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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]    
|-------------------------------------------- | ----------------------------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2002.
|OR                                          
|/ /                                          | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required]
|Commission file number 1-12175              

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

Delaware(State or other jurisdiction of
incorporation or organization)

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

76092(Zip Code)


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

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

Title of each class

Name of exchange on which registeredClass A common stock, par value $.01 per share

New York Stock Exchange


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

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. / /

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes /X/
    No / /.

The
aggregate market value of the voting stock held by non-affiliates of the registrant as of March 6, 2003 was approximately $2,269,751,962, based on the closing
price per share of Class A common stock of $15.81 on such date. As of March 6, 2003, 143,564,324 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 13, 2003.

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PART I

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In this Annual Report on Form 10-K, the words "Sabre Holdings", "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 a world leader in travel commerce, providing distribution and retailing of travel products and technology solutions for the travel industry. We serve
travel agents, individual travelers, companies managing business travelers and travel suppliers through ourSabre Travel Network(formerly
Travel Marketing & Distribution),Travelocity,GetThereand Sabre Airline Solutions(formerly Airline Solutions) business segments.

Sabre
Holdings Corporation is a Delaware holding company. Sabre Inc. is the principal operating subsidiary and sole direct subsidiary of Sabre Holdings Corporation. All of our
businesses are conducted by Sabre Inc. or its direct or indirect subsidiaries.

Three
of our four business segments market and distribute travel-related services and products. Through our Sabre®1
global distribution system (the "Sabresystem"), travel agencies, corporate travel departments and individual consumers ("subscribers") can access
information about and can book reservations for airline trips, hotel stays, car rentals, cruises and tour packages, among other things. We principally market and distribute products and services for
third party suppliers in exchange for a fee paid by the supplier. Increasingly, however, we acquire travel services and products on consignment from suppliers, which we then offer as the merchant to
the travel purchasereither on a standalone basis or as part of a travel package.

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We
are an industry leader in multiple travel distribution channels: the travel agency channel, the consumer-direct channel and the business-direct channel. We are a leading distributor
of travel in each of those channels.



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TheSabreGlobal Distribution System

TheSabresystem and other global distribution systems are a primary means of air travel distribution in the
United States and in many international regions. During 2002, more airline bookings in North America, Latin America and Asia were made through theSabresystem than through any other global 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. Through theSabresystem, subscribers can access
information about and book reservations with airlines and other providers of travel and travel-related products and services ("associates"). In 2002, over 950 associates displayed information about
their products and services through theSabresystem. We estimate that more than $80 billion of travel-related products and services were sold
through theSabresystem.

TheSabresystem reports transaction data about subscriber-generated reservations to travel providers, allowing vendors to better manage
inventory and revenues. TheSabresystem also allows travel agency subscribers and airline personnel to print airline tickets and itineraries.
Additionally, theSabresystem provides subscribers with travel information on matters such as currency, medical and visa requirements, weather and
sightseeing. TheSabresystem provides subscribers a single rich source of travel information, allowing agents to search tens of thousands of itinerary
and pricing options across multiple travel providers for consumers within seconds.

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Associate Participation

Airlines and other associates can display, warehouse, manage and sell their inventory in theSabresystem.
Airlines are offered a wide range of participation levels. The lowest level of participation for airlines,Sabre® Basic Booking
RequestSM participation level, provides schedules and electronic booking functionality only. Higher levels of participation for airlines, such as Sabre® Direct Connect®
Availability("DCA") participation level, provide enhanced levels of communication with theSabresystem, giving subscribers more detailed information and associates improved inventory management. In October 2002 we announced a new DCA
3-Year Pricing Option to airlines with United States points of sale. If they elect this option under their Sabre GDS participating carrier agreements, they will receive an approximate 10%
to 12% discount from the standard DCA rates. 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. Associates use this marketing information in yield optimization and other operational systems we sell to
improve their revenue and profitability.

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 by channel to travel agencies, individual travelers, business users and travel suppliers.

Sabre Travel Network

TheSabre®system and other global distribution systems are a primary means of air travel distribution
in the United States and in many international regions. Through theSabresystem, 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, 2002, travel agencies with approximately 56,000 locations in over 113
countries on 6 continents subscribed to theSabresystem, which enabled these subscribers to make reservations with approximately 423 airlines, 50 car
rental companies, 232 tour operators, 9 cruise lines, 36 railroads and 234 hotel companies covering approximately 60,000 hotel properties worldwide.

During
2002, more airline bookings in North America, Latin America and Asia were made through theSabresystem than through any other
global distribution system. Approximately 76.5%, 78.0% and 82.9% of our revenue from continuing operations in 2002, 2001 and 2000, respectively, was generated by the marketing and distribution of
travel, primarily through booking fees paid by associates.

Travel
agents may access theSabresystem on their own hardware over communications circuits contracted from telecommunications vendors or
may contract with Sabre for the hardware, software, technical support and other services needed to use theSabresystem. Increasingly, travel agents are
providing the majority of their own hardware. Fees for Sabre provided services 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 terminate after one year in Europe. In addition, Sabre pays incentives to many travel agencies based on their booking productivity.

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Because
travel agencies have differing needs, we have modified theSabresystem interface to meet the specific needs of different
categories of travel agents. TheSabresystem interfaces are available in English, Spanish, Portuguese, French, German, Italian and Japanese. 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 offer Sabre 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 Website development, business logic middleware and backend
processing. 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. The end consumer accesses the agency and associate-specific Websites 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.

Travelocity

Travelocity is a leading provider of consumer direct travel services for the leisure traveler and the unmanaged business traveler. Travelocity 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 is also
an exclusive provider of some of the travel booking services on Websites operated by Yahoo!, Inc. in the United States and Canada. Through the Travelocity Websites and certain
co-branded sites such as AOL and Yahoo!, individual leisure and business travelers can shop and compare prices and make travel reservations online with airlines, car rental agencies, hotel
companies and cruise and vacation providers. In addition, we offer access to a database of information regarding specific destinations and other information of interest to travelers. During 2002,
members purchased approximately $3.5 billion in travel services from associates through the Travelocity Websites.

In
addition to Travelocity's main U.S. Website, it operates multiple Websites tailored to customers outside the United States. In 2001, Travelocity and Otto Versand, 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
consumer direct agencies. Finally, Travelocity also operatesTravelocity.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 travel vendors.

Travelocity
receives fees from travel providers for purchases of their travel products and services pursuant to reservations made through its Websites. In addition, we receive
advertising revenues from the delivery of advertising impressions on the Travelocity Websites. Travelocity's services are generally provided free of charge except for a $5 customer service fee charged
for most air tickets, not including merchant transactions, that was instituted on January 16, 2003.

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Travelocity
instituted a merchant business model through its own travel supplier agreements in 2001 for air travel and in 2002 for vacation packages and hotels whereby it has access to
travel inventory at discounted wholesale prices from air carriers, hotels and car rental companies. These components are combined to create packages for sale to end consumers at a retail price which
Travelocity determines for both traditional vacation destination packages and last-minute deals. Additionally, certain air tickets are sold on a standalone basis as merchant offerings, as
are certain standalone hotel reservations. In October 2002, Travelocity launched its own merchant model hotel ("MMH") offering to complement the inventory from Hotels.com which provides certain
merchant hotel inventory to Travelocity Websites. Approximately, 1,400 hotels currently participate in the MMH program and participants are being added regularly. Travelocity does not have purchase
obligations for unsold inventory. Revenue from such transactions is recorded on a net basis, which is defined as the price to the consumer less the cost of the inventory obtained from the supplier, at
the time the travel is sold to the consumer for air travel and at the date of check-out for vacation packages and hotel stays.

In
2000, we merged our subsidiary, Travelocity, with Preview Travel, Inc. ("Preview"), an independent publicly-traded company engaged in consumer direct travel distribution over
the Internet, retaining an approximate 70% ownership interest in the combined company. On April 8, 2002 we completed a $28 per share cash tender offer for all of the approximately
16.7 million outstanding publicly-held common shares of Travelocity that we did not previously own. Accordingly, Travelocity became our indirect 100% owned subsidiary on
April 11, 2002. The Travelocity transaction supports our continuing strategy of delivering value to suppliers and travelers across multiple distribution channels. We believe it makes sense to
combine the strengths of our businesses to pursue new revenue opportunities, while optimizing investment decisions across segments.

GetThere

GetThere provides Web-based travel booking systems designed for managed business travelers, travel arrangers and travel managers. Through our GetThere
system, companies provide their employees with a convenient way to make travel and meetings reservations via their company intranet. We believe that GetThere can significantly reduce costs to the
employer as a result of lower service fees, better policy adherence, lower average ticket prices and real-time data on spending. Many companies 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. A significant portion of GetThere's transaction volume is from distributor agreements with
leading travel agencies. As of December 31, 2002 more than 1,000 corporations, including over half of the Fortune 200, use GetThere technology.

GetThere
also provides a Web interface for reservation systems operated by airlines or other suppliers. 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 these Web-based booking systems to several major
airlines including Air New Zealand, Alitalia, All Nippon Airways, Aloha Air, British Airways, Cathay Pacific Airways and United Airlines.

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

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Sabre Airline Solutions

Software Development and Licensing.Sabre Airline Solutions' suite of software products provides industry-specific
applications that help airlines and other travel providers increase their revenues, 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 revenue management, passenger systems and frequent flyer programs. We currently provide both custom
and off-the-shelf software solutions to more than 200 airlines.

We
began expanding our existing software products and solutions in 2000 by launching Sabre®eMergo Web-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 23 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.

Reservations Hosting.Sabre Airline Solutions is a leading provider of airline reservations and departure control hosting
services. We offer a fully integrated system that effectively manages reservations and airport functions for airlines of all sizes and in all stages of growth. These services support maintenance and
storage of an airline's schedules, fares and inventory, as well as airport and customer relationship management functions such as check-in, ticketing, car and hotel reservations and
frequent flyer programs. We currently provide reservations hosting services to over 70 airlines from 23 countries around the world, boarding over 300 million passengers annually. Our customers
range in size from fewer than 25 thousand passengers boarded annually to over 80 million, and range in growth stage from low cost start-ups to full service airlines. Our
reservations and departure control hosting services allow the airlines to easily integrate our leading software solutions to expand and complement their capabilities.

Consulting Services.Sabre Airline Solutions' consulting services provide solutions for customers in the travel and
transportation industries, focusing on commercial, operations and management and strategic areas. As part of the Sabre Airline Solutions business, the consulting group helps clients during the
implementation of Sabre's software products, transferring knowledge and improving work processes to derive direct value from products by working in partnership to solve business problems using Sabre's
tools. In addition to assisting with product implementation, we offer consulting services in pricing and revenue management; airline planning (scheduling, route and profitability analysis, and fleet
planning); sales (reservations, distribution, customer relationship management, sales and marketing); and data services. Consulting services offered in operations are crew planning and scheduling,
maintenance and engineering, and safety and security. Consulting services in management and strategic areas include start-up assistance, alliance analysis, merger and acquisitions,
privatization assistance, turnaround services and management consulting on business transformation. The client base for our consulting services are airlines, airports, manufacturers and governments,
as well as individuals, travel agencies and members of the financial community.

Agreements with EDS

We have an agreement with Electronic Data Systems Corporation ("EDS") through which EDS manages our information technology systems. Under the 10-year
agreement, effective July 1, 2001, EDS provides us with information technology services, including data center management, applications hosting, applications development, data assurance and
network management. Among the services provided is transaction processing for our travel marketing and distribution businesses, including operation of the Sabresystem. The agreement was entered into as
part of the 2001 sale to EDS of our infrastructure outsourcing business and information technology
infrastructure assets and the associated real estate. See Note 3 to the Consolidated Financial Statements for more information related to the sale.

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In
connection with the sale, we also entered into agreements with EDS to jointly market information technology services and software solutions to the travel and transportation
industries.

International Marketing

Sabre Travel Network is actively involved in marketing theSabresystem internationally either directly or through
joint venture and 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.

Sabre
Travel Network has 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 Travel Network 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. Sabre Travel Network also provides travel marketing and distribution
services through our 51% owned (48% voting rights) joint venture, Sabre Sociedad Technologica S.A. de C.V. in Mexico.

Travelocity
is marketed internationally either directly or through joint venture arrangements. In Europe, Travelocity has partnered with Otto Versand and established a joint venture
company (Kommanditgesellschaft Travel Overland GmbH & Co.) which distributes Travelocity in the region. Travelocity owns 50% of this joint venture. In Japan, Travelocity and Tabini Holdings,
whose primary shareholders include Japan Airlines and All Nippon Airways, launched the Tabini travel Website in 2002. Travelocity has approximately a 34% equity stake in this joint venture. In the
rest of the Asia Pacific region, Travelocity is distributed through Zuji Enterprises Pte. Ltd., a joint venture with 16 airlines in the Asia Pacific region established in 2002, of which
Travelocity has approximately a 13% equity stake. In Canada, Travelocity directly markets its Travelocity.ca site, which was launched in 1999.

GetThere
is marketed internationally directly in Europe and through ABACUS in the Asia Pacific region. GetThere pursues large corporate account opportunities in the major European
countries and serves to facilitate the extension of GetThere's services to the region. We are actively involved in growing our direct presence in Europe and extending our distributor arrangements.

Additionally,
Sabre Airline Solutions distributes software solutions and consulting services through a sales and marketing organization that spans 4 continents, with primary sales
offices in the Dallas/Ft. Worth area, London, Hong Kong and Sydney. Sabre Airline Solutions also maintains agency relationships to support sales efforts in key markets, including countries in Asia and
the Middle East.

Competition

The marketplace for travel distribution is large, multi-faceted and highly competitive. A significant channel for travel distribution continues to be through the
global distribution systems such as theSabresystem. Although the traditional travel agency channel continues to be important to travel distribution,
other rapidly-growing channels are allowing travel distribution directly to businesses and consumers, particularly via the Internet. Our product and service offerings are well positioned to compete in
all channels of travel distribution. Those include our Travelocity business in the consumer-direct channel and our GetThere business in the business-direct channel. We also offer traditional travel
agencies a wide array of tools that allow them to market their services over the Internet.

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Global
competition to attract and retain travel agency subscribers is intense. Factors affecting competitive success 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. Sabre Travel Network competes in the travel agency channel against other large
and well-established traditional global distribution systems, such as Amadeus Global Travel Distribution S.A., Galileo International Inc. and Worldspan, L.P. Each of these
competitors offers many products and services substantially similar to those offered by Sabre Travel Network. New competitors in this channel are emerging, however. For example, Orbitz.com has
announced plans to offer Internet travel booking services to travel agents.

We
face many new competitors as travel distribution channels emerge and mature, including the growing Internet-based business-direct and consumer-direct channels. Many of these channels
continue to utilize services from a global distribution system such as theSabresystem. OurSabresystem provides transaction processing and other services to parties that compete with the Travelocity Website and GetThere.

We
market travel in the consumer-direct channel primarily through the Travelocity Websites. Competitors of the Travelocity Websites include Priceline.com, Expedia (controlled by USA
Interactive, Inc.) and Hotwire.com (owned by a consortium of carriers). Many travel suppliers have developed their own Websites, some of which offer an array of products and services directly
to consumers. Virtually all major airlines have their own Websites allowing direct bookings. Airline joint ventures, such as Orbitz (controlled by major U.S. airlines) and Opodo (controlled by large
European carriers) provide booking services for airline travel, hotel accommodations and other travel services offered by multiple vendors. Five large U.S. hotel chains, along with a hotel technology
provider, operate Travelweb.com, which provides booking services for hotel accommodations. 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 Websites. See further discussion underRisk Factors.

We
market travel in the business-direct channel principally through GetThere. The corporate marketplace for Internet-based travel procurement and supply services is highly competitive
and rapidly evolving. Travelocity's competitors in the business-direct channel include travel agencies such as Carlson Wagonlit Travel, global distribution systems such as Amadeus'
E-Travel and Galileo's Highwire and more recently, leisure travel sites such as Orbitz.com and Expedia.com.

Merchant Model

Independent travel distributors, including our travel marketing and distribution companies, are attempting to reduce their reliance on supplier-paid
commissions and booking fees by increasingly promoting a merchant model of travel distribution. Under this model, the distributor recognizes as revenue the sale price to the traveler less the cost of
the inventory, rather than a supplier-paid booking fee or commission. Merchant model content can include air, hotel and vacation offerings. However, other travel suppliers are starting to
offer their content on a merchant basis as well through independent travel distributors. Merchant content is good for travelers because they can generally book their travel at a lower price than
regularly published offerings. For us, the merchant business generally delivers higher revenue per transaction than comparable sales under the agency/booking fee model.

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Computer Reservation System Industry Regulation

Aspects of our travel marketing and distribution businesses are subject to the computer reservation systems ("CRS") regulations in the United States, the European
Union, Canada and Peru. These regulations generally address the relationships among the CRS's, the airline suppliers and subscribers such as travel agencies. Generally, these regulations do not
address our relationships with non-airline suppliers. The regulations in the European Union, however, do include rail suppliers in certain circumstances. In general, these regulations are
directed at ensuring fair competition among air travel suppliers. Among the principles addressed in the current regulations are:



The
CRS regulations in the United States are currently under review. On November 12, 2002, the United States Department of Transportation ("DOT") issued a notice of proposed
rule-making to revise the existing regulations governing air travel distribution through computer reservations systems. We believe that many of the facts and conclusions discussed in the
notice of proposed rule-making are erroneous. The comment period for the proposed rules is scheduled to conclude on May 15, 2003. The DOT has proposed that the current rules be
extended until January 31, 2004, to allow sufficient time for the DOT to review the comments filed by May 15, 2003. It is not clear when the DOT may issue final rules or what form they
may take. See further discussion underRisk Factors.

The
European Commission also has begun the process of reviewing its CRS Code of Conduct for possible changes, including eliminating some or all of the Code. The Commission has not yet
published any proposed rules, so it is not clear when the Commission may issue final rules or what form they may take. See further discussion underRisk
Factors.

Other Regulation

We may be impacted by regulations affecting issues such as: exports of technology, telecommunications, data privacy and electronic commerce. Any such regulations
may vary among jurisdictions. We believe that we are capable of addressing these regulatory issues as they arise.

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. See the discussion on Seasonality in the Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.

Research and Development Expenses

Research and development costs in continuing operations approximated $40 million, $73 million and $57 million for 2002, 2001 and 2000,
respectively.

Segment Information

Financial information for our operating segments and geographical revenues and assets are included in Note 15 to the Consolidated Financial Statements.

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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 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 where appropriate. We also seek statutory and common law protection of our trademarks where appropriate. 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, 2002, we had approximately 6,300 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.

Website

We offer access to our documents filed with, or furnished to, the United States Securities and Exchange Commission at no charge on the investor relations section
of our Website at www.sabre.com. These documents are generally available as soon as reasonably practicable after they are filed with, or furnished to, the SEC.

ITEM 2.    PROPERTIES

Our principal executive offices are located in Southlake, Texas and consist of three leased buildings. 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 2008; office facilities in Fort Worth, Texas for Travelocity under a lease expiring in 2005 and office facilities
in Irving, Texas for GetThere under a lease expiring in 2006. We also lease office facilities in approximately 90 other locations worldwide.

In
connection with the sale of our outsourcing assets to EDS effective July 1, 2001, 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, under
a sublease that will expire in 2011. Additionally, in July 2002, we purchased a data center facility constructed on our behalf in Tulsa, Oklahoma from the lessor under the provisions of the
lease agreement for approximately $92 million and immediately sold it to a third party. This sale of the data center was contemplated as part of the sale of the Outsourcing Business. We
received proceeds of approximately $68 million in cash and realized a loss of approximately $24 million, which had been previously accrued in 2001 in connection with the EDS transaction.
See Note 3 to the Consolidated Financial Statements. On January 31, 2002 we sold our previous headquarters office facility in Fort Worth, Texas to American Airlines for proceeds of
approximately $80 million and recognized a pre-tax gain of approximately $18 million.

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

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ITEM 3.    LEGAL PROCEEDINGS

Sabre Holdings Corporation, its subsidiary Travelocity.com Inc., and the directors of Travelocity.com Inc. are named as defendants in eleven
separate lawsuits brought by twelve individual former shareholders of Travelocity.com Inc. ("Travelocity.com"). 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 and a second suit filed in the same court on
February 25, 2002. The plaintiffs generally allege that our tender offer for the publicly-held shares of Travelocity.com, which we announced on February 19, 2002, was unfair
to Travelocity.com's former minority shareholders, that our tender offer price was inadequate, that we breached our fiduciary duties to Travelocity.com's minority shareholders and other related
allegations. On March 20, 2002, Sabre Holdings Corporation and Travelocity.com signed a memorandum of understanding with the plaintiffs to settle all pending stockholder litigation relating to
the tender offer. Under the terms of the memorandum, we stated our intention to agree to an offer price of no less than $28 per share and not to object to an award of attorneys' fees and costs to
counsel to the putative plaintiff class in an amount not to exceed $1.9 million. Under the terms of the memorandum, the plaintiffs stated an intention to have all pending stockholder litigation
settled and dismissed as to the plaintiffs and the putative plaintiff class. The settlement was approved by an order of the Delaware Court of Chancery, issued February 28, 2003. The Court,
however, has not ruled on the amount of the attorneys' fees and costs to award plaintiffs' counsel, but that amount will not exceed $1.9 million in any event. We completed our tender offer for
the publicly-held shares of Travelocity.com on April 8, 2002 and Travelocity.com became a 100% owned indirect subsidiary of Sabre Holdings Corporation on April 11, 2002.

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, 2002.

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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 March 6, 2003 was 10,735.

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: |                    |      |   |      
|               | December 31, 2002  |      | $ | 22.25
|               | September 30, 2002 |      |   | 35.80
|               | June 30, 2002      |      |   | 49.35
|               | March 31, 2002     |      |   | 49.98
|Quarter Ended: |                    |      |   |      
|               | December 31, 2001  |      | $ | 43.02
|               | September 30, 2001 |      |   | 53.85
|               | June 30, 2001      |      |   | 54.98
|               | March 31, 2001     |      |   | 47.85

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 Corporation, which was our majority owner until March 2000. No dividends were paid during 2001 or 2002. Although we have traditionally retained our earnings to finance
future growth, we may consider paying dividends in the future if we feel it is in the best interest of our shareholders. 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. We may consider additional share repurchases, but such repurchases would require approval from our Board of Directors. The
timing, volume and price of any repurchases would be made at the discretion of management and would depend on corporate considerations and market conditions.

13

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ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected historical financial data for each of the five years in the period ended
December 31, 2002. On April 8, 2002, we completed a $28 per share cash tender offer for all of the approximately 16.7 million outstanding publicly-held common shares
of Travelocity.com that we did not own. Prior to the tender offer, we had an approximate 70% ownership stake in Travelocity.com. We consolidated Travelocity.com and accounted for the 30% outside
ownership as minority interest. After the tender offer, we effected a short-form merger, on April 11,2002, whereby Travelocity.com became our indirect 100% owned subsidiary.
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 3 to the
Consolidated Financial Statements. During 2002, we also completed the purchase of Site59, and during 2001 we completed the acquisition of Sabre Pacific. During 2000, we acquired Preview, Gradient
Solutions Limited (now known as Sabre Ireland Online Limited), GetThere and a 51% ownership interest in Dillon Communication Systems GmbH ("Dillon"). These transactions affect the comparability of the
data presented. See Management's Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements for further information regarding these
transactions and their impact on our financial condition and results of operations. We have paid a dividend only once in our history. On February 7, 2000, we declared a cash dividend on all
outstanding shares of our Class A common stock. A dividend of approximately $675 million, or $5.20 per share, was paid on February 18, 2000 in connection with our separation from
AMR Corporation, which was our majority owner until March, 2000. In addition, effective January 1, 2002, we adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets("SFAS No. 142"). Under the new rules, intangible assets deemed to have indefinite lives are not amortized,
but are subject to impairment tests annually or when changes in circumstances indicate that the carrying value may not be recoverable. See Note 2 to the Consolidated Financial Statements for
further information regarding the impact of this change in accounting.

|                                                                             |                                                
|---------------------------------------------------------------------------- | -----------------------------------------------
|
|
|
|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                                                                 |                                                
|                                                                             |                                                
|Earnings (loss) per common sharebasic:                                      |                                                
|                                                                             | Income (loss) from continuing operations (1)   
|                                                                             | Income from discontinued operations, net (1)   
|                                                                             | Cumulative effect of accounting change, net (6)
|                                                                             |                                                
|Net earnings                                                                 |                                                
|                                                                             |                                                
|Earnings (loss) per common sharediluted:                                    |                                                
|                                                                             | Income (loss) from continuing operations (1)   
|                                                                             | Income from discontinued operations, net (1)   
|                                                                             | Cumulative effect of accounting change, net (6)
|                                                                             |                                                
|Net earnings                                                                 |                                                
|                                                                             |                                                

14

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|Balance Sheet Data (at end of period) (1):            |  |   |         |   |   |         |    |   |         |   |   |         |   |   |         |  
|----------------------------------------------------- |  | - | ------- | - | - | ------- | -- | - | ------- | - | - | ------- | - | - | ------- | -
|Current assets                                        |  | $ | 1,311.6 |   | $ | 1,092.2 |    | $ | 693.0   |   | $ | 976.4   |   | $ | 944.4   |  
|Goodwill and intangible assets, net                   |  | $ | 855.7   |   | $ | 672.1   |    | $ | 891.5   |   | $ |        |   | $ |        |  
|Total assets                                          |  | $ | 2,756.5 |   | $ | 2,376.0 |    | $ | 2,650.4 |   | $ | 1,951.2 |   | $ | 1,926.8 |  
|Current liabilities                                   |  | $ | 499.9   |   | $ | 564.5   |    | $ | 1,266.4 |   | $ | 525.1   |   | $ | 400.8   |  
|Long-term notes payable                               |  | $ | 435.8   |   | $ | 400.4   |    | $ | 149.0   |   | $ |        |   | $ | 317.9   |  
|Minority interests                                    |  | $ | 10.3    |   | $ | 219.7   |    | $ | 239.5   |   | $ |        |   | $ |        |  
|Stockholders' equity                                  |  | $ | 1,641.6 |   | $ | 1,041.8 |    | $ | 791.0   |   | $ | 1,262.0 |   | $ | 953.7   |  
|
|
|
|Other Data (1):                                       |  |   |         |   |   |         |    |   |         |   |   |         |   |   |         |  
|Direct reservations booked using theSabresystem (7)   |  |   | 340     |   |   | 372     |    |   | 394     |   |   | 370     |   |   | 358     |  
|Total reservations processed using theSabresystem (8) |  |   | 397     |   |   | 431     |    |   | 467     |   |   | 439     |   |   | 409     |  
|Operating margin                                      |  |   | 15.4    | % |   | (0.4    | )% |   | 8.8     | % |   | 17.9    | % |   | 19.0    | %
|EBITDA (9)                                            |  | $ | 434.7   |   | $ | 402.7   |    | $ | 475.5   |   | $ | 480.6   |   | $ | 455.5   |  
|EBITDA margin (9)                                     |  |   | 21.1    | % |   | 18.8    | %  |   | 24.3    | % |   | 28.2    | % |   | 29.2    | %
|Ratio of earnings to fixed charges (10)               |  |   | 11.69   |   |   | 0.97    |    |   | 4.75    |   |   | 29.44   |   |   | 15.41   |  
|Cash flows from operating activities (1)              |  | $ | 299.4   |   | $ | 390.2   |    | $ | 310.8   |   | $ | 495.4   |   | $ | 450.8   |  
|Capital expenditures (1)                              |  | $ | 62.7    |   | $ | 158.4   |    | $ | 190.1   |   | $ | 168.0   |   | $ | 320.0   |  
|                                                      | 

15

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Year Ended December 31,2002

2001

2000

1999

1998(in thousands)Income from continuing operations before provision for income taxes

$
339.1

$
34.0

$
189.6

$
460.9

$
317.3Net interest (income) expense


(4.5
)

16.6


15.5


(17.7
)

(6.6
)Other, net


(16.8
)

(36.8
)

(1.5
)

(137.8
)

(14.5
)Depreciation and amortization from continuing operations


116.9


388.9


271.9


175.2


159.3


16

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

Summary

During 2002, we generated revenues by providing travel marketing and distribution services to travel agencies, corporate travel departments and travel suppliers
using theSabresystem through our Sabre Travel Network business segment (formally Travel Marketing and Distribution); to consumers using the
Travelocity Websites, to businesses using GetThere products and from the development and marketing of Sabre Airline Solutions products. Approximately 76.5% of our revenue was generated from Sabre
Travel Network, approximately 11.1% from Travelocity, 2.4% from GetThere and 10.0% from Sabre Airline Solutions. Total revenues from continuing operations have grown at a compound annual growth rate
of 6.4% for the three years ended December 31, 2002.

Air
travel in 2001 was trending lower than in 2000, initially because of the declining economic conditions in the United States, then due to the September 11, 2001 terrorist
attacks. As further discussed in theReduced Volume of Air TravelSection ofBusiness Trendsbelow, we
have experienced significant decreases in bookings volumes due to reduced travel in the United States and, to a lesser degree, internationally following these attacks.

For
the three years ended December 31, 2002, operating expenses from continuing operations have increased at a compound annual rate of 7.5%. Amortization of goodwill and
intangible assets resulting from acquisitions of GetThere, Preview, Gradient Solutions Limited (now known as Sabre Ireland Online Limited), Sabre Pacific, Dillon, Site 59 and the purchase of the
remaining publicly-held common shares of Travelocity.com that we did not previously own was $53.4 million in 2002, $277.5 million in 2001 and $109.4 million in 2000.
Amortization of goodwill and certain indefinite lived intangible assets ceased on January 1, 2002 upon our adoption of SFAS No.142 (Note 2 to the Consolidated Financial
Statements),resulting in approximately $237 million less amortization expense during 2002 than in 2001. Absent the effect of the amortization of
goodwill and intangible assets, operating expenses from continuing operations have grown at a compound annual growth rate of 6.4%. Our primary operating expenses consist of salaries, benefits, other
employee-related costs, communication costs and customer incentives, representing approximately 61.0%, 54.8% and 58.8% of total operating expenses in 2002, 2001 and 2000, respectively. Those expenses
increased at a compound annual rate of 7.1% for the three years ended December 31, 2002, primarily due to higher customer incentives expenses.

As
a result of lower than expected growth in travel bookings and revenues from the declining economy, the September 11, 2001 terrorist attacks, the possibility of terrorist
attacks, hostilities and war, the financial instability of many of the air carriers, delays resulting from added security measures at airports and the shift to airline direct distribution, our 2002
revenues were only 5.2% higher than 2000 revenues. However, this growth in revenues, coupled with a 2.5% decrease in operating expenses during this same period, resulted in an increase in operating
margin to 15.4% in 2002 from (0.4%) in 2001 and 8.8% in 2000. The 2001 margin was lower due to increased amortization of goodwill and intangible assets and higher operating expenses during 2001 than
in either 2002 or 2000.

Business Trends.Our revenues are highly dependent on the travel and transportation industries, and
particularly on United States airline travel bookings. We are experiencing significant decreases in bookings volumes due to reduced travel in the United States and, to a lesser degree, internationally
and due to increased efforts by airlines to divert bookings to alternative distribution channels.

Reduced Volume of Air Travel.We attribute the lower travel activity principally to economic conditions in the United States
and to ongoing travel security concerns. Air travel continues to be adversely affected by the state of the United States economy, by the possibility of terrorist attacks, hostilities and war, and by
delays resulting from added security measures at airports. Travelers appear to be traveling less, remaining closer to home, deferring travel and substituting alternative methods of travel for air
travel.

17

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Air
travel in 2001 was trending lower than in 2000, initially because of the declining economic conditions in the United States. On September 11, 2001, the United States was the
target of terrorist attacks of unprecedented scope involving the hijacking and destruction of multiple passenger aircraft operated by commercial air carriers. Bookings were down approximately 65%
immediately after the attacks. By the end of 2001, bookings volumes had partially recovered, to approximately 15% lower than the same period in 2000. Air travel bookings volumes recovered further
during 2002, and by the end of 2002, air travel bookings were 16.1% below 2000 levels and 8.2% lower than 2001 because of the general economic decline that has occurred since September 11,
2001. Our results of operations for the year ended December 31, 2002 were negatively affected by this continued reduction in travel. Our total bookings for 2002 in the U.S. were approximately
11.9% lower than the year ago period. We are uncertain whether travel booking volumes will fully recover to historical levels, especially when compared to the year 2000, which was a year in which we
experienced historically high levels of travel bookings. Travel demands have been trending lower than expected for the first quarter of 2003 because of global security concerns and possible military
action, as well as economic and political issues in Latin America.

Financial Condition of Airlines.Our airline customers are negatively affected by the continuing lower levels of travel
activity. Several major carriers are experiencing liquidity problems. Some airlines have sought bankruptcy protection and others may consider bankruptcy relief. The financial difficulties facing our
airline customers increase the risk that they may not perform on our contracts with them, including the risk we may not be paid for services provided to them, although this risk may be mitigated by
our participation in industry clearinghouses, which allow for centralized payment of service providers in the travel industry. Several air carriers have reduced the size of their fleets and the number
of flights available or are implementing other cost saving measures. These conditions may result in the airlines buying less of our products or services or seeking to reduce costs through price
negotiation or other means.

Supplier Efforts to Control Travel Distribution.The airline owners of Orbitz and Worldspan are aggressively working to
divert travel bookings onto channels that they collectively control. Those airlines have withheld inventory from independent travel distributors, have greatly reduced commissions paid to online and
traditional travel agencies and have conditioned independent distributors' access to inventory on their response to pricing offered by channels that those airlines control. Their collective efforts
are resulting in travel bookings being diverted from traditional distribution channels toward airline-controlled channels, such as Orbitz, individual airline Websites and call centers. Additionally,
several hotels have announced plans for similar multi-vendor Websites for booking hotels and other accommodations.

Merchant Model.Independent travel distributors, including our travel marketing and distribution companies, are attempting to
reduce their reliance on supplier-paid commissions and booking fees by increasingly promoting a "merchant model" of travel distribution. Under this model, the distributor recognizes as
revenue the sale price to the traveler less the cost of the inventory, rather than a supplier-paid booking fee or commission. Merchant model content can include air, hotel and vacation
offerings. However, other travel suppliers are starting to offer their content on a merchant basis as well as through independent travel distributors. Merchant content is good for travelers because
they can generally book their travel at a lower price than regularly published offerings. For us, the merchant business generally delivers higher revenue per transaction than comparable sales under
the agency/booking fee model.

The
potential effects of these trends, events and uncertainties are discussed below underRisk Factors.

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.

18

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We
have included below a discussion of the accounting policies involving material estimates and assumptions that we believe are most critical to 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. We have discussed the development,
selection and disclosure of these accounting policies with our audit committee. Although we believe these policies to be the most critical, other accounting policies also have a significant effect on
our financial statements and certain of these policies also require the use of estimates and assumptions. Note 2 to the Consolidated Financial Statements discusses each of our significant
accounting policies.

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, 2002, approximately 63% 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
2002 and 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. Our airline customers are negatively affected by the continuing lower levels of travel activity. Several major domestic air carriers are experiencing liquidity problems. Some
airlines have sought bankruptcy protection, and others may consider bankruptcy relief. 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, war
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. After nearly doubling our allowance for bad debts
in 2001 to $41.3 million, we reduced this allowance by $6.8 million, or 17%, to $34.5 million at December 31, 2002. This reduction was driven primarily by a large payment
from a customer in a bankruptcy dispute which resulted in a $5.5 million reduction of the allowance.

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, such as 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, 2002 and 2001, our booking fee cancellation reserves were approximately $18.4 million and $21.0 million, respectively. In
2002, the cancellation reserve declined by $2.6 million due to declining booking levels. This reserve is sensitive to changes in booking levels. For example, if 2002 booking volumes had been
10% lower, the reserve balance would have been reduced by $1.8 million.

19

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Business Combinations:During 2002, 2001 and 2000, we completed a number of acquisitions of other companies using the
purchase method of accounting. 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, including goodwill.

Long-Lived Assets and Goodwill:Prior to January 1, 2002, we reviewed all of our long-lived
assets, including identifiable intangible assets, for impairment when changes in circumstances indicated that the carrying amount of an asset may not be recoverable. If we determined that such
indicators were present, we prepared an undiscounted future net cash flow projection for the asset. In preparing this projection, we made a number of assumptions concerning such things as future
booking volume levels, price levels, commission rates, rates of growth in our consumer and corporate direct booking businesses, rates of increase in operating expenses, etc. If our projection of
undiscounted future net cash flows was in excess of the carrying value of the recorded asset, no impairment was recorded. If the carrying value of the asset exceeded the projected undiscounted net
cash flows, an impairment was recorded. The amount of the impairment charge was determined by discounting the projected net cash flows. Intangible assets subject to amortization continue to be
evaluated for impairment as discussed above.

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. Upon adoption of Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible
Assets("SFAS No. 142") on January 1, 2002, we began to evaluate our goodwill for impairment on an annual basis or whenever indicators of impairment exist. The
evaluation is 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 are estimated based upon discounted future cash flow projections for the unit. These cash flow projections are based upon a number of assumptions, as
discussed above. Under SFAS No. 142 intangible assets deemed to have indefinite lives are subject to impairment tests annually or when changes in circumstances indicate that the carrying value
may not be recoverable. If the carrying value of an indefinite lived intangible asset exceeds its fair value, as generally estimated using a discounted future net cash flow projection, the carrying
value of the asset is reduced to its fair value.

To
date, we have not recorded a significant 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. See Note 2 to the Consolidated Financial Statements for further discussion.

20

---

Off-Balance Sheet Arrangements

Syndicated Lease FinancingAs part of a syndicated lease arrangement, we are affiliated with a special
purpose entity ("SPE"), which is also a variable interest entity as that term is defined in Financial Accounting Standards Board ("FASB") Interpretation No. 46, Consolidation of Variable Interest Entities, that currently 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. The data center in Tulsa was sold during the third quarter of 2002 and the balance of the lease facility is now
approximately $207 million. We currently account for the financing facility as an operating lease. As a result, neither the asset nor the related debt are recorded in our balance sheets at
December 31, 2002 and 2001.

In
January 2003, the FASB issued Interpretation No. 46,Consolidation of Variable Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51, Consolidated Financial Statements("FIN 46"). FIN 46 will significantly change current practice by requiring the consolidation of entities in which an
enterprise absorbs a majority of the entity's expected losses, receives a majority of the entity's expected residual returns, or both, as a result of ownership, contractual or other pecuniary
interests in the entity. Currently entities are generally consolidated by an enterprise which has a controlling financial interest through ownership of a majority voting interest in the entity. This
statement is to be applied to all new variable interest entities entered into after January 31, 2003. The statement will apply to all existing variable interest entities for periods beginning
after June 15, 2003. As a result of the issuance of FIN 46, we will begin consolidating the SPE effective July 1, 2003.

The
SPE leases the properties to us under a master lease agreement. The initial lease term expires September 2004, with two one-year renewal periods thereafter,
subject to specified lessor and lessee approvals. At any time during the lease term, including the renewal periods, we have the option to purchase or sell the properties. If the sell option is
exercised, we have guaranteed to the lessor that proceeds on a sale will be at least 84% of the original fair value of the leased facilities and we are responsible for the first dollar loss on a
devaluation of the property of up to 84% of the total funded value of the SPE. At December 31, 2002 (taking into consideration the sale of the data center), the total guarantee approximated
$174 million. We periodically evaluate whether any liability exists related to this residual value guarantee. To date, we do not believe that any significant liability exists. If the sales
proceeds exceed the original fair value of the leased facilities, we retain the excess.

All
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.
Therefore, we do not consolidate the SPE in our financial statements. If the invested capital at risk of the lenders declines below 3.3%, or if certain other criteria are not met, we would be required
to consolidate the SPE prior to the effective date of FIN 46.

Had
we consolidated the SPE at December 31, 2002 (after taking into consideration the sale of the data center), our reported assets would have increased by approximately
$192 million and reported liabilities would have increased approximately $201 million, net of deferred taxes. Additionally, instead of rent expense of $5 million and
$3 million for the years ended December 31, 2002 and 2001, respectively, we would have recorded depreciation expense of $12 million and $3 million and interest expense of
$5 million and $3 million, respectively.

21

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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. Additionally, we had a $47 million gain in the third quarter of 2001 resulting from our sale of France Telecom shares. The third and fourth quarters of 2001 and all of the 2002
quarters were also negatively impacted by the significant decrease in air travel and booking activity after the September 11, 2001 terrorist attacks and the resulting decline in both the travel
industry and the overall economic climate.

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

|                                            |                                             | First
Quarter |         | Second
Quarter |   | Third
Quarter |     | Fourth
Quarter |        
|------------------------------------------- | ------------------------------------------- | ------------- | ------- | -------------- | - | ------------- | --- | -------------- | -------
|2002                                        |                                             |               |         |                |   |               |     |                |        
|Revenues                                    |                                             | $             | 549,358 |                | $ | 536,748       |     | $              | 517,374
|Operating income                            |                                             |               | 119,994 |                |   | 104,304       |     |                | 87,474 
|                                            |                                             |               |         |                |   |               |     |                |        
|Net earnings                                |                                             | $             | 87,387  |                | $ | 67,965        |     | $              | 57,921 
|                                            |                                             |               |         |                |   |               |     |                |        
|Earnings per common share:                  |                                             |               |         |                |   |               |     |                |        
|                                            | Basic                                       |               | $       | .66            |   | $             | .48 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        
|                                            | Diluted                                     |               | $       | .64            |   | $             | .47 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        
|
|2001                                        |                                             |               |         |                |   |               |     |                |        
|Revenues                                    |                                             | $             | 583,581 |                | $ | 593,322       |     | $              | 535,453
|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 (loss) 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 |                | $      
|                                            |                                             |               |         |                |   |               |     |                |        

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Results of Operations

Summary.We generate revenues from continuing operations by providing travel marketing and
distribution services to travel agencies, corporate travel departments and travel suppliers using theSabresystem, to individuals through the
Travelocity Websites, to businesses using GetThere products, and from the development and marketing of Sabre Airline Solutions products and services. During the year ended December 31, 2002, we
generated approximately 76.5% of our revenue from Sabre Travel Network services, approximately 11.1% from Travelocity, 2.4% from GetThere and 10.0% from Sabre Airline Solutions. Revenues by business
unit are exclusive of intersegment activity. Our consolidated operating margins were 15.4% and (0.4%) for the years ended December 31, 2002 and 2001, respectively.

EDS Transaction.On July 2, 2001, we completed a transaction with EDS which provided for
(i) the sale of our infrastructure outsourcing business and IT infrastructure assets and associated real estate to EDS, (ii) a 10-year contract with EDS to manage our IT
systems, and (iii) agreements with EDS to jointly market IT services and software solutions to the travel and transportation industries. As a result of the EDS transaction, our financial
statements have been reclassified to present the results of operations of the information technology infrastructure outsourcing business as discontinued operations for the years ended
December 31, 2001 and 2000. See Note 3 to the Consolidated Financial Statements for additional information regarding this transaction.

2002 Compared to 2001

Revenues.Total revenues from continuing operations for the year ended December 31, 2002 decreased approximately
$89 million or 4.1%, compared to the year ended December 31, 2001, from $2,145 million to $2,056 million.

Sabre Travel NetworkRevenues decreased $100 million or 6.0%, from $1,673 million in 2001 to
$1,573 million in 2002. This decrease was primarily due to a $93 million decrease in booking and other fees from associates, a $3 million decrease in subscriber revenue and a
$4 million decrease in other revenues. Total worldwide travel bookings processed through theSabresystem, which include direct connect bookings
and joint venture bookings for which we or our distribution partners earn a booking fee, were 397 million for the year ended December 31, 2002, a decrease of 7.8% from 431 million
bookings in 2001. Although bookings increased 1.2% in the fourth quarter of 2002 compared to the same period in 2001, bookings have not recovered to the levels experienced prior to 2001 due to
economic conditions in the United States, the ongoing travel security concerns discussed above and the shift to airline direct distribution. The effect on revenues from the decreases in booking
volumes were partially offset by a 4.3% increase in average price per booking charged to associates during 2002. The decrease in subscriber revenue was a result of a declining base in equipment leased
to subscribers. Other revenues fell mainly due to decreased development revenue from our joint ventures.

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TravelocityRevenues decreased approximately $6 million or 2.6%, from $234 million to $228 million. The
decrease was primarily due to decreases in air revenues of $30 million, advertising revenues of $10 million and the recognition of losses from our equity investments in joint ventures of
$5 million. Much like our Sabre Travel Network segment, we believe that the decreases in air revenues can primarily be attributed to economic conditions in the United States and travel security
concerns. Even though Travelocity's gross travel bookings (the total purchase price of all travel booked through Travelocity's Websites) increased 11.8%, average revenues per transaction were lower
than we expected primarily as a result of changes in the air commission structure driven by the need to compete with an airline-owned competitor's pricing scheme. Advertising revenues decreased due
principally to the general softening of the online advertising market. The losses from joint ventures relate to our investments in joint ventures for the establishment of online travel reservation
sites in the Far East and Europe. These joint ventures began operations during 2002 and losses were anticipated. These decreases were partially offset by a $26 million increase in
non-air revenues and a $13 million increase in other revenue. The increase in non-air revenues can primarily be attributed to the launch, during 2002, of Travelocity's
branded vacation and cruise programs and the acquisition of Site59, the last minute online travel leader. See Note 5 to the Consolidated Financial Statements regarding this acquisition. Other
revenues increased 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
Hotels.com. See Note 7 to the Consolidated Financial Statements for additional information on these warrants.

GetThereRevenues increased approximately $8 million or 19.0%, from $42 million to $50 million. This
increase was primarily the result of a $14 million increase in corporate and other revenues. Corporate and other revenues increased due to an increase in trip fees and revenues from
partnerships with agencies such as American Express. Corporate adoption rates, as measured by the estimated percentage of a corporation's total corporate travel expenditures purchased through
GetThere's online booking tools, have increased 48.8% in 2002. We believe that this indicates that, despite the reduction in business travel, GetThere's online booking tools are gaining widespread
acceptance and use by the employees of its corporate customers. For the year ended December 31, 2002, GetThere's corporate business achieved bookings growth of 82.7% year over year. The
increase in corporate and other revenues was partially offset by a $6 million decrease in supplier revenue, which consists of services provided to air travel providers, such as United Airlines,
for hosting their consumer Websites. The decline reflects the decrease in travel as well as the loss of several customers.

Sabre Airline SolutionsRevenues increased approximately $9 million or 4.6%, from $196 million to
$205 million, due to an $8 million increase in revenues from applications development products and services provided to various travel providers coupled with a $1 million increase
in airline reservation hosting revenue. The increase in products and services was due to acquisitions and various product sales in 2002. Airline reservation hosting revenue increased due to the
signings of 11 new carriers coupled with an increase in access fees.

Cost of Revenues.Cost of revenues for the year ended December 31, 2002 decreased approximately $156 million or
11.7%, compared to the year ended December 31, 2001, from $1,336 million to $1,180 million.

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Sabre Travel NetworkCost of revenues decreased $148 million or 14.5%, from $1,018 million to
$870 million. This decrease was primarily due to lower communications and data processing costs of $40 million resulting from lower transaction volumes and savings resulting from our IT
infrastructure outsourcing services contract with EDS, which was effective July 1, 2001. The outsourcing agreement also resulted in lower depreciation and amortization of $37 million due
to the sale of subscriber equipment to EDS in this transaction. Customer incentives decreased $34 million due to lower booking volumes. Salaries and benefits decreased $16 million due to
December 2001 workforce reductions and lower incentive compensation expenses and all other operating expenses decreased $21 million.

TravelocityCost of revenues increased $13 million or 12.6%, from $103 million to $116 million. This
increase was primarily the result of increased data processing expenses of approximately $8 million consisting of higher Web hosting costs of $3 million, increased purchased services of
$2 million and increased software costs of $3 million. Salaries and benefits increased $5 million due to increased headcount in 2002.

GetThereCost of revenues decreased $18 million or 28.1%, from $64 million to $46 million. This
improvement was primarily attributable to an $18 million decrease in salaries and benefits resulting from workforce reductions and cost cutting initiatives.

Sabre Airline SolutionsCost of revenues decreased approximately $3 million or 2.0%, from $151 million to
$148 million. This decrease was the result of lower other operating expenses.

Selling, General and Administrative Expenses.Selling, general and administrative expenses for the year ended
December 31, 2001 increased $169 million or 45.6%, compared to the year ended December 31, 2000 from $371 million to $540 million. Salaries and benefits increased
$30 million to accommodate the growth in the business which occurred prior to the September 11, 2001 terrorist attacks. Facilities costs increased $11 million to accommodate
growth and as a result of moving into our new headquarter facilities and consolidating Travelocity and GetThere facilities. Approximately $32 million of the increase in selling, general and
administrative expenses relates to the Travelocity business and includes an $18 million increase in amortization of payments made to strategic distribution partners, an $8 million
increase in advertising spending and a $6 million increase in 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. Bad debt reserves increased
$19 million as a result of the events of September 11, 2001. Depreciation increased $10 million, data processing expenses increased $5 million, communications expenses
increased $4 million and maintenance and device support expenses increased $2 million in order to support the growth of the business. Other selling, general and administrative expenses
increased to support our growth and as a result of costs which were historically allocated to the outsourcing business that are still being incurred as part of continuing operations.

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Amortization of Goodwill and Intangible Assets.Amortization of goodwill and intangible assets decreased $225 million,
or 80.9%, from $278 million for the year ended December 31, 2001 to $53 million for the year ended December 31, 2002. Goodwill and intangible assets of approximately
$1 billion were recorded in connection with the merger of Travelocity.com and Preview Travel, the acquisitions of GetThere, Gradient Solutions Limited (now known as Sabre Ireland Online
Limited) and a 51% interest in Dillon Communications Systems during 2000, as well as the acquisition of Sabre Pacific in March 2001. Acquired goodwill and intangible assets were being amortized
over periods ranging from one to seven years. Amortization of this goodwill and certain indefinite lived intangible assets ceased on January 1, 2002 upon our adoption of Statement of Financial
Accounting Standards No. 142,Goodwill and Other Intangible Assets("SFAS 142"). Our adoption of SFAS 142 resulted in approximately
$237 million less of gross amortization expense related to these acquisitions during 2002 compared with 2001. This reduction was offset by an increase in amortization expense of
$12 million for intangible assets still subject to amortization due to the acquisition of Site59.com, Inc., the acquisition of the Travelocity.com minority interest and the impact of
having a full year of amortization for intangible assets related to the acquisition of Sabre Pacific. See the discussion in Note 2 of the Consolidated Financial Statements for additional
information about the effect of adopting SFAS 142 on accounting for acquired goodwill and certain intangible assets.

Operating Income.Operating income for the year ended December 31, 2002 increased $327 million, as compared to
the year ended December 31, 2001 from a $9 million operating loss to a $318 million operating income. Operating margins increased from (0.4)% in 2001 to 15.4% during 2002 due to a
19.3% decrease in operating expenses while revenues only declined 4.1%. This expense decrease was primarily due to reduced goodwill and certain indefinite lived intangible asset amortization resulting
from our adoption of SFAS 142 effective January 1, 2002. Sabre Travel Network's operating income increased $73 million or 21.7%, due primarily to decreases in communications, data
processing, depreciation and amortization, customer incentives and salaries and benefits during 2002 as compared to 2001 which more than offset the decline in revenue. Travelocity's operating loss
decreased $23 million or 30.6%, due primarily to lower goodwill amortization charges. GetThere's operating loss decreased $187 million due primarily to lower goodwill amortization and
lower salaries and benefits. Sabre Airline Solutions' operating income increased by $23 million due to increases in product and services revenues and decreased operating expenses. Further,
although we cannot precisely quantify the effect, we believe that 2001 and 2002 operating incomes in all operating segments were negatively impacted by the events of September 11, 2001, the
subsequent decline in the travel industry and the general economy both domestically and internationally.

Interest Income.Interest income increased by $3 million or 12.0%, from $25 million for the year ended
December 31, 2001 to $28 million for the year ended December 31, 2002, 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 for the year ended December 31, 2002 decreased $18 million or 43.9%, from
$41 million to $23 million. This decrease was primarily due to the retirement of $859 million of debt in July and August 2001, partially offset by interest on the
$400 million in aggregate principal amount of Notes we issued August 2001.

Other, net.Other, net decreased $20 million or 54.1%, from $37 million to $17 million, from 2001 to
2002. Other, net during 2001 was due primarily to a $47 million gain from the sale of France Telecom shares, partially offset by writedowns of investments we had made in companies developing
emerging travel technologies totaling $10 million. The $17 million in other, net during 2002 was primarily due to an $18 million gain from the sale of our former corporate
headquarters building, a $7 million gain realized from the sale of France Telecom shares and other investment gains of $3 million, partially offset by $11 million in writedowns of
investments in companies developing emerging travel technologies.

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Minority Interests.Minority interests include minority owners' interests in our consolidated subsidiaries. As discussed in
Note 5 to the Consolidated Financial Statements, in April 2002 we acquired the approximately 16.7 million publicly-held common shares of Travelocity.com which we did
not previously own. Accordingly, minority interests during 2002 only reflect these interests in Travelocity.com for the period prior to acquisition. During 2001, the full year net loss of
Travelocity.com resulted in minority interests of approximately $22 million.

Income Taxes.The provision for income taxes was $125 million and $81 million for 2002 and 2001, respectively.
Our effective tax rate for 2002 was approximately 37% which varies from the statutory U.S. federal income tax rate of 35% due primarily to state income taxes. Our effective tax rate for 2001 was 238%
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 rate for 2001 was 34.7%. The tax provision was reduced in both years due to the recognition of research and experimentation
credits of approximately $4.0 million. See Note 12 to the Consolidated Financial Statements for additional information regarding income taxes.

Income from Continuing Operations.Income from continuing operations increased $261 million from a loss of
$47 million during 2001 to income of $214 million in 2002. This increase is primarily due to the $327 million increase in operating income, partially offset by a
$22 million decrease in minority interests and a $44 million increase in income taxes.

Income from Discontinued Operations.As noted in Note 3 to the Consolidated Financial Statements, we sold our
information technology infrastructure outsourcing business to EDS effective July 1, 2001 which resulted in net income from discontinued operations of $75 million. There were no
discontinued operations during 2002.

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

Net Earnings.Net earnings increased $183 million or 590.3%, from $31 million to $214 million, primarily
due to decreases in operating expenses of 19.3%, which exceeded the 4.1% decrease in revenues between years.

Results of Operations

2001 Compared to 2000

Revenues.Total revenues from continuing operations for the year ended December 31, 2001 increased approximately
$189 million or 9.7%, compared to the year ended December 31, 2000, from $1,956 million to $2,145 million.

Sabre Travel NetworkRevenues increased $51 million or 3.1%, from $1,622 million during 2000 to
$1,673 million during 2001. 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 travel due to the U.S. economic slowdown and the events of September 11, 2001. The remaining increase of
$22 million was driven by an increase in leased subscriber equipment revenue.

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TravelocityRevenues increased approximately $90 million or 62.5%, from $144 million to $234 million.
This increase is due primarily to a $47 million increase in transaction revenue, a $16 million increase in advertising revenues and a $27 million increase in other revenues. The
increase in transaction revenues was mainly due to a 33% increase in gross travel bookings. The growth in advertising revenues was primarily from the revenue sharing agreement with AOL, and growth in
other revenues was 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
Hotels.com.

GetThereRevenues increased approximately $30 million or 250.0%, from $12 million to $42 million. This
increase is primarily a result of an $18 million increase in corporate and other revenue and a $12 million increase in supplier revenue, which consists of services provided to air travel
providers, such as United Airlines, for hosting their consumer Websites. These increases resulted primarily from the combination of GetThere with our existing Business Travel Solutions business in
October 2000. Corporate and other revenue increased due to an increase in trip fees and revenues from partnerships with agencies such as American Express and other online customers.

Sabre Airline SolutionsRevenues increased approximately $18 million or 10.1%, from $178 million to
$196 million, due primarily to increases in applications development performed on behalf of various travel providers.

Further,
although we cannot precisely quantify the effect, we believe that revenue was negatively impacted by the events of September 11, 2001 in all operating segments.

Cost of Revenues.Cost of revenues for the year ended December 31, 2001 increased approximately $34 million or
2.6%, compared to the year ended December 31, 2000, from $1,302 million to $1,336 million.

Sabre Travel NetworkCost of revenues decreased $53 million or 4.9%, from $1,071 million to
$1,018 million, as the result of $52 million of depreciation savings resulting from the sale of subscriber equipment to EDS effective July 1, 2001 and a $1 million net
decrease in all other operating expenses.

TravelocityCost of revenues increased $27 million or 35.5%, from $76 million to $103 million, as the
result of increased salaries and benefits due to the growth of the business in 2001.

GetThereCost of revenues increased $41 million or 178.3%, from $23 million to $64 million, as the result
of increases in salaries and benefits of $29 million, development labor of $3 million, depreciation of $3 million and other operating expenses of $6 million resulting from
the growth of the business during 2001.

Sabre Airline SolutionsCost of revenues increased $19 million or 14.4%, from $132 million to
$151 million, due primarily to increases in salaries and benefits of $8 million and other operating expenses of $11 million to support increased applications develpment workloads.

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Selling, General and Administrative Expenses.Selling, general and administrative expenses for the year ended
December 31, 2001 increased $169 million or 45.6%, compared to the year ended December 31, 2000 from $371 million to $540 million. Approximately $32 million
of the increase in selling, general and administrative expenses relates to the Travelocity business and includes an $18 million increase in amortization of payments made to strategic
distribution partners, an $8 million increase in advertising spending and a $6 million increase in salaries, benefits, 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 $118 million increase in selling, general and administrative expenses is due to increases in bad debt reserves of $19 million as a result of the events of September 11,
2001 and increases in advertising and promotion costs, distributor 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 continuing operations.

Amortization of Goodwill and Intangible Assets.Amortization of goodwill and intangible assets increased $169 million
or 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 Solutions Limited (now known as Sabre Ireland Online Limited) and an interest in
Dillon in 2000, as well as the purchase of Sabre Pacific and other immaterial acquisitions. The majority of goodwill and intangible assets resulting from acquisitions are being amortized over periods
ranging from one to seven years. As of January 1, 2002, we no longer amortize goodwill and certain other intangible assets. See Note 2 to the Consolidated Financial Statements regarding
this new accounting pronouncement.

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Operating Income.Operating income for the year ended December 31, 2001 decreased $182 million or 105.2%, as
compared to the year ended December 31, 2000 from $173 million to ($9) million. Operating margins decreased from 8.8% in 2000 to (0.4)% in 2001, due to an increase in operating expenses
of 20.8% partially offset by a 9.7% increase in revenues. Sabre Travel Network's operating income decreased $71 million or 17.5%, due to increases in selling, general and administrative
expenses, partially offset by decreases in depreciation and amortization. Travelocity'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. Sabre Airline Solutions' operating loss decreased by $25 million due to increases in product and services revenues that were
slightly offset by increased operating expenses. We believe that the events of September 11, 2001 had a negative impact on operating income in all operating segments, although we cannot
precisely quantify this effect.

Interest Income.Interest income increased by $9 million or 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 for the year ended December 31, 2001 increased $9 million or 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 $36 million, from $1 million to $37 million primarily due to a
$47 million gain from the sale of France Telecom shares, 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.

Income from Continuing Operations.Income from continuing operations decreased $143 million or 149.0%, from
$96 million in 2000 to ($47) million in 2001 due to an increase in revenues of only 9.7% as a result of the negative effect of the events of September 11, 2001 which was more than offset
by an increase of operating expenses of 20.8%.

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Income from Discontinued Operations.Income from discontinued operations increased $27 million or 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 3 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 will still be incurred as part of continuing operations in the
future.

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

Net Earnings.Net earnings decreased $113 million or 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.

Liquidity and Capital Resources

At December 31, 2002, we had approximately $912 million in cash and marketable securities and working capital of $812 million compared to
$667 million in cash and marketable securities and working capital of $528 million at December 31, 2001. We invest cash in highly liquid instruments, including high credit quality
money market mutual funds, 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 $299 million, $390 million and
$311 million for 2002, 2001 and 2000, respectively. The decrease in cash provided by operating activities from 2001 to 2002 primarily resulted from the significant reduction in accounts
receivable during 2001 due to the collection of accounts receivable from our Outsourcing Business customers outstanding at December 31, 2000 with no corresponding billings and collections in
2002, due to the sale of the Outsourcing Business to EDS. 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 as described above, net of
certain gains recognized during 2001.

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We
used cash for investing activities of approximately $677 million, $18 million and $473 million in 2002, 2001 and 2000, respectively. The increase in cash used for
investing activities during 2002 as compared to 2001 primarily results from the cash tender offer for the outstanding publicly-held common shares of Travelocity.com for
$456 million, the acquisition of Site59 for $40 million net of cash received of $4 million and the purchase of the data center facility from the lessor, netted against the
proceeds of selling the same data center to EDS, of $24 million. We estimate that $18 million remains to be paid for the Travelocity.com acquisition. These increases in cash used during
2002 were partially offset by $80 million of cash received from the sale of our former headquarters building. The decrease in cash used for investing activities during 2001 as compared to 2000
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 France
Telecom depository certificates which we held, as further described in Note 6 to the Consolidated Financial Statements, and $39 million from the exercise of warrants and disposal of
stock of Hotels.com. See Note 7 to the Consolidated Financial Statements for more information on these warrants.

Cash
expended for business acquisitions was $499 million, $55 million and $711 million, net of cash acquired, in 2002, 2001 and 2000, respectively. The increase
during 2002 was due to the cash tender offer for the outstanding publicly-held common shares of Travelocity.com for $456 million and the acquisition of Site59 for approximately
$40 million, net of $4 million cash acquired. The large expenditure during 2000 primarily resulted from the acquisition of GetThere.

We
invested excess cash of approximately $242 million and $506 million in marketable securities, net of marketable securities sold, during 2002 and 2001, respectively.
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. We try to invest all excess cash in marketable securities. Therefore, our annual investments will fluctuate depending on the levels of cash provided or used by all of
our other investing, operating and financing activities.

Capital
investments for the years ended December 31, 2002, 2001 and 2000 were $63 million, $158 million and $190 million, respectively. The reduction in
capital expenditures from 2000 to 2001 and 2002 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 slightly higher than 2002 due to purchases of equipment. However, we do expect capital expenditures to remain significantly lower than 2001.

During
the third quarter of 2001, we made an unsecured $30 million loan to a customer in the travel industry, which was repaid in March 2002.

We
provided $380 million and used $361 million in cash for financing activities during 2002 and 2001, respectively. 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. See Note 9 to the
Consolidated Financial Statements for further discussion of debt transactions. Sabre Inc., a 100% owned subsidiary of Sabre Holdings Corporation, unconditionally guarantees all debt obligations
of Sabre Holdings Corporation as detailed in Note 17 to the Consolidated Financial Statements. In conjunction with these Notes, we have entered into two interest rate swaps through 2011 for a
total of $300 million, which pay us 7.35% and on which we will pay a variable rate based on a six-month London Interbank Offered Rate ("LIBOR") plus 231 basis points. See
Note 7 to the Consolidated Financial Statements for more information on these swaps.

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In
February 2000, we entered into a $300 million senior unsecured revolving credit agreement which expires on September 14, 2004. Interest on this agreement is variable,
based upon the LIBOR, the prime rate or the federal funds rate plus a margin, at our option. At December 31, 2002 and 2001, we did not have any outstanding borrowings under this agreement and
the entire $300 million is available for us to draw upon if necessary. We are currently in compliance with all debt covenant requirements under this agreement.

In
April 2002, we completed an underwritten public offering of 9.43 million shares of Class A common stock at $44.50 per share, which resulted in net proceeds to us
of approximately $400 million, net of transaction fees. We are using the proceeds from the offering for general corporate purposes.

During
2002, we generated $37 million in cash through financing activities pursuant to stock options, restricted stock incentives and stock purchase plans. This compares to
$109 million and $18 million that was raised in 2001 and 2000, respectively.

We
had not paid any dividends on our common stock before the one-time cash dividend of $675 million was paid in February 2000 in connection with our separation
from AMR, nor have we paid any since. Although we have traditionally retained our earnings to finance future growth, we may consider paying dividends in the future if we feel it is in the best
interest of our shareholders. 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
2002, we repurchased 2.2 million of our shares at a total cost of $57 million. This completed our remaining authorization to repurchase our shares. We repurchased
0.4 million of our shares at a total cost of $9 million in 2001 and spent approximately $34 million buying shares of our own stock in 2000. We may consider additional share
repurchases, but such repurchases would require approval from our Board of Directors. The timing, volume and price of any authorized future repurchases would be made at the discretion of management
and would depend on corporate considerations and market conditions.

In
1999, we entered into an agreement with AOL that provides, among other things, that the Travelocity Websites will be the exclusive reservations engine for AOL's
Internet properties. Travelocity is obligated for payments of up to $200 million, subject to AOL meeting certain revenue targets, a percentage of which are shared with us over the five-year
term of the agreement. AOL and Travelocity will share advertising revenues and commissions over the five-year term of the agreement. As of December 31, 2002, Travelocity is
obligated for future payments of up to $80 million, as we have paid approximately $40 million per year in 2002, 2001 and 2000. Under certain circumstances, Travelocity may elect to alter
the terms of this agreement such that guaranteed payments to AOL would no longer be required.

During
the second quarter of 2002, we entered into an agreement with Yahoo! whereby Travelocity will be the exclusive air, car and hotel booking engine on Yahoo! Travel. Under the terms
of the agreement, we are obligated to purchase certain levels of advertising, corporate services and enterprise solutions from Yahoo! The companies also plan to jointly develop travel solutions for
the millions of individuals, travel agents and travel suppliers that rely on the firms' extensive networks. Minimum payments due to Yahoo! under the terms of the agreement were $14 million
during 2002, $28 million during 2003 and $29 million per year in both 2004 and 2005. The agreement also contains a productivity component, where Yahoo! is paid a percentage of the
transactions services revenue generated through the Yahoo! network. As of December 31, 2002, we are obligated for total future payments of $86 million, as we paid approximately
$14 million during 2002. The agreement is effective July 1, 2002 and expires December 31, 2005. The agreement can be extended for up to two years at Yahoo!'s option. See
Note 10 to the Consolidated Financial Statements for additional discussion of this agreement.

32

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Contractual Cash Obligations

Our future minimum noncancelable contractual obligations as of December 31, 2002 are as follows (in thousands of dollars):

|                                                  |  | Payments Due by Period
for the Years Ended December 31, |        
|------------------------------------------------- |  | ------------------------------------------------------- | -------
|
|
|Notes payable (1)                                 |  | $                                                       |       
|Lease obligations                                 |  |                                                         | 28,241 
|Amounts receivable under non-cancelable subleases |  |                                                         | (5,880 
|Other long-term obligations (2)                   |  |                                                         | 242,289
|                                                  |  |                                                         |        
|Total contractual cash obligations                |  | $                                                       | 264,650
|                                                  |  |                                                         |        

---

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.

Recent Accounting Pronouncements

In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146,Accounting for Costs Associated with Exit
or Disposal Activities("SFAS 146"). This statement nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The standard requires companies
to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. This statement is to be applied prospectively
to exit or disposal activities initiated after December 31, 2002. The adoption of this standard is not expected to have a significant effect on our financial position or results of operations.

Mergers and Acquisitions

During 2002 we completed the tender offer for the outstanding publicly-held shares of Travelocity.com common stock that we did not previously own, completed the
acquisition of Site 59.com, Inc. and completed other immaterial acquisitions. During 2001, we completed the acquisitions of Sabre Pacific and other immaterial acquisitions. During 2000, we
completed the merger of Travelocity.com and Preview, as well as the acquisitions of Gradient Solutions Limited (now known as Sabre Ireland Online Limited), GetThere and a 51% ownership interest in
Dillon. For further information regarding the material merger and acquisition transactions, see Note 5 to the Consolidated Financial Statements.

33

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Inflation

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

SABRE HOLDINGS CORPORATION 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.

RISK FACTORS

General

Risks associated with an investment in our securities, and with achieving the forward-looking statements in this report, our news releases, our Websites, 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.

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:



34

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The
September 11, 2001 terrorist attacks on New York and Washington, and the economic downturn that preceded and was worsened by the attacks, may continue to adversely affect us and the travel
industry. Additionally, the possibility of terrorist attacks, hostilities and war, the financial instability of many of the air carriers, and delays resulting from added security measures at airports
may continue to adversely affect the travel industry. Airlines may reduce the number of their flights, making less inventory available to us. Several major airlines are experiencing liquidity problems
and some have sought bankruptcy protection. Travelers' perceptions of passenger security or airlines' financial stability may have an adverse effect on demand. 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.

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

Our
business includes channels of distribution that target the travel agency, corporate-direct and consumer-direct segments of the global travel distribution market. In all of these
distribution channels, we face significant competitors, many of whom are aggressively seeking to divert our customers away from traditional distribution methods. 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, Gailileo and Worldspan. In addition, we face competition in the travel agency channel from travel suppliers that distribute directly to travel agencies and from other companies.
In the corporate-direct channel, our GetThere business competes against similar products offered by Amadeus, Galileo, Worldspan and travel agencies. Some competitors market business travel systems
that are bundled with financial and other non-travel software systems that we do not offer. As a result, our customers may choose to use our competitors' bundled products and services,
which would reduce the revenue we otherwise would have earned from these customers. In the consumer-direct channel, our Travelocity product competes not only against similar products offered by
affiliates of Amadeus, Galileo and Worldspan, but also with a large number of travel Websites, including those operated by travel suppliers and by Expedia, Hotwire and Orbitz. Consolidation among
travel suppliers, including airline mergers, may increase competition from distribution channels related to those suppliers and place more negotiating leverage in the hands of those suppliers. If we
are unable to compete effectively, competitors could divert our customers away from our travel distribution channels and, unless we substitute alternative revenue streams, it could adversely affect
our results of operations.

SOME TRAVEL SUPPLIERS ARE AGGRESSIVELY SEEKING TO BYPASS OUR TRAVEL DISTRIBUTION CHANNELS, WHICH MAY HAVE THE EFFECT OF ADVERSELY AFFECTING OUR RESULTS
OF OPERATIONS.

Some
travel suppliers are aggressively seeking to decrease their reliance on global distribution systems such as ourSabresystem.
Airlines and other travel suppliers have significant ownership stakes in some of our global distribution system competitors, such as Amadeus, Galileo and Worldspan. Various airlines and hotels have
established their own travel distribution Websites. Several airlines and hotels have formed joint ventures that offer multi-supplier travel distribution Websites (such as Orbitz in the United States
and Opodo in Europe). Many of these travel suppliers offer discounted prices when their products and services are purchased from these supplier-related Websites. Many of these discounted prices have
not been made available to us. These pricing differences may have the effect of diverting customers from our distribution system to supplier-related Websites.

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CONSOLIDATION IN THE TRAVEL AGENCY INDUSTRY AND INCREASED COMPETITION FOR TRAVEL AGENCY SUBSCRIBERS MAY RESULT IN INCREASED EXPENSES, LOST BOOKINGS AND
REDUCED REVENUE.

The
absolute and relative size of our travel agency subscriber base is important to our success. Some travel suppliers have reduced or eliminated commissions paid to travel agencies
(including consumer direct travel sites like Travelocity). The loss of commissions causes travel agencies to become more dependent on other sources of revenues, such as traveler-paid
services fees and GDS-paid incentives. The reduction or elimination of 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 larger travel agency subscribers. Consolidation of
travel agencies may result in increased competition for these subscribers. Some of our competitors aggressively pay economic incentives to travel agencies to obtain business. In order to compete
effectively, we may need to increase incentives, pre-pay 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 GLOBAL DISTRIBUTION SYSTEM SERVICES,
WHICH WOULD ADVERSELY AFFECT OUR BOOKING FEE REVENUE AND OUR RESULTS OF OPERATIONS.

Rules
in the U.S., Canada, the European Union and Peru govern computer reservation systems such as ourSabreglobal distribution system.
Airlines (such as British Airways, United Airlines, US Airways and Continental Airlines) that divest their ownership of global distribution systems may not be subject to these rules, which would
otherwise require them to make their inventory available 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 limit their distribution of inventory through global distribution systems. Losing access to their inventory would make our global distribution system less attractive to
travel agencies and travel purchasers, which could reduce our booking fee revenue. In order to gain access to inventory, it might become necessary for us to reduce the fees charged to suppliers, which
could reduce our booking fee revenue.

SOME OF OUR COMPETITORS IN THE BUSINESS ARE WELL FUNDED, WHICH MAY GIVE THESE COMPETITORS A COMPETITIVE ADVANTAGE THAT COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.

Some
of our competitors are owned by companies that are larger than us, and that may have better access to capital than we do. This may afford them the ability to take advantage of more
business opportunities, including acquisitions, business combinations and strategic alliances. They may have greater resources to enable them to finance strategic transactions and research and
development in the business. These competitive advantages could allow our competitors to offer products and services for less than we can, which could reduce demand for our products and services and
adversely affect our results of operations.

36

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WE MAY BE UNSUCCESSFUL IN PURSUING AND INTEGRATING BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES, WHICH COULD RESULT IN INCREASED EXPENDITURES OR CAUSE
US TO FAIL TO ACHIEVE ANTICIPATED COST SAVINGS OR REVENUE GROWTH.

We
plan to continue to examine possible business combinations, investments, joint ventures or other strategic alliances with other companies in order to maintain and grow revenue and
market presence. There are risks inherent in these types of transactions 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.

RAPID TECHNOLOGICAL CHANGES AND NEW DISTRIBUTION CHANNELS OR UNAUTHORIZED USE OF OUR INTELLECTUAL PROPERTY MAY RENDER OUR TECHNOLOGY OBSOLETE OR
ADVERSELY AFFECT THE VALUE OF OUR CURRENT OR FUTURE TECHNOLOGIES TO US AND OUR CUSTOMERS, WHICH COULD CAUSE US TO INCREASE EXPENDITURES TO UPGRADE OUR TECHNOLOGY OR DEVELOP COMPETING PRODUCTS IN NEW
DISTRIBUTION CHANNELS AND TO PROTECT THEM.

New
distribution channels and technology in our industry are evolving rapidly. Our ability to compete and our future results depend in part on our ability to make timely and
cost-effective enhancements and additions to our technology to introduce new products and services that meet customer demands and rapid advancements in technology, and to protect our
technology. Unauthorized use of our intellectual property could have a material adverse effect on us, and our legal remedies may not adequately compensate us for the damages to our business caused by
such use. Maintaining flexibility to respond to technological and market dynamics may require substantial expenditures and lead-time. We cannot assure you 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
businesses are largely dependent on the computer data centers and network systems operated by EDS. We rely on several communications service suppliers and on the global Internet to
provide network access between our computer data center and end-users of our 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, terrorist attacks, hostilities or war or similar events. Computer viruses, physical or electronic break-ins and similar
disruptions affecting the global Internet or our systems might cause service interruptions, delays and loss of critical data. Problems affecting our systems 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.

37

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

The
U.S. Department of Transportation ("DOT") released its notice of proposed rule making ("NPRM") on November 12, 2002 as part of its comprehensive review of its rules governing
computer reservation systems ("CRS") such as ourSabreglobal distribution system. If those rules were to become final in their current form, we would
be adversely affected. In particular, the rules could facilitate efforts by the airline owners of Orbitz and Worldspan to divert travel bookings to distribution channels that they own and control.
Carriers that own CRS systems would no longer be required to participate in competing systems. The proposed rules would also reduce the value of marketing information sold by Sabre to airline
associates. Furthermore, the proposed rules would apply to traditional CRS systems but not to travel distribution Websites, even if they have the same functionality as a traditional CRS system and
even if accessed by travel agents. The NPRM is not the final rule. There will an opportunity for interested parties to make their concerns known to the DOT. We intend to seek changes to eliminate
aspects of the regulations that negatively impact our business. The proposed rules may be implemented with few changes, may be implemented with major changes or we may see CRS systems become
completely de-regulated. We do not know when the proposed regulations might become final or whether our changes will be accepted. We expect that our business will likely be adversely affected under
any of the possible scenarios.

The
Commission of the European Union (the "Commission") is also engaged in a comprehensive review of its rules governing CRS systems. It is unclear at this time when the Commission will
complete its review and what changes, if any, will be made to the E.U. rules. We could be unfairly and adversely affected if the E.U. rules are retained as to traditional global distribution systems
used by travel agencies but are not applied to travel distribution Websites owned by more than one airline. We could also be adversely affected if changes to any of the foregoing CRS rules increased
our 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 global distribution competitors.

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

Trade
barriers erected by non-U.S. travel suppliers, who are 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
products and services offered by other global distribution systems that have such capability. The potential for us to add new travel agency subscribers exists primarily outside of North America. Those
trade barriers 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 that could adversely affect our results of operations.

OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO OTHER RISKS, WHICH MAY IMPEDE OUR ABILITY TO GROW INTERNATIONALLY AND ADVERSELY AFFECT OUR OVERALL RESULTS
OF OPERATIONS.

We
face risks inherent in international operations, such as risks of:



38

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These
risks may adversely affect our ability to conduct and grow business internationally, which could cause us to increase expenditures and costs, decrease our revenue growth or both.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

At December 31, 2002, our exposure to interest rates relates primarily to our marketable securities portfolio. Largely offsetting this exposure are our
notes payable, as hedged with 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 2003 than they were during 2002, our interest income from marketable
securities would decrease by approximately $2.9 million. In comparison, at December 31, 2001, we estimated that if short-term interest rates averaged 10% lower in 2002 than
they were during 2001, our interest income from marketable securities would have decreased by approximately $2.2 million. These amounts were determined by applying the hypothetical interest
rate change to our marketable securities balances, including marketable securities held by Travelocity, as of December 31, 2002 and 2001.

In
addition, we had fixed rate notes of $400 million ("Notes") at December 31, 2002. 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 2003 than they were in 2002, our interest expense would increase by approximately $0.6 million. This amount was determined by applying the hypothetical interest rate change to our
floating rate borrowings balance at December 31, 2002.

39

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In
addition, we had floating rate exposure on the approximately $207 million funded under our syndicated lease facility at December 31, 2002. If short-term
interest rates average 10% higher in 2003 than they were in 2002, our lease expense would increase by approximately $0.6 million. This amount was determined by applying the hypothetical
interest rate change to our average syndicated lease balance at December 31, 2002.

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, 2002 and 2001. These contracts were not material to our financial position or results of
operations as of or for the year ending December 31, 2002 or 2001.

40

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                  |  | Page
|------------------------------------------------- |  | ----
|Report of Ernst & Young LLP, Independent Auditors |  | 42  
|Consolidated Balance Sheets                       |  | 43  
|Consolidated Statements of Income                 |  | 44  
|Consolidated Statements of Cash Flows             |  | 45  
|Consolidated Statements of Stockholders' Equity   |  | 46  
|Notes to Consolidated Financial Statements        |  | 47  

41

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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, 2002 and 2001, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed
under Item 15(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, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, 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.

As
discussed in Note 2 to the consolidated financial statements, effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets.



Dallas, Texas
January 13, 2003

42

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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                                                                                                                |                                            |        
|                                           | Computer equipment and software                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  |                                            | 436,251
|                                           | Less accumulated depreciation and amortization                                                                                                   |                                            |        
|                                           |                                                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  | Total property and equipment               |        
|Deferred income taxes                      |                                                                                                                                                  |                                            |       
|Investments in joint ventures              |                                                                                                                                                  |                                            | 196,725
|Goodwill and intangible assets, net        |                                                                                                                                                  |                                            | 855,683
|Other assets, net                          |                                                                                                                                                  |                                            | 152,408
|                                           |                                                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  | Total assets                               |        
|                                           |                                                                                                                                                  |                                            |        
|Liabilities and stockholders' equity       |                                                                                                                                                  |                                            |        
|Current liabilities                        |                                                                                                                                                  |                                            |        
|                                           | Accounts payable                                                                                                                                 |                                            | $      
|                                           | Accrued compensation and related benefits                                                                                                        |                                            |        
|                                           | Accrued subscriber incentives                                                                                                                    |                                            |        
|                                           | Deferred revenues                                                                                                                                |                                            |        
|                                           | Other accrued liabilities                                                                                                                        |                                            |        
|                                           |                                                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  | Total current liabilities                  |        
|Deferred income taxes                      |                                                                                                                                                  |                                            | 13,755 
|Pensions and other postretirement benefits |                                                                                                                                                  |                                            | 116,305
|Other liabilities                          |                                                                                                                                                  |                                            | 38,914 
|Minority interests                         |                                                                                                                                                  |                                            | 10,300 
|Notes payable                              |                                                                                                                                                  |                                            | 435,765
|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; 145,164 and 133,527 shares issued at December 31, 2002 and 2001, respectively |                                            |        
|                                           | Additional paid-in capital                                                                                                                       |                                            |        
|                                           | Retained earnings                                                                                                                                |                                            |        
|                                           | Accumulated other comprehensive income (loss)                                                                                                    |                                            |        
|                                           | Less treasury stock at cost; 2,480 and 384 shares, respectively                                                                                  |                                            |        
|                                           |                                                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  | Total stockholders' equity                 |        
|                                           |                                                                                                                                                  |                                            |        
|                                           |                                                                                                                                                  | Total liabilities and stockholders' equity |        
|                                           |                                                                                                                                                  |                                            |        

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

43

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

---

|                                                                    |                                                | Year Ended December 31,      |          
|------------------------------------------------------------------- | ---------------------------------------------- | ---------------------------- | ---------
|
|Revenues                                                            |                                                | $                            | 2,056,466
|Operating expenses                                                  |                                                |                              |          
|                                                                    | Cost of revenues                               |                              |          
|                                                                    | Selling, general and administrative            |                              |          
|                                                                    | Amortization of goodwill and intangible assets |                              |          
|                                                                    |                                                |                              |          
|                                                                    |                                                | Total operating expenses     |          
|                                                                    |                                                |                              |          
|Operating income (loss)                                             |                                                |                              | 317,500  
|Other income (expense)                                              |                                                |                              |          
|                                                                    | Interest income                                |                              |          
|                                                                    | Interest expense                               |                              |          
|                                                                    | Other, net                                     |                              |          
|                                                                    |                                                |                              |          
|                                                                    |                                                | Total other income (expense) |          
|                                                                    |                                                |                              |          
|Minority interests                                                  |                                                |                              | 214      
|                                                                    |                                                |                              |          
|Income from continuing operations before provision for income taxes |                                                |                              | 339,068  
|Provision for income taxes                                          |                                                |                              | 124,924  
|                                                                    |                                                |                              |          
|Income (loss) from continuing operations                            |                                                |                              | 214,144  
|Income from discontinued operations, net                            |                                                |                              |         
|Gain on sale of discontinued operations, net                        |                                                |                              |         
|                                                                    |                                                |                              |          
|Income before cumulative effect of accounting change                |                                                |                              | 214,144  
|Cumulative effect of accounting change, net                         |                                                |                              |         
|                                                                    |                                                |                              |          
|Net earnings                                                        |                                                | $                            | 214,144  
|                                                                    |                                                |                              |          
|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.

44

---



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

---

|                                                                                                 |                                                    | Year Ended December 31,                        |           
|------------------------------------------------------------------------------------------------ | -------------------------------------------------- | ---------------------------------------------- | ----------
|
|Operating activities                                                                             |                                                    |                                                |           
|Net earnings                                                                                     |                                                    | $                                              | 214,144   
|Adjustments to reconcile net earnings to cash provided by operating activities:                  |                                                    |                                                |           
|                                                                                                 | Depreciation and amortization                      |                                                |           
|                                                                                                 | Stock compensation                                 |                                                |           
|                                                                                                 | Deferred income taxes                              |                                                |           
|                                                                                                 | Tax benefit from exercise of stock options         |                                                |           
|                                                                                                 | Minority interests                                 |                                                |           
|                                                                                                 | Gain on sale of former headquarters building       |                                                |           
|                                                                                                 | Gain on sale of discontinued operations, net       |                                                |           
|                                                                                                 | Gain on sale of France Telecom shares              |                                                |           
|                                                                                                 | 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                                                              |                                                    |                                                | (62,650   
|Business combinations, net of cash acquired                                                      |                                                    |                                                | (498,508  
|Proceeds from exercise of Travelocity.com stock options                                          |                                                    |                                                | 33,658    
|Proceeds from sale of former headquarters building                                               |                                                    |                                                | 80,000    
|Purchase of data center facility from lessor                                                     |                                                    |                                                | (92,092   
|Proceeds from sale of data center facility                                                       |                                                    |                                                | 68,464    
|Proceeds from sale of minority interest in Sabre Pacific                                         |                                                    |                                                | 23,466    
|Proceeds from sale of discontinued operations                                                    |                                                    |                                                |          
|Purchases of marketable securities                                                               |                                                    |                                                | (4,695,307
|Sales of marketable securities                                                                   |                                                    |                                                | 4,453,062 
|Proceeds from sales of investments                                                               |                                                    |                                                | 8,807     
|Purchases of Travelocity.com common stock                                                        |                                                    |                                                |          
|Other investing activities, net                                                                  |                                                    |                                                | 4,354     
|                                                                                                 |                                                    |                                                |           
|                                                                                                 | Cash used for investing activities                 |                                                |           
|Financing activities                                                                             |                                                    |                                                |           
|Proceeds from public offering of common stock                                                    |                                                    |                                                | 399,763   
|Proceeds from exercise of stock options and issuance of stock under employee stock purchase plan |                                                    |                                                | 36,609    
|Purchase of treasury stock                                                                       |                                                    |                                                | (56,610   
|Dividends paid                                                                                   |                                                    |                                                |          
|Issuance of notes payable                                                                        |                                                    |                                                |          
|Repayment of notes payable                                                                       |                                                    |                                                |          
|Other financing activities, net                                                                  |                                                    |                                                | (90       
|                                                                                                 |                                                    |                                                |           
|                                                                                                 | Cash provided by (used for) financing activities   |                                                |           
|Increase in cash                                                                                 |                                                    |                                                | 2,321     
|Cash at beginning of the period                                                                  |                                                    |                                                | 18,855    
|                                                                                                 |                                                    |                                                |           
|Cash at end of the period                                                                        |                                                    | $                                              | 21,176    
|                                                                                                 |                                                    |                                                |           
|                                                                                                 | Cash payments for income taxes                     |                                                | $         
|                                                                                                 |                                                    |                                                |           
|                                                                                                 | Cash payments for interest                         |                                                | $         
|                                                                                                 |                                                    |                                                |           

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

45

---

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
(Loss) |   | Treasury Stock |   | Total |        
|------------------------------------------------------------------------------------------------------------------------------ |  | -------------------- | ----- | -------------------- | - | -------------------------- | - | ----------------- | --------- | --------------------------------------------- | - | -------------- | - | ----- | -------
|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  
|Issuance of 1,615 shares of Class A common stock pursuant to stock option, restricted stock incentive and stock purchase plans |  |                      | 16    |                      |   |                           |   |                   | 33,145    |                                               |   |               |   |       |       
|Issuance of 9,430 shares of Class A common stock pursuant to equity offering                                                   |  |                      | 94    |                      |   |                           |   |                   | 399,669   |                                               |   |               |   |       |       
|Settlement of warrants issued in connection with business combination                                                          |  |                      |      |                      |   |                           |   |                   | (15,972   | )                                             |   |               |   |       |       
|Conversion of vested stock options pursuant to the acquisition of Travelocity.com minority interest                            |  |                      |      |                      |   |                           |   |                   | 14,209    |                                               |   |               |   |       |       
|Tax benefit from exercise of employee stock options                                                                            |  |                      |      |                      |   |                           |   |                   | 9,687     |                                               |   |               |   |       |       
|Purchases of treasury stock                                                                                                    |  |                      |      |                      |   |                           |   |                   |          |                                               |   |               |   |       |       
|Stock based compensation for employees and consultants                                                                         |  |                      |      |                      |   |                           |   |                   | 16,933    |                                               |   |               |   |       |       
|Comprehensive income: Net earnings                                                                                             |  |                      |      |                      |   |                           |   |                   |          |                                               |   | 214,144        |   |       |       
|Minimum pension liability adjustment, net of deferred income taxes                                                             |  |                      |      |                      |   |                           |   |                   |          |                                               |   |               |   |       | (21,638
|Unrealized gain on foreign currency forward contracts, net of deferred income taxes                                            |  |                      |      |                      |   |                           |   |                   |          |                                               |   |               |   |       | 4,174  
|Unrealized loss on investments, net of deferred income taxes                                                                   |  |                      |      |                      |   |                           |   |                   |          |                                               |   |               |   |       | (1,867 
|Unrealized foreign currency translation gain                                                                                   |  |                      |      |                      |   |                           |   |                   |          |                                               |   |               |   |       | 131    
|                                                                                                                               |  |                      |       |                      |   |                            |   |                   |           |                                               |   |                |   |       |        
|Total comprehensive income                                                                                                     |  |                      |       |                      |   |                            |   |                   |           |                                               |   |                |   |       |        
|                                                                                                                               |  |                      |       |                      |   |                            |   |                   |           |                                               |   |                |   |       |        
|Other                                                                                                                          |  |                      | (10   | )                    |   |                           |   |                   | 249       |                                               |   |               |   |       |       
|                                                                                                                               |  |                      |       |                      |   |                            |   |                   |           |                                               |   |                |   |       |        
|Balance at December 31, 2002                                                                                                   |  | $                    | 1,451 |                      | $ |                           |   | $                 | 1,276,662 |                                               | $ | 442,130        |   | $     | (16,024
|                                                                                                                               |  |                      |       |                      |   |                            |   |                   |           |                                               |   |                |   |       |        

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

46

---



SABRE HOLDINGS CORPORATION        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

1.    General Information



2.    Summary of Significant Accounting Policies



47

---



Property and equipment:Buildings

30 yearsFurniture and fixtures

5 to 15 yearsLeasehold improvements

Lesser of lease term or useful lifeComputer/service contract equipment

3 to 5 yearsComputer software

3 to 7 yearsOther assets:Capitalized software development costs

3 to 7 yearsIntangible assets

1 to 20 yearsGoodwill (prior to January 1, 2002)

3 to 20 years




48

---



49

---



50

---



51

---



52

---



Year Ended
December 31,2002

2001

2000Reported income (loss) from continuing operations

$
214,144

$
(46,953
)
$
96,105Goodwill and indefinite lived intangible assets amortization, net of income taxes and minority interests





211,998


82,001Adjusted income from continuing operations

$
214,144

$
165,045

$
178,106Reported net earnings

$
214,144

$
31,227

$
144,052Goodwill and indefinite lived intangible assets amortization, net of income taxes and minority interests





211,998


82,001Adjusted net earnings

$
214,144

$
243,225

$
226,053


53

---

Earnings per shareBasic:Reported income (loss) from continuing operations

$
1.53

$
(.35
)
$
.74Goodwill and indefinite lived intangible assets amortization, net of income taxes and minority interest





1.60


.63Adjusted income from continuing operations

$
1.53

$
1.25

$
1.37Reported net earnings

$
1.53

$
..24

$
1.11Goodwill and indefinite lived intangible assets amortization, net of income taxes and minority interest





1.60


.63Adjusted net earnings

$
1.53

$
1.84

$
1.74Diluted:Reported income (loss) from continuing operations

$
1.50

$
(.35
)
$
.74Goodwill and indefinite lived intangible assets amortization, net of income taxes and minority interest





1.60


.63Adjusted income from continuing operations

$
1.50

$
1.25

$
1.37Reported net earnings

$
1.50

$
..24

$
1.11Goodwill and indefinite lived intangible assets amortization, net of income taxes and minority interests





1.60


.63Adjusted net earnings

$
1.50

$
1.84

$
1.74




54

---



December 31, 2002

December 31, 2001Weighted
Average
Useful Lives

Gross Carrying
Amount, at Cost

Accumulated
Amortization

Gross Carrying
Amount, at Cost

Accumulated
AmortizationNot subject to amortization:Goodwill



$
819,856

$


$
626,785

$
Tradenames, trademarks and domain names




21,980





7,682


841,836





634,467


Subject to amortization:Purchased technology

4 years


129,766


(68,961
)

125,146


(36,592
)Acquired customer relationships and database

7 years


36,687


(10,834
)

32,820


(4,950
)Non-compete agreements

4 years


17,059


(11,634
)

17,059


(4,971
)Acquired contracts, supplier and distributor agreements

3 years


29,369


(13,526
)

8,261


(5,018
)212,881


(104,955
)

183,286


(51,531
)Total



$
1,054,717

$
(104,955
)
$
817,753

$
(51,531
)




2003

$
47,9132004


40,6762005


10,6142006


4,3822007


4,341


55

---



Sabre Travel
Network

Travelocity

GetThere

Sabre Airline
Solutions

TotalBalance at December 31, 2000

$
129,684

$
176,524

$
545,941

$


$
852,149Goodwill acquired


6,400








3,724


10,124Goodwill adjustments


(205
)

1,312


527





1,634Goodwill amortization


(12,160
)

(80,234
)

(144,728
)




(237,122
)Balance at December 31, 2001


123,719


97,602


401,740


3,724


626,785Goodwill acquired





198,341





1,457


199,798Goodwill adjustments








(6,811
)

84


(6,727
)Balance at December 31, 2002

$
123,719

$
295,943

$
394,929

$
5,265

$
819,856




56

---



57

---



Year Ended December 31,2002

2001

2000Denominator for basic earnings per common share
weighted-average shares

140,337

132,317

129,198Dilutive effect of stock awards and options

2,222



643Denominator for diluted earnings per common share
adjusted weighted-average shares

142,559

132,317

129,841




58

---



Year Ended December 31,2002

2001

2000Net earnings as reported

$
214,144

$
31,227

$
144,052Add stock compensation expense, net of income taxes determined under intrinsic value method


19,794


15,934


7,080Less total stock-based employee compensation expense determined under fair value based method for all awards, net of income taxes


(41,008
)

(44,636
)

(32,698
)Pro forma net earnings

$
192,930

$
2,525

$
118,434Net earnings per common share, as reported:Basic

$
1.53

$
.24

$
1.11Diluted

$
1.50

$
.24

$
1.11Net earnings per common share, pro forma:Basic

$
1.37

$
.02

$
.92Diluted

$
1.35

$
.02

$
.91




59

---



SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

---

2.    Summary of Significant Accounting Policies (Continued)



Minimum Pension Liability Adjustment

Unrealized Gains (Losses) on Investments

Unrealized Gains on Foreign Currency Forward Contracts

Unrealized Foreign Currency Translation Gains (Losses)

Total Accumulated Other Comprehensive Income (Loss)Beginning balance, December 31, 2001

$


$
2,483

$
802

$
(109
)
$
3,1762002 other comprehensive income, net of income taxes


(21,638
)

(1,867
)

4,174


131


(19,200
)Ending balance, December 31, 2002

$
(21,638
)
$
616

$
4,976

$
22

$
(16,024
)




60

---



3.    EDS Transaction



61

---



Year Ended December 31,2001

2000Revenues

$
370,007

$
676,640Income before provision for income taxes

$
59,060

$
77,680Provision for income taxes


22,755


29,733Income from discontinued operations, net

$
36,305

$
47,947




62

---



4.    Marketable Securities

Marketable securities consist of (in thousands):

December 31,2002

2001Corporate notes

$
465,624

$
237,616U.S. Government agency and treasury notes


185,602


Mortgages


158,146


75,052Overnight investments and time deposits


58,495


205,558Asset-backed securities


22,717


129,806Total

$
890,584

$
648,032




December 31,2002

2001Due in one year or less

$
145,709

$
226,842Due after one year through three years


512,872


308,709Due after three years


232,003


112,481Total

$
890,584

$
648,032




5.    Mergers and Acquisitions



63

---



Minority interest assumed

$
252,597Deferred income tax asset, net


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


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


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


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


3,739Tradenames, trademarks and domain names (indefinite life)


13,698Goodwill


160,146Total purchase price

$
474,309




64

---



Working capital acquired

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


824Software


1,352Non-current liabilities


(75
)Supplier agreements (weighted average life of 1.5 years)


900Tradenames, trademarks and domain names (indefinite life)


600Goodwill


38,195Total purchase price

$
43,566




65

---



Year Ended December 312002

2001(unaudited)Revenues

$
2,056,466

$
2,144,961Income (loss) from continuing operations

$
220,777

$
(80,233
)Income (loss) before cumulative effect of change in accounting method

$
220,777

$
(5,156
)Net earnings (loss)

$
220,777

$
(2,053
)Earnings (loss) from continuing operations per common shareBasic

$
1.57

$
(.61
)Diluted

$
1.55

$
(.61
)Net earnings (loss) per common shareBasic

$
1.57

$
(.02
)Diluted

$
1.55

$
(.02
)




66

---



Working capital acquired

$
745Long term assets and liabilities


1,049Non-compete agreements (weighted average life of 4 years)


13,200Customer relationships (weighted average life of 7 years)


24,800Goodwill


6,594Total purchase price

$
46,388




67

---



68

---



69

---



Year Ended
December 31, 2000(unaudited)Revenues

$
2,028,412Loss from continuing operations

$
(64,305
)Net loss

$
(16,358
)Loss per common share from continuing operations:Basic

$
(.50
)Diluted

$
(.50
)Net loss per common share:Basic

$
(.13
)Diluted

$
(.13
)


6.    Significant Events and Transactions



70

---



71

---



Severance

Facilities

TotalEstimated cost of 2001 workforce reduction

$
19,945

$
8,245

$
28,190Amounts paid in 2001


(3,055
)

(513
)

(3,568
)Remaining liability at December 31, 2001


16,890


7,732


24,622Estimated cost of 2002 workforce reduction


15,791





15,791Amounts paid in 2002


(17,520
)

(2,672
)

(20,192
)Revisions of estimated cost of 2001 workforce reduction


(2,365
)

(3,889
)

(6,254
)Remaining liability at December 31, 2002

$
12,796

$
1,171

$
13,967




72

---



7.    Derivatives



73

---



74

---



SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

---

7.    Derivatives (Continued)



December 31,2002

2001Foreign currency forwards

$
7,019

$
356Hotels.com warrants


2,213


1,669Interest rate swaps


21,397


2,874Total

$
30,629

$
4,899




8.    Certain Transactions with AMR and American



75

---



76

---



9.    Debt



10.  Commitments and Contingencies



77

---



78

---



2003

$
28,0002004


29,0002005


29,000$
86,000




|                                                  |  | Payments Due by Period
For the Years Ended December 31, |        
|------------------------------------------------- |  | ------------------------------------------------------- | -------
|
|
|Notes payable (Note 9)                            |  | $                                                       |       
|Lease obligations                                 |  |                                                         | 28,241 
|Amounts receivable under non-cancelable subleases |  |                                                         | (5,880 
|Other long-term obligations(1)                    |  |                                                         | 242,289
|                                                  |  |                                                         |        
|Total contractual cash obligations                |  | $                                                       | 264,650
|                                                  |  |                                                         |        

---





79

---



11.  Employee Benefit Plans



80

---



Pension Benefits

Other Benefits2002

2001

2002

2001Change in benefit obligation:Benefit obligation at January 1

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


(7,052
)

(9,891
)

(3,213
)

(4,047
)Interest cost


(19,219
)

(18,372
)

(5,671
)

(5,457
)Actuarial losses


(46,088
)

(18,464
)

(14,667
)

(4,137
)Transfers


(4,166
)




(171
)

Divestitures





4,025





Curtailments





54,440





7,192Benefits paid


4,495


2,197


2,906


2,614Benefit obligation at December 31

$
(315,050
)
$
(243,020
)
$
(97,966
)
$
(77,150
)Change in plan assets:Fair value at January 1

$
186,245

$
152,665

$
10,949

$
10,966Actual return on plan assets


(14,257
)

3,350





982Transfers


3,481








Divestitures





(2,601
)




Employer contributions (distributions)


30,804


35,028


(10,949
)

1,615Benefits paid


(4,495
)

(2,197
)




(2,614
)Fair value at December 31

$
201,778

$
186,245

$


$
10,949Funded status of the plan (underfunded)

$
(111,884
)
$
(56,775
)
$
(97,759
)
$
(66,202
)Transfers


(1,719
)




(46
)

Unrecognized net loss


110,713


28,874


16,037


1,570Unrecognized prior service cost


652


713


2,743


3,064Minimum pension liability


(35,042
)







Accrued benefit cost

$
(37,280
)
$
(27,188
)
$
(79,025
)
$
(61,568
)




Pension Benefits

Other Benefits2002

2001

2002

2001Weighted-average assumptions:Discount rate

6.75
%
7.25
%
6.75
%
7.25
%Expected return on plan assets

9.00
%
9.50
%
N/A

9.50
%Rate of compensation increase

5.25
%
5.25
%





81

---



Pension Benefits

Other Benefits2002

2001

2000

2002

2001

2000Service cost

$
7,052

$
9,891

$
10,836

$
3,213

$
4,047

$
4,369Interest cost


19,219


18,372


16,974


5,670


5,457


4,764Expected return on plan assets


(20,848
)

(16,376
)

(13,025
)




(1,003
)

(1,093
)Amortization of transition asset


(24
)

7


9


18





Amortization of prior service cost


61


57


53


321


410


248Amortization of net loss (gain)


332


1,045


74


206


156


(475
)Net periodic benefit cost


5,792


12,996


14,921


9,428


9,067


7,813Settlement gain

















(1,945
)Curtailment gains





(69
)







(5,491
)

Total net periodic benefit cost

$
5,792

$
12,927

$
14,921

$
9,428

$
3,576

$
5,868




82

---



SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

---

12.    Income Taxes

The provision (benefit) for income taxes from continuing operations is as follows (in thousands):

Year Ended December 31,2002

2001

2000Current portion:Federal

$
56,045

$
66,547

$
63,966State


2,072


3,306


1,041Foreign


13,603


8,984


10,611Total current


71,720


78,837


75,618Deferred portion:Federal


42,579


720


9,198State


10,625


1,406


8,667Total deferred


53,204


2,126


17,865Total provision for income taxes

$
124,924

$
80,963

$
93,483




Year Ended December 31,2002

2001

2000Income tax provision at statutory federal income tax rate

$
118,674

$
11,718

$
66,352State income taxes, net of federal tax benefit


8,253


3,063


4,194Non-deductible goodwill amortization





69,970


28,278Other, net


(2,003
)

(3,788
)

(5,341
)Total provision for income taxes

$
124,924

$
80,963

$
93,483


83

---



December 31,2002

2001Deferred tax assets:Accrued expenses

$
50,982

$
79,321Employee benefits other than pensions


30,825


25,295Deferred revenue


2,139


3,007Pension obligations


7,139


9,974Net operating loss carryforwards


35,426


60,488US Airways options


40,770


64,689Total deferred tax assets


167,281


242,774Deferred tax liabilities:Foreign operations


(4,471
)

(2,065
)Depreciation and amortization


(28,981
)

(26,929
)Amortization of computer software and intangible assets


(73,005
)

(58,675
)Other


(58,851
)

(41,737
)Total deferred tax liabilities


(165,308
)

(129,406
)Valuation allowance





(47,787
)Net deferred tax asset

$
1,973

$
65,581Current deferred income tax asset

$
15,728

$
45,970Noncurrent deferred income tax asset (liability)


(13,755
)

19,611Net deferred tax asset

$
1,973

$
65,581




84

---



13.    Capital Stock



85

---



14.    Options and Other Stock-Based Awards



Year Ended December 31,2002

2001

2000Outstanding at January 1

447,246

841,219

192,410Granted

25,000

13,000

715,957Issued

(118,423
)
(342,785
)
(67,148
)Canceled

(11,604
)
(64,188
)
Outstanding at December 31

342,219

447,246

841,219




86

---



Year Ended December 31,2002

2001

2000Outstanding at January 1

292,509

466,147

479,069Granted





282,361Awards settled in cash

(133,201
)
(153,405
)
(194,957
)Canceled

(14,184
)
(20,233
)
(100,326
)Outstanding at December 31

145,124

292,509

466,147




|                                               |  | Year Ended December 31,
|---------------------------------------------- |  | -----------------------
|
|
|Outstanding at January 1                       |  | 9,693,103              
|Granted                                        |  | 4,180,904              
|Exercised                                      |  | (1,332,330             
|Canceled                                       |  | (1,787,717             
|Converted Travelocity.com options              |  | 3,645,221              
|                                               |  |                        
|Outstanding at December 31                     |  | 14,399,181             
|                                               |  |                        
|Exercisable options outstanding at December 31 |  | 5,094,143              
|                                               |  |                        



87

---



|                   |  | Options Outstanding |  | Options Exercisable
|------------------ |  | ------------------- |  | -------------------
|
|$  0.16 - $  15.99 |  | 241,572             |  | 6.69               
|$16.00 - $  25.99  |  | 1,592,610           |  | 6.96               
|$26.00 - $  35.99  |  | 2,042,440           |  | 6.92               
|$36.00 - $  48.99  |  | 8,831,724           |  | 8.37               
|$49.00 - $  60.99  |  | 1,448,283           |  | 7.26               
|$61.00 - $105.06   |  | 242,552             |  | 7.00               
|                   |  |                     |  |                    
|Total              |  | 14,399,181          |  | 7.85               
|                   |  |                     |  |                    



88

---



15.    Segment Reporting



89

---



90

---



Year Ended December 31,2002

2001

2000Revenues from external customers:Sabre Travel Network

$
1,555,354

$
1,655,155

$
1,600,538Travelocity


233,236


233,611


144,261GetThere


49,611


42,337


11,991Sabre Airline Solutions


205,289


195,817


177,871Total external revenues

$
2,043,490

$
2,126,920

$
1,934,661Intersegment revenues:Sabre Travel Network

$
26,508

$
24,811

$
16,249Travelocity


80,051


68,159


48,409GetThere


1,224


154


Sabre Airline Solutions





2,852


3,046Total intersegment revenues

$
107,783

$
95,976

$
67,704Equity in net income of equity method investees:Sabre Travel Network

$
17,943

$
18,041

$
20,849Travelocity


(4,967
)




Total equity in net income of equity method investees

$
12,976

$
18,041

$
20,849Total consolidated revenues:Sabre Travel Network

$
1,599,805

$
1,698,007

$
1,637,636Travelocity


308,320


301,770


192,670GetThere


50,835


42,491


11,991Sabre Airline Solutions


205,289


198,669


180,917Elimination of intersegment revenues


(107,783
)

(95,976
)

(67,704
)Total consolidated revenues

$
2,056,466

$
2,144,961

$
1,955,510Segment operating income (loss) from continuing operations, excluding special items:Sabre Travel Network

$
428,822

$
374,051

$
416,236Travelocity


(11,821
)

10,618


(43,502
)GetThere


(25,636
)

(53,593
)

(36,705
)Sabre Airline Solutions


20,924


(1,145
)

(25,918
)Net corporate allocations


1,785


(15,974
)

(1,894
)Total segment operating income from continuing operations, excluding special items

$
414,074

$
313,957

$
308,217


91

---



Year Ended December 31,2002

2001

2000Sabre Travel Network:Goodwill and other intangibles amortization

$
15,852

$
19,136

$
4,207Write-off of software which will not be utilized





5,975


Stock compensation


414


1,272


527Severance expense


3,771


11,613


4,055Total Sabre Travel Network


20,037


37,996


8,789Travelocity:Goodwill and other intangibles amortization


9,823


85,060


67,996Stock compensation


23,725


1,662


2,556Severance expenses


313





Tender offer expenses


7,111





Total Travelocity


40,972


86,722


70,552GetThere:Goodwill and other intangibles amortization


26,011


173,326


37,216Stock compensation


2,750


6,660


1,665Severance and integration expense


(396
)

7,347


549Total GetThere


28,365


187,333


39,430Sabre Airline Solutions:Severance expenses


2,196


2,725


Write-off of software which will not be utilized








3,153Total Sabre Airline Solutions


2,196


2,725


3,153Corporate:Litigation insurance


1,350





Expenses related to Spin-off from AMR








12,548Severance expenses


3,654


7,890


963Total Corporate


5,004


7,890


13,511Total special items

$
96,574

$
322,666

$
135,435


92

---

Operating income (loss) from continuing operations including special items:Sabre Travel Network

$
408,785

$
336,055

$
407,447Travelocity


(52,793
)

(76,104
)

(114,054
)GetThere


(54,001
)

(240,926
)

(76,135
)Sabre Airline Solutions


18,728


(3,870
)

(29,071
)Unallocated corporate expenses


(3,219
)

(23,864
)

(15,405
)Total consolidated operating income (loss) from continuing operations

$
317,500

$
(8,709
)
$
172,782


December 31,2002

2001

2000Depreciation and amortization included in income from continuing operations (in thousands):Sabre Travel Network

$
46,429

$
79,202

$
110,699Travelocity


23,835


94,002


82,348GetThere


33,015


176,990


38,758Sabre Airline Solutions


8,970


32,318


22,826Unallocated depreciation and amortization


4,699


6,426


17,296Total consolidated depreciation and amortization included in income from continuing operations

$
116,948

$
388,938

$
271,927Amortization of goodwill and intangible assets included in income from continuing operations, including special items (in thousands):Sabre Travel Network

$
15,852

$
19,136

$
4,207Travelocity


9,861


85,060


67,996GetThere


26,011


173,326


37,216Sabre Airline Solutions


1,700





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

$
53,424

$
277,522

$
109,419


93

---



December 31,2002

2001

2000Segment assets (in thousands):Sabre Travel Network

$
713,905

$
523,954

$
459,483Travelocity


490,677


373,024


370,205GetThere


412,289


452,417


684,810Sabre Airline Solutions


311,255


327,484


543,907Unallocated cash, investments, corporate headquarters and other


828,405


699,138


591,949Total consolidated assets

$
2,756,531

$
2,376,017

$
2,650,354




Year Ended December 31,2002

2001

2000Capital expenditures for segment assets:Sabre Travel Network

$
23,392

$
62,348

$
78,567Travelocity


12,029


11,572


11,755GetThere


6,025


7,985


1,341Sabre Airline Solutions


16,139


70,949


81,876Unallocated capital expenditures


5,065


5,553


16,587Total capital expenditures

$
62,650

$
158,407

$
190,126




Year Ended December 31,2002

2001

2000Revenues from continuing operations:United States

$
1,248,314

1,459,075

$
1,328,708Foreign


808,152

685,886


626,802Total

$
2,056,466

2,144,961

$
1,955,510


94

---



December 31,2002

2001

2000United States

$
1,186,873

$
1,025,923

$
1,681,641Singapore (primarily investment in joint venture)


151,399


152,733


145,606Other foreign


106,616


105,123


130,139Total

$
1,444,888

$
1,283,779

$
1,957,386


16.    Quarterly Financial Information (Unaudited)



First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter2002Revenues

$
549,358

$
536,748

$
517,374

$
452,986Operating income

$
119,994

$
104,304

$
87,474

$
5,728Net earnings

$
87,387

$
67,965

$
57,921

$
871Earnings per common share:Basic

$
.66

$
.48

$
.40

$
.01Diluted

$
.64

$
.47

$
.40

$
.01


First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter2001Revenues

$
583,581

$
593,322

$
535,453

$
432,605Operating income (loss)

$
44,861

$
38,448

$
2,106

$
(94,124
)Income (loss) from continuing operations

$
413

$
5,051

$
17,290

$
(69,707
)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

$
(69,707
)Earnings (loss) per common sharebasic:Income (loss) from continuing operations

$


$
.04

$
.13

$
(.52
)Income from discontinued operations, net


.10


.17


.29


Cumulative effect of accounting change, net


.03








Net earnings (loss)

$
.13

$
.21

$
.42

$
(.52
)


95

---

Earnings (loss) per common sharediluted:Income (loss) from continuing operations

$


$
.04

$
.13

$
(.52
)Income from discontinued operations, net


.10


.16


.29


Cumulative effect of accounting change, net


.03








Net earnings (loss)

$
.13

$
.20

$
.42

$
(.52
)




17.    Supplemental Guarantor/Non-Guarantor Financial Information



96

---



97

---





SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

---

17.    Supplemental Guarantor/Non-Guarantor Financial Information (Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS  DECEMBER 31, 2002  (in thousands)

| |                                      | Sabre Holdings                             |                                            | Sabre Inc. |           | Non-
Guarantor
Subsidiaries |           | Eliminating
Entries |           | Sabre
Consolidated
| | ------------------------------------ | ------------------------------------------ | ------------------------------------------ | ---------- | --------- | --------------------------- | --------- | ------------------- | --------- | ------------------
| | Assets                               |                                            |                                            |            |           |                             |           |                     |           |                   
| | Current assets                       |                                            |                                            |            |           |                             |           |                     |           |                   
| |                                      | Cash and marketable securities             |                                            | $          |          |                             | $         | 898,958             |           | $                 
| |                                      | Accounts receivabletrade, net             |                                            |            |          |                             |           | 223,216             |           |                   
| |                                      | Intercompany accounts receivable (payable) |                                            |            | 1,532,426 |                             |           | (2,094,913          | )         |                   
| |                                      | Prepaid expenses                           |                                            |            |          |                             |           | 38,994              |           |                   
| |                                      | Deferred income taxes                      |                                            |            |          |                             |           | 15,678              |           |                   
| |                                      |                                            |                                            |            |           |                             |           |                     |           |                   
| |                                      |                                            | Total current assets                       |            |           | 1,532,426                   |           |                     | (918,067  | )                 
| | Property and equipment, net          |                                            |                                            |           |           |                             | 187,783   |                     |           | 52,289            
| | Investments in joint ventures        |                                            |                                            |           |           |                             | 11,892    |                     |           | 184,833           
| | Deferred income taxes                |                                            |                                            |           |           |                             | (38,267   | )                   |           | 38,267            
| | Goodwill and intangible assets, net  |                                            |                                            |           |           |                             | 10,605    |                     |           | 845,078           
| | Investments in subsidiaries          |                                            |                                            | 529,892    |           |                             | 1,675,167 |                     |           |                  
| | Other assets, net                    |                                            |                                            | 24,058     |           |                             | 89,060    |                     |           | 39,290            
| |                                      |                                            |                                            |            |           |                             |           |                     |           |                   
| | Total assets                         |                                            | $                                          | 2,086,376  |           | $                           | 1,018,173 |                     | $         | 1,857,041         
| |                                      |                                            |                                            |            |           |                             |           |                     |           |                   
| | Liabilities and stockholders' equity |                                            |                                            |            |           |                             |           |                     |           |                   
| | Current liabilities                  |                                            |                                            |            |           |                             |           |                     |           |                   
| |                                      | Accounts payable                           |                                            | $          | 88        |                             | $         | 163,071             |           | $                 
| |                                      | Accrued compensation and related benefits  |                                            |            |          |                             |           | 44,752              |           |                   
| |                                      | Other accrued liabilities                  |                                            |            | 8,381     |                             |           | 169,783             |           |                   
| |                                      |                                            |                                            |            |           |                             |           |                     |           |                   
| |                                      |                                            | Total current liabilities                  |            |           | 8,469                       |           |                     | 377,606   |                   
| |                                      | Deferred income taxes                      |                                            |            |          |                             |           | (13,404             | )         |                   
| |                                      | Pensions and other postretirement benefits |                                            |            |          |                             |           | 115,400             |           |                   
| |                                      | Other liabilities                          |                                            |            | 564       |                             |           | 8,679               |           |                   
| |                                      | Minority interests                         |                                            |            |          |                             |           |                    |           |                   
| |                                      | Notes payable                              |                                            |            | 435,765   |                             |           |                    |           |                   
| | Stockholders' equity                 |                                            |                                            | 1,641,578  |           |                             | 529,892   |                     |           | 1,675,167         
| |                                      |                                            |                                            |            |           |                             |           |                     |           |                   
| |                                      |                                            | Total liabilities and stockholders' equity |            | $         | 2,086,376                   |           | $                   | 1,018,173 |                   
| |                                      |                                            |                                            |            |           |                             |           |                     |           |                   

98

---

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            
| | Investments in joint ventures                            |                                            |                                            |           |           |                             | 12,353    |                     |          | 157,596           
| | Goodwill and intangible assets, net                      |                                            |                                            |           |           |                             | 9,626     |                     |          | 662,519           
| | Investments in subsidiaries                              |                                            |                                            | 372,556    |           |                             | 1,132,522 |                     |          |                  
| | Other assets, net                                        |                                            |                                            | 5,845      |           |                             | 76,545    |                     |          | 70,846            
| |                                                          |                                            |                                            |            |           |                             |           |                     |          |                   
| |                                                          |                                            | Total assets                               |            | $         | 1,452,531                   |           | $                   | 902,398  |                   
| |                                                          |                                            |                                            |            |           |                             |           |                     |          |                   
| | 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  |                   
| |                                                          |                                            |                                            |            |           |                             |           |                     |          |                   

99

---



SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

---

17.    Supplemental Guarantor/Non-Guarantor Financial Information (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME  YEAR ENDED DECEMBER 31, 2002  (in thousands)

|                                  |                          | Sabre
Holdings               |         | Sabre Inc. |         | Non-
Guarantor
Subsidiaries |          | Eliminating
Entries |         | Sabre
Consolidated |       
|--------------------------------- | ------------------------ | ---------------------------- | ------- | ---------- | ------- | --------------------------- | -------- | ------------------- | ------- | ------------------ | ------
|Revenues                          |                          | $                            |        |            | $       | 1,577,252                   |          | $                   | 943,305 |                    | $     
|Operating expenses                |                          |                              | 1,389   |            |         | 1,361,926                   |          |                     | 839,742 |                    |       
|                                  |                          |                              |         |            |         |                             |          |                     |         |                    |       
|Operating income (loss)           |                          |                              | (1,389  | )          |         | 215,326                     |          |                     | 103,563 |                    |       
|Other income (expense)            |                          |                              |         |            |         |                             |          |                     |         |                    |       
|                                  | Interest income          |                              |         | 90,440     |         |                             | 22,064   |                     |         | 22,219             |       
|                                  | Interest expense         |                              |         | (19,047    | )       |                             | (108,449 | )                   |         | (2,674             | )     
|                                  | Income from subsidiaries |                              |         | 168,029    |         |                             | 85,151   |                     |         |                   |       
|                                  | Other, net               |                              |         |           |         |                             | 19,134   |                     |         | (2,333             | )     
|                                  |                          |                              |         |            |         |                             |          |                     |         |                    |       
|                                  |                          | Total other income (expense) |         |            | 239,422 |                             |          | 17,900              |         |                    | 17,212
|Minority interests                |                          |                              |        |            |         |                            |          |                     | 214     |                    |       
|                                  |                          |                              |         |            |         |                             |          |                     |         |                    |       
|Income (loss) before income taxes |                          |                              | 238,033 |            |         | 233,226                     |          |                     | 120,989 |                    |       
|Provision for income taxes        |                          |                              | 23,889  |            |         | 65,197                      |          |                     | 35,838  |                    |       
|                                  |                          |                              |         |            |         |                             |          |                     |         |                    |       
|Net income (loss)                 |                          | $                            | 214,144 |            | $       | 168,029                     |          | $                   | 85,151  |                    | $     
|                                  |                          |                              |         |            |         |                             |          |                     |         |                    |       

100

---

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

| |                                                                                    | Sabre Holdings           |                              | Sabre Inc. |        | Non-
Guarantor Subsidiaries |           | Eliminating Entries |          | Sabre Consolidated |       
| | ---------------------------------------------------------------------------------- | ------------------------ | ---------------------------- | ---------- | ------ | --------------------------- | --------- | ------------------- | -------- | ------------------ | ------
| | Revenues                                                                           |                          | $                            |           |        | $                           | 1,660,384 |                     | $        | 885,899            |       
| | Operating expenses                                                                 |                          |                              | 1,843      |        |                             | 1,607,671 |                     |          | 946,666            |       
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       
| | 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            | )     
| |                                                                                    |                          |                              |            |        |                             |           |                     |          |                    |       

101

---

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

| |                                                              | Sabre Holdings           |                              | Sabre Inc. |         | Non-
Guarantor Subsidiaries |           | Eliminating Entries |         | Sabre Consolidated |       
| | ------------------------------------------------------------ | ------------------------ | ---------------------------- | ---------- | ------- | --------------------------- | --------- | ------------------- | ------- | ------------------ | ------
| | Revenues                                                     |                          | $                            |           |         | $                           | 1,643,077 |                     | $       | 594,952            |       
| | Operating expenses                                           |                          |                              | 1,523      |         |                             | 1,481,622 |                     |         | 587,388            |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       
| | 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             |       
| |                                                              |                          |                              |            |         |                             |           |                     |         |                    |       

102

---



SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

---

17.    Supplemental Guarantor/Non-Guarantor Financial Information (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  YEAR ENDED DECEMBER 31, 2002  (in thousands)

| |                                                  | Sabre
Holdings                                                                                   |                                              | Sabre Inc. |          | Non-
Guarantor
Subsidiaries |          | Eliminating
Entries |         | Sabre
Consolidated |         
| | ------------------------------------------------ | ------------------------------------------------------------------------------------------------ | -------------------------------------------- | ---------- | -------- | --------------------------- | -------- | ------------------- | ------- | ------------------ | --------
| | Operating Activities                             |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Net earnings                                                                                     |                                              | $          | 214,144  |                             | $        | 168,029             |         | $                  | 85,151  
| |                                                  | Adjustments to reconcile net earnings to cash provided by operating activities:                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  |                                                                                                  | Depreciation and amortization                |            |          |                            |          |                     | 42,136  |                    |         
| |                                                  |                                                                                                  | Stock compensation                           |            |          |                            |          |                     |        |                    |         
| |                                                  |                                                                                                  | Deferred income taxes                        |            |          |                            |          |                     | 88,375  |                    |         
| |                                                  |                                                                                                  | Tax benefit from exercise of stock options   |            |          | 9,687                       |          |                     |        |                    |         
| |                                                  |                                                                                                  | Minority interests                           |            |          |                            |          |                     |        |                    |         
| |                                                  |                                                                                                  | (Income) loss from subsidiaries              |            |          | (168,029                    | )        |                     | (85,151 | )                  |         
| |                                                  |                                                                                                  | Gain on sale of former headquarters building |            |          |                            |          |                     | (18,308 | )                  |         
| |                                                  |                                                                                                  | Other                                        |            |          | 11,828                      |          |                     | (12,866 | )                  |         
| |                                                  |                                                                                                  | Changes in operating assets and liabilities  |            |          | (453,859                    | )        |                     | 576,763 |                    |         
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Cash provided by (used for) operating activities                                                 |                                              |            | (386,229 | )                           |          | 758,978             |         |                    | (73,354 
| | Investing Activities                             |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Additions to property and equipment                                                              |                                              |            |         |                             |          | (40,654             | )       |                    | (21,996 
| |                                                  | Business combinations, net of cash acquired                                                      |                                              |            |         |                             |          | (2,963              | )       |                    | (495,545
| |                                                  | Proceeds from exercise of Travelocity.com stock options                                          |                                              |            |         |                             |          |                    |         |                    |        
| |                                                  | Proceeds from sale of former headquarters building                                               |                                              |            |         |                             |          | 80,000              |         |                    |        
| |                                                  | Purchase of data center facility from lessor                                                     |                                              |            |         |                             |          | (92,092             | )       |                    |        
| |                                                  | Proceeds from sale of data center facility                                                       |                                              |            |         |                             |          | 68,464              |         |                    |        
| |                                                  | Proceeds from sale of minority interest in Sabre Pacific                                         |                                              |            |         |                             |          |                    |         |                    | 23,466  
| |                                                  | Purchases of marketable securities                                                               |                                              |            |         |                             |          | (4,373,678          | )       |                    | (321,629
| |                                                  | Sales of marketable securities                                                                   |                                              |            |         |                             |          | 4,018,609           |         |                    | 434,453 
| |                                                  | Proceeds from sale of investments                                                                |                                              |            |         |                             |          |                    |         |                    | 8,807   
| |                                                  | Investments in subsidiaries, net                                                                 |                                              |            | (10,945  | )                           |          | (457,494            | )       |                    |        
| |                                                  | Other investing activities, net                                                                  |                                              |            |         |                             |          | 30,461              |         |                    | (26,107 
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) investing activities |                                                                                                  |                                              | (10,945    | )        |                             | (769,347 | )                   |         | (398,551           | )       
| | Financing Activities                             |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Contributions from (repayments to) affiliates                                                    |                                              |            |         |                             |          | 10,945              |         |                    | 457,494 
| |                                                  | Proceeds from issuance of common stock                                                           |                                              |            | 399,763  |                             |          |                    |         |                    |        
| |                                                  | Proceeds from exercise of stock options and issuance of stock under employee stock purchase plan |                                              |            | 36,609   |                             |          |                    |         |                    | 33,658  
| |                                                  | Purchase of treasury stock                                                                       |                                              |            | (56,610  | )                           |          |                    |         |                    |        
| |                                                  | Other financing activities, net                                                                  |                                              |            | 17,412   |                             |          |                    |         |                    | (17,502 
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) financing activities |                                                                                                  |                                              | 397,174    |          |                             | 10,945   |                     |         | 473,650            |         
| |                                                  | Increase in cash                                                                                 |                                              |            |         |                             |          | 576                 |         |                    | 1,745   
| |                                                  | Cash at beginning of the period                                                                  |                                              |            |         |                             |          | 10,046              |         |                    | 8,809   
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Cash at end of the period                                                                        |                                              | $          |         |                             | $        | 10,622              |         | $                  | 10,554  
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         

103

---

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  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 |                    |         
| |                                                  |                                                                                                  | Stock compensation                           |            |          |                            |          |                     |        |                    |         
| |                                                  |                                                                                                  | Deferred income taxes                        |            |          |                            |          |                     | (74,892 | )                  |         
| |                                                  |                                                                                                  | Tax benefit from exercise of stock options   |            |          | 31,126                      |          |                     |        |                    |         
| |                                                  |                                                                                                  | Minority interests                           |            |          |                            |          |                     |        |                    |         
| |                                                  |                                                                                                  | (Income) loss from subsidiaries              |            |          | (14,214                     | )        |                     | 74,844  |                    |         
| |                                                  |                                                                                                  | Gain on sale of discontinued operations, net |            |          |                            |          |                     | (38,208 | )                  |         
| |                                                  |                                                                                                  | Gain on sale of France Telecom shares        |            |          |                            |          |                     | (47,303 | )                  |         
| |                                                  |                                                                                                  | Cumulative effect of accounting change, net  |            |          |                            |          |                     |        |                    |         
| |                                                  |                                                                                                  | Loss on disposal of equipment                |            |          |                            |          |                     | 8,132   |                    |         
| |                                                  |                                                                                                  | Other                                        |            |          |                            |          |                     | 9,858   |                    |         
| |                                                  |                                                                                                  | Changes in operating assets and liabilities  |            |          | (504,030                    | )        |                     | 681,994 |                    |         
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Cash provided by (used for) operating activities                                                 |                                              |            | (455,891 | )                           |          | 740,501             |         |                    | 105,627 
| | Investing Activities                             |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Additions to property and equipment                                                              |                                              |            |         |                             |          | (121,196            | )       |                    | (37,211 
| |                                                  | Business combinations, net of cash acquired                                                      |                                              |            |         |                             |          | (9,387              | )       |                    | (45,956 
| |                                                  | Proceeds from exercise of Travelocity.com stock options                                          |                                              |            |         |                             |          |                    |         |                    |        
| |                                                  | Proceeds from sale of discontinued operations                                                    |                                              |            |         |                             |          | 607,525             |         |                    | 53,238  
| |                                                  | Purchases of marketable securities                                                               |                                              |            |         |                             |          | (2,883,251          | )       |                    | (456,974
| |                                                  | Sales of marketable securities                                                                   |                                              |            |         |                             |          | 2,466,243           |         |                    | 367,671 
| |                                                  | Proceeds from sale of investments                                                                |                                              |            |         |                             |          | 47,303              |         |                    | 38,950  
| |                                                  | Purchases of Travelocity.com common stock                                                        |                                              |            |         |                             |          |                    |         |                    | (17,908 
| |                                                  | Investments in subsidiaries, net                                                                 |                                              |            | (41,699  | )                           |          | 292                 |         |                    |        
| |                                                  | Dividends received                                                                               |                                              |            |         |                             |          | 13,758              |         |                    |        
| |                                                  | Other investing activities, net                                                                  |                                              |            |         |                             |          | (36,023             | )       |                    | (3,919  
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) investing activities |                                                                                                  |                                              | (41,699    | )        |                             | 85,264   |                     |         | (102,109           | )       
| | Financing Activities                             |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Contributions from (repayments to) affiliates                                                    |                                              |            |         |                             |          | 41,699              |         |                    | (292    
| |                                                  | Proceeds from exercise of stock options and issuance of stock under employee stock purchase plan |                                              |            | 109,262  |                             |          |                    |         |                    | 13,145  
| |                                                  | Purchase of treasury stock                                                                       |                                              |            | (9,064   | )                           |          |                    |         |                    |        
| |                                                  | Dividends paid                                                                                   |                                              |            |         |                             |          |                    |         |                    | (13,758 
| |                                                  | Issuance of notes payable                                                                        |                                              |            | 397,392  |                             |          |                    |         |                    |        
| |                                                  | Repayments of notes payable                                                                      |                                              |            |         |                             |          | (859,000            | )       |                    |        
| |                                                  | Other financing activities, net                                                                  |                                              |            |         |                             |          |                    |         |                    |        
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| | Cash provided by (used for) financing activities |                                                                                                  |                                              | 497,590    |          |                             | (817,301 | )                   |         | (905               | )       
| |                                                  | Increase in cash                                                                                 |                                              |            |         |                             |          | 8,464               |         |                    | 2,613   
| |                                                  | Cash at beginning of the period                                                                  |                                              |            |         |                             |          | 1,582               |         |                    | 6,196   
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         
| |                                                  | Cash at end of the period                                                                        |                                              | $          |         |                             | $        | 10,046              |         | $                  | 8,809   
| |                                                  |                                                                                                  |                                              |            |          |                             |          |                     |         |                    |         

104

---

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  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  |                    |         
| |                                                  |                                                                                                  | Deferred income taxes                       |            |          |                            |          |                     | 30,234   |                    |         
| |                                                  |                                                                                                  | Minority interests                          |            |          |                            |          |                     |         |                    |         
| |                                                  |                                                                                                  | Income from subsidiaries                    |            |          | (126,259                    | )        |                     | (15,812  | )                  |         
| |                                                  |                                                                                                  | Other                                       |            |          |                            |          |                     | 16,784   |                    |         
| |                                                  |                                                                                                  | Changes in operating assets and liabilities |            |          | 243,836                     |          |                     | (258,498 | )                  |         
| |                                                  |                                                                                                  |                                             |            |          |                             |          |                     |          |                    |         
| |                                                  | Cash provided by (used for) operating activities                                                 |                                             |            | 261,629  |                             |          | 78,425              |          |                    | (29,282 
| | Investing Activities                             |                                                                                                  |                                             |            |          |                             |          |                     |          |                    |         
| |                                                  | Additions to property and equipment                                                              |                                             |            |         |                             |          | (154,523            | )        |                    | (35,603 
| |                                                  | Business combinations, net of cash acquired                                                      |                                             |            |         |                             |          |                    |          |                    | (711,383
| |                                                  | Proceeds from exercise of Travelocity.com stock options                                          |                                             |            |         |                             |          |                    |          |                    |        
| |                                                  | 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               |          |                    |        
| |                                                  | Other investing activities, net                                                                  |                                             |            |         |                             |          | (40,564             | )        |                    | 21,381  
| |                                                  |                                                                                                  |                                             |            |          |                             |          |                     |          |                    |         
| | Cash provided by (used for) investing activities |                                                                                                  |                                             | 428,338    |          |                             | (506,268 | )                   |          | (767,950           | )       
| | Financing Activities                             |                                                                                                  |                                             |            |          |                             |          |                     |          |                    |         
| |                                                  | Contributions from (repayments to) affiliates                                                    |                                             |            |         |                             |          | (53                 | )        |                    | 799,207 
| |                                                  | Proceeds from exercise of stock options and issuance of stock under employee stock purchase plan |                                             |            | 18,198   |                             |          |                    |          |                    | 3,786   
| |                                                  | 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  |                     |          | 801,232            |         
| |                                                  | 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   
| |                                                  |                                                                                                  |                                             |            |          |                             |          |                     |          |                    |         

105

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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



ITEM 14.    CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.Within 90 days prior to the filing of this
report, our principal executive officer ("CEO") and principal financial officer ("CFO") evaluated the effectiveness of our disclosure controls and procedures. Based on these evaluations, our CEO and
CFO believe (i) that our disclosure controls and procedures have been designed to ensure that information required to be disclosed by us in this Report is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure; and (ii) that our disclosure controls and procedures are functioning as designed.

Changes in internal controls.There have been no significant changes in our internal controls or in
other factors that could significantly affect our disclosure controls and procedures subsequent to the evaluation referred to above, nor have there been any corrective actions with regard to
significant deficiencies or material weaknesses.

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



106

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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)(21)                                                                                        
|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          |  | Syndicated Lease Facility with Various Associated Documents, dated September 14, 1999 as specified below:(4)                                                                                                      

107

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|      |  | 10.12(a)                                                           |  | Participation Agreement dated as of September 14, 1999 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee and Bank of America, N.A.(4)                                                                                                                                                                                                                                  
|----- |  | ------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  | 10.12(b)                                                           |  | Lease Agreement dated as of September 14, 1999 between Sabre Inc., and First Security Bank, National Association, as the Owner Trustee.(4)                                                                                                                                                                                                                                                             
|      |  | 10.12(c)                                                           |  | Agency Agreement dated as of September 14, 1999 between Sabre Inc., and First Security Bank, National Association as the Owner Trustee.(4)                                                                                                                                                                                                                                                             
|      |  | 10.12(d)                                                           |  | Credit Agreement dated as of September 14, 1999 among First Security Bank, National Association, as the Owner Trustee, as the Borrower, and Bank of America, N.A., as the Agent.(4)                                                                                                                                                                                                                    
|      |  | 10.12(e)                                                           |  | Security Agreement dated as of September 14, 1999 between First Security Bank, National Association, as the Owner Trustee under the TSG Trust 1999-1, as the Borrower, and Bank of America, N.A., as the Agent, and accepted
and agreed to by Sabre Inc.(4)                                                                                                                                            
|      |  | 10.12(f)                                                           |  | Trust Agreement dated as of September 14, 1999 between The Several Holders from Time to Time Parties thereto, as the Holders, and First Security Bank, National Association, in its individual capacity and as the Owner
Trustee.(4)                                                                                                                                                                   
|      |  | 10.12(g)                                                           |  | First Amendment and Restatement of Operative Agreements dated as of December 15, 1999 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending
institutions as the Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)
|      |  | 10.12(h)                                                           |  | Second Amendment to Certain Operative Agreements dated as of October 4, 2000 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending institutions as the
Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)         
|      |  | 10.12(i)                                                           |  | Third Amendment to Certain Operative Agreements dated as of March 11, 2002 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending institutions as the
Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)           
|      |  | 10.12(j)                                                           |  | Fourth Amendment to Certain Operative Agreements dated as of June 11, 2002 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending institutions as the Holders,
 the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)          
|10.13 |  | Reserved.                                                         
|10.14 |  | The Sabre Group Holdings, Inc. Directors Stock Incentive Plan.(11)

108

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|10.15 |  | The Sabre Group Holdings, Inc. Employee Stock Purchase Plan.(12)                                                                                               
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.16 |  | The Sabre Group Holdings, Inc. Deferred Compensation Plan.(16)                                                                                                 
|10.17 |  | The Sabre Group Holdings, Inc. Amended and Restated 1996 Long-Term Incentive Plan, dated January 19, 1999, as amended November 13, 2000.(29)                   
|10.18 |  | Supplemental Agreement Regarding Workers' Compensation dated as of March 15, 2000 between Sabre Inc. and American Airlines, Inc.(10)(21)                       
|10.19 |  | Supplemental Executive Retirement Plan, as Amended (Restoration).(22)                                                                                          
|10.20 |  | Supplemental Executive Retirement Plan, as Amended (Officer).(23)                                                                                              
|10.21 |  | Supplemental Executive Retirement Plan, as Amended (Grandfathered).(24)                                                                                        
|10.22 |  | Form of Executive Termination Benefits Agreement.(25)                                                                                                          
|10.23 |  | Forms of Addenda to Executive Termination Benefits Agreement with respect to William J. Hannigan, Jeffery M. Jackson and Eric J. Speck.(26)                    
|10.24 |  | Employment Agreement between Sabre Holdings Corporation, Sabre Inc. and William J. Hannigan.(29)                                                               
|10.25 |  | Employment Agreement Addendum between Sabre Inc. and William J. Hannigan.(29)                                                                                  
|10.26 |  | Employment Agreement Addendum between Sabre Inc. and William J. Hannigan.(4)                                                                                   
|10.27 |  | Option Issuance Agreement, dated January 1, 1998 between Registrant and US Airways, Inc.(15)                                                                   
|10.28 |  | 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.(18)
|10.29 |  | Agreement on Spin-off Taxes dated March 15, 2000 between AMR Corporation and Sabre Holdings Corporation.(10)(21)                                               
|10.30 |  | Credit Agreement, dated as of February 4, 2000, among Sabre Inc., Bank of America, N.A., and the other banks party thereto.(27)                                
|10.31 |  | Amendment No. 1 to the Credit Agreement, dated as of October 4, 2000, among Sabre Inc., Bank of America, N.A., and the other banks party thereto.(29)          
|10.32 |  | 2000 Stock Option Plan effective March 2000.(30)                                                                                                               
|10.33 |  | 2000 Stock Option Plan Amended and Restated effective November 13, 2000.(4)                                                                                    
|10.34 |  | Form of Addenda to Executive Termination Benefits with respect to David A. Schwarte.(4)                                                                        
|10.35 |  | Form of Addenda to Executive Termination Benefits with respect to M. Sam Gilliland.(4)                                                                         
|12.1  |  | Computation of ratio of earnings to fixed charges for the year ended December 31, 2002.(4)                                                                     
|21.1  |  | Subsidiaries of Registrant.(4)                                                                                                                                 
|23.1  |  | Consent of Ernst & Young LLP.(4)                                                                                                                               

---

109

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110

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Pursuant
to General Instruction B.2. of Form 8-K, the Forms 8-K listed below contained only Item 9 disclosures, except for the December 23, 2002 Form 8-K,
a portion of which was furnished under Item 9 as noted above and below, and consequently such Forms 8-K are not incorporated into this Form 10-K or into any other
form or report filed with the Commission into which this Form 10-K would be incorporated by reference.

111

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SABRE HOLDINGS CORPORATION    INDEX TO FINANCIAL STATEMENTS AND SCHEDULES  COVERED BY REPORT OF INDEPENDENT AUDITORS    [Item 15(a)]

Financial Statements

|                                                                                                     |  | Page
|---------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Auditors                                                                       |  | 42  
|Consolidated Balance Sheets at December 31, 2002 and 2001                                            |  | 43  
|Consolidated Statements of Income for the Years Ended December 31, 2002, 2001 and 2000               |  | 44  
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000           |  | 45  
|Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2002, 2001 and 2000 |  | 46  
|Notes to Consolidated Financial Statements                                                           |  | 47  
|Schedule IIValuation and Qualifying Accounts for the Years Ended December 31, 2002, 2001 and 2000   |  | 113 



112

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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, 2002        (in
thousands)

|                             |                                      |  |   | Additions |  |   |        |    
|---------------------------- | ------------------------------------ |  | - | --------- |  | - | ------ | ---
|
|Year Ended December 31, 2002 |                                      |  |   |           |  |   |        |    
|                             | Allowance for uncollectible accounts |  | $ | 41,317    |  | $ | 12,812 |    
|                             | Booking fee cancellation reserve     |  |   | 21,017    |  |   |       |    
|                             | Associate reserves                   |  |   | 2,189     |  |   | 10,831 | (3)
|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  |    

---



113

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Signatures



| |  | SABRE HOLDINGS CORPORATION                                                                                                                          
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | /s/WILLIAM J. HANNIGANWilliam J. Hannigan Chairman 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: March 14, 2003                                                                                                                                



|                                                |  |                                      
|----------------------------------------------- |  | -------------------------------------
|                                                |  |                                      
|/s/ROYCE S. CALDWELLRoyce S. Caldwell           |  | /s/BOB L. MARTINBob L. Martin        
|/s/PAUL C. ELY, JR.Paul C. Ely, Jr.             |  | /s/PAMELA B. STROBELPamela B. Strobel
|/s/WILLIAM J. HANNIGANWilliam J. Hannigan       |  | /s/MARY ALICE TAYLORMary Alice Taylor
|/s/RICHARD G. LINDNERRichard G. Lindner         |  | /s/RICHARD L. THOMASRichard L. Thomas
|/s/GLENN W. MARSCHEL, JR.Glenn W. Marschel, Jr. |  |                                      
|Date: March 14, 2003                            |  |                                      

114

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I, William J. Hannigan, certify that:



|Date: March 14, 2003 |  |                                                                                                       
|-------------------- |  | ------------------------------------------------------------------------------------------------------
|                     |  | /s/WILLIAM J. HANNIGANWilliam J. Hannigan Chairman of the Board,
President and Chief Executive Officer

115

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I,
Jeffery M. Jackson, certify that:



|Date: March 14, 2003 |  |                                                                                             
|-------------------- |  | --------------------------------------------------------------------------------------------
|                     |  | /s/JEFFERY M. JACKSONJeffery M. Jackson Executive Vice President and
Chief Financial Officer

116

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Index to Exhibits

|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)(21)                                                                                        
|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          |  | Syndicated Lease Facility with Various Associated Documents, dated September 14, 1999 as specified below:(4)                                                                                                      

---

|      |  | 10.12(a)                                                                                                                                     |  | Participation Agreement dated as of September 14, 1999 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee and Bank of America, N.A.(4)                                                                                                                                                                                                                                  
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  | 10.12(b)                                                                                                                                     |  | Lease Agreement dated as of September 14, 1999 between Sabre Inc., and First Security Bank, National Association, as the Owner Trustee.(4)                                                                                                                                                                                                                                                             
|      |  | 10.12(c)                                                                                                                                     |  | Agency Agreement dated as of September 14, 1999 between Sabre Inc., and First Security Bank, National Association as the Owner Trustee.(4)                                                                                                                                                                                                                                                             
|      |  | 10.12(d)                                                                                                                                     |  | Credit Agreement dated as of September 14, 1999 among First Security Bank, National Association, as the Owner Trustee, as the Borrower, and Bank of America, N.A., as the Agent.(4)                                                                                                                                                                                                                    
|      |  | 10.12(e)                                                                                                                                     |  | Security Agreement dated as of September 14, 1999 between First Security Bank, National Association, as the Owner Trustee under the TSG Trust 1999-1, as the Borrower, and Bank of America, N.A., as the Agent, and accepted
and agreed to by Sabre Inc.(4)                                                                                                                                            
|      |  | 10.12(f)                                                                                                                                     |  | Trust Agreement dated as of September 14, 1999 between The Several Holders from Time to Time Parties thereto, as the Holders, and First Security Bank, National Association, in its individual capacity and as the Owner
Trustee.(4)                                                                                                                                                                   
|      |  | 10.12(g)                                                                                                                                     |  | First Amendment and Restatement of Operative Agreements dated as of December 15, 1999 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending
institutions as the Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)
|      |  | 10.12(h)                                                                                                                                     |  | Second Amendment to Certain Operative Agreements dated as of October 4, 2000 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending institutions as the
Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)         
|      |  | 10.12(i)                                                                                                                                     |  | Third Amendment to Certain Operative Agreements dated as of March 11, 2002 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending institutions as the
Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)           
|      |  | 10.12(j)                                                                                                                                     |  | Fourth Amendment to Certain Operative Agreements dated as of June 11, 2002 among Sabre Inc., First Security Bank, National Association, as the Owner Trustee, the Various Banks and other lending institutions as the
Holders, the Various Banks and other lending institutions, as the Lenders, and Bank of America, N.A., a national banking association, as the Agent for the Lenders.(4)           
|10.13 |  | Reserved.                                                                                                                                   
|10.14 |  | The Sabre Group Holdings, Inc. Directors Stock Incentive Plan.(11)                                                                          
|10.15 |  | The Sabre Group Holdings, Inc. Employee Stock Purchase Plan.(12)                                                                            
|10.16 |  | The Sabre Group Holdings, Inc. Deferred Compensation Plan.(16)                                                                              
|10.17 |  | The Sabre Group Holdings, Inc. Amended and Restated 1996 Long-Term Incentive Plan, dated January 19, 1999, as amended November 13, 2000.(29)

---

|10.18 |  | Supplemental Agreement Regarding Workers' Compensation dated as of March 15, 2000 between Sabre Inc. and American Airlines, Inc.(10)(21)                       
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19 |  | Supplemental Executive Retirement Plan, as Amended (Restoration).(22)                                                                                          
|10.20 |  | Supplemental Executive Retirement Plan, as Amended (Officer).(23)                                                                                              
|10.21 |  | Supplemental Executive Retirement Plan, as Amended (Grandfathered).(24)                                                                                        
|10.22 |  | Form of Executive Termination Benefits Agreement.(25)                                                                                                          
|10.23 |  | Forms of Addenda to Executive Termination Benefits Agreement with respect to William J. Hannigan, Jeffery M. Jackson and Eric J. Speck.(26)                    
|10.24 |  | Employment Agreement between Sabre Holdings Corporation, Sabre Inc. and William J. Hannigan.(29)                                                               
|10.25 |  | Employment Agreement Addendum between Sabre Inc. and William J. Hannigan.(29)                                                                                  
|10.26 |  | Employment Agreement Addendum between Sabre Inc. and William J. Hannigan.(4)                                                                                   
|10.27 |  | Option Issuance Agreement, dated January 1, 1998 between Registrant and US Airways, Inc.(15)                                                                   
|10.28 |  | 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.(18)
|10.29 |  | Agreement on Spin-off Taxes dated March 15, 2000 between AMR Corporation and Sabre Holdings Corporation.(10)(21)                                               
|10.30 |  | Credit Agreement, dated as of February 4, 2000, among Sabre Inc., Bank of America, N.A., and the other banks party thereto.(27)                                
|10.31 |  | Amendment No. 1 to the Credit Agreement, dated as of October 4, 2000, among Sabre Inc., Bank of America, N.A., and the other banks party thereto.(29)          
|10.32 |  | 2000 Stock Option Plan effective March 2000.(30)                                                                                                               
|10.33 |  | 2000 Stock Option Plan Amended and Restated effective November 13, 2000.(4)                                                                                    
|10.34 |  | Form of Addenda to Executive Termination Benefits with respect to David A. Schwarte.(4)                                                                        
|10.35 |  | Form of Addenda to Executive Termination Benefits with respect to M. Sam Gilliland.(4)                                                                         
|12.1  |  | Computation of ratio of earnings to fixed charges for the year ended December 31, 2002.(4)                                                                     
|21.1  |  | Subsidiaries of Registrant.(4)                                                                                                                                 
|23.1  |  | Consent of Ernst & Young LLP.(4)                                                                                                                               

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