices available exclusively on
their proprietary or multi-vendor Web sites. To that end, Orbitz has included "most favored distributor" and exclusivity provisions in its airline participation contracts. Orbitz is currently being
investigated by the U.S. Department of Transportation (the "DOT") and the U.S. Department of Justice (the "DOJ"). The DOT is also conducting a rulemaking proceeding in which one of the central issues
is whether Orbitz should be subject to the same sorts of regulations as have long applied to airline-owned or airline-marketed computer reservations systems used by travel agencies.

The
Attorneys General of 20 U.S. states and the Commonwealth of Puerto Rico have filed comments with both the DOT and the DOJ expressing their serious concerns about the impact that
Orbitz might have on competition. The Senate Antitrust Subcommittee has written to the DOJ and the Federal Trade Commission calling for an investigation of Orbitz. In those proceedings, a number of
partiesincluding the Association of Retail Travel Agents, the American Society of Travel Agents, Southwest Airlines, the Consumer Federation and Sabrehave either sought to
have conditions imposed on the manner in which Orbitz may operate or to have it prohibited outright. Congress has recently passed legislation requiring the DOT to report on the competitive impact of
Orbitz and whether it is being used to distort competition. We have sought the imposition of conditions that will safeguard fair competition in this sphere. We are unable to say when those proceedings
might conclude or what the final outcome may be.

Opodo
is a multi-airline owned travel distribution Web site in Europe. The European Commission has given tentative approval for Opodo to operate in the European Union. In an effort to
gain final approval, Opodo and its owner carriers have proposed certain conditions limiting the use of most favored distributor clauses and exclusivity provisions, and have proposed to be bound by
provisions of the EC CRS Code of Conduct that require equal access to fare content. We have commented on the proposal and have asked the Commission to strengthen and clarify language regarding equal
access to content. We are unable to say when this process will be complete or what the final outcome will be.

Computer Reservation System Industry Regulation

Our travel marketing and distribution business is subject to regulation in the United States, the European Union, Canada and Peru. These regulations generally
address the relationships among computer reservation systems, airline associates and travel agency subscribers. Generally, these regulations do not address relationships with non-airline
associates. The regulations in the European Union, however, do include rail associates in certain circumstances. In general, these regulations are directed at ensuring fair competition among travel
providers. Among the principles addressed in the current regulations are:



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The
computer reservation system regulations in the United States are currently under review. In addition, the Transportation Ministry of Peru adopted new computer reservation system
regulations in December 2001. We do not believe that the possible revisions to the United States regulations, or the adoption of regulations in Peru will materially adversely affect our
operations.

Other Regulation

We may be impacted by regulations affecting issues such as exports of technology, telecommunications, data privacy and electronic commerce. Some portions of our
business, such as our Internet-based travel marketing and distribution, may be affected if regulations are adopted in these areas. Any such regulations may vary among jurisdictions. We believe that we
are capable of addressing these regulatory issues as they arise.

EDS Transaction

On March 14, 2001, we entered into agreements with EDS which provide for (i) the sale of our infrastructure outsourcing business (the "Outsourcing
Business") and information technology ("IT") infrastructure assets and associated real estate to EDS (the "Asset Purchase Agreement"), (ii) a 10-year contract with EDS to manage our IT systems
(the "IT Outsourcing Agreement"), and (iii) agreements between Sabre and EDS to jointly market IT services and software solutions to the travel and transportation industries (the "Marketing
Agreements").

Effective
on July 1, 2001, we completed the sale to EDS of our information technology infrastructure outsourcing business including outsourcing contracts, Web hosting contracts,
and IT infrastructure assets and related real estate to EDS for approximately $661 million in cash. We may receive aggregate additional payments from EDS for these assets of up to a total of
$6 million on April 15, 2003 and 2004, depending on the amount of revenues received by EDS under an airline outsourcing contract included in the sale. We used the entire
$661 million of the cash proceeds from the sale to reduce existing debt.

The
assets transferred included our: outsourcing contracts with American, US Airways, Gulf Air and Dollar/Thrifty Rent-A-Car; our data centers; and our network,
desktop and mid-range computer systems. These assets were used for our outsourcing business and for transaction processing in our travel marketing and distribution segment, including the operation of
theSabresystem. Approximately 4,000 of our employees, located mostly in the United States, were transitioned to employment with EDS upon closing of
the transaction.

We
retained our core travel marketing and distribution business, including: the line of business related to contracts with travel suppliers and travel agency subscribers for
participation in theSabresystem; our investment in the Travelocity.com[nc_cad,176] consumer online business and
GetThere[nc_cad,176] corporate online booking business; and contracts with travel suppliers, travel agencies and online travel sites for Web site development and booking engine services.
We plan to continue to focus our business on remaining the global leader in all channels of travel distribution.

We
also retained contracts and assets that are directly related to our core travel marketing and distribution business. Those include our reservations hosting business, which provides
internal reservation systems for airline customers; contracts to provide software applications development, maintenance and licensing; our intellectual property assets, including our software
applications portfolios; and theeMergosuite of airline solutions.

Research and Development Expenses

Research and development costs in continuing operations approximated $73 million, $57 million and $46 million for 2001, 2000 and 1999,
respectively.

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Segment Information

Financial information for our operating segments and geographical revenues and assets are included in Note 16 to the Consolidated Financial Statements.

Intellectual Property

We use software, business processes and other proprietary information to carry out our business. These assets and related patents, copyrights, trade secrets,
trademarks and intellectual property rights are significant assets of our business. We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures and
contractual provisions to protect these assets. We have implemented a program to seek patent protection on key technology and business processes of our business. Our software and related documentation
are also protected under trade secret and copyright laws. The laws of some foreign jurisdictions may provide less protection than the laws of the United States for our proprietary rights. Unauthorized
use of our intellectual property could have a material adverse effect on us, and there can be no assurance that our legal remedies would adequately compensate us for the damages to our business caused
by such use.

Employees

As of December 31, 2001, we had approximately 6,000 employees. A central part of our philosophy is to attract and maintain a highly capable staff. We
consider our current employee relations to be good. Our employees based in the United States are not represented by a labor union.

Subsequent Events

On February 19, 2002, we announced our intent to make a cash tender offer for all of the outstanding publicly-held common shares of Travelocity.com that we do not
already own. We intend to offer $23.00 per share to acquire the balance of Travelocity's common stock (approximately 15 million shares). The tender offer would not be conditioned on us
obtaining any financing. The tender offer would be conditioned on the tender of a number of shares sufficient to bring our ownership interest in Travelocity common stock to over 90 percent. We
expect to commence the tender offer on or soon after March 5, 2002. For information regarding the possible effect of this proposed transaction on our liquidity and capital resources, see the
Liquidity and Capital Resources section in Management's Discussion and Analysis.

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ITEM 2.    PROPERTIES

Our principal corporate executive headquarters offices are located in Southlake, Texas and consist of two newly constructed leased buildings and one previously
constructed leased building. The initial term of the lease expires in 2004 with two one-year renewal periods, thereafter subject to certain lessor and lessee approvals. We also have an
option to purchase these facilities prior to or upon expiration of the lease. Additionally, we lease office facilities in Westlake, Texas under leases expiring in 2003. We also lease office facilities
in approximately 70 other locations worldwide.

In
connection with the sale of our outsourcing assets to EDS, we assigned nine facility leases to EDS. Four of the assigned facilities are located in Tulsa, Oklahoma and include our
principal data center, a data tape archive facility, an operations center and a computer center. EDS also subleases a large office facility from us in Fort Worth, Texas in a sublease that will expire
in 2011.

The
construction of a new data center facility in Tulsa, Oklahoma is near completion. We are currently negotiating to sell this data center when construction is completed. On
January 31, 2002 we sold our previous headquarters office facility in Fort Worth, Texas to American Airlines for proceeds of approximately $80 million. A second small office facility in
Fort Worth, Texas, which we own, is also actively being marketed at this time.

Many
of our travel agency and corporate subscribers connect to theSabresystem through leased access circuits. These leased access
circuits, in turn, connect to the domestic and international data networks leased by us, such as those leased from Société Internationale de Telecommunications
Aéronautiques ("SITA"), which is owned by a consortium of airlines.

We
believe that our office facilities will be adequate for our immediate needs and could accommodate expansion. We also believe that our network access will be adequate for our immediate
and foreseeable needs.

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ITEM 3.    LEGAL PROCEEDINGS

Worldspan Dispute

On January 9, 1998, Worldspan LP ("Worldspan"), the former provider of computer reservation system services to ABACUS International Holdings ("ABACUS"),
filed a lawsuit against us in the United States District Court for the Northern District of Georgia, Atlanta Division, seeking damages and an injunction, and alleging, among other things, that we
interfered with Worldspan's relationship with ABACUS, violated the U.S. antitrust laws, and misappropriated Worldspan's confidential information. On March 30, 2001, the parties filed cross
motions for summary judgment on certain claims and said motions were heard by the court on November 6, 2001. The court granted Sabre's motion for partial summary judgment dismissing Worldspan's
state law claims, including alleged tortious interference and misappropriation of trade secrets. Worldspan has appealed the court's ruling. We believe that Worldspan's remaining claims are without
merit and we are vigorously defending ourselves. Additionally, we are entitled to indemnification pursuant to the terms of the agreement with ABACUS. No trial date has been set.

India Tax Issue

In 1998, the Indian tax authority asserted that we have a taxable presence in India. In March 1999, we received a $30 million USD tax assessment
(including interest) for the two years ending March 31, 1998. We challenged the assessment on the grounds that we do not have a taxable presence in India and, even if we do, the assessment is
based on incorrect financial data. The United States government intervened on our behalf (and other U.S. companies currently facing similar tax-related issues with the Indian government)
but was unable to reach agreement with the Indian government on our case. Additionally, we appealed the validity and amount of the assessment within the Indian tax authority. Although we did not
prevail in our appeal based on the merits, a reassessment based on correct financial data was ordered by the tax authority. We are awaiting that redetermination. We continue to believe that the
position of the Indian government is without merit and that we will ultimately prevail. We anticipate that we will appeal the case through judicial systems in India if an unfavorable ruling is
obtained from the tax authority in India.

Northwest Dispute

On June 5, 2001, Northwest Airlines ("NWA") filed a lawsuit in California District Court (San Mateo County) against Sabre Holdings Corporation and GetThere
L.P. seeking 778,209 shares of Sabre Holdings Corporation Class A common stock. The California lawsuit is based on a 1999 agreement between GetThere (before we acquired it) and NWA, whereby NWA
could exercise a number of warrants to obtain GetThere stock (which were converted into warrants for Sabre Holdings Corporation stock after the acquisition) if, within a certain period of time, the
parties entered into certain additional agreements and GetThere began processing transactions for the NWA Web site. We believe that NWA's claim to entitlement to stock is meritless because none of the
conditions precedent have been satisfied. No trial date has been set.

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Travelocity Shareholder Litigation

Sabre Holdings Corporation, its subsidiary Travelocity.com, Inc., and the directors of Travelocity.com, Inc. have been named as defendants in ten
separate lawsuits brought by eleven individual shareholders of Travelocity. Nine of these lawsuits were filed in the Delaware Court of Chancery in and for New Castle County on February 19, 2002
and one lawsuit was filed in the District Court of Tarrant County, Texas on February 21, 2002. The plaintiffs generally allege that our proposed tender offer for the publicly-held shares of
Travelocity, which we announced on February 19, 2002, is unfair to Travelocity's minority shareholders, that our proposed tender offer price is inadequate, that we breached our fiduciary duties
to Travelocity's minority shareholders, and other related allegations. The plaintiffs generally seek class certification from the court, injunctive relief, unspecified damages, and other relief. We
believe that these lawsuits are without merit and intend to vigorously defend ourselves.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders during the fourth quarter of the fiscal year ended December 31, 2001.

13

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PART II

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ITEM 5.    MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our Class A common stock is traded on the New York Stock Exchange (symbol TSG). The approximate number of record holders of our Class A common stock
at February 21, 2002 was 10,731.

The
range of the high and low sales prices for our Class A common stock on the New York Stock Exchange by quarter for the two most recent fiscal years was:

|               |                    | High |   | Low  
|-------------- | ------------------ | ---- | - | -----
|Quarter Ended: |                    |      |   |      
|               | March 31, 2001     |      | $ | 47.85
|               | June 30, 2001      |      |   | 54.98
|               | September 30, 2001 |      |   | 53.85
|               | December 31, 2001  |      |   | 43.02
|Quarter Ended: |                    |      |   |      
|               | March 31, 2000     |      | $ | 53.50
|               | June 30, 2000      |      |   | 38.63
|               | September 30, 2000 |      |   | 30.56
|               | December 31, 2000  |      |   | 43.81

We
have paid a dividend only once in our history. A dividend of approximately $675 million, or $5.20 per share, was paid on February 18, 2000 in connection with our
separation from AMR. No dividends were paid during 2001. In the future, we intend to retain our earnings to finance future growth and, therefore, we do not anticipate paying any additional cash
dividends on our common stock. Any determination as to the future payment of dividends will depend upon the future results of operations, capital requirements and financial condition of Sabre Holdings
Corporation and its subsidiaries and such other factors as our Board of Directors may consider, including any contractual or statutory restrictions on our ability to pay dividends.

14

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ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents our historical financial data. Effective on July 1, 2001 we completed the sale of our information technology infrastructure
outsourcing business ("Outsourcing Business") to Electronic Data Systems Corporation ("EDS"). The results of operations of the Outsourcing Business have been presented as a discontinued operation for
the years ended December 31, 2001, 2000, 1999 and 1998 (See Note 2 of the Consolidated Financial Statements). During 2001, we completed the acquisition of Sabre Pacific. During 2000, we
acquired Preview; Gradient Solutions Limited ("Gradient"); GetThere and a 51% ownership interest in Dillon Communication Systems GmbH ("Dillon"). Those acquisitions affect the comparability of the
data presented. See Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 5 to the Consolidated Financial Statements for further information regarding
these acquisitions and their impact on our financial condition and results of operations.

|                                                                            
|----------------------------------------------------------------------------
|
|
|
|Income Statement Data (1) (2) (3):                                          
|Revenues                                                                    
|Operating expenses, excluding amortization of goodwill and intangible assets
|Amortization of goodwill and intangible assets                              
|                                                                            
|Operating income (loss)                                                     
|Other income (expense), net                                                 
|Minority interests                                                          
|                                                                            
|Income from continuing operations before income taxes                       
|Income taxes                                                                
|                                                                            
|Income (loss) from continuing operations                                    
|Income from discontinued operations, net (1) (5)                            
|Cumulative effect of accounting change, net (6)                             
|                                                                            
|Net earnings (loss)                                                         
|                                                                            
|Earnings (loss) per common sharebasic:                                     
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net income                                                                  
|                                                                            
|Earnings (loss) per common sharediluted:                                   
|Income (loss) from continuing operations (1)                                
|                                                                            
|                                                                            
|                                                                            
|Net income                                                                  
|                                                                            
|Balance Sheet Data (at end of period) (1):                                  
|Current assets                                                              
|Goodwill and intangible assets, net                                         
|Total assets                                                                
|Current liabilities                                                         
|Long-term notes payable                                                     
|Minority interests                                                          
|Stockholders' equity                                                        

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|                                                      |  | Year Ended December 31, |      
|----------------------------------------------------- |  | ----------------------- | -----
|
|
|Other Data (1):                                       |  |                         |      
|Direct reservations booked using theSabresystem (7)   |  |                         | 372  
|Total reservations processed using theSabresystem (8) |  |                         | 431  
|Operating margin                                      |  |                         | (0.4 
|EBITDA (9)                                            |  | $                       | 402.7
|EBITDA margin (9)                                     |  |                         | 19.2 
|Ratio of earnings to fixed charges (10)               |  |                         | 0.97 
|Cash flows from operating activities (1)              |  | $                       | 410.2
|Capital expenditures (1)                              |  | $                       | 158.4
|                                                      | 

16

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17

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Summary

During 2001, we generated revenue from continuing operations by providing Travel Marketing and Distribution services to travel agencies, corporate travel
departments and travel suppliers using theSabresystem; to consumers using the Travelocity.com Web site and to businesses using GetThere products; from
the development and marketing of airline solutions; and from products and services offered by emerging businesses. Approximately 77.5% of our revenue was generated from Travel Marketing and
Distribution services, approximately 11.1% from Travelocity.com, 9.4% from Airline Solutions and Emerging Businesses and 2.0% from GetThere. Total revenues from continuing operations have grown at a
compound annual growth rate of 10.4% for the three years ended December 31, 2001.

Our
revenue for 2001 was adversely affected by the terrorist attacks of September 11. Air travel in the United States was suspended for several days following the attacks. Once
air travel resumed, we experienced significant decreases in booking volumes due to reduced travel in the United States, and, to a lesser degree, internationally. Travel bookings decreased dramatically
from approximately a 65% decline in the days immediately following the attacks, as compared to the same period a year ago, but have increased since the attacks to end the year approximately 15% lower
than the same period a year ago. While it is difficult to quantify the amount of revenue lost as a result of the attacks, we believe a reasonable estimate is $200 million.

For
the three years ended December 31, 2001, operating expenses from continuing operations have grown at a compound annual growth rate of 18.6%. Amortization of goodwill and
intangible assets resulting from acquisitions of GetThere, Preview, Gradient, Sabre Pacific and Dillon was $109.4 million in 2000 and increased to $277.5 million in 2001. Absent the
effect of this amortization expense, operating expenses from continuing operations have grown at a compound annual growth rate of 13.2%. Our primary operating expenses consist of salaries, benefits,
other employee-related costs, communication costs and customer incentives, representing approximately 61.5%, 66.7% and 77.4% of total operating expenses in 2001, 2000 and 1999, respectively. Those
expenses grew at a compound annual growth rate of 10.4% for the three years ended December 31, 2001, primarily due to our growth, including business acquisitions, and were in line with revenue
growth during this same period.

As
a result of lower than expected growth in travel bookings and revenues resulting from the September 11 terrorist attacks and higher growth in operating expenses primarily
resulting from amortization of goodwill and intangibles, our operating margin decreased to (0.4)% in 2001 from 18.0% in 1999.

Critical Accounting Policies

The preparation of our financial statements requires that we adopt and follow certain accounting policies. Certain amounts presented in the financial statements
have been determined based upon estimates and assumptions. Although we believe that our estimates and assumptions are reasonable, actual results may differ.

We
have included below a discussion of the following critical accounting policies that we believe are affected by our more significant judgments and estimates used in the preparation of
our financial statements, how we apply such policies, and how results differing from our estimates and assumptions would affect the amounts presented in our financial statements. Other accounting
policies also have a significant effect on our financial statements, and some of these policies also require the use of estimates and assumptions. Note 3 to the Consolidated Financial
Statements discusses our significant accounting policies.

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Accounts Receivable:We generate a significant portion of our revenues and corresponding accounts receivable from services
provided to the commercial air travel industry. As of December 31, 2001, approximately 75% of our accounts receivable were attributable to these customers. Our other accounts receivable are
generally due from other participants in the travel and transportation industry.

We
evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer's inability to meet its financial
obligations to us (e.g., bankruptcy filings, failure to pay amounts due to us or others), we record a specific reserve for bad debts against amounts due to reduce the net recognized receivable to the
amount we reasonably believe will be collected. For all other customers, we recognize reserves for bad debts based on past write-off history (average percentage of receivables written off
historically), and the length of time the receivables are past due.

During
2001, the commercial air travel industry in particular, and the travel and transportation industry in general, was adversely affected by a decline in travel resulting from a
softening economy. This was worsened by the aftermath of the terrorist attacks of September 11. We believe that we have appropriately considered the effects of these factors, as well as any
other known customer liquidity issues, on the ability of our customers to pay amounts owed to us. However, if demand for commercial air travel softens, due to prevailing economic conditions, terrorist
acts or other incidents involving commercial air transport, or other factors, the financial condition of our customers may be adversely impacted. If we begin, or estimate that we will begin, to
experience higher than expected defaults on amounts due us, our estimates of the amounts which we will ultimately collect could be reduced by a material amount. As an example, we increased our
allowance for bad debts by a net amount of approximately $20 million during 2001, to $41 million at December 31, 2001 to account for the adverse effects of the weakening economy
and the events of September 11 on the ability of our customers to pay amounts due to us.

Booking Fee Cancellation Reserve:We record revenue for airline travel reservations processed through the Sabresystem at the time of the booking of the reservation. However, if the booking is canceled in a later month, the booking fee must be refunded to
the customer (less a small cancellation fee). Therefore we record revenue net of an estimated amount reserved to account for future cancellations. This reserve is calculated based on historical
cancellation rates. In estimating the amount of future cancellations that will require us to refund a booking fee, we assume that a significant percentage of cancellations are followed by an immediate
re-booking, without loss of revenue. This assumption is based on historical rates of cancellations/re-bookings and has a significant impact on the amount reserved. If
circumstances change (i.e., higher than expected cancellation rates or changes in booking behavior), our estimates of future cancellations could be increased by a material amount, and our revenue
decreased by a corresponding amount. At December 31, 2001, we have a recorded booking fee cancellation reserve of approximately $21 million.

Business Combinations:During 2000 and 2001, we completed acquisitions of other companies. The amounts assigned to the
identifiable assets and liabilities acquired in connection with these acquisitions were based on estimated fair values as of the date of the acquisition, with the remainder recorded as goodwill. The
fair values were determined by our management, generally based upon information supplied by the management of the acquired entities and valuations prepared by independent appraisal experts. The
valuations have been based primarily upon future cash flow projections for the acquired assets, discounted to present value using a risk-adjusted discount rate. For certain classes of
intangible assets, the valuations have been based upon estimated cost of replacement.

In
connection with these acquisitions, we have recorded a significant amount of intangible assets. These assets are being amortized over the expected economic lives of the assets,
generally ranging from one to seven years. If we determine that we have over-estimated the economic life of these assets, we will begin to amortize the remaining unamortized carrying value
of the assets over the newly estimated life. Accordingly, depreciation and amortization expense would be increased. The amount of the increase could be material to our results of operations.

19

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We
evaluate the carrying value of our intangible assets for impairment whenever indicators of impairment exist. If we determine that such indicators are present, we prepare an
undiscounted future net cash flow projection for the asset. In preparing this projection, we must make a number of assumptions concerning such things as future booking volume levels, price levels,
commission rates, rates of growth in our online booking businesses, rates of increase in operating expenses, etc. If our projection of undiscounted future net cash flows is in excess of the carrying
value of the recorded asset, no impairment is recorded. If the carrying value of the asset exceeds the projected undiscounted net cash flows, an impairment is recorded. The amount of the impairment
charge is determined by discounting the projected net cash flows.

We
also recorded a significant amount of goodwill in connection with our 2000 and 2001 acquisitions. Through the end of 2001, we evaluated goodwill for impairment based on undiscounted
projected future cash flows. If the carrying value of the goodwill was less than the undiscounted projected future cash flows, no impairment would be recognized. Beginning January 1, 2002, we
will adopt a recently issued accounting standard and begin to evaluate our goodwill for impairment on an annual basis or whenever indicators of impairment exist. The evaluation will be based upon a
comparison of the estimated fair value of the unit of our business to which the goodwill has been assigned to the sum of the carrying value of the assets and liabilities of that unit. The fair values
used in this evaluation will be estimated based upon discounted future cash flow projections for the unit. These cash flow projections will be based upon a number of assumptions, as discussed in the
immediately preceding paragraph.

To
date, we have not recorded an impairment of our goodwill or intangible assets. We believe that assumptions we have made in projecting future cash flows for the evaluations described
above are reasonable. However, if future actual results do not meet our expectations, we may be required to record an impairment charge, the amount of which could be material to our results of
operations.

Deferred Tax Assets:We account for deferred income taxes based upon differences between the financial reporting and income
tax bases of our assets and liabilities. The measurement of deferred tax assets is adjusted by a valuation allowance, if necessary, to recognize the extent to which, more likely than not, the future
tax benefits will be recognized.

At
December 31, 2001, we have recorded a net deferred tax asset of approximately $66 million. We have recorded this asset as we believe it is more likely than not that we
will be able to realize the asset through reduction of future taxable income. We base this belief upon the levels of taxable income historically generated by our business, as well as projections of
future taxable income. If future levels of taxable income are not consistent with our expectations, we may be required to record an additional valuation allowance, which could reduce our net income by
a material amount.

Syndicated Lease Arrangement:We are affiliated with a special purpose entity (SPE) that qualifies for
off-balance sheet treatment. In 1999, we arranged a syndicated lease financing facility of approximately $310 million through this entity for the use of land, an existing office
building and the construction of a new corporate headquarters facility in Southlake, Texas, as well as the construction of a new data center in Tulsa, Oklahoma. We anticipate exercising a purchase
option for the data center and executing an immediate sale to a third party in 2002. If the anticipated sale of the data center occurs, the outstanding commitment on the syndicated lease financing
facility of $310 million will decrease by approximately $100 million. We account for the lease financing facility as an operating lease, and the costs of the properties financed through
the facility, as well as the related debt, are not consolidated in our financial statements.

20

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All
of the capitalization of the SPE has been provided by a consortium of independent banking institutions. The banks have invested capital at risk exceeding 3.3% of the capital of the
SPE. This, and certain other criteria, allow the SPE to not be consolidated in our financial statements. If the invested capital at risk of the lenders declines below 3%, or if certain other criteria
are not met, we would be required to consolidate the SPE. Had we consolidated the SPE at December 31, 2001, both our reported assets and liabilities would have been increased by approximately
$260 million.

Seasonality

The travel industry is seasonal in nature. Bookings, and thus fees charged for the use of theSabresystem,
decrease significantly each year in the fourth quarter, primarily in December, due to early bookings by customers for travel during the holiday season and a decline in business travel during the
holiday season. The third and fourth quarters of 2001 were also negatively impacted by the significant decrease in air travel and booking activity after the September 11 terrorist attacks.

The
following table sets forth our quarterly financial data (in millions, except per share data):

|                                            |                                             | First
Quarter |         | Second
Quarter |   | Third
Quarter |     | Fourth
Quarter |        
|------------------------------------------- | ------------------------------------------- | ------------- | ------- | -------------- | - | ------------- | --- | -------------- | -------
|2001                                        |                                             |               |         |                |   |               |     |                |        
|Revenues                                    |                                             | $             | 573,414 |                | $ | 582,035       |     | $              | 524,829
|Operating income (loss)                     |                                             |               | 44,861  |                |   | 38,448        |     |                | 2,106  
|Income (loss) from continuing operations    |                                             |               | 413     |                |   | 5,051         |     |                | 17,290 
|Income from discontinued operations, net    |                                             |               | 13,632  |                |   | 22,673        |     |                | 38,772 
|Cumulative effect of accounting change, net |                                             |               | 3,103   |                |   |              |     |                |       
|                                            |                                             |               |         |                |   |               |     |                |        
|Net earnings (loss)                         |                                             | $             | 17,148  |                | $ | 27,724        |     | $              | 56,062 
|                                            |                                             |               |         |                |   |               |     |                |        
|Earnings per common sharebasic:            |                                             |               |         |                |   |               |     |                |        
|                                            | Income (loss) from continuing operations    |               | $       |               |   | $             | .04 |                | $      
|                                            | Income from discontinued operations, net    |               |         | .10            |   |               | .17 |                |        
|                                            | Cumulative effect of accounting change, net |               |         | .03            |   |               |    |                |        
|                                            |                                             |               |         |                |   |               |     |                |        
|                                            | Net earnings (loss)                         |               | $       | .13            |   | $             | .21 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        
|Earnings (loss) per common sharediluted:   |                                             |               |         |                |   |               |     |                |        
|                                            | Income (loss) from continuing operations    |               | $       |               |   | $             | .04 |                | $      
|                                            | Income from discontinued operations, net    |               |         | .10            |   |               | .16 |                |        
|                                            | Cumulative effect of accounting change, net |               |         | .03            |   |               |    |                |        
|                                            |                                             |               |         |                |   |               |     |                |        
|                                            | Net earnings (loss)                         |               | $       | .13            |   | $             | .20 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        
|2000                                        |                                             |               |         |                |   |               |     |                |        
|Revenues                                    |                                             | $             | 479,142 |                | $ | 501,377       |     | $              | 495,596
|Operating income (loss)                     |                                             |               | 76,271  |                |   | 74,864        |     |                | 60,781 
|Income (loss) from continuing operations    |                                             |               | 49,358  |                |   | 47,532        |     |                | 39,987 
|Income from discontinued operations, net    |                                             |               | 16,258  |                |   | 15,876        |     |                | 4,428  
|                                            |                                             |               |         |                |   |               |     |                |        
|Net earnings (loss)                         |                                             | $             | 65,616  |                | $ | 63,408        |     | $              | 44,415 
|                                            |                                             |               |         |                |   |               |     |                |        
|Earnings per common sharebasic:            |                                             |               |         |                |   |               |     |                |        
|                                            | Income (loss) from continuing operations    |               | $       | .38            |   | $             | .37 |                | $      
|                                            | Income from discontinued operations, net    |               |         | .13            |   |               | .12 |                |        
|                                            |                                             |               |         |                |   |               |     |                |        
|                                            | Net earnings (loss)                         |               | $       | .51            |   | $             | .49 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        
|Earnings (loss) per common sharediluted:   |                                             |               |         |                |   |               |     |                |        
|                                            | Income (loss) from continuing operations    |               | $       | .38            |   | $             | .37 |                | $      
|                                            | Income from discontinued operations, net    |               |         | .10            |   |               | .09 |                |        
|                                            |                                             |               |         |                |   |               |     |                |        
|                                            | Net earnings (loss)                         |               | $       | .48            |   | $             | .46 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        

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Results of Operations

2001 Compared to 2000

Revenues.Total revenues from continuing operations for the year ended December 31, 2001 increased approximately
$162 million, 8.3%, compared to the year ended December 31, 2000, from $1,941 million to $2,103 million. Travel Marketing and Distribution revenue increased
$24 million, 1.5%. This increase was primarily due to a $29 million increase from booking and other fees from associates which reflected a price increase of 8% over prior year offset by
a decrease in direct booking volumes of 6% as a result of the decrease in leisure travel due to the U.S. economic slowdown and the events of September 11; a $9 million increase in joint
venture revenue due to increases in joint venture development revenues; and a decrease in revenues from other products of $14 million. Travelocity.com increased revenues approximately
$89 million, 61.9%, due to increases in transaction revenue from a 33% increase in gross travel bookings, growth in advertising revenues primarily from the revenue sharing agreement with AOL,
and growth in other revenues primarily due to service charges for the handling and express delivery of certain paper tickets and the recognition of additional revenue related to warrants received from
Hotel Reservations Network ("HRN"). GetThere revenues increased approximately $30 million, 253.1%, resulting primarily from the combination of GetThere with our existing Business Travel
Solutions business in October 2000. Supplier revenue, which consists of services provided to air travel providers, such as United Airlines, for hosting their consumer Web sites, increased
$12 million. GetThere also increased corporate and other revenue approximately $18 million, due to increases in trip fees and revenues from partnerships with agencies such as American
Express and other online customers. Airline Solutions and Emerging Businesses revenues increased approximately $19 million, 10.6%, due primarily to increases in applications development
performed on behalf of various travel providers. While it is difficult to quantify the amount of revenue lost as a result of the attacks, we believe a reasonable estimate is $200 million.

Cost of Revenues.Cost of revenues for the year ended December 31, 2001 increased approximately $51 million,
3.9%, compared to the year ended December 31, 2000, from $1,317 million to $1,368 million. Approximately $41 million of this increase was driven by increases in salaries,
development labor, depreciation and other operating expenses for GetThere due to the growth in the business during 2001. Approximately $23 million of the increase was primarily due to increased
salaries, benefits and employee-related expenses resulting from growth in Travelocity.com. The increases in Travelocity.com and GetThere were partially offset by decreases in expenses in Travel
Marketing and Distribution of $4 million, mainly resulting from savings in depreciation expense, offset by increased customer incentive expenses. The remaining offset of
$9 million in Airline Solutions and Emerging Businesses was due to decreases in development labor.

Selling, General and Administrative Expenses.Selling, general and administrative expenses for the year ended
December 31, 2001 increased $125 million, 36.5%, compared to the year ended December 31, 2000 from $342 million to $467 million. Approximately $32 million of
the increase in selling, general and administrative expenses relates to the Travelocity.com business and includes an increase in advertising spending, amortization of payments made to strategic
distribution partners, salaries, benefits and employee-related costs, and professional services as well as other administrative costs to support the business. Approximately $19 million of the
increase relates to the GetThere business as a result of the purchase of GetThere in October 2000. The remaining $74 million increase in selling, general administrative expenses is due to
increases in bad debt reserves as a result of the events of September 11, and increases in advertising and promotion costs, customer incentives, and other selling, general and administrative
expenses to support our growth, as well as costs historically allocated to the outsourcing business that are still being incurred as part of the continuing operations.

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Amortization of Goodwill and Intangible Assets.Amortization of goodwill and intangible assets increased $169 million,
155.0%, from $109 million for the year ended December 31, 2000 to $278 million for the year ended December 31, 2001. The increase is primarily due to the impact in 2001 of
recognizing a full year of amortization of goodwill recorded in connection with the 2000 acquisitions of GetThere and Preview Travel. We recorded approximately $1 billion of goodwill and
intangible assets associated with the merger of Preview and Travelocity.com and the acquisitions of GetThere, Gradient and an interest in Dillon in 2000, as well as the purchase of Sabre Pacific and
David R. Bornemann Associates, Inc. in 2001. The majority of goodwill and intangible assets resulting from acquisitions are being amortized over periods ranging from one to seven years.

Operating Income.Operating income decreased $182 million for the year ended December 31, 2001, 105.2%, from
$173 million for the year ended December 31, 2000 to ($9) million. Operating margins decreased from 8.9% in 2000 to (0.4)% in 2001, due to an increase in operating expenses of 19.4%
partially offset by an 8.3% increase in revenues. Travel Marketing and Distribution's operating income decreased $58 million, 14.3%, due to the increase in customer incentives partially offset
by decreases in depreciation and amortization. Travelocity.com's operating loss decreased $38 million due to increases in transaction services revenues from associates and increases in
advertising revenues, slightly offset by increased goodwill amortization and higher selling, general and administrative expenses. GetThere's operating loss increased $165 million due primarily
to higher goodwill amortization. Airline Solutions and Emerging Businesses' operating loss decreased by $12 million due to increases in product and services revenues that were slightly offset
by increased operating expenses. While it is difficult to quantify the amount of revenue lost as a result of the attacks, we believe a reasonable estimate is $200 million.

Interest Income.Interest income increased by $9 million, 56.3%, from $16 million for the year ended
December 31, 2000 to $25 million for the year ended December 31, 2001, due primarily to higher average balances maintained in our cash and marketable securities accounts partially
offset by lower average interest rates.

Interest Expense.Interest expense increased $9 million for the year ended December 31, 2001, 28.1%, from
$32 million to $41 million as a result of interest expense related to the $710 million of borrowings to finance the purchase of GetThere and interest expense on the
$400 million in unsecured notes which we issued on August 7, 2001.

Other, net.Other, net increased $35 million, primarily due to a $47 million gain from the sale of Equant
shares and from the changes in fair value of warrants we held to purchase shares of Hotel Reservations Network common stock, partially offset by a $10 million writedown of investments we had
made in companies developing emerging travel technologies.

Minority Interests.Minority interests include minority owners' interests in our consolidated subsidiaries, primarily
Travelocity.com. The decrease in losses attributable to minority interest is due primarily to a decrease in the net loss of Travelocity.com.

Income Taxes.The provision for income taxes was $81 million and $93 million for 2001 and 2000, respectively.
Our effective tax rates for 2001 and 2000 were approximately 238% and 49%, respectively, primarily as a result of the effect of the recognition of non-deductible amortization expense for
goodwill recorded in conjunction with the acquisitions of GetThere and Preview Travel in 2000. Excluding the effects of the goodwill amortization, our effective tax rates for 2001 and 2000 were 34.7%
and 35.4%, respectively. Both years benefited from the recognition of a research and experimentation credit of approximately $4.0 million. See Note 12 to the Consolidated Financial
Statements for additional information regarding income taxes.

23

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Income from Continuing Operations.Income from continuing operations decreased $143 million, 149.0%, from
$96 million in 2000 to ($47) million in 2001 due to an increase in revenues of only 8.3% as a result of the negative effect of the events of September 11, which was more than offset by
an increase of operating expenses of 19.4%.

Income from Discontinued Operations.Income from discontinued operations increased $27 million, 56.3%, from
$48 million to $75 million for 2000 and 2001, respectively. Income from discontinued operations in 2001 includes a gain of approximately $39 million, net of related income taxes,
resulting from the disposition of the Outsourcing Business and related assets to EDS in July of 2001. See Note 2 to the Consolidated Financial Statements for additional information regarding
this transaction. Discontinued operations have been fully allocated with selling, general and administrative expenses to be representative of the business as it operated during the relevant periods.
Some of the selling, general and administrative expenses historically allocated to the information technology outsourcing business may still be incurred as part of continuing operations in the future.
The amount of such costs is not currently estimable.

Cumulative Effect of Accounting Change.We adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities("FAS 133") effective January 1, 2001. We recognized a cumulative gain in
earnings for the year ended 2001 upon adoption of FAS 133 of approximately $3 million, net of minority interests of approximately $2 million and deferred income taxes of
approximately $2 million, relating to the HRN Warrants (See Note 7 to the Consolidated Financial Statements).

Net Earnings.Net earnings decreased $113 million, 78.5%, from $144 million to $31 million, primarily
due to decreases in operating income and increases in interest expense in 2001 compared to 2000.

2000 Compared to 1999

Revenues.Total revenues from continuing operations for the year ended December 31, 2000 increased approximately
$242 million, 14.2%, compared to the year ended December 31, 1999, from $1,699 million to $1,941 million. Travel Marketing and Distribution revenue increased
$168 million, 11.7%. This increase was primarily due to a $154 million increase from booking and other fees from associates while revenues from other products grew $14 million.
Travelocity.com increased revenues approximately $104 million, 257.9%, due to increases in transaction revenue from growth in booking volumes, and advertising and license fee revenues. GetThere
revenues increased approximately $10 million, 453.9%, resulting primarily from the combination of GetThere with our existing Business Travel Solutions business in October 2000. Supplier
revenue, which consists of services provided to air travel providers, such as United Airlines, for hosting their consumer Web sites, increased $5 million. GetThere also increased corporate and
other revenue approximately $5 million, due to increases in trip fees and revenues from partnerships with agencies such as American Express and other online customers. Airline Solutions and
Emerging Businesses revenues decreased approximately $40 million, 18.3%, due primarily to decreases in applications development performed on behalf of various travel providers.

Cost of Revenues.Cost of revenues for the year ended December 31, 2000 increased approximately $106 million,
8.8%, compared to the year ended December 31, 1999, from $1,211 million to $1,317 million. Approximately $86 million of this increase was driven by higher Travel Marketing
and Distribution expenses for salaries and benefits, data processing, development labor and subscriber incentives. The remaining increase of $20 million was primarily due to increased salaries,
benefits and employee-related expenses resulting from growth in Travelocity.com and the acquisition of GetThere in October 2000.

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Selling, General and Administrative Expenses.Selling, general and administrative expenses for the year ended
December 31, 2000 increased $159 million, 86.9%, compared to the year ended December 31, 1999 from $183 million to $342 million. General and administrative expenses
for the year include approximately $19 million of non-recurring charges associated with our spin-off from AMR. Additionally, approximately $100 million of the
increase in selling, general and administrative expenses relates to the Travelocity.com business and includes approximately $46 million of payments made to strategic distribution partners,
approximately $36 million in increased advertising and promotion activities and approximately $18 million for higher salaries, benefits and other administrative expenses necessary to
support the growth of that business. The remaining $40 million increase in selling, general and administrative expenses is due to our growth initiatives including strategic acquisitions
consummated during 2000.

Amortization of Goodwill and Intangible Assets.Amortization of goodwill and intangible assets was $109 million in
2000. We recorded approximately $1 billion of goodwill and intangible assets associated with the merger of Preview and Travelocity.com and the acquisitions of GetThere, Gradient and an interest
in Dillon in 2000. The goodwill and intangible assets resulting from these acquisitions are being amortized over periods ranging from one to five years.

Operating Income.Operating income for the year ended December 31, 2000 decreased $132 million, 43.3%, as
compared to the year ended December 31, 1999 from $305 million to $173 million. Operating margins decreased from 18.0% in 1999 to 8.9% in 2000, due to an increase in operating
expenses of 26.9% partially offset by a 14.2% increase in revenues. Travel Marketing and Distribution operating income increased $39 million, 10.6%, due to higher booking fees from associates.
Travelocity.com had a $91 million increase in operating loss due primarily to increased goodwill amortization and higher selling, general and administrative expenses. GetThere had a
$55 million increase in operating loss due primarily to higher goodwill amortization. Airline Solutions and Emerging Businesses operating loss increased $14 million due to increases in
operating expenses.

Interest Income.Interest income decreased by $12 million, 42.9%, from $28 million to $16 million, due
primarily to lower average balances maintained in our cash and marketable securities accounts as a result of the payment of a $675 million dividend to shareholders in February 2000 and
strategic acquisitions during 2000.

Interest Expense.Interest expense increased $22 million, 220.0%, from $10 million to $32 million as a
result of the debt assumed during 2000 in connection with the payment of a $675 million dividend to shareholders in February 2000 and the acquisition of GetThere in October 2000.

Other, net.Other, net decreased $136 million, primarily due to a $138 million non-recurring gain
recognized in 1999 on the liquidation of Equant N.V. ("Equant") depository certificates.

Minority Interests.Minority interests include minority owners' interests in our consolidated subsidiaries, primarily
Travelocity.com.

Income Taxes.The provision for income taxes was $93 million and $170 million for 2000 and 1999, respectively.
The decrease in the provision for income taxes primarily corresponds with the change in income before the provision for income taxes. The decrease is also due to a lower effective tax rate resulting
from the research and experimentation credit, partially offset by a higher effective tax rate resulting from non-deductible goodwill amortization. See Note 12 to the Consolidated
Financial Statements for additional information regarding income taxes.

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Income from Continuing Operations.Income from continuing operations decreased $194 million, 66.9% from
$290 million in 1999 to $96 million in 2000 due to an increase in revenues of 14.2%, which was more than offset by an increase of operating expenses of 26.9%. The increase in operating
expense was offset by the non-recurring 1999 gain recognized on the liquidation of the Equant depository certificates. The increase in operating expenses was mainly driven by increases in
expenses related to acquisition activity in 2000 including amortization of goodwill and intangible assets.

Income from Discontinued Operations.Income from discontinued operations increased $7 million, 17.1%, from
$41 million to $48 million for 1999 and 2000, respectively. Revenues decreased due to reduced conversion and migration work for US Airways and for Canadian Airlines applications work.
The revenue decrease was more than offset by decreased operating expenses as a result of lower employee and contractor headcount.

Net Earnings.Net earnings decreased $188 million, 56.6%, from $332 million to $144 million, primarily
due to decreases in other income, operating income and interest income and increases in interest expense in 2000 compared to 1999.

Liquidity and Capital Resources

At December 31, 2001, we had approximately $667 million in cash and marketable securities and working capital of $528 million compared to
$193 million in cash and marketable securities, including $47 million of long-term marketable securities, and a working capital deficit of $573 million at December 31,
2000. We invest cash in highly liquid instruments, including high credit quality certificates of deposit, bankers' acceptances, commercial paper, mortgage-backed and receivables-backed securities, and
corporate and government notes.

Historically,
we have funded our operations through internally generated cash. We generated cash from operating activities of $410 million, $311 million and
$495 million for 2001, 2000 and 1999, respectively. The increase in cash provided by operating activities from 2000 to 2001 primarily resulted from the non-recurrence of an
$81 million payment made to US Airways in 2000 in connection with an outsourcing contract sold to EDS on July 1, 2001 and positive working capital variances, net of certain gains
recognized during 2001.

Our
operating income and cash flows were negatively affected by decreases in booking volumes as a consequence of the terrorist attacks on September 11, 2001. While it is difficult
to quantify the amount of revenue lost as a result of the attacks, we believe a reasonable estimate is $200 million. We expect that our Company, the travel industry and the economy in general
will continue to be adversely affected by the terrorist attacks on New York and Washington, and by any subsequent terrorist-related activity. It is not possible to predict either the severity or
duration of such decreases in the medium- or long-term. A prolonged substantial decrease in travel volumes would have an adverse impact on our liquidity.

In
1999, we entered into an agreement with AOL that provides, among other things, that the Travelocity.com Web site will be the exclusive
reservations engine for AOL's Internet properties. Travelocity.com is obligated for payments of up to $200 million and AOL and Travelocity.com will share advertising revenues and
commissions over the five-year term of the agreement. As of December 31, 2001, Travelocity.com is obligated for future payments of up to $120 million, as we have paid
approximately $40 million in both 2001 and 2000. Under certain circumstances, Travelocity.com may elect to alter the terms of this agreement such that guaranteed payments to AOL would no longer
be required.

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We
used cash for investing activities of approximately $38 million, $473 million and $438 million in 2001, 2000 and 1999, respectively. The decrease in cash used
during 2001 for investing activities primarily results from proceeds realized from the sale of our Outsourcing Business to EDS for approximately $661 million, proceeds of approximately
$47 million from the sale of Equant depository certificates which we held (See Note 6 to the Consolidated Financial Statements) and $37 million from the exercise of warrants and
disposal of stock of Hotel Reservations Network (See Note 7 to the Consolidated Financial Statements).

Cash
expended for business acquisitions, net of cash acquired, decreased from approximately $711 million, primarily relating to the acquisition of GetThere in 2000, to
$55 million in 2001.

We
invested excess cash of approximately $509 million in marketable securities, net of marketable securities sold, during 2001. During 2000, we used cash from the sale of
marketable securities of approximately $444 million, net of marketable securities purchased, to help finance the payment of a $675 million dividend in February 2000.

Capital
investments for the years ended December 31, 2001 and 2000 were $158 million and $190 million, respectively. The reduction in capital expenditures from 2000
to 2001 is due to reduced acquisitions of IT assets resulting from our IT infrastructure outsourcing services contract with EDS. We believe that future capital expenditures will be reduced as a result
of the transaction with EDS.

During
the third quarter of 2001, we made an unsecured $30 million loan to a customer in the travel industry. The loan is due March 21, 2002.

On
January 16, 2001, the Board of Directors authorized the purchase of up to $25 million of Travelocity.com common stock at management's discretion. During 2001, we
purchased 857,500 shares of common stock of Travelocity.com in the open market at a cost of $18 million. The purchases were made to offset the potentially dilutive effect on Sabre's equity
ownership percentage of Travelocity.com from employee stock options granted by Travelocity.com. As of December 31, 2001 Sabre Holdings Corporation and its affiliates held a total of 2,033,970
shares of common stock and 33 million shares of Class A common stock in Travelocity.com. Accordingly, we hold an approximate 70% economic interest in the Travelocity.com business.

On
February 19, 2002, we announced that we intend to make a cash tender offer for all of the outstanding publicly-held common shares of Travelocity.com that we do not own. We intend to
offer $23.00 per share to acquire the approximately 15 million shares of Travelocity common stock held by the public. We believe that we have sufficient cash to fund the purchase of
Travelocity's common stock pursuant to the tender offer at that price and to fund our operating activities for the next 12 months.

We
used $361 million in cash for financing activities during 2001. During 2000, we provided approximately $163 million through financing activities. During 2000, we
borrowed approximately $859 million, primarily to finance the acquisition of GetThere. We repaid these borrowings during 2001 primarily using proceeds from the sale of our Outsourcing Business
and the issuance in August of 2001 by Sabre Holdings Corporation of $400 million in unsecured notes ("Notes"), bearing interest at 7.35% and maturing August 1, 2011, in an underwritten
public offering resulting in net cash proceeds to us of approximately $397 million. Sabre Inc., a wholly-owned subsidiary of Sabre Holdings Corporation, unconditionally guarantees all debt
obligations of Sabre Holdings Corporation. In conjunction with these notes, we have entered into two interest rate swaps through 2011 for a total notional amount of $300 million, which pay us
7.35% and on which we will pay a variable rate based on a six-month LIBOR rate plus 140.5 or 157.4 basis points (See Note 7 of the Consolidated Financial Statements).

We
generated approximately $109 million in cash through the sale of stock to employees during 2001, as compared to approximately $18 million in 2000.

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We
had not paid any dividends on our common stock before the one-time cash dividend was paid in February 2000 in connection with the separation from AMR, nor have we
paid any since. In the future, we intend to retain earnings to finance future growth and, therefore, do not anticipate paying any cash dividends on our common stock. Any determination as to the future
payment of dividends will depend upon our future results of operations, capital requirements and financial condition and such other factors as our Board of Directors may consider, including any
contractual or statutory restrictions on our ability to pay dividends.

During
2001, we repurchased 374,000 of our shares at an average price of $24.20 per share, at a total cost of approximately $9 million. We spent approximately $34 million
buying shares of our own stock in 2000. As of December 31, 2001, we had authorization to spend up to an additional $56 million to repurchase our own shares. The timing, volume and price
of any future repurchases will be made at the discretion of management, and will depend on corporate considerations and market conditions.

We
believe available balances of cash and short-term investments, cash flows from operations and funds available under our revolving credit facility will be sufficient to meet our cash
requirements for the foreseeable future. We continually evaluate opportunities to sell additional equity or debt securities, obtain credit facilities from lenders, or restructure our long-term debt
for strategic reasons or to further strengthen our financial position. If market conditions warrant, we may engage in additional financing transactions. In addition, to the extent we consider
additional acquisitions of or investments in complementary businesses, products, services and technologies, such additional activities might affect our liquidity requirements or cause us to issue
additional equity or debt securities. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

Contractual Cash Obligations

Our future minimum noncancelable contractual obligations as of December 31, 2001 are as follows (in millions of dollars):

|                                                 |  | Payments Due by Period |        
|------------------------------------------------ |  | ---------------------- | -------
|
|Notes payable                                    |  | $                      | 400.0  
|Lease obligations                                |  |                        | 90.9   
|Amounts receivable under noncancelable subleases |  |                        | (55.9  
|Other long-term obligations (1)                  |  |                        | 932.6  
|                                                 |  |                        |        
|Total contractual cash obligations               |  | $                      | 1,367.6
|                                                 |  |                        |        

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Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142,Goodwill and Other Intangible Assets("FAS 142"),
effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized, but will be
subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

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We
will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of FAS 142
is expected to increase net income by approximately $218 million, or $1.60 per diluted share, in 2002, as a result of the cessation of amortization of existing goodwill and certain intangible
assets. Amortization of goodwill and other intangible assets recorded in connection with business combinations totaled approximately $278 million and $109 million during the years ended
December 31, 2001 and 2000, respectively.

Prior
to the adoption of FAS 142, our policy was to evaluate goodwill for impairment on an undiscounted projected future cash flows basis. We have performed the first of the
required impairment tests of goodwill and indefinite-lived intangible assets as of January 1, 2002. As a result of these tests, we have concluded no impairment charge is necessary associated
with the adoption of FAS 142.

The
FASB has also recently issued Statement of Financial Accounting Standards No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets("FAS 144"), which we will adopt as of January 1, 2002. The FASB's new rules on asset impairment supersede FAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of("FAS 121").
FAS 144 retains the requirements of FAS 121 to (a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its
undiscounted cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset, but removes goodwill from its scope. This aspect of
FAS 144 will primarily affect our accounting for intangible assets subject to amortization, property and equipment, and certain other long-lived assets. We do not believe that
adoption of FAS 144 will have a significant effect on our financial condition and results of operations.

We
adopted Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging Activities("FAS 133") effective January 1, 2001. FAS 133 requires us to recognize all derivatives on the balance sheet at fair value. Derivatives that are not designated as hedges must be
adjusted to fair value through income. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the
change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of the change in fair value of a derivative designated as a hedge will be immediately recognized in earnings. For derivative instruments not designated as hedging instruments, the
gain or loss is recognized in current earnings during the period of change. See Note 7 to the Consolidated Financial Statements.

Mergers and Acquisitions

During 2001, we completed the acquisitions of Sabre Pacific and David R. Bornemann Associates, Inc. During 2000, we completed the merger of Travelocity.com
and Preview, as well as the acquisitions of Gradient, GetThere and a 51% ownership interest in Dillon. For further information regarding these transactions, see Note 5 to the Consolidated
Financial Statements.

Inflation

We believe that inflation has not had a material effect on our results of operations.

Outlook for 2002

This outlook section contains a number of forward-looking statements, all of which are based on our current expectations. Actual results may differ materially.
Please refer to the Cautionary Statement and Risk Factors paragraphs contained below in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

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During
the course of 2002, we expect that the travel industry will gradually recover from the impact of the attacks on September 11, 2001. We expect consolidated
year-over-year revenue growth to be in the range of 1% to 5%, and expect full year earnings per share to be in the range of $1.80 to $1.90, or
year-over-year growth of 5% to 10% compared to 2001, excluding certain non-cash and one-time charges in both years. The non-cash and
one-time charges in 2001 include such items as amortization of goodwill and other intangible assets associated with strategic acquisitions, amortization expense associated with stock
options granted to US Airways, a one-time gain from the sale of the Outsourcing Business to EDS, expenses associated with reduction in workforce, and other various special items. The
non-cash and one-time charges in 2002 are expected to include amortization of intangible assets associated with strategic acquisitions and other various special items.

We
expect that the year-over-year change in revenue within the Travel Marketing and Distribution business will be in the range of (2%) to 1%. Revenue growth will be negatively impacted
by the expected year-over-year decline in travel bookings, but will be partially offset by an increase in average price per booking. We expect that year-over-year revenue growth within
Travelocity.com, of which we own approximately 70%, will be in the range of 20% to 30%. We expect the GetThere business to have year-over-year revenue growth in the range of
40% to 45%. We attribute this expected revenue growth to projected year-over-year growth in online travel transactions by individual and corporate consumers. We anticipate flat
to slight year-over-year growth within the Airlines Solutions business.

Cautionary Statement

Statements in this report which are not purely historical facts, including statements regarding our anticipations, beliefs, expectations, hopes, intentions or
strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements in this report
are based upon information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the
forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

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Risk Factors

Risks associated with an investment in our securities, and with achievement of our forward-looking statements in this report, our news releases, our Web sites,
public filings, investor and analyst conferences and elsewhere, include, but are not limited to, the risk factors described below. Any of the risk factors described below could have a material adverse
effect on our business, financial condition or results of operations. We may not succeed in addressing these challenges and risks.

For
a discussion of risk factors specific to the Travelocity.com business, please refer to the filings made with the Securities and Exchange Commission by Travelocity.com, Inc.
Those filings may be accessed on the Internet at www.sec.gov.

WE FACE COMPETITION FROM ESTABLISHED AND EMERGING TRAVEL DISTRIBUTION CHANNELS. MANY OF OUR COMPETITORS IN THE TRAVEL MARKETING AND DISTRIBUTION
BUSINESS ARE WELL FUNDED AND HAVE MAJOR TRAVEL SUPPLIERS AS SIGNIFICANT SHAREHOLDERS.

Our
travel marketing and distribution business includes channels of distribution that target the Travel Agency, online corporate and online consumer segments of the global travel
distribution market. In all of these distribution channels, we face significant competitors in the Travel Marketing and Distribution business. In the Travel Agency channel, our Sabreglobal distribution
system competes primarily against other large and well-established global distribution systems, including those
operated by Amadeus, Galileo and Worldspan. In addition, we face competition in the Travel Agency channel from travel suppliers that distribute directly to Travel Agencies and from
non-global distribution system companies. In the online corporate channel, ourGetTheresuite of products competes not only against similar
products offered by Amadeus, Galileo and Worldspan, but also with products offered by competitors such as SAP. Some of these competitors market business travel systems that are bundled with financial
and other non-travel software systems that are not offered by us. In the online consumer channel, ourTravelocityproduct offering competes
not only against similar products offered by Amadeus, Galileo and Worldspan, but also with a large number of travel Web sites, including those operated by travel suppliers and by Expedia and
Priceline. Airlines and other travel suppliers, such as Cendant, have significant ownership stakes in some of these competitors. In addition, various airlines have recently established their own
travel distribution Web sites, and several have created multi-airline travel distribution Web sites (such as Orbitz in the United States and Opodo in Europe). Although government authorities in some
jurisdictions are examining whether the content and features made available through multi-airline Web sites by their owner airlines must also be made available to competitor Web sites, and although
Orbitz remains subject to review by the U.S. Departments of Justice and Transportation, it is uncertain whether the various governments will act to require carriers owning multi-carrier Web sites to
treat competing Web sites in a fair and non-discriminatory way. Consolidation among travel suppliers, including airline mergers and alliances, may increase competition from these
supplier-related distribution channels.

DECREASED SUPPLIER COMMISSIONS COULD ADVERSELY AFFECT US

Some
travel suppliers have reduced commissions paid to Travel Agencies, which causes Travel Agencies to become more dependent on other sources of revenues, such as
traveler-paid services fees and GDS-paid incentives. That may increase the use of incentives in competition for Travel Agency business. A few travel suppliers have eliminated
commissions paid to online Travel Agencies such as Travelocity.com, resulting in service fees being charged by online Travel Agencies for bookings on those suppliers, which fees are not charged by Web
sites that are related to those suppliers. Furthermore, many travel suppliers offer discounted prices when their products and services are purchased directly from a supplier-related site. Those
pricing differences may have the effect of diverting customers to supplier-related Web sites.

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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.

The
absolute and relative size of our Travel Agency subscriber base is important to our success. The reduction in supplier-paid commissions has forced some smaller Travel
Agencies to close or to combine with larger Travel Agencies. Although we have a leading share of large Travel Agencies, competition is particularly intense among global distribution systems for Travel
Agency subscribers. The potential for us to add new Travel Agency subscribers exists primarily outside of North America. Some of our competitors aggressively pay economic incentives to Travel Agencies
to obtain business. New ownership or potential consolidation of existing global distribution systems may result in increased competition. For example, Galileo was recently acquired by Cendant. In
order to compete effectively, we may need to increase incentives, increase spending on marketing or product development, or make significant investments to purchase strategic assets. If we do not
retain subscribers representing a significant percentage of historic bookings through our global distribution system, our booking fee revenues would decrease.

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

Rules
in the U.S., Canada, the European Union and Peru govern "computer reservation systems" such as our global distribution system. Airlines that divest their ownership of computer
reservation systems (such as British Airways, United Airlines, US Airways, and Continental Airlines) may not be subject to the rules in these jurisdictions, which would otherwise require them to
participate in our global distribution system in a non-discriminatory manner. We could be adversely affected by a decision by one or more large airlines to discontinue or to lower its
level of participation in our global distribution system. Consolidation among travel suppliers, including airline mergers, may increase competition from these supplier-related distribution channels
and place more negotiating leverage generally in the hands of suppliers which account for larger shares of our business.

REGULATORY DEVELOPMENTS COULD LIMIT OUR ABILITY TO COMPETE.

The
U.S. Department of Transportation is engaged in a comprehensive review of its rules governing computer reservation systems such as our global distribution system. It is unclear at
this time when the Department of Transportation will complete its review and what changes, if any, will be made to the U.S. rules. We could be unfairly and adversely affected if the U.S. rules are
retained as to traditional global distribution systems used by Travel Agencies but are not applied to travel distribution Web sites owned by more than one airline. We could also be adversely affected
if changes to the U.S. rules increased its cost of doing business, weakened the non-discriminatory participation rules to allow one or more large airlines to discontinue or to lower its
level of participation in our global distribution system, or caused us to be subject to rules that do not apply to our travel marketing and distribution competitors.

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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.

New
distribution channels and technology in the Travel Marketing and Distribution business and Airline Solutions and Emerging Businesses are rapidly emerging, such as the Internet,
computer online services, private networks, cellular telephones and other wireless communications devices. Our ability to compete in the Travel Marketing and Distribution business and Airline
Solutions and Emerging Businesses, and our future results, depend in part on our ability to make timely and cost-effective enhancements and additions to our technology and to introduce new
products and services that meet customer demands and rapid advancements in technology. Maintaining flexibility to respond to technological and market dynamics may require substantial expenditures and
lead-time. There can be no assurance that we will successfully identify and develop new products or services in a timely manner, that products, technologies or services developed by others
will not render our offerings obsolete or noncompetitive, or that the technologies in which we focus our research and development investments will achieve acceptance in the marketplace.

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

Our
Travel Marketing and Distribution and Airline Solutions Businesses are largely dependent on the computer data centers and network systems operated by EDS. We rely on several
communications service suppliers to provide network access between our computer data center and end-users of our travel marketing and distribution and airline solutions services. We
occasionally experience system interruptions that make our global distribution system or other data processing services unavailable. Much of our computer and communications hardware is located in a
single facility. Our systems might be damaged or interrupted by fire, flood, power loss, telecommunications failure, break-ins, earthquakes and similar events. Computer viruses, physical
or electronic break-ins and similar disruptions might cause system interruptions, delays and loss of critical data and could significantly diminish our reputation and brand name and
prevent us from providing services. Although we believe we have taken adequate steps to address these risks, we could be harmed by outages in or unreliability of the data center or network systems.

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.

Most
of our revenue is derived from airlines, hotel operators, car rental companies and other suppliers in the travel and transportation industries. Our revenue increases and decreases
with the level of travel and transportation activity and is therefore highly subject to declines in or disruptions to travel and transportation. The travel industry is seasonal, and our revenue varies
significantly from quarter to quarter. Factors that may adversely affect travel and transportation activity include price escalation in travel-related industries, airline or other travel-related labor
action, political instability and hostilities, inclement weather, fuel price escalation, increased occurrence of travel-related accidents, acts of terrorism, and economic downturns and recessions. We,
the travel industry and the economy in general may continue to be adversely affected by the September 11, 2001 terrorist attacks on New York and Washington, and by any subsequent
terrorist-related activity, particularly if any such activity involves commercial air transportation. It is not possible to predict either the severity or duration of such decreases in the medium- or
long-term. A prolonged substantial decrease in travel bookings volumes could have an adverse impact on our financial performance, operations, liquidity, or capital resources and could
impair our ability to recover the carrying value of certain of our assets, including capitalized software, other intangible assets and goodwill.

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

Trade
barriers erected by non-U.S. travel suppliershistorically often government-ownedhave on occasion prevented us from offering our products and
services in their markets or have denied us content or features that they give to our competitors. Those trade barriers make our products and services less attractive to travel agencies in those
countries than other global distribution systems that have such capability and have restricted our ability to gain market share outside of the U.S. Competition in those countries could require us to
increase incentives, reduce prices, increase spending on marketing or product development, or otherwise to take actions adverse to us.

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

We
face risks inherent in international operations, such as risks of currency exchange rate fluctuations, local economic and political conditions, restrictive governmental actions (such
as trade protection measures, including export duties and quotas and custom duties and tariffs), changes in legal or regulatory requirements, import or export licensing requirements, limitations on
the repatriation of funds, difficulty in obtaining distribution and support, nationalization, different accounting practices and potentially longer payment cycles, seasonal reductions in business
activity, higher costs of doing business, consumer protection laws and restrictions on pricing or discounts, lack of or the failure to implement the appropriate infrastructure to support our
technology, disruptions of capital and trading markets, laws and policies of the U.S. affecting trade, foreign investment and loans, and tax and other laws. These risks may adversely affect our
ability to conduct and grow business internationally.

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

We
plan to continue to enter into business combinations, investments, joint ventures or other strategic alliances with other companies in order to maintain and grow revenue and market
presence. Those transactions with other companies create risks such as difficulty in assimilating the operations, technology and personnel of the combined companies; disruption of our ongoing
business, including loss of management focus on existing businesses and other market developments; problems retaining key technical and managerial personnel; expenses associated with amortization of
identifiable intangible assets; additional operating losses and expenses of acquired businesses; impairment of relationships with existing employees, customers and business partners; and fluctuations
in value and losses that may arise from equity investments. In addition, 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.

34

---

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

At December 31, 2001, our exposure to interest rates relates primarily to our investment portfolio. Largely offsetting this exposure are our fixed to
floating interest rate swaps.

The
objectives of our marketable securities are safety of principal, liquidity maintenance, yield maximization and full investment of all available funds. As such, our investment
portfolio consists primarily of high credit quality certificates of deposit, bankers' acceptances, commercial paper, mortgage-backed and receivables-backed securities, and corporate and government
notes. If short-term interest rates average 10% lower in 2002 than they were during 2001, our interest income from marketable securities would decrease by approximately
$1.9 million. In comparison, at December 31, 2000, we estimated that if short-term interest rates averaged 10% lower in 2001 than they were during 2000, our interest income
from marketable securities would have decreased by approximately $0.5 million. These amounts were determined by applying the hypothetical interest rate change to our marketable securities
balances as of December 31, 2001 and 2000.

In
addition, we had fixed rate Notes of $400 million at December 31, 2001. We entered into fixed to floating interest rate swaps related to $300 million of the
outstanding Notes, effectively converting $300 million of the $400 million fixed rate Notes into floating rate obligations. If short-term interest rates average 10% higher in
2002 than they were in 2001, our interest expense would increase by approximately $1.6 million. This amount was determined by applying the hypothetical interest rate change to our floating rate
borrowings balance at December 31, 2001.

In
addition, we had floating rate exposure on the approximately $260 million funded under our syndicated lease facility at December 31, 2001. If short-term interest rates
average 10% higher in 2002 than they were in 2001, our lease expense would increase by approximately $1.4 million. This amount was determined by applying the hypothetical interest rate change
to our syndicated lease balance at December 31, 2001.

If
our mix of interest rate-sensitive assets and liabilities changes significantly, we may enter into additional derivative transactions to manage our net interest exposure.

Foreign Currency Risk

We have various foreign operations, primarily in North America, South America, Europe, Australia and Asia. As a result of these business activities, we are
exposed to foreign currency risk. However, these exposures have historically related to a small portion of our overall operations as a substantial majority of our business is transacted in the United
States dollar. We were a party to certain foreign currency derivative contracts at December 31, 2001 and 2000. These contracts were not significant to our financial position or results of
operations as of or for the year ending December 31, 2001 or 2000.

35

---

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                  |  | Page
|------------------------------------------------- |  | ----
|Report of Ernst & Young LLP, Independent Auditors |  | 37  
|Consolidated Balance Sheets                       |  | 38  
|Consolidated Statements of Income                 |  | 39  
|Consolidated Statements of Cash Flows             |  | 40  
|Consolidated Statements of Stockholders' Equity   |  | 41  
|Notes to Consolidated Financial Statements        |  | 42  

36

---



REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The
Board of Directors and Stockholders
Sabre Holdings Corporation

We
have audited the accompanying consolidated balance sheets of Sabre Holdings Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2001. Our audits also included the financial statement schedule listed
under Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule
based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sabre Holdings Corporation and
subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the information set forth therein.



Dallas, Texas
January 14, 2002
except for Note 19, as to which
the date is February 19, 2002

37

---



SABRE HOLDINGS CORPORATION        CONSOLIDATED BALANCE SHEETS        (in thousands)

---

|                                           |                                                                                                                    | December 31,                               |        
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | -------
|
|Assets                                     |                                                                                                                    |                                            |        
|Current assets                             |                                                                                                                    |                                            |        
|                                           | Cash                                                                                                               |                                            | $      
|                                           | Marketable securities                                                                                              |                                            |        
|                                           | Accounts receivable, net                                                                                           |                                            |        
|                                           | Prepaid expenses                                                                                                   |                                            |        
|                                           | Deferred income taxes                                                                                              |                                            |        
|                                           |                                                                                                                    |                                            |        
|                                           |                                                                                                                    | Total current assets                       |        
|Property and equipment                     |                                                                                                                    |                                            |        
|                                           | Buildings and leasehold improvements                                                                               |                                            |        
|                                           | Furniture, fixtures and equipment                                                                                  |                                            |        
|                                           | Service contract equipment                                                                                         |                                            |        
|                                           | Computer equipment                                                                                                 |                                            |        
|                                           |                                                                                                                    |                                            |        
|                                           |                                                                                                                    |                                            | 493,630
|                                           | Less accumulated depreciation and amortization                                                                     |                                            |        
|                                           |                                                                                                                    |                                            |        
|                                           |                                                                                                                    | Total property and equipment               |        
|Deferred income taxes                      |                                                                                                                    |                                            | 19,611 
|Investments in joint ventures              |                                                                                                                    |                                            | 169,949
|Goodwill and intangible assets, net        |                                                                                                                    |                                            | 664,271
|Other assets, net                          |                                                                                                                    |                                            | 141,499
|                                           |                                                                                                                    |                                            |        
|                                           |                                                                                                                    | Total assets                               |        
|                                           |                                                                                                                    |                                            |        
|Liabilities and stockholders' equity       |                                                                                                                    |                                            |        
|Current liabilities                        |                                                                                                                    |                                            |        
|Accounts payable                           |                                                                                                                    | $                                          | 158,839
|Accrued compensation and related benefits  |                                                                                                                    |                                            | 73,274 
|Notes payable                              |                                                                                                                    |                                            |       
|Accrued subscriber incentives              |                                                                                                                    |                                            | 89,337 
|Deferred revenues                          |                                                                                                                    |                                            | 59,591 
|Other accrued liabilities                  |                                                                                                                    |                                            | 183,415
|                                           |                                                                                                                    |                                            |        
|Total current liabilities                  |                                                                                                                    |                                            | 564,456
|Deferred income taxes                      |                                                                                                                    |                                            |       
|Pensions and other postretirement benefits |                                                                                                                    |                                            | 88,756 
|Other liabilities                          |                                                                                                                    |                                            | 60,938 
|Minority interests                         |                                                                                                                    |                                            | 219,716
|Notes payable                              |                                                                                                                    |                                            | 400,375
|Commitments and contingencies              |                                                                                                                    |                                            |        
|Stockholders' equity                       |                                                                                                                    |                                            |        
|                                           | Preferred stock: $0.01 par value; 20,000 shares authorized; no shares issued                                       |                                            |        
|                                           | Common stock: Class A: $0.01 par value; 250,000 shares authorized; 133,527 and 131,632 shares issued, respectively |                                            |        
|                                           | Additional paid-in capital                                                                                         |                                            |        
|                                           | Retained earnings                                                                                                  |                                            |        
|                                           | Accumulated other comprehensive income                                                                             |                                            |        
|                                           | Less treasury stock at cost; 384 and 1,625 shares, respectively                                                    |                                            |        
|                                           |                                                                                                                    |                                            |        
|                                           |                                                                                                                    | Total stockholders' equity                 |        
|                                           |                                                                                                                    |                                            |        
|                                           |                                                                                                                    | Total liabilities and stockholders' equity |        
|                                           |                                                                                                                    |                                            |        

The accompanying notes are an integral part of these financial statements.

38

---

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

---

|                                                                    |                                                | Year Ended December 31,      |          
|------------------------------------------------------------------- | ---------------------------------------------- | ---------------------------- | ---------
|
|Revenues                                                            |                                                | $                            | 2,103,090
|Operating expenses                                                  |                                                |                              |          
|                                                                    | Cost of revenues                               |                              |          
|                                                                    | Selling, general and administrative            |                              |          
|                                                                    | Amortization of goodwill and intangible assets |                              |          
|                                                                    |                                                |                              |          
|                                                                    |                                                | Total operating expenses     |          
|                                                                    |                                                |                              |          
|Operating income (loss)                                             |                                                |                              | (8,709   
|Other income (expense)                                              |                                                |                              |          
|                                                                    | Interest income                                |                              |          
|                                                                    | Interest expense                               |                              |          
|                                                                    | Other, net                                     |                              |          
|                                                                    |                                                |                              |          
|                                                                    |                                                | Total other income (expense) |          
|                                                                    |                                                |                              |          
|Minority interests                                                  |                                                |                              | 22,469   
|                                                                    |                                                |                              |          
|Income from continuing operations before provision for income taxes |                                                |                              | 34,010   
|Provision for income taxes                                          |                                                |                              | 80,963   
|                                                                    |                                                |                              |          
|Income (loss) from continuing operations                            |                                                |                              | (46,953  
|Income from discontinued operations, net                            |                                                |                              | 36,305   
|Gain on sale of discontinued operations, net                        |                                                |                              | 38,772   
|                                                                    |                                                |                              |          
|Income before cumulative effect of accounting change                |                                                |                              | 28,124   
|Cumulative effect of accounting change, net                         |                                                |                              | 3,103    
|                                                                    |                                                |                              |          
|Net earnings                                                        |                                                | $                            | 31,227   
|                                                                    |                                                |                              |          
|Earnings (loss) per common sharebasic                              |                                                |                              |          
|                                                                    | Income (loss) from continuing operations       |                              | $        
|                                                                    | Income from discontinued operations, net       |                              |          
|                                                                    | Cumulative effect of accounting change, net    |                              |          
|                                                                    |                                                |                              |          
|                                                                    | Net earnings                                   |                              | $        
|                                                                    |                                                |                              |          
|Earnings (loss) per common sharediluted                            |                                                |                              |          
|                                                                    | Income (loss) from continuing operations       |                              | $        
|                                                                    | Income from discontinued operations, net       |                              |          
|                                                                    | Cumulative effect of accounting change, net    |                              |          
|                                                                    |                                                |                              |          
|                                                                    | Net earnings                                   |                              | $        
|                                                                    |                                                |                              |          

The
accompanying notes are an integral part of these financial statements.

39

---



SABRE HOLDINGS CORPORATION        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands)

---

|                                                                                |                                                    | Year Ended December 31,                        |           
|------------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------------------- | ----------
|
|Operating activities                                                            |                                                    |                                                |           
|Net earnings                                                                    |                                                    | $                                              | 31,227    
|Adjustments to reconcile net earnings to cash provided by operating activities: |                                                    |                                                |           
|                                                                                | Depreciation and amortization                      |                                                |           
|                                                                                | Deferred income taxes                              |                                                |           
|                                                                                | Tax benefit from exercise of stock options         |                                                |           
|                                                                                | Minority interests                                 |                                                |           
|                                                                                | Gain on sale of outsourcing business, net of tax   |                                                |           
|                                                                                | Gain on sale of investments                        |                                                |           
|                                                                                | Cumulative effect of accounting change, net of tax |                                                |           
|                                                                                | Loss on disposal of equipment                      |                                                |           
|                                                                                | Other                                              |                                                |           
|                                                                                | Changes in operating assets and liabilities:       |                                                |           
|                                                                                |                                                    | Accounts receivable                            |           
|                                                                                |                                                    | Prepaid expenses                               |           
|                                                                                |                                                    | Other assets                                   |           
|                                                                                |                                                    | Accrued compensation and related benefits      |           
|                                                                                |                                                    | Accounts payable and other accrued liabilities |           
|                                                                                |                                                    | Receivable from and payable to related parties |           
|                                                                                |                                                    | Pensions and other postretirement benefits     |           
|                                                                                |                                                    | Payment to US Airways                          |           
|                                                                                |                                                    | Other liabilities                              |           
|                                                                                |                                                    |                                                |           
|                                                                                | Cash provided by operating activities              |                                                |           
|Investing activities                                                            |                                                    |                                                |           
|Additions to property and equipment                                             |                                                    |                                                | (158,407  
|Purchases of marketable securities                                              |                                                    |                                                | (3,293,584
|Sales of marketable securities                                                  |                                                    |                                                | 2,784,831 
|Purchases of Travelocity.com common stock                                       |                                                    |                                                | (17,908   
|Loan to affiliate                                                               |                                                    |                                                |          
|Business combinations, net of cash acquired                                     |                                                    |                                                | (55,343   
|Proceeds from sale of outsourcing business                                      |                                                    |                                                | 660,763   
|Proceeds from sale of investments                                               |                                                    |                                                | 47,303    
|Sale of HRN stock                                                               |                                                    |                                                | 36,604    
|Investments in joint ventures, net                                              |                                                    |                                                |          
|Other investing activities, net                                                 |                                                    |                                                | (41,963   
|                                                                                |                                                    |                                                |           
|                                                                                | Cash used for investing activities                 |                                                |           
|Financing activities                                                            |                                                    |                                                |           
|Proceeds from issuance of common stock                                          |                                                    |                                                | 15,467    
|Proceeds from exercise of stock options                                         |                                                    |                                                | 93,794    
|Purchase of treasury stock                                                      |                                                    |                                                | (9,064    
|Dividends paid                                                                  |                                                    |                                                |          
|Issuance of notes payable                                                       |                                                    |                                                | 397,392   
|Repayment of notes payable                                                      |                                                    |                                                | (859,000  
|Payments on debenture payable to affiliate                                      |                                                    |                                                |          
|Other financing activities, net                                                 |                                                    |                                                |          
|                                                                                |                                                    |                                                |           
|                                                                                | Cash provided by (used for) financing activities   |                                                |           
|Increase (decrease) in cash                                                     |                                                    |                                                | 11,077    
|Cash at beginning of the period                                                 |                                                    |                                                | 7,778     
|                                                                                |                                                    |                                                |           
|Cash at end of the period                                                       |                                                    | $                                              | 18,855    
|                                                                                |                                                    |                                                |           
|                                                                                | Cash payments for income taxes                     |                                                | $         
|                                                                                |                                                    |                                                |           
|                                                                                | Cash payments for interest                         |                                                | $         
|                                                                                |                                                    |                                                |           

The accompanying notes are an integral part of these financial statements.

40

---

SABRE HOLDINGS CORPORATION        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY        (in thousands)

---

|                                                                                                                               |              | Class A
Common
Stock |       | Class B
Common
Stock |   | Additional
Paid-in
Capital |   | Retained
Earnings |         | Accumulated
Other
Comprehensive
Income |   | Treasury
Stock |        | Total |      
|------------------------------------------------------------------------------------------------------------------------------ | ------------ | -------------------- | ----- | -------------------- | - | -------------------------- | - | ----------------- | ------- | -------------------------------------- | - | -------------- | ------ | ----- | -----
|Balance at December 31, 1998                                                                                                   |              | $                    | 237   |                      | $ | 1,074                      |   | $                 | 599,087 |                                        | $ | 395,800        |        | $     |     
|Net earnings                                                                                                                   |              |                      |      |                      |   |                           |   |                   |        |                                        |   | 331,907        |        |       |     
|Repurchase of Company stock                                                                                                    |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       |     
|Issuance of 289 shares of Class A common stock pursuant to stock option, restricted stock incentive and stock purchase plans   |              |                      | 3     |                      |   |                           |   |                   | 1,276   |                                        |   |               |        |       |     
|Tax benefit from exercise of employee stock options                                                                            |              |                      |      |                      |   |                           |   |                   | 6,922   |                                        |   |               |        |       |     
|Unrealized loss on investments                                                                                                 |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       | (657 
|                                                                                                                               |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|Balance at December 31, 1999                                                                                                   |              |                      | 240   |                      |   | 1,074                      |   |                   | 607,285 |                                        |   | 727,707        |        |       | (657 
|Net earnings                                                                                                                   |              |                      |      |                      |   |                           |   |                   |        |                                        |   | 144,052        |        |       |     
|Exchange of Class B common stock for Class A common stock                                                                      |              |                      | 1,074 |                      |   | (1,074                     | ) |                   |        |                                        |   |               |        |       |     
|Dividends paid                                                                                                                 |              |                      |      |                      |   |                           |   |                   |        |                                        |   | (675,000       | )      |       |     
|Repurchase of Company stock                                                                                                    |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       |     
|Issuance of 720 shares of Class A common stock pursuant to stock option, restricted stock incentive and stock purchase plans   |              |                      | 7     |                      |   |                           |   |                   | (24,583 | )                                      |   |               |        |       |     
|Tax benefit from exercise of employee stock options                                                                            |              |                      |      |                      |   |                           |   |                   | 3,125   |                                        |   |               |        |       |     
|Options issued in connection with business combinations, net of unearned deferred compensation of $46,855                      |              |                      |      |                      |   |                           |   |                   | 75,271  |                                        |   |               |        |       |     
|Unrealized gain on investment                                                                                                  |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       | 768  
|Other                                                                                                                          |              |                      |      |                      |   |                           |   |                   | (706    | )                                      |   |               |        |       |     
|                                                                                                                               |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|Balance at December 31, 2000                                                                                                   |              |                      | 1,321 |                      |   |                           |   |                   | 660,392 |                                        |   | 196,759        |        |       | 111  
|Issuance of 3,063 shares of Class A common stock pursuant to stock option, restricted stock incentive and stock purchase plans |              |                      | 30    |                      |   |                           |   |                   | 42,081  |                                        |   |               |        |       |     
|Tax benefit from exercise of employee stock options                                                                            |              |                      |      |                      |   |                           |   |                   | 31,126  |                                        |   |               |        |       |     
|Purchase of treasury stock                                                                                                     |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       |     
|Reclassification of US Airways options to equity instruments                                                                   |              |                      |      |                      |   |                           |   |                   | 100,447 |                                        |   |               |        |       |     
|Change in fair value of contingent warrants to be issued to customer                                                           |              |                      |      |                      |   |                           |   |                   | (10,977 | )                                      |   |               |        |       |     
|Comprehensive income:                                                                                                          |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|                                                                                                                               | Net earnings |                      |       |                     |   |                            |  |                   |         |                                       |   |                | 31,227 |       |      
|Unrealized gain on foreign currency forward contracts, net of deferred income taxes                                            |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       | 802  
|Unrealized gain on investments, net of deferred income taxes                                                                   |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       | 2,372
|Unrealized foreign currency translation loss                                                                                   |              |                      |      |                      |   |                           |   |                   |        |                                        |   |               |        |       | (109 
|                                                                                                                               |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|Total comprehensive income                                                                                                     |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|                                                                                                                               |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|Other                                                                                                                          |              |                      |      |                      |   |                           |   |                   | (4,327  | )                                      |   |               |        |       |     
|                                                                                                                               |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      
|Balance at December 31, 2001                                                                                                   |              | $                    | 1,351 |                      | $ |                           |   | $                 | 818,742 |                                        | $ | 227,986        |        | $     | 3,176
|                                                                                                                               |              |                      |       |                      |   |                            |   |                   |         |                                        |   |                |        |       |      

The accompanying notes are an integral part of these financial statements.

41

---



SABRE HOLDINGS CORPORATION        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

1.    General Information



2.    EDS Transaction



42

---



For the Year Ended December 31,2001

2000

1999Revenues

$
370,007

$
676,640

$
735,652Income before provision for income taxes

$
59,060

$
77,680

$
67,083Provision for income taxes


22,755


29,733


25,659Income from discontinued operations, net

$
36,305

$
47,947

$
41,424




43

---



3.    Summary of Significant Accounting Policies



Property and Equipment:Buildings

30 yearsService contract equipment

3 to 5 yearsComputer equipment

3 to 5 yearsFurniture and fixtures

5 to 15 yearsLeasehold improvements

Lesser of lease term or useful lifeCapitalized software

3 to 7 yearsOther Assets:Internally developed software

3 to 7 yearsIntangible assets

1 to 20 yearsGoodwill

3 to 20 years


44

---



45

---



46

---



47

---



48

---



49

---



50

---



Unrealized Gains (Losses) on Investments

Unrealized
Gains (Losses)
on Foreign Currency Forward Contracts

Unrealized Foreign Currency Translation
Gains (Losses)

Accumulated Other Comprehensive IncomeBeginning balance, December 31, 2000

$
111

$


$


$
1112001 other comprehensive income, net of tax


2,372


802


(109)


3,065Ending balance, December 31, 2001

$
2,483

$
802

$
(109)

$
3,176




51

---







52

---



4.    Marketable Securities



December 31,2001

2000Corporate notes

$
237,616

$
Overnight investment and time deposits


205,558


99,961Mortgages


75,052


37,280Asset-backed securities


129,806


17Total

$
648,032

$
137,258




December 31,2001

2000Due in one year or less

$
226,842

$
99,961Due after one year through three years


308,709


17Due after three years


112,481


37,280Total

$
648,032

$
137,258




53

---



5.    Mergers and Acquisitions



Working capital acquired

$
745Long term assets and liabilities


1,049Intangible assets subject to amortization


38,000Goodwill


6,594Total purchase price

$
46,388




54

---



55

---



UnauditedYear Ended December 31, 2001

Year Ended December 31, 2000Revenues

$
2,119,946

$
2,013,636Loss from continuing operations


(49,096
)

(64,305
)Loss per common share from continuing operations:Basic

$
(0.37
)
$
(0.50
)Diluted

$
(0.37
)
$
(0.50
)


6.    Significant Transactions



56

---



57

---



7.    Derivatives



58

---



59

---



Asset2001

2000Foreign currency forwards

$
356

$
2,113HRN Warrants


1,669


9,721Interest rate/foreign currency swap





Interest rate swaps


2,874


Total

$
4,899

$
11,834




8.    Certain Transactions with AMR and American



60

---







61

---



62

---



Year Ended December 31, 1999Employee benefits

$
45,471Facilities rental


2,814Marketing cooperation


10,793Management services


5,719Other administrative costs


2,816Travel services


45,190Total expenses

$
112,803




9.    Debt



63

---



10.  Commitments and Contingencies



64

---



|Contractual
Obligations                           |  | Payments Due by Period |        
|------------------------------------------------- |  | ---------------------- | -------
|
|Lease obligations                                 |  | $                      | 29,120 
|Amounts receivable under non-cancelable subleases |  |                        | (5,880 
|Other long-term obligations                       |  |                        | 191,018
|                                                  |  |                        |        
|Total contractual cash obligations                |  | $                      | 214,258
|                                                  |  |                        |        



11.  Employee Benefit Plans



65

---



Pension Benefits

Other Benefits2001

2000

2001

2000Change in benefit obligation:Benefit obligation at January 1

$
(256,955
)
$
(201,950
)
$
(73,315
)
$
(61,335
)Service cost


(9,891
)

(10,836
)

(4,047
)

(4,369
)Interest cost


(18,372
)

(16,974
)

(5,457
)

(4,764
)Actuarial losses


(18,464
)

(27,828
)

(4,137
)

(5,895
)Plan amendments











(7,673
)Acquisitions


4,025








Curtailments


54,440





7,192


Settlements











9,739Benefits paid


2,197


633


2,614


982Benefit obligation at December 31

$
(243,020
)
$
(256,955
)
$
(77,150
)
$
(73,315
)


66

---

Change in plan assets:Fair value at January 1

$
152,665

$
126,299

$
10,966

$
10,600Actual return on plan assets


3,350


10,122


982


(1,654
)Divestitures


(2,601
)







Employer contributions


35,028


18,261


1,615


12,741Transfers from AMR





(1,384
)




Settlements











(9,739
)Benefits paid


(2,197
)

(633
)

(2,614
)

(982
)Fair value at December 31

$
186,245

$
152,665

$
10,949

$
10,966Funded status of the plan (underfunded)

$
(56,775
)
$
(104,290
)
$
(66,202
)
$
(62,349
)Unrecognized net loss (gain)


28,874


54,292


1,570


(4,246
)Unrecognized prior service cost


713


702


3,064


5,995Unrecognized transition asset





7





Accrued benefit cost

$
(27,188
)
$
(49,289
)
$
(61,568
)
$
(60,600
)




Pension Benefits

Other Benefits2001

2000

2001

2000Weighted-average assumptions:Discount rate

7.25
%
7.50
%
7.25
%
7.50
%Expected return on plan assets

9.50
%
9.50
%
9.50
%
9.50
%Rate of compensation increase

5.25
%
5.25
%







67

---



Pension Benefits

Other Benefits2001

2000

1999

2001

2000

1999Service cost

$
9,891

$
10,836

$
13,055

$
4,047

$
4,369

$
5,118Interest cost


18,372


16,974


15,710


5,458


4,764


4,350Expected return on plan assets


(16,376
)

(13,025
)

(10,294
)

(1,003
)

(1,093
)

(904
)Amortization of transition asset


7


9


(151
)







Amortization of prior service cost


57


53


22


410


248


(150
)Amortization of net loss (gain)


1,045


74


3,032


155


(475
)

(533
)Net periodic benefit cost


12,996


14,921


21,374


9,067


7,813


7,881Settlement gain














(1,945
)

Curtailment gain


(69
)







(5,491
)




Total net periodic benefit cost

$
12,927

$
14,921

$
21,374

$
3,576

$
5,868

$
7,881




68

---



12.  Income Taxes



Year Ended December 31,2001

2000

1999Current portion:Federal

$
66,547

$
63,966

$
148,325State


3,306


1,041


10,961Foreign


8,984


10,611


6,929Total current


78,837


75,618


166,215Deferred portion:Federal


720


9,198


(3,501
)State


1,406


8,667


7,665Total deferred


2,126


17,865


4,164Total provision for income taxes

$
80,963

$
93,483

$
170,379




Year Ended December 31,2001

2000

1999Income tax provision at statutory federal income tax rate

$
11,718

$
66,352

$
161,302State income taxes, net of federal benefit


3,063


4,194


12,107Research and experimentation credit


(4,000
)

(4,000
)

Non-deductible goodwill amortization


69,970


28,278


Other, net


212


(1,341
)

(3,030
)Total provision for income taxes

$
80,963

$
93,483

$
170,379


69

---



December 31,2001

2000Deferred tax assets:Accrued expenses

$
79,321

$
39,630Employee benefits other than pensions


25,295


29,432Deferred revenue


3,007


5,855Pension obligations


9,974


10,606Net operating loss carryforwards


60,488


82,225US Airways options


64,689


12,879Total deferred tax assets


242,774


180,627Deferred tax liabilities:Foreign operations


(2,065
)

(837
)Depreciation and amortization


(26,929
)

(25,588
)Amortization of computer software and intangible assets


(58,675
)

(90,093
)Other


(41,737
)

(47,123
)Total deferred tax liabilities


(129,406
)

(163,641
)Valuation allowance


(47,787
)

(48,800
)Net deferred tax asset (liability)

$
65,581

$
(31,814
)Current deferred income tax asset

$
45,970

$
15,889Noncurrent deferred income tax asset (liability)


19,611


(47,703
)Net deferred tax asset (liability)

$
65,581

$
(31,814
)




70

---



13.  Capital Stock



71

---







Year Ended December 31,2001

2000

1999Outstanding at January 1

841,219

192,410

155,590Granted

13,000

715,957

168,000Issued

(342,785
)
(67,148
)
(126,740
)Canceled

(64,188
)


(4,440
)Outstanding at December 31

447,246

841,219

192,410




72

---



Year Ended December 31,2001

2000

1999Outstanding at January 1

466,147

479,069

504,873Granted



282,361

197,326Awards settled in cash

(153,405
)
(194,957
)
(179,035
)Canceled

(20,233
)
(100,326
)
(44,095
)Outstanding at December 31

292,509

466,147

479,069




| |                                                | Year Ended December 31,
| | ---------------------------------------------- | -----------------------
|
|
| | Outstanding at January 1                       |                        
| | Granted                                        |                        
| | Exercised                                      |                        
| | Canceled                                       |                        
| |                                                |                        
| | Outstanding at December 31                     |                        
| |                                                |                        
| | Exercisable options outstanding at December 31 |                        
| |                                                |                        



73

---



| |                  | Options Outstanding |           | Options Exercisable
| | ---------------- | ------------------- | --------- | -------------------
|
| | $  0.16 - $25.99 |                     | 1,789,253 |                    
| | $26.00 - $35.99  |                     | 2,131,384 |                    
| | $36.00 - $48.99  |                     | 4,274,855 |                    
| | $49.00 - $61.12  |                     | 1,497,611 |                    
| |                  |                     |           |                    
| | Total            |                     | 9,693,103 |                    
| |                  |                     |           |                    



74

---



75

---



Year Ended December 31,2001

2000

1999Income (loss) from continuing operations:As reported

$
(46,953
)
$
96,105

$
290,483Pro forma

$
(64,546
)
$
86,118

$
285,364Earnings (loss) per common share, as reported:Basic

$
(0.35
)
$
0.74

$
2.24Diluted

$
(0.35
)
$
0.74

$
2.22Earnings per common share, pro forma:Basic

$
(0.49
)
$
0.67

$
2.20Diluted

$
(0.49
)
$
0.66

$
2.18


15.  Earnings per Share



Year Ended December 31,2001

2000

1999Denominator for basic earnings per common shareweighted-average shares


132,317


129,198


129,574Dilutive effect of stock awards and options





643


1,081Denominator for diluted earnings per common shareadjusted weighted-average shares


132,317


129,841


130,655Earnings per common sharebasic

$
0.24

$
1.11

$
2.56Earnings per common sharediluted

$
0.24

$
1.11

$
2.54




76

---



16.  Segment Reporting



77

---



Year Ended December 31,2001

2000

1999Revenues from external customers:Travel marketing and distribution

$
1,612,302

$
1,585,762

$
1,420,693Travelocity.com


233,611


144,261


40,305GetThere


42,337


11,991


2,165Airline solutions and emerging businesses


196,799


177,871


217,767Total external revenues

$
2,085,049

$
1,919,885

$
1,680,930Intersegment revenues:Travel marketing and distribution

$
24,811

$
16,249

$
(23,882
)Travelocity.com


68,159


48,409


23,882GetThere


154





Airline solutions and emerging businesses


2,852


3,046


Total intersegment revenues

$
95,976

$
67,704

$
Equity in net income of equity method investees:Travel marketing and distribution

$
18,041

$
20,849

$
18,037Total consolidated revenues:Travel marketing and distribution

$
1,655,154

$
1,622,860

$
1,414,848Travelocity.com


301,770


192,670


64,187GetThere


42,491


11,991


2,165Airline solutions and emerging businesses


199,651


180,917


217,767Elimination of intersegment revenues


(95,976
)

(67,704
)

Total consolidated revenues

$
2,103,090

$
1,940,734

$
1,698,967Segment operating income (loss) from continuing operations, excluding special items:Travel marketing and distribution

$
381,017

$
416,236

$
369,021Travelocity.com


10,618


(43,502
)

(22,578
)GetThere


(53,593
)

(36,705
)

(21,565
)Airline solutions and emerging businesses


(8,111
)

(25,918
)

(13,132
)Net corporate allocations


(15,974
)

(1,894
)

(4,042
)Total segment operating income from continuing operations, excluding special items

$
313,957

$
308,217

$
307,704


78

---



Year Ended December 31,2001

2000

1999Travel Marketing and Distribution:Goodwill and other intangibles amortization

$
19,136

$
4,207

$
Stock compensation


1,272


527


Severance expense


11,613


4,055


603Total Travel Marketing and Distribution


32,021


8,789


603Travelocity.com:Goodwill and other intangibles amortization


85,060


67,996


Stock compensation


1,662


2,556


Total Travelocity.com


86,722


70,552


GetThere:Goodwill and other intangibles amortization


173,326


37,216


Stock compensation


6,660


1,665


Integration expenses


1,386





Severance expenses


5,961


549


Total GetThere


187,333


39,430


Airline Solutions and Emerging Businesses:Severance expenses


2,725





Write-off of software which will not be used


5,975


3,153


1,682Total Airline Solutions and Emerging Businesses


8,700


3,153


1,682Corporate:Expenses related to spin off from AMR





12,548


Severance expenses


7,890


963


Total Corporate


7,890


13,511


Total special items

$
322,666

$
135,435

$
2,285Operating income (loss) from continuing operations including special items:Travel Marketing and Distribution

$
348,996

$
407,447

$
368,418Travelocity.com


(76,104
)

(114,054
)

(22,578
)GetThere


(240,926
)

(76,135
)

(21,565
)Airline Solutions and Emerging Businesses


(16,811
)

(29,071
)

(14,814
)Unallocated corporate expenses


(23,864
)

(15,405
)

(4,042
)Total consolidated operating income (loss) from continuing operations

$
(8,709
)
$
172,782

$
305,419


79

---

December 31,2001

2000

1999Depreciation and amortization included in income from continuing operations (in thousands):Travel marketing and distribution

$
79,202

$
110,699

$
123,268Travelocity.com


94,002


82,348


2,833GetThere


176,990


38,758


5,018Airline solutions and emerging businesses


32,318


22,826


20,544Unallocated depreciation and amortization


6,426


17,296


23,553Total consolidated depreciation and amortization included in income from continuing operations

$
388,938

$
271,927

$
175,216Amortization of goodwill and intangible assets included in income from continuing operations, including special items (in thousands):Travel marketing and distribution

$
19,136

$
4,207

$
Travelocity.com


85,060


67,996


GetThere


173,326


37,216


Total amortization of goodwill and intangible assets included in income from continuing operations

$
277,522

$
109,419

$





December 31,2001

2000

1999Segment assets (in thousands):Travel marketing and distribution

$
488,446

$
459,483

$
546,971Travelocity.com


373,024


370,205


9,606GetThere


452,417


684,810


2,400Airline solutions and emerging businesses


327,484


543,907


434,273Unallocated cash and investments


457,979


145,036


611,126Unallocated corporate headquarters and other


276,667


446,913


346,835Total consolidated assets

$
2,376,017

$
2,650,354

$
1,951,211


80

---



Year Ending December 31,2001

2000

1999Capital expenditures for segment assets:Travel marketing and distribution

$
62,348

$
78,567

$
67,466Travelocity.com


11,572


11,755


522GetThere


7,985


1,341


491Airline solutions and emerging businesses


70,949


81,876


62,057Unallocated capital expenditures


5,553


16,587


37,427Total capital expenditures

$
158,407

$
190,126

$
167,963




Year Ended December 31,2001

2000

1999Revenues from continuing operations:United States

$
1,433,371

$
1,317,624

$
1,147,597Foreign


669,719


623,110


551,370Total

$
2,103,090

$
1,940,734

$
1,698,967




December 31,2001

2000

1999United States

$
1,025,923

$
1,681,641

$
754,201Singapore


152,733


145,606


145,586Other foreign


105,123


130,139


75,000Total

$
1,283,779

$
1,957,386

$
974,787


81

---





| |                                             | First
Quarter                               |   | Second
Quarter |     | Third
Quarter |         | Fourth
Quarter |  
| | ------------------------------------------- | ------------------------------------------- | - | -------------- | --- | ------------- | ------- | -------------- | -
| | 2001                                        |                                             |   |                |     |               |         |                |  
| | Revenues                                    |                                             | $ | 573,414        |     | $             | 582,035 |                | $
| | Operating income (loss)                     |                                             |   | 44,861         |     |               | 38,448  |                |  
| | Income (loss) from continuing operations    |                                             |   | 413            |     |               | 5,051   |                |  
| | Income from discontinued operations, net    |                                             |   | 13,632         |     |               | 22,673  |                |  
| | Cumulative effect of accounting change, net |                                             |   | 3,103          |     |               |        |                |  
| |                                             |                                             |   |                |     |               |         |                |  
| | Net earnings (loss)                         |                                             | $ | 17,148         |     | $             | 27,724  |                | $
| |                                             |                                             |   |                |     |               |         |                |  
| | Earnings per common sharebasic:            |                                             |   |                |     |               |         |                |  
| |                                             | Income (loss) from continuing operations    |   | $              |    |               | $       | .04            |  
| |                                             | Income from discontinued operations, net    |   |                | .10 |               |         | .17            |  
| |                                             | Cumulative effect of accounting change, net |   |                | .03 |               |         |               |  
| |                                             |                                             |   |                |     |               |         |                |  
| |                                             | Net earnings (loss)                         |   | $              | .13 |               | $       | .21            |  
| |                                             |                                             |   |                |     |               |         |                |  
| | Earnings (loss) per common sharediluted:   |                                             |   |                |     |               |         |                |  
| |                                             | Income (loss) from continuing operations    |   | $              |    |               | $       | .04            |  
| |                                             | Income from discontinued operations, net    |   |                | .10 |               |         | .16            |  
| |                                             | Cumulative effect of accounting change, net |   |                | .03 |               |         |               |  
| |                                             |                                             |   |                |     |               |         |                |  
| |                                             | Net earnings (loss)                         |   | $              | .13 |               | $       | .20            |  
| |                                             |                                             |   |                |     |               |         |                |  
| | 2000                                        |                                             |   |                |     |               |         |                |  
| | Revenues                                    |                                             | $ | 479,142        |     | $             | 501,377 |                | $
| | Operating income (loss)                     |                                             |   | 76,271         |     |               | 74,864  |                |  
| | Income (loss) from continuing operations    |                                             |   | 49,358         |     |               | 47,532  |                |  
| | Income from discontinued operations, net    |                                             |   | 16,258         |     |               | 15,876  |                |  
| |                                             |                                             |   |                |     |               |         |                |  
| | Net earnings (loss)                         |                                             |   | 65,616         |     |               | 63,408  |                |  
| |                                             |                                             |   |                |     |               |         |                |  
| | Earnings per common sharebasic:            |                                             |   |                |     |               |         |                |  
| |                                             | Income (loss) from continuing operations    |   | $              | .38 |               | $       | .37            |  
| |                                             | Income from discontinued operations, net    |   |                | .13 |               |         | .12            |  
| |                                             |                                             |   |                |     |               |         |                |  
| |                                             | Net earnings (loss)                         |   | $              | .51 |               | $       | .49            |  
| |                                             |                                             |   |                |     |               |         |                |  
| | Earnings (loss) per common sharediluted:   |                                             |   |                |     |               |         |                |  
| |                                             | Income (loss) from continuing operations    |   | $              | .38 |               | $       | .37            |  
| |                                             | Income from discontinued operations, net    |   |                | .10 |               |         | .09            |  
| |                                             |                                             |   |                |     |               |         |                |  
| |                                             | Net earnings (loss)                         |   | $              | .48 |               | $       | .46            |  
| |                                             |                                             |   |                |     |               |         |                |  

82

---



18.  Supplemental Guarantor/Non-Guarantor Financial Information



83

---



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             |          | $                 
| |                                     | Accounts receivabletrade, net             |                                            |            |          |                             |           | 238,747             |          |                   
| |                                     | Intercompany accounts receivable (payable) |                                            |            | 1,074,130 |                             |           | (1,406,885          | )        |                   
| |                                     | Prepaid expenses                           |                                            |            |          |                             |           | 18,120              |          |                   
| |                                     | Deferred income taxes                      |                                            |            |          |                             |           | 45,740              |          |                   
| |                                     |                                            |                                            |            |           |                             |           |                     |          |                   
| |                                     |                                            | Total current assets                       |            |           | 1,074,130                   |           |                     | (561,082 | )                 
| | Property and equipment, net         |                                            |                                            |           |           |                             | 232,434   |                     |          | 56,015            
| | Investment in joint ventures        |                                            |                                            |           |           |                             | 12,353    |                     |          | 157,596           
| | Goodwill and intangible assets, net |                                            |                                            |           |           |                             | 3,359     |                     |          | 660,912           
| | Investment in subsidiaries          |                                            |                                            | 372,556    |           |                             | 1,132,522 |                     |          |                  
| | Other assets, net                   |                                            |                                            | 5,845      |           |                             | 82,812    |                     |          | 72,453            
| |                                     |                                            |                                            |            |           |                             |           |                     |          |                   
| | Total assets                        |                                            | $                                          | 1,452,531  |           | $                           | 902,398   |                     | $        | 1,526,166         
| |                                     |                                            |                                            |            |           |                             |           |                     |          |                   
| | Liabilities and stockholders equity |                                            |                                            |            |           |                             |           |                     |          |                   
| | Current liabilities                 |                                            |                                            |            |           |                             |           |                     |          |                   
| |                                     | Accounts payable                           |                                            | $          |          |                             | $         | 136,608             |          | $                 
| |                                     | Accrued compensation and related benefits  |                                            |            |          |                             |           | 59,184              |          |                   
| |                                     | Other accrued liabilities                  |                                            |            | 9,347     |                             |           | 219,651             |          |                   
| |                                     |                                            |                                            |            |           |                             |           |                     |          |                   
| |                                     |                                            | Total current liabilities                  |            |           | 9,347                       |           |                     | 415,443  |                   
| |                                     | Pensions and other postretirement benefits |                                            |            |          |                             |           | 88,362              |          |                   
| |                                     | Other liabilities                          |                                            |            | 1,033     |                             |           | 26,037              |          |                   
| |                                     | Minority interests                         |                                            |            |          |                             |           |                    |          |                   
| |                                     | Notes payable                              |                                            |            | 400,375   |                             |           |                    |          |                   
| | Stockholders' equity                |                                            |                                            | 1,041,776  |           |                             | 372,556   |                     |          | 1,132,522         
| |                                     |                                            |                                            |            |           |                             |           |                     |          |                   
| |                                     |                                            | Total liabilities and stockholders' equity |            | $         | 1,452,531                   |           | $                   | 902,398  |                   
| |                                     |                                            |                                            |            |           |                             |           |                     |          |                   

84

---

CONDENSED CONSOLIDATING BALANCE SHEETS  DECEMBER 31, 2000  (in thousands)

| |                                     | Sabre Holdings                             |                                            | Sabre Inc. |         | Non-
Guarantor Subsidiaries |           | Eliminating Entries |           | Sabre Consolidated
| | ----------------------------------- | ------------------------------------------ | ------------------------------------------ | ---------- | ------- | --------------------------- | --------- | ------------------- | --------- | ------------------
| | Assets                              |                                            |                                            |            |         |                             |           |                     |           |                   
| | Current Assets                      |                                            |                                            |            |         |                             |           |                     |           |                   
| |                                     | Cash and marketable securities             |                                            | $          |        |                             | $         | 113,967             |           | $                 
| |                                     | Accounts receivabletrade, net             |                                            |            |        |                             |           | 360,275             |           |                   
| |                                     | Intercompany accounts receivable (payable) |                                            |            | 474,865 |                             |           | (742,052            | )         |                   
| |                                     | Prepaid expenses                           |                                            |            |        |                             |           | 58,415              |           |                   
| |                                     | Deferred income taxes                      |                                            |            |        |                             |           | 15,384              |           |                   
| |                                     |                                            |                                            |            |         |                             |           |                     |           |                   
| |                                     |                                            | Total current assets                       |            |         | 474,865                     |           |                     | (194,011  | )                 
| | Property and equipment, net         |                                            |                                            |           |         |                             | 464,643   |                     |           | 91,398            
| | Investment in joint ventures        |                                            |                                            |           |         |                             | 5,640     |                     |           | 153,677           
| | Goodwill and intangible assets, net |                                            |                                            |           |         |                             |          |                     |           | 891,497           
| | Investment in subsidiaries          |                                            |                                            | 316,643    |         |                             | 1,221,416 |                     |           |                  
| | Other assets, net                   |                                            |                                            | 503        |         |                             | 266,220   |                     |           | 83,808            
| |                                     |                                            |                                            |            |         |                             |           |                     |           |                   
| |                                     |                                            | Total assets                               |            | $       | 792,011                     |           | $                   | 1,763,908 |                   
| |                                     |                                            |                                            |            |         |                             |           |                     |           |                   
| | Liabilities and stockholders equity |                                            |                                            |            |         |                             |           |                     |           |                   
| | Current liabilities                 |                                            |                                            |            |         |                             |           |                     |           |                   
| |                                     | Accounts payable                           |                                            | $          |        |                             | $         | 136,083             |           | $                 
| |                                     | Accrued compensation and related benefits  |                                            |            |        |                             |           | 80,137              |           |                   
| |                                     | Notes payable                              |                                            |            |        |                             |           | 710,000             |           |                   
| |                                     | Other accrued liabilities                  |                                            |            |        |                             |           | 210,568             |           |                   
| |                                     |                                            |                                            |            |         |                             |           |                     |           |                   
| |                                     |                                            | Total current liabilities                  |            |         |                            |           |                     | 1,136,788 |                   
| |                                     | Deferred income taxes                      |                                            |            |        |                             |           | 24,115              |           |                   
| |                                     | Pensions and other postretirement benefits |                                            |            |        |                             |           | 109,889             |           |                   
| |                                     | Other liabilities                          |                                            |            | 994     |                             |           | 27,473              |           |                   
| |                                     | Minority interests                         |                                            |            |        |                             |           |                    |           |                   
| |                                     | Notes payable                              |                                            |            |        |                             |           | 149,000             |           |                   
| | Stockholders' equity                |                                            |                                            | 791,017    |         |                             | 316,643   |                     |           | 1,221,416         
| |                                     |                                            |                                            |            |         |                             |           |                     |           |                   
| |                                     |                                            | Total liabilities and stockholders' equity |            | $       | 792,011                     |           | $                   | 1,763,908 |                   
| |                                     |                                            |                                            |            |         |                             |           |                     |           |                   

85

---

CONDENSED CONSOLIDATING STATEMENTS OF INCOME  FOR THE YEAR ENDED DECEMBER 31, 2001  (in thousands)

| |                                                                                    | Sabre Holdings           |                              | Sabre Inc. |        | Non-
Guarantor Subsidiaries |           | Eliminating Entries |          | Sabre Consolidated |       
| | ---------------------------------------------------------------------------------- | ------------------------ | ---------------------------- | ---------- | ------ | --------------------------- | --------- | ------------------- | -------- | ------------------ | ------
| | Revenues                                                                           |                          | $                            |           |        | $                           | 1,617,977 |                     | $        | 886,435            |       
| | Operating expenses                                                                 |                          |                              | 1,843      |        |                             | 1,565,264 |                     |          | 947,202            |       
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| | Operating income (loss)                                                            |                          |                              | (1,843     | )      |                             | 52,713    |                     |          | (60,767            | )     
| | Other income (expense)                                                             |                          |                              |            |        |                             |           |                     |          |                    |       
| |                                                                                    | Interest income          |                              |            | 37,251 |                             |           | 18,885              |          |                    | 5,774 
| |                                                                                    | Interest expense         |                              |            | (9,581 | )                           |           | (88,359             | )        |                    | 19,524
| |                                                                                    | Income from subsidiaries |                              |            | 14,214 |                             |           | (74,844             | )        |                    |      
| |                                                                                    | Other, net               |                              |            |       |                             |           | 42,385              |          |                    | (5,629
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| |                                                                                    |                          | Total other income (expense) |            |        | 41,884                      |           |                     | (101,933 | )                  |       
| | Minority interests                                                                 |                          |                              |           |        |                             |          |                     |          | 22,469             |       
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| | Income (loss) from continuing operations before income taxes                       |                          |                              | 40,041     |        |                             | (49,220   | )                   |          | (18,629            | )     
| | Provision for income taxes                                                         |                          |                              | 8,814      |        |                             | 10,938    |                     |          | 61,211             |       
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| | Income (loss) from continuing operations                                           |                          |                              | 31,227     |        |                             | (60,158   | )                   |          | (79,840            | )     
| | Income (loss) from discontinued operations, net                                    |                          |                              |           |        |                             | 36,164    |                     |          | 1,329              |       
| | Gain on sale of discontinued operations, net                                       |                          |                              |           |        |                             | 38,208    |                     |          | 564                |       
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| | Income before cumulative effect of change in accounting method                     |                          |                              | 31,227     |        |                             | 14,214    |                     |          | (77,947            | )     
| | Cumulative effect of accounting method, net of minority interests and income taxes |                          |                              |           |        |                             |          |                     |          | 3,103              |       
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| | Net income (loss)                                                                  |                          | $                            | 31,227     |        | $                           | 14,214    |                     | $        | (74,844            | )     
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       

86

---

CONDENSED CONSOLIDATING STATEMENTS OF INCOME  FOR THE YEAR ENDED DECEMBER 31, 2000  (in thousands)

| |                                                              | Sabre Holdings           |                              | Sabre Inc. |         | Non-
Guarantor Subsidiaries |           | Eliminating Entries |         | Sabre Consolidated |       
| | ------------------------------------------------------------ | ------------------------ | ---------------------------- | ---------- | ------- | --------------------------- | --------- | ------------------- | ------- | ------------------ | ------
| | Revenues                                                     |                          | $                            |           |         | $                           | 1,628,204 |                     | $       | 595,049            |       
| | Operating expenses                                           |                          |                              | 1,523      |         |                             | 1,466,749 |                     |         | 587,485            |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       
| | Operating income (loss)                                      |                          |                              | (1,523     | )       |                             | 161,455   |                     |         | 7,564              |       
| | Other income (expense)                                       |                          |                              |            |         |                             |           |                     |         |                    |       
| |                                                              | Interest income          |                              |            | 28,534  |                             |           | 11,894              |         |                    | 4,197 
| |                                                              | Interest expense         |                              |            |        |                             |           | (74,953             | )       |                    | 14,890
| |                                                              | Income from subsidiaries |                              |            | 126,259 |                             |           | 15,812              |         |                    |      
| |                                                              | Other, net               |                              |            |        |                             |           | 310                 |         |                    | 1,180 
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       
| |                                                              |                          | Total other income (expense) |            |         | 154,793                     |           |                     | (46,937 | )                  |       
| | Minority interests                                           |                          |                              |           |         |                             |          |                     |         | 30,754             |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       
| | Income (loss) from continuing operations before income taxes |                          |                              | 153,270    |         |                             | 114,518   |                     |         | 58,585             |       
| | Provision for income taxes                                   |                          |                              | 9,218      |         |                             | 35,076    |                     |         | 49,189             |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       
| | Income (loss) from continuing operations                     |                          |                              | 144,052    |         |                             | 79,442    |                     |         | 9,396              |       
| | Income (loss) from discontinued operations, net              |                          |                              |           |         |                             | 46,817    |                     |         | 6,416              |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       
| | Net income (loss)                                            |                          | $                            | 144,052    |         | $                           | 126,259   |                     | $       | 15,812             |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       

87

---

CONDENSED CONSOLIDATING STATEMENTS OF INCOME  FOR THE YEAR ENDED DECEMBER 31, 1999  (in thousands)

| |                                                              | Sabre Holdings           |                              | Sabre Inc. |         | Non-
Guarantor Subsidiaries |           | Eliminating Entries |         | Sabre Consolidated |      
| | ------------------------------------------------------------ | ------------------------ | ---------------------------- | ---------- | ------- | --------------------------- | --------- | ------------------- | ------- | ------------------ | -----
| | Revenues                                                     |                          | $                            |           |         | $                           | 1,486,298 |                     | $       | 355,844            |      
| | Operating expenses                                           |                          |                              | 1,348      |         |                             | 1,309,385 |                     |         | 225,990            |      
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |      
| | Operating income (loss)                                      |                          |                              | (1,348     | )       |                             | 176,913   |                     |         | 129,854            |      
| | Other income (expense)                                       |                          |                              |            |         |                             |           |                     |         |                    |      
| |                                                              | Interest income          |                              |            | 44,946  |                             |           | 23,170              |         |                    | 204  
| |                                                              | Interest expense         |                              |            | (8,821  | )                           |           | (49,599             | )       |                    | 7,778
| |                                                              | Income from subsidiaries |                              |            | 309,302 |                             |           | 95,091              |         |                    |     
| |                                                              | Other, net               |                              |            |        |                             |           | 137,788             |         |                    | (23  
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |      
| |                                                              |                          | Total other income (expense) |            |         | 345,427                     |           |                     | 206,450 |                    |      
| | Income (loss) from continuing operations before income taxes |                          |                              | 344,079    |         |                             | 383,363   |                     |         | 137,813            |      
| | Provision for income taxes                                   |                          |                              | 12,172     |         |                             | 113,999   |                     |         | 44,208             |      
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |      
| | Income (loss) from continuing operations                     |                          |                              | 331,907    |         |                             | 269,364   |                     |         | 93,605             |      
| | Income from discontinued operations, net                     |                          |                              |           |         |                             | 39,938    |                     |         | 1,486              |      
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |      
| | Net income (loss)                                            |                          | $                            | 331,907    |         | $                           | 309,302   |                     | $       | 95,091             |      
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |      

88

---



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  FOR THE YEAR ENDED DECEMBER 31, 2001  (in thousands)

| |                                                  | Sabre Holdings                                                                  |                                                  | Sabre Inc. |          | Non-
Guarantor Subsidiaries |          | Eliminating Entries |         | Sabre Consolidated |         
| | ------------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------------------------------ | ---------- | -------- | --------------------------- | -------- | ------------------- | ------- | ------------------ | --------
| | Operating Activities                             |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| |                                                  | Net earnings                                                                    |                                                  | $          | 31,227   |                             | $        | 14,214              |         | $                  | (74,844 
| |                                                  | Adjustments to reconcile net earnings to cash provided by operating activities: |                                                  |            |          |                             |          |                     |         |                    |         
| |                                                  | Depreciation and amortization                                                   |                                                  |            |         |                             |          | 111,862             |         |                    | 325,785 
| |                                                  | Deferred income taxes                                                           |                                                  |            |         |                             |          | (74,082             | )       |                    | (12,517 
| |                                                  | Tax benefit from exercise of stock options                                      |                                                  |            | 31,126   |                             |          |                    |         |                    |        
| |                                                  | Minority interests                                                              |                                                  |            |         |                             |          |                    |         |                    | (22,469 
| |                                                  | (Income) loss from subsidiaries                                                 |                                                  |            | (14,214  | )                           |          | 74,844              |         |                    |        
| |                                                  | Gain on sale of business, net of tax                                            |                                                  |            |         |                             |          | (38,208             | )       |                    | (564    
| |                                                  | Gain on sale of investments                                                     |                                                  |            |         |                             |          | (47,303             | )       |                    |        
| |                                                  | Loss on disposal of equipment                                                   |                                                  |            |         |                             |          | 8,132               |         |                    | 215     
| |                                                  | Cumulative effect of accounting change, net                                     |                                                  |            |         |                             |          |                    |         |                    | (3,103  
| |                                                  | Other                                                                           |                                                  |            |         |                             |          | 12,805              |         |                    | 14,154  
| |                                                  | Changes in operating assets and liabilities                                     |                                                  |            | (504,029 | )                           |          | 681,994             |         |                    | (104,833
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| |                                                  |                                                                                 | Cash provided by (used for) operating activities |            |          | (455,890                    | )        |                     | 744,258 |                    |         
| | Investing Activities                             |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| |                                                  | Additions to property and equipment                                             |                                                  |            |         |                             |          | (121,196            | )       |                    | (37,211 
| |                                                  | Purchases of marketable securities                                              |                                                  |            |         |                             |          | (2,883,861          | )       |                    | (409,723
| |                                                  | Sales of marketable securities                                                  |                                                  |            |         |                             |          | 2,464,856           |         |                    | 319,975 
| |                                                  | Purchases of Travelocity.com common stock                                       |                                                  |            |         |                             |          |                    |         |                    | (17,908 
| |                                                  | Investments in subsidiaries, net                                                |                                                  |            | (41,699  | )                           |          | 292                 |         |                    |        
| |                                                  | Dividends received                                                              |                                                  |            |         |                             |          | 13,758              |         |                    |        
| |                                                  | Business combinations, net of cash acquired                                     |                                                  |            |         |                             |          | (9,387              | )       |                    | (45,956 
| |                                                  | Proceeds from sale of outsourcing business                                      |                                                  |            |         |                             |          | 607,525             |         |                    | 53,238  
| |                                                  | Proceeds from sale of investments                                               |                                                  |            |         |                             |          | 47,303              |         |                    |        
| |                                                  | Sale of HRN warrants.                                                           |                                                  |            |         |                             |          |                    |         |                    | 36,604  
| |                                                  | Other investing activities, net                                                 |                                                  |            |         |                             |          | (39,187             | )       |                    | (2,776  
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) investing activities |                                                                                 |                                                  | (41,699    | )        |                             | 80,103   |                     |         | (103,757           | )       
| | Financing Activities                             |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| |                                                  | Contributions from affiliates                                                   |                                                  |            |         |                             |          | 41,699              |         |                    | (292    
| |                                                  | Proceeds from issuance of common stock                                          |                                                  |            | 15,467   |                             |          |                    |         |                    |        
| |                                                  | Proceeds from exercise of stock options                                         |                                                  |            | 93,794   |                             |          |                    |         |                    |        
| |                                                  | Purchase of treasury stock                                                      |                                                  |            | (9,064   | )                           |          |                    |         |                    |        
| |                                                  | Dividends paid                                                                  |                                                  |            |         |                             |          |                    |         |                    | (13,758 
| |                                                  | Issuance of notes payable                                                       |                                                  |            | 397,392  |                             |          |                    |         |                    |        
| |                                                  | Repayment of notes payable                                                      |                                                  |            |         |                             |          | (859,000            | )       |                    |        
| |                                                  | Other financing activities, net                                                 |                                                  |            |         |                             |          |                    |         |                    |        
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) financing activities |                                                                                 |                                                  | 497,589    |          |                             | (817,301 | )                   |         | (14,050            | )       
| |                                                  | Increase in cash                                                                |                                                  |            |         |                             |          | 7,060               |         |                    | 4,017   
| |                                                  | Cash at beginning of the period                                                 |                                                  |            |         |                             |          | 1,582               |         |                    | 6,196   
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         
| |                                                  | Cash at end of the period                                                       |                                                  | $          |         |                             | $        | 8,642               |         | $                  | 10,213  
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |         |                    |         

89

---

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  FOR THE YEAR ENDED DECEMBER 31, 2000  (in thousands)

| |                                                  | Sabre Holdings                                                                  |                                                  | Sabre Inc. |          | Non-
Guarantor Subsidiaries |          | Eliminating Entries |        | Sabre Consolidated |         
| | ------------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------------------------------ | ---------- | -------- | --------------------------- | -------- | ------------------- | ------ | ------------------ | --------
| | Operating Activities                             |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| |                                                  | Net earnings                                                                    |                                                  | $          | 144,052  |                             | $        | 126,259             |        | $                  | 15,812  
| |                                                  | Adjustments to reconcile net earnings to cash provided by operating activities: |                                                  |            |          |                             |          |                     |        |                    |         
| |                                                  | Depreciation and amortization                                                   |                                                  |            |         |                             |          | 179,458             |        |                    | 166,336 
| |                                                  | Deferred income taxes                                                           |                                                  |            |         |                             |          | 30,234              |        |                    | (7,900  
| |                                                  | Minority interests                                                              |                                                  |            |         |                             |          |                    |        |                    | (30,754 
| |                                                  | Income from subsidiaries                                                        |                                                  |            | (126,259 | )                           |          | (15,812             | )      |                    |        
| |                                                  | Other                                                                           |                                                  |            |         |                             |          | 16,784              |        |                    | 2,551   
| |                                                  | Changes in operating assets and liabilities                                     |                                                  |            | 243,836  |                             |          | (258,498            | )      |                    | (175,327
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| |                                                  |                                                                                 | Cash provided by (used for) operating activities |            |          | 261,629                     |          |                     | 78,425 |                    |         
| | Investing Activities                             |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| |                                                  | Additions to property and equipment                                             |                                                  |            |         |                             |          | (154,523            | )      |                    | (35,603 
| |                                                  | Purchases of marketable securities                                              |                                                  |            |         |                             |          | (9,726,716          | )      |                    | (260,586
| |                                                  | Sales of marketable securities                                                  |                                                  |            |         |                             |          | 10,212,988          |        |                    | 218,241 
| |                                                  | Investments in subsidiaries                                                     |                                                  |            | 53       |                             |          | (799,207            | )      |                    |        
| |                                                  | Dividends received                                                              |                                                  |            | 428,285  |                             |          | 1,754               |        |                    |        
| |                                                  | Business combinations, net of cash acquired                                     |                                                  |            |         |                             |          |                    |        |                    | (711,383
| |                                                  | Other investing activities, net                                                 |                                                  |            |         |                             |          | (40,564             | )      |                    | 25,167  
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| | Cash provided by (used for) investing activities |                                                                                 |                                                  | 428,338    |          |                             | (506,268 | )                   |        | (764,164           | )       
| | Financing Activities                             |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| |                                                  | Contributions from affiliates                                                   |                                                  |            |         |                             |          | (53                 | )      |                    | 799,207 
| |                                                  | Proceeds from issuance of common stock                                          |                                                  |            | 18,198   |                             |          |                    |        |                    |        
| |                                                  | Purchase of treasury stock                                                      |                                                  |            | (34,472  | )                           |          |                    |        |                    |        
| |                                                  | Dividends paid                                                                  |                                                  |            | (675,000 | )                           |          | (428,285            | )      |                    | (1,754  
| |                                                  | Issuance of notes payable                                                       |                                                  |            |         |                             |          | 859,000             |        |                    |        
| |                                                  | Other financing activities, net                                                 |                                                  |            |         |                             |          | (4,362              | )      |                    | (7      
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| | Cash provided by (used for) financing activities |                                                                                 |                                                  | (691,274   | )        |                             | 426,300  |                     |        | 797,446            |         
| |                                                  | Increase (decrease) in cash                                                     |                                                  |            | (1,307   | )                           |          | (1,543              | )      |                    | 4,000   
| |                                                  | Cash at beginning of the period                                                 |                                                  |            | 1,307    |                             |          | 3,125               |        |                    | 2,196   
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         
| |                                                  | Cash at end of the period                                                       |                                                  | $          |         |                             | $        | 1,582               |        | $                  | 6,196   
| |                                                  |                                                                                 |                                                  |            |          |                             |          |                     |        |                    |         

90

---

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  FOR THE YEAR ENDED DECEMBER 31, 1999  (in thousands)

| |                                                  | Sabre Holdings                                                                  |                                       | Sabre Inc. |          | Non-
Guarantor Subsidiaries |          | Eliminating Entries |         | Sabre Consolidated |         
| | ------------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------------------- | ---------- | -------- | --------------------------- | -------- | ------------------- | ------- | ------------------ | --------
| | Operating Activities                             |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| |                                                  | Net earnings                                                                    |                                       | $          | 331,907  |                             | $        | 309,302             |         | $                  | 95,091  
| |                                                  | Adjustments to reconcile net earnings to cash provided by operating activities: |                                       |            |          |                             |          |                     |         |                    |         
| |                                                  | Depreciation and amortization                                                   |                                       |            |         |                             |          | 212,950             |         |                    | 45,296  
| |                                                  | Deferred income taxes                                                           |                                       |            |         |                             |          | (2,795              | )       |                    | (5,293  
| |                                                  | Income from subsidiaries                                                        |                                       |            | (309,302 | )                           |          | (95,091             | )       |                    |        
| |                                                  | Gain on sale of investments                                                     |                                       |            |         |                             |          | (137,657            | )       |                    |        
| |                                                  | Other                                                                           |                                       |            | (657     | )                           |          | 12,288              |         |                    | (10,087 
| |                                                  | Changes in operating assets and liabilities                                     |                                       |            | 62,318   |                             |          | 90,463              |         |                    | (103,351
| |                                                  |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| |                                                  |                                                                                 | Cash provided by operating activities |            |          | 84,266                      |          |                     | 389,460 |                    |         
| | Investing Activities                             |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| |                                                  | Additions to property and equipment                                             |                                       |            |         |                             |          | (143,970            | )       |                    | (23,993 
| |                                                  | Purchases of marketable securities                                              |                                       |            |         |                             |          | (8,846,160          | )       |                    | (370    
| |                                                  | Sales of marketable securities                                                  |                                       |            |         |                             |          | 8,771,401           |         |                    |        
| |                                                  | Investments in subsidiaries                                                     |                                       |            | (6,277   | )                           |          | (20                 | )       |                    |        
| |                                                  | Dividends received                                                              |                                       |            | 281,000  |                             |          | 9,044               |         |                    |        
| |                                                  | Loan to affiliate                                                               |                                       |            | (300,000 | )                           |          |                    |         |                    |        
| |                                                  | Proceeds from sale of investments                                               |                                       |            |         |                             |          | 137,657             |         |                    |        
| |                                                  | Investments in joint ventures, net                                              |                                       |            |         |                             |          | (473                | )       |                    | 6,438   
| |                                                  | Other investing activities, net                                                 |                                       |            |         |                             |          | (38,172             | )       |                    | (130    
| |                                                  |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) investing activities |                                                                                 |                                       | (25,277    | )        |                             | (110,693 | )                   |         | (17,795            | )       
| | Financing Activities                             |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| |                                                  | Proceeds from issuance of common stock                                          |                                       |            | 20,645   |                             |          |                    |         |                    |        
| |                                                  | Contributions from affiliates                                                   |                                       |            |         |                             |          | 6,277               |         |                    | 20      
| |                                                  | Dividends paid                                                                  |                                       |            |         |                             |          | (281,000            | )       |                    | (9,044  
| |                                                  | Purchase of treasury stock                                                      |                                       |            | (60,454  | )                           |          |                    |         |                    |        
| |                                                  | Payments on debenture payable to affiliate                                      |                                       |            | (17,873  | )                           |          |                    |         |                    |        
| |                                                  | Other financing activities, net                                                 |                                       |            |         |                             |          | (1,568              | )       |                    |        
| |                                                  |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) financing activities |                                                                                 |                                       | (57,682    | )        |                             | (276,291 | )                   |         | (9,024             | )       
| |                                                  | Increase (decrease) in cash                                                     |                                       |            | 1,307    |                             |          | 2,476               |         |                    | (5,163  
| |                                                  | Cash at beginning of the period                                                 |                                       |            |         |                             |          | 649                 |         |                    | 7,359   
| |                                                  |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         
| |                                                  | Cash at end of the period                                                       |                                       | $          | 1,307    |                             | $        | 3,125               |         | $                  | 2,196   
| |                                                  |                                                                                 |                                       |            |          |                             |          |                     |         |                    |         

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19.  Subsequent Events



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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



ITEM 11.    EXECUTIVE COMPENSATION



ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



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|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                            
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Asset Purchase Agreement by and among EDS Information Services, L.L.C., Electronic Data Systems Corporation, Sabre Inc., and Sabre Holdings Corporation.(1)                                                       
|2.2            |  | First Amendment to Asset Purchase Agreement by and among EDS Information Services L.L.C., Electronic Data Systems Corporation, Sabre Inc., and Sabre Holdings Corporation.(2)                                     
|2.3            |  | Second Amendment to Asset Purchase Agreement by and among EDS Information Services L.L.C., Electronic Data Systems Corporation, Sabre Inc., and Sabre Holdings Corporation.(3)                                    
|3.1            |  | Restated Certificate of Incorporation of Sabre Holdings Corporation.(5)                                                                                                                                           
|3.2            |  | Restated Bylaws of Sabre Holdings Corporation.(6)                                                                                                                                                                 
|4.1            |  | Specimen Certificate representing Class A common stock.(7)                                                                                                                                                        
|4.2            |  | Indenture, dated as of August 3, 2001, between Sabre Holdings Corporation and SunTrust Bank, as Trustee, providing for issuance of debt securities in series.(8)                                                  
|4.3            |  | First Supplemental Indenture, to be dated August 7, 2001, between Sabre Holdings Corporation and SunTrust Bank, as Trustee, relating to the 7.35% Notes Due 2011 of Sabre Holdings Corporation.(9)                
|10.1           |  | Marketing Cooperation Agreement, dated as of July 1, 1996, between The Sabre Group, Inc. and American Airlines, Inc.(10)(11)                                                                                      
|10.2           |  | Tax Sharing Agreement, dated July 1, 1996, between The Sabre Group, Inc. and American Airlines, Inc.(11)                                                                                                          
|10.3           |  | Travel Privileges Agreement, dated as of July 1, 1996, between The Sabre Group, Inc. and American Airlines, Inc.(10)(11)                                                                                          
|10.4           |  | Amendment to Travel Privileges Agreement dated as of March 15, 2000 between Sabre Inc. and American Airlines, Inc.(10)(17)                                                                                        
|10.5           |  | Software Marketing Agreement, dated September 10, 1996, among Registrant, The Sabre Group, Inc. and AMR Corporation.(10)(11)                                                                                      
|10.6           |  | American Airlines Special Facilities Lease Agreement, dated October 1, 1972, between American Airlines, Inc. and the Dallas-Fort Worth Regional Airport Board, as amended by Supplemental Agreements
Nos. 1-5.(11)
|10.7           |  | Assignment Agreement, dated as of July 1, 1996, between The Sabre Group, Inc. and American Airlines, Inc.(11)                                                                                                     
|10.8           |  | Sublease, dated June 1, 1958, between American Airlines, Inc. and the Trustees of the Tulsa Municipal Airport Trust, as amended by Amendments Nos. 1-12.(11)                                                      
|10.9           |  | Assignment Agreement, dated as of July 1, 1996, between The Sabre Group, Inc. and American Airlines, Inc.(11)                                                                                                     
|10.10          |  | Amended and Restated Sublease Agreement, dated May, 1996, between American Airlines, Inc. and the Tulsa Airports Improvement Trust.(11)                                                                           
|10.11          |  | Assignment Agreement, dated as of July 1, 1996, between The Sabre Group, Inc. and American Airlines, Inc.(11)                                                                                                     
|10.12          |  | Office Lease Agreement, dated as of January 19, 1996, between American Airlines, Inc. and Maguire/Thomas Partners - Westlake/Southlake Partnership.(11)                                                           
|10.13          |  | The Sabre Group Holdings, Inc. Directors Stock Incentive Plan.(11)                                                                                                                                                
|10.14          |  | The Sabre Group Holdings, Inc. Employee Stock Purchase Plan.(12)                                                                                                                                                  

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|10.15 |  | The Sabre Group Holdings, Inc. Deferred Compensation Plan.(14)                                                                                                 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.16 |  | Sabre Holdings Corporation Amended and Restated 1996 Long-Term Incentive Plan, as amended November 13, 2000.(4)                                                
|10.17 |  | Supplemental Agreement Regarding Workers' Compensation dated as of March 15, 2000 between Sabre Inc. and American Airlines, Inc.(10)(17)                       
|10.18 |  | Supplemental Executive Retirement Plan, as Amended (Restoration).(18)                                                                                          
|10.19 |  | Supplemental Executive Retirement Plan, as Amended (Officer).(19)                                                                                              
|10.20 |  | Supplemental Executive Retirement Plan, as Amended (Grandfathered).(20)                                                                                        
|10.21 |  | Form of Executive Termination Benefits Agreement.(21)                                                                                                          
|10.22 |  | Forms of Addenda to Executive Termination Benefits Agreement.(22)                                                                                              
|10.23 |  | Employment Agreement between Sabre Holdings Corporation, Sabre Inc. and William J. Hannigan.(4)                                                                
|10.24 |  | Employment Agreement Addendum between Sabre Inc. and William J. Hannigan.(4)                                                                                   
|10.25 |  | Option Issuance Agreement, dated January 1, 1998 between Registrant and US Airways, Inc.(13)                                                                   
|10.26 |  | Program Lease Agreement, dated September 30, 1998, between The Sabre Group, Inc. and Comdisco, Inc.(10)(15)                                                    
|10.27 |  | Agreement and Plan of Merger dated as of October 3, 1999 by and among Sabre Inc., Travelocity Holdings, Inc., Travelocity.com Inc. and Preview Travel, Inc.(16)
|10.28 |  | Agreement on Spin-off Taxes dated March 15, 2000 between AMR Corporation and Sabre Holdings Corporation.(10)(17)                                               
|10.29 |  | Credit Agreement, dated as of February 4, 2000, among Sabre Inc., Bank of America, N.A., and the other banks party thereto.(23)                                
|10.30 |  | Amendment No. 1 to Credit Agreement, dated as of October 4, 2000, among Sabre Inc., Bank of America, N.A., and the other banks party thereto.(4)               
|12.1  |  | Computation of ratio of earnings to fixed charges for the year ended December 31, 2001.(4)                                                                     
|21.1  |  | Subsidiaries of Registrant.(4)                                                                                                                                 
|23.1  |  | Consent of Ernst & Young LLP.(4)                                                                                                                               

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SABRE HOLDINGS CORPORATION        INDEX TO FINANCIAL STATEMENTS AND SCHEDULES  COVERED BY REPORT OF INDEPENDENT AUDITORS        [Item 14(a)]

Financial Statements

|                                                                                                     |  | Page
|---------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Auditors                                                                       |  | 37  
|Consolidated Balance Sheets at December 31, 2001 and 2000                                            |  | 38  
|Consolidated Statements of Income for the Years Ended December 31, 2001, 2000 and 1999               |  | 39  
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999           |  | 40  
|Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2001, 2000 and 1999 |  | 41  
|Notes to Consolidated Financial Statements                                                           |  | 42  
|Schedule IIValuation and Qualifying Accounts for the Years Ended December 31, 2001, 2000 and 1999   |  | 98  



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Sabre Holdings Corporation        Schedule IIValuation and Qualifying Accounts        For Each of the Three Years in the Period Ended December 31, 2001        (In
Thousands)

|                             |                                      |  |   | Additions |  |   |        | 
|---------------------------- | ------------------------------------ |  | - | --------- |  | - | ------ | 
|
|Year Ended December 31, 2001 |                                      |  |   |           |  |   |        | 
|                             | Allowance for uncollectible accounts |  | $ | 21,053    |  | $ | 35,099 | 
|                             | Booking fee cancellation reserve     |  |   | 20,854    |  |   |       | 
|                             | Associate reserves                   |  |   | 1,600     |  |   | 5,283  | 
|Year Ended December 31, 2000 |                                      |  |   |           |  |   |        | 
|                             | Allowance for uncollectible accounts |  |   | 11,913    |  |   | 16,412 | 
|                             | Booking fee cancellation reserve     |  |   | 19,748    |  |   |       | 
|                             | Associate reserves                   |  |   | 1,704     |  |   | 4,133  | 
|Year Ended December 31, 1999 |                                      |  |   |           |  |   |        | 
|                             | Allowance for uncollectible accounts |  |   | 12,403    |  |   | 12,913 | 
|                             | Booking fee cancellation reserve     |  |   | 17,722    |  |   |       | 
|                             | Associate reserves                   |  |   | 3,711     |  |   | 1,871  | 

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Signatures



| |  | SABRE HOLDINGS CORPORATION                                                                                                                          
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | /s/WILLIAM J. HANNIGANWilliam J. Hannigan Chairman, President and Chief Executive Officer (Principal
Executive Officer)                             
| |  | /s/JEFFERY M. JACKSONJeffery M. Jackson Executive Vice President, Chief Financial Officer and
Treasurer (Principal Financial and Accounting Officer)
| |  | Date: February 28, 2002                                                                                                                             



|                                                |  |                                      
|----------------------------------------------- |  | -------------------------------------
|                                                |  |                                      
|/s/ROYCE S. CALDWELLRoyce S. Caldwell           |  | /s/BOB L. MARTINBob L. Martin        
|/s/DAVID W. DORMANDavid W. Dorman               |  | /s/PAMELA B. STROBELPamela B. Strobel
|/s/PAUL C. ELY, JR.Paul C. Ely, Jr.             |  | /s/MARY ALICE TAYLORMary Alice Taylor
|/s/WILLIAM J. HANNIGANWilliam J. Hannigan       |  | /s/RICHARD L. THOMASRichard L. Thomas
|/s/GLENN W. MARSCHEL, JR.Glenn W. Marschel, Jr. |  |                                      
|Date: February 28, 2002                         |  |                                      

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