(PAGE) 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1997.
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the Transition Period From to .
Commission file number 1-12175.
The SABRE Group Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2662240
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation or
organization)
4255 Amon Carter Blvd.
Fort Worth, Texas 76155
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code (817) 931-7300
Not Applicable
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past
90 days. Yes X No ___.
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Class A Common Stock, $.01 par value - 23,474,671 as of
November 11, 1997
Class B Common Stock, $.01 par value - 107,374,000 as of
November 11, 1997
(PAGE) 2
INDEX
THE SABRE GROUP HOLDINGS, INC.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet -- September 30, 1997 and December
31, 1996
Consolidated Statement of Income -- Three months ended
September 30, 1997 and 1996; Nine months ended September 30,
1997 and 1996
Condensed Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 1997
Consolidated Statement of Cash Flows -- Nine months ended
September 30, 1997 and 1996
Notes to Consolidated Financial Statements -- September 30,
1997
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other information
Pro forma Consolidated Statement of Income -- Three months
ended September 30, 1996; Nine months ended September 30,
1996
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
(PAGE) 3
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited) (In thousands, except per share data)
(TABLE)
September 30, December 31,
1997 1996
(S) (C) (C)
Assets
Current Assets
Cash and cash equivalents $ 9,526 $ 15,992
Short-term investments 538,879 426,945
Accounts receivable, net 241,179 197,015
Receivable from affiliates 22,395 -
Prepaid expenses 15,217 13,630
Deferred income taxes 31,815 40,946
Total current assets 859,011 694,528
Property and Equipment
Buildings and leasehold improvements 316,199 298,740
Furniture, fixtures and equipment 34,504 24,403
Service contract equipment 556,208 545,302
Computer equipment 404,277 356,506
1,311,188 1,224,951
Less accumulated depreciation and
amortization (718,038) (665,884)
Total property and equipment 593,150 559,067
Other assets, net 62,421 33,488
$1,514,582 $1,287,083
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 97,315 $ 96,622
Accrued compensation and related benefits 62,535 55,547
Other accrued liabilities 152,002 110,391
Payable to affiliates --- 27,267
Total current liabilities 311,852 289,827
Deferred income taxes 36,363 43,077
Other postretirement benefits 65,103 50,070
Other liabilities 30,373 16,595
Debenture payable to AMR 317,873 317,873
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; 23,444 issued
and outstanding at September 30, 1997 234 234
Class B: $0.01 par value;
107,374 shares authorized; 107,374
issued and outstanding at
September 30, 1997 1,074 1,074
Additional paid-in capital 593,587 591,885
Retained earnings (deficit) 158,123 (23,552)
Total stockholders' equity 753,018 569,641
$1,514,582 $1,287,083
(/TABLE)
The accompanying notes are an integral part of these
financial statements.
(PAGE) 4
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) (In thousands, except per share amounts)
(TABLE)
(CAPTION)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(S) (C) (C) (C) (C)
Revenues
Electronic Travel
Distribution $306,754 $280,998 $924,174 $855,980
Technology Solutions 149,292 126,422 418,880 389,729
Total revenues 456,046 407,420 1,343,054 1,245,709
Operating expenses
Cost of revenues
Electronic Travel
Distribution 214,119 189,690 619,097 563,793
Technology Solutions 112,132 92,751 317,653 291,331
Selling, general and
administrative 41,709 37,065 117,330 105,082
Total operating expenses 367,960 319,506 1,054,080 960,206
Operating income 88,086 87,914 288,974 285,503
Other income (expense)
Interest income 8,617 2,155 21,784 7,774
Interest expense (5,713) (15,340) (16,753) (20,019)
Other - net 873 (783) 3,139 (4,121)
3,777 (13,968) 8,170 (16,366)
Income before provision for
income taxes 91,863 73,946 297,144 269,137
Provision for income
taxes 35,664 28,795 115,724 104,936
Net earnings $ 56,199 $ 45,151 $ 181,420 $ 164,201
Earnings per common share
data
Pro forma earnings per
common share $ .35 $ 1.26
Earnings per common share $ .43 $ 1.39
Common and common equivalent
shares used in per share
calculations 130,813 130,604 130,792 130,604
(/TABLE)
The accompanying notes are an integral part of these
financial statements.
(PAGE) 5
THE SABRE GROUP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited) (In thousands)
(TABLE)
Class Class
A B Additional Retained
Common Common Paid-in (Deficit)
Stock Stock Capital Earnings
(S) (C) (C) (C) (C)
Balance at December 31, 1996 $ 234 $1,074 $591,885 $ (23,552)
Net earnings --- --- --- 181,420
Issuance of Class A Common
Stock pursuant to stock option,
restricted stock incentive, and
stock purchase plans --- --- 1,702 ---
Unrealized gain on investments,
net of deferred taxes --- --- --- 255
Balance at September 30, 1997 $ 234 $1,074 $593,587 $158,123
(/TABLE)
The accompanying notes are an integral part of these financial statements.
(PAGE) 6
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (In thousands)
(TABLE)
(CAPTION)
Nine Months Ended
September 30,
1997 1996
(S) (C) (C)
Operating Activities
Net earnings $181,420 $164,201
Adjustments to reconcile net earnings to cash
provided by operating activities
Depreciation and amortization 135,954 126,986
Deferred income taxes 2,417 (17,738)
Other (170) 4,444
Changes in operating assets and liabilities
Accounts receivable (44,164) (81,803)
Prepaid expenses (1,587) (7,665)
Other assets 1,637 16,881
Accrued compensation and related benefits 6,988 13,723
Accounts payable and other accrued
liabilities 45,563 61,202
Receivable from and payable to affiliates (49,662) (54,193)
Postretirement benefits 15,033 1,749
Other liabilities (1,221) 4,996
Cash provided by operating activities 292,208 232,783
Investing Activities
Additions to property and equipment (170,630) (129,960)
Net increase in short-term investments (111,680) (215,392)
Other investing activities, net (21,060) (3,802)
Proceeds from sale of equipment 3,616 32,166
Cash used for investing activities (299,754) (316,988)
Financing Activities
Proceeds from issuance of common stock and
exercise of stock options 1,080 ---
Cash provided by financing activities 1,080 ---
Decrease in cash and cash
equivalents (6,466) (84,205)
Cash and cash equivalents at beginning of the
period 15,992 94,861
Cash and cash equivalents at end of the
period $ 9,526 $ 10,656
Supplemental cash flow information
Cash payments to affiliates for income
taxes $ 91,790 $116,336
Cash payments to affiliates for interest $ 24,613 $ 20,161
(/TABLE)
The accompanying notes are an integral part of these financial statements.
(PAGE) 7
THE SABRE GROUP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General Information
The SABRE Group Holdings, Inc. is a holding company. Its
sole direct subsidiary is The SABRE Group, Inc., which,
pursuant to the Reorganization (as defined below), is the
successor to the businesses of The SABRE Group which were
previously operated as subsidiaries or divisions of American
Airlines, Inc. ("American")or AMR Corporation ("AMR"). The
SABRE Group was formed by AMR to capitalize on synergies of
combining AMR's information technology businesses under common
management. Unless otherwise indicated, references herein to
the "Company" include The SABRE Group Holdings, Inc. and its
consolidated subsidiaries and, for the period prior to the
Reorganization, the businesses of American and AMR
constituting The SABRE Group, an operating unit of AMR.
On July 2, 1996, AMR reorganized the businesses of The SABRE
Group (the "Reorganization"). As part of the Reorganization,
the Company was incorporated as a Delaware corporation and a
direct wholly-owned subsidiary of American, the businesses of
The SABRE Group formerly operated as divisions and
subsidiaries of American or AMR were combined under the
Company and the Company and its subsidiaries were dividended
by American to AMR.
In connection with the Reorganization on July 2, 1996, the
Company issued 1,000 shares of common stock, par value $.01
per share, to American which shares were subsequently
dividended to AMR. The Company completed its initial public
offering (the "Offering") of 23,230,000 shares of Class A
Common Stock, par value $.01 per share on October 17, 1996.
The offering price of $27.00 per share resulted in net
proceeds to the Company of approximately $589 million, after
deducting underwriting discounts and commissions and other
expenses payable by the Company. The Company used
approximately $532 million of the net proceeds to repay a
portion of the debenture payable to AMR.
Concurrent with the Offering, the 1,000 shares of Common Stock
held by AMR were reclassified into 107,374,000 shares of Class
B Common Stock of the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation - The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, these financial
statements contain all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial
position, results of operations and cash flows for the periods
indicated. The preparation of financial statements in accordance
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results may differ from these estimates. The
Company's quarterly financial data should be read in conjunction
with the consolidated financial statements of the Company for
the year ended December 31,1996 (including the notes thereto),
set forth in The SABRE Group Holdings, Inc. Annual Report on
Form 10-K.
(PAGE) 8
THE SABRE GROUP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Earnings Per Common Share - The pro forma earnings per share
data is calculated as though the 23,230,000 shares of Class
A Common Stock issued in connection with the Offering and the
reclassification of shares held by AMR into 107,374,000
shares of Class B Common Stock were outstanding for the three
and nine months ended September 30, 1996. The earnings per
common share data for the three and nine months ended
September 30, 1997 is calculated based on the weighted average
shares outstanding for the period. The dilutive impact of
common share equivalents related to stock awards and options
outstanding under the Company's Long-term Incentive Plans was
not significant for the periods presented.
Reclassifications - Certain 1996 amounts have been reclassified
to conform to the current presentation.
3. Interest on Debenture
The Debenture payable to AMR is a floating rate subordinated
debenture due September 30, 2004 with a principal balance of
$317,873,000 (the "Debenture"). The interest rate on the
Debenture is based on the sum of the London Interbank Offered
Rate (LIBOR rate) plus a margin determined based upon the
Company's senior unsecured long-term debt rating or, if such
debt rating is not available, upon the Company's ratio of net
debt to total capital. The interest rate is determined monthly
and accrued interest is payable each September 30 and March 31.
The average interest rate for the nine months ended September
30, 1997 was 6.22%. The Company may prepay the principal
balance in whole or in part at any interest payment date.
4. Employee Benefits
Effective January 1, 1997, the Company established The SABRE
Group Retirement Plan (the "SGRP"), a defined contribution plan
qualified under Section 401(k) of the Internal Revenue Code of
1986 (the "Code"). Upon establishment, substantially all
Company employees under the age of 40 began participating in the SGRP.
The Company contributes 2.75% of each participating employee's
base pay to the SGRP. The employees vest in the Company's
contributions after three years of service, including any prior
service with AMR affiliates. In addition, the Company matches
50 cents of each dollar contributed by participating employees,
limited to the first 6% of the employee's base pay contribution,
subject to IRS limitations. Employees are immediately vested in
their own contributions and the Company's matching contributions.
The obligation for benefits previously earned by these employees
under American's defined benefit retirement plan
(the "American Plan") will become the responsibility of the
Legacy Pension Plan (the "LPP"), a defined benefit plan
sponsored by the Company which offers benefits substantially
similar to those offered by the American Plan. These benefits
will be based on the accredited years of service earned as of
December 31, 1996. However, these employees will continue to
earn years of service for purposes of determining vesting and
early retirement eligibility under the LPP based on future
service to the Company. Additionally, future increases in
compensation levels will be considered in the calculation of
retirement benefits to be paid from the LPP to these employees
upon their retirement.
Employees age 40 or over as of December 31, 1996, and who were
previously participants in the American Plan, were given the
option of participating in the SGRP or the LPP. Benefits
provided by the LPP to retirees of the Company are based on years
of service and the employee's base pay for the highest consecutive
five years of the ten years preceding retirement. With the exception
noted below, the obligation for benefits previously earned by these
employees under the American Plan will become the responsibility
of the LPP.
Certain employees of the Company meeting specified criteria
have elected to remain in the American Plan for service
through December 31, 1996 and are in the LPP for service and
increases in compensation levels subsequent to that date. The
obligation for benefits earned by these employees as of December
31, 1996 under the American Plan will remain with the American
Plan.
(PAGE) 9
THE SABRE GROUP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In October 1997, AMR spun off the portion of the American Plan
applicable to employees of the Company to the LPP. At the
date of the spin-off, the unrecognized net obligation
attributable to the Company's employees participating in the
American Plan was approximately $20 million, which was charged
to stockholders' equity, net of deferred taxes of
approximately $8 million.
5. Stock Purchase Plan
Effective January 1, 1997, the Company established The SABRE
Group Holdings, Inc. Employee Stock Purchase Plan (the
"ESPP"). The ESPP allows eligible employees to purchase Class
A Common Stock on a monthly basis at the lower of 85% of the
market price at the beginning or end of each monthly offering
period. The ESPP allows each employee to acquire Class A Common
Stock with an aggregate maximum purchase price equal to either
1% or 2% of that employee's annual base pay, subject to limitations
under the Code. As of January 1, 1997, 1,000,000 shares of Class A
Common Stock were reserved for issuance under the ESPP.
6. Financial Instruments and Risk Management
To reduce its exposure to future exchange rate fluctuations,
the Company has entered into an agreement that allows American
to purchase currency put options for the Company's benefit.
Under the terms of this agreement, the Company receives any
financial benefit from the options and reimburses and
indemnifies American from all resulting obligations. The
Company does not hold or issue derivative financial instruments
for trading purposes. The put option agreements entered into
are designated as hedges of probable monthly cash flows through
December 1997, which otherwise would expose the Company to
foreign currency risk. At September 30, 1997, the notional
amount related to these options totaled approximately $23.9
million and the fair value, representing the amount the Company
would receive to terminate the agreements, totaled approximately
$700,000.
Gains on the options are recognized as a component of
Electronic Travel Distribution revenue in the same period as
the hedged transactions. The amount of gain recognized on
these contracts through September 30, 1997 was approximately
$1.2 million. Premiums paid on the option agreements are
included in other current assets and are amortized over the
term of the option. The unamortized premium balance at
September 30, 1997 was $410,000.
The Company is exposed to credit risk in the event of
nonperformance by the counterparty; however, the Company does
not anticipate nonperformance based on the counterparty's
current credit standing.
(PAGE) 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
THE SABRE GROUP HOLDINGS, INC.
RESULTS OF OPERATIONS
Summary The Company generates its revenue from providing
electronic travel distribution services and technology
solutions services. During the nine months ended September
30, 1997, the Company generated approximately 68.8% of its
revenue from electronic travel distribution services and
approximately 31.2% of its revenue from technology solution
services. The following table sets forth revenues by
affiliation and geographic location as a percent of
total revenues:
(TABLE)
(CAPTION)
Three months ended Nine months
September 30, ended
September 30,
1997 1996 1997 1996
(S) (C) (C) (C) (C)
Affiliation:
Non-affiliated Customers 70.8% 70.2% 70.6% 69.3%
Affiliated Customers 29.2 29.8 29.4 30.7
Total 100.0% 100.0% 100.0% 100.0%
Geographical:
United States 80.7% 82.3% 81.0% 82.7%
International 19.3 17.7 19.0 17.3
Total 100.0% 100.0% 100.0% 100.0%
(/TABLE)
The Company's operating income as a percentage of revenue was
21.5% and 22.9% for the nine months ended September 30, 1997 as
compared to 1996. Gross margins for electronic travel
distribution services and technology solution services were 33.0%
and 24.2%, respectively, for the nine months ended September 30,
1997, and 34.1% and 25.2%, respectively, for the nine months
ended September 30, 1996.
On August 28, 1997, the Company signed a letter of intent for a
proposed multi-billion dollar technology outsourcing
relationship with US Airways Group, Inc. If a definitive
agreement relating to the proposed agreement is reached,
substantially all of US Airways' information technology functions
would be contracted to The SABRE Group. The Company and US
Airways intend to complete negotiation of a definitive
agreement during the fourth quarter of 1997.
For the Three Months Ended September 30, 1997 and 1996
Electronic Travel Distribution. Electronic travel distribution
revenues for the three months ended September 30, 1997 increased
approximately $26 million, 9.3%, compared to the three months
ended September 30, 1996, from $281 million to $307 million.
This increase was primarily due to growth in booking fees from
$258 million to $277 million. The growth in booking fees was due
to an overall increase in the price per booking charged to
associates and to an increase in booking volumes. The increase
in booking volumes occurred primarily in Europe and Latin
America and was partly offset by a decline in domestic U.S.
booking volumes.
Cost of revenues for electronic travel distribution increased
approximately $24 million, 12.6%, from $190 million to $214
million. This increase was primarily attributable to an increase
in depreciation and amortization, salaries, benefits and employee
related costs, subscriber incentive expenses, and other
operating expenses. Depreciation and amortization expense
increased primarily due to growth in the subscriber equipment
base, shorter depreciable lives on purchased subscriber
equipment reflective of increased technological changes and an
increase in internally developed software. Salaries, benefits
and employee related costs increased due to an increase in the
average number of employees necessary to support the Company's
revenue growth and to annual salary increases. Employee related
costs also increased due to increased travel expenses.
Subscriber incentive expenses increased in order to maintain and
expand the Company's travel agency subscriber base. Other
operating expenses increased due to an increase in fees paid to
American under the Marketing Cooperation Agreement, costs
associated with SABREWorld 97, a global travel technology
conference and trade show, increased software license expenses
and other miscellaneous expenses.
(PAGE) 11
THE SABRE GROUP HOLDINGS, INC.
RESULTS OF OPERATIONS (Continued)
Technology Solutions. Revenues from technology solution
services for the three months ended September 30, 1997
increased approximately $23 million, 18.3%, compared to
the three months ended September 30, 1996, from $126
million to $149 million. Revenues from unaffiliated customers
increased approximately $13 million due to an increase in
software development, consulting and software license fee revenues.
Revenues from AMR increased $10 million due to an increase in
software development revenues.
Cost of revenues for technology solution services increased
approximately $19 million, 20.4%, from $93 million to $112
million. This increase was primarily attributable to an increase
in salaries, benefits and employee related costs. Salaries,
benefits and employee related costs increased due to an increase
in the average number of employees necessary to support the
Company's business growth and annual salary increases. Employee
related costs also increased due to increased travel expenses.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses increased $5 million, 13.5%, from $37
million to $42 million primarily due to an increase in salaries,
benefits and employee related costs as a result of sales growth
initiatives for both the electronic travel distribution and the
technology solutions lines of business. Employee related costs
also increased due to increased travel expenses.
Operating Income. Operating income remained unchanged at $88
million. Operating margins decreased from 21.6% in 1996 to 19.3%
in 1997 due to an increase in revenues of 11.9% while operating
expenses increased 15.2%.
Interest Income. Interest income increased $7 million due to
higher balances maintained in the Company's short-term investment
accounts.
Interest Expense. Interest expense decreased $9 million due
to a lower outstanding principal balance on the Debenture
issued to American in July 1996 and lower interest rates.
Other Income. Other income increased $2 million primarily due
to growth in income from joint ventures in which the Company
owns an interest accounted for under the equity method.
Income Taxes. The provision for income taxes was $36 million and
$29 million for the three months ended September 30, 1997 and
1996, respectively. The increase in the provision for income
taxes corresponds with the increase in income before the
provision for income taxes.
Net Earnings. Net earnings increased $11 million, 24.4%, from
$45 million to $56 million, primarily due to the increase in
other income.
For the Nine Months Ended September 30, 1997 and 1996
Electronic Travel Distribution. Electronic travel distribution
revenues for the nine months ended September 30, 1997
increased approximately $68 million, 7.9%, compared to the nine
months ended September 30, 1996, from $856 million to $924
million. This increase was primarily due to growth in booking
fees from $784 million to $841 million. The growth in booking
fees was due to an overall increase in the price per booking
charged to associates and to an increase in booking volumes. The
increase in booking volumes occurred primarily in Europe and
Latin America.
(PAGE) 12
THE SABRE GROUP HOLDINGS, INC.
RESULTS OF OPERATIONS (Continued)
Cost of revenues for electronic travel distribution increased
approximately $55 million, 9.8%, from $564 million to $619
million. This increase was primarily attributable to an increase
in salaries, benefits and employee related costs, subscriber
incentive expenses, depreciation and amortization and other
operating expenses. Salaries, benefits and employee related
costs increased due to an increase in the average number of
employees necessary to support the Company's revenue growth and
annual salary increases. Employee related costs also increased
due to increased travel expenses. Subscriber incentive expenses
increased in order to maintain and expand the Company's travel
agency subscriber base. Depreciation and amortization expense
increased primarily due to growth in the subscriber equipment base,
shorter depreciable lives on purchased subscriber equipment
reflective of increased technological changes and an increase
in internally developed software. Other operating expenses
increased due to an increase in fees paid to American under the
Marketing Cooperation Agreement, costs associated with SABREWorld 97,
a global technology conference and trade show, increased software
license expenses and other miscellaneous expenses.
Technology Solutions. Revenues from technology solution services
for the nine months ended September 30, 1997 increased
approximately $29 million, 7.4%, compared to the nine months
ended September 30, 1996, from $390 million to $419 million.
Revenues from unaffiliated customers increased approximately $21
million due to an increase in software development, consulting
and software license fee revenues. Revenues from AMR also
increased $8 million due to an increase in software development
revenue and data processing volumes offset by a decrease in data
network revenues from the sale, in July 1996, of data network
equipment to a third party which began direct billing certain
items to American.
Cost of revenues for technology solution services increased
approximately $27 million, 9.3%, from $291 million to $318
million. This increase was primarily attributable to an increase
in salaries, benefits and employee related costs and other
operating expenses offset by a decrease in depreciation and
amortization. Salaries, benefits and employee related costs
increased due to an increase in the average number of employees
necessary to support the Company's business growth and annual
salary increases. Employee related costs also increased due to
increased travel expenses. The increase in other operating
expenses is primarily due to the write-off of a disputed amount
billed to a customer. The decrease in depreciation and amortization
expense is primarily due to the benefits of price and performance
improvements for data center equipment and the sale, in July 1996,
of certain data network equipment with net book value of approximately
$25 million to a third party.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses increased $12 million, 11.4%, from
$105 million to $117 million primarily due to an increase in
salaries, benefits and employee related costs and other operating
costs as a result of sales growth initiatives for both the
electronic travel distribution and the technology solutions lines
of business. Employee related costs also increased due to
increased travel expenses.
Operating Income. Operating income increased $3 million, 1.0%,
from $286 million to $289 million. Operating margins decreased
from 22.9% in 1996 to 21.5% in 1997 due to an increase in
revenues of 7.8% while operating expenses increased 9.8%.
Interest Income. Interest income increased $14 million due to
higher balances maintained in the Company's short-term investment
accounts.
Interest Expense. Interest expense decreased $3 million due to a
lower outstanding principal balance on the Debenture issued to
American in July 1996 and lower interest rates.
(PAGE) 13
THE SABRE GROUP HOLDINGS, INC.
RESULTS OF OPERATIONS (Continued)
Other Income. Other income increased $7 million primarily due to
growth in income from joint ventures in which the Company owns an
interest accounted for under the equity method.
Income Taxes. The provision for income taxes was $116 million
and $105 million for the nine months ended September 30, 1997 and
1996, respectively. The increase in the provision for income
taxes corresponds with the increase in income before the
provision for income taxes.
Net Earnings. Net earnings increased $17 million, 10.4%, from
$164 million to $181 million, primarily due to the increase in
operating income and other income.
LIQUIDITY AND CAPITAL RESOURCES
The Company had substantial liquidity at September 30, 1997,
with approximately $548 million in cash and short-term
investments and $547 million in working capital. At December 31,
1996, cash and short-term investments and working capital were
$443 million and $405 million, respectively. Prior to July 2,
1996, the Company's cash and cash equivalents were held for the
Company by American. Cash and cash equivalents were immediately
charged or credited to the Company upon recording certain
transactions, including transactions with American for airline
booking fees and purchases of goods and services.
Effective with the Reorganization on July 2, 1996, the Company
began maintaining a separate cash management system and cash and
investment accounts separate from American. Transactions with
American no longer result in the recording of cash equivalents,
but are settled through intercompany billings, with payment due
in 30 days. American performs cash management services for the
Company under the Management Services Agreement. The Company
invests the cash in short-term marketable securities, consisting
primarily of certificates of deposit, bankers' acceptances,
commercial paper, corporate notes and government notes.
The Company has funded its operations through cash generated from
operations. The Company's cash provided by operating activities
of $292 million and $233 million for the nine months ended
September 30,1997 and 1996, respectively, was primarily
attributable to net earnings before noncash charges.
Capital investment principally has been related to purchases of
service contract equipment to be provided to subscribers of
SABRE, purchases of computer equipment to be used in the data
processing center and building and leasehold improvements and
furniture and fixtures for building refurbishments in process.
Capital expenditures for the nine months ended September 30,
1997 and 1996 were $171 million and $130 million, respectively.
The Company is continuing a program, begun in 1996, that is
designed to ensure that hardware and software systems operated
or licensed in the Company's business, including those of its
travel agency subscribers, will timely achieve Year 2000
compliance. The Company currently projects future, non-recurring,
expenses of between $60 million and $85 million for the Year
2000 compliance program, the majority of which will be expensed
in 1998. The Company believes that it has allocated adequate
resources to timely achieve Year 2000 compliance. There is no
assurance that systems operated by third partices (e.g., data
providers, associates, credit card transaction processors)
with which the Company's systems interface will continue to
properly interface with the Company's systems and will otherwise
timely achieve Year 2000 compliance. Any failure of the Company's
or these third parties' systems to timely achieve Year 2000
compliance could have a material adverse effect on the Company's
business, financial condition and results of operations.
(PAGE) 14
THE SABRE GROUP HOLDINGS, INC.
LIQUIDITY AND CAPITAL RESOURCES (Continued)
The Company expects that the principal use of funds in the
foreseeable future will be for capital expenditures, software
product development, acquisitions and working capital. Capital
expenditures will consist of purchases of equipment for the data
center, as well as computer equipment, printers, fileservers and
workstations to support (i) updating subscriber equipment
primarily for travel agencies, (ii) expansion of the subscriber
base and (iii) new product capital requirements. The Company has
estimated capital expenditures of approximately $240 million to
$280 million for 1997. The Company believes available balances
of cash and short-term investments combined with cash flows from
operations will be sufficient to meet the Company's capital
requirements.
The Company currently intends to retain its earnings to
finance future growth and, therefore, does not anticipate paying
any cash dividends on its common stock in the foreseeable future.
Any determination as to the payment of dividends will depend upon
the future results of operations, capital requirements and
financial condition of the Company and its subsidiaries and such
other factors as the Board of Directors of the Company may
consider, including any contractual or statutory restrictions on
the Company's ability to pay dividends.
PRO FORMA RESULTS OF OPERATIONS
The discussion of pro forma results of operations is based on the
pro forma condensed consolidated financial information presented
in Part II: Other Information, Item 5. Other Information. The
statement of income assumes the Reorganization and Offering were
consummated on January 1, 1996.
Three Months Ended September 30, 1997 Compared to Pro Forma
Three Months Ended September 30, 1996
No pro forma adjustments were required for revenues, operating
expenses or interest income for the three months ended September
30, 1996.
Interest Expense. Actual interest expense compared to pro forma
remained relatively unchanged.
Income Taxes. The actual provision for income taxes was $36
million and the pro forma provision for income taxes was $33
million for the three months ended September 30, 1997 and 1996,
respectively. The increase in the provision for income taxes
corresponds with the increase in income before the provision
for income taxes.
Net Earnings. Actual net earnings increased $5 million, 9.8%,
compared to pro forma, from $51 million to $56 million, primarily
due to the increase in other income.
Nine Months Ended September 30, 1997 Compared to Pro Forma Nine
Months Ended September 30, 1996
Electronic Travel Distribution. Electronic travel distribution
actual revenues for the nine months ended September 30, 1997
increased approximately $68 million, 7.9%, compared to the pro
forma revenues for the nine months ended September 30, 1996,
from $856 million to $924 million. This increase was primarily
due to growth in booking fees from $784 million to $841 million.
The growth in booking fees was due to an overall increase in the
price per booking charged to associates and to an increase in
booking volumes. The increase in booking volumes occurred
primarily in Europe and Latin America.
(PAGE) 15
THE SABRE GROUP HOLDINGS, INC.
PRO FORMA RESULTS OF OPERATIONS (Continued)
Actual cost of revenues for electronic travel distribution for
the nine months ended September 30, 1997 increased approximately
$54 million, 9.6%, compared to pro forma for the nine months
ended September 30, 1996, from $565 million to $619 million.
This increase was primarily attributable to an increase in
salaries, benefits and employee related costs, subscriber
incentive expenses and depreciation and amortization. Salaries,
benefits and employee related costs increased due to an increase
in the average number of employees necessary to support the
Company's revenue growth and annual salary increases.
Subscriber incentive expenses increased in order to maintain and
expand the Company's travel agency subscriber base. Depreciation
and amortization expense increased primarily due to growth in the
subscriber equipment base, shorter depreciable lives on purchased
subscriber equipment reflective of increased technological
changes and an increase in internally developed software. Other
operating expenses increased due to an increase in fees paid to
American under the Marketing Cooperation Agreement, costs
associated with SABREWorld 97, a global travel technology
conference and trade show, increased software license expenses
and other miscellaneous expenses.
Technology Solutions. Actual revenues from technology solution
services for the nine months ended September 30, 1997 increased
approximately $35 million, 9.1%, compared to pro forma for the
nine months ended September 30, 1996, from $384 million to $419
million. Revenues from unaffiliated customers increased
approximately $21 million due to an increase in software
development, consulting and software license fee revenues.
Revenues from AMR also increased $14 million due to an increase
in software development revenue and data processing volume increases.
Actual cost of revenues for technology solution services for the
nine months ended September 30, 1997 increased approximately $34
million, 12.0%, compared to pro forma for the nine months ended
September 30, 1997, from $284 million to $318 million. This
increase was primarily attributable to an increase in salaries,
benefits and employee related costs, communication expenses and
other operating expenses, offset by a decrease in
depreciation and amortization expense. Salaries, benefits and
employee related costs increased due to an increase in the
average number of employees necessary to support the Company's
business growth and annual salary increases. The increase in
communication expense is primarily due to the lease of the
domestic data network from a third party. This data network was
owned by the Company through July 1996. The increase in other
operating expenses is primarily due to the write-off of a disputed
amount billed to a customer. The decrease in depreciation and
amortization expense is primarily due to the benefits of price and
performance improvements for data center equipment and the sale,
in July 1996, of certain data network equipment with net book value
of approximately $25 million to a third party.
Selling, General and Administrative Expenses. Actual selling,
general and administrative expenses increased $12 million, 11.4%,
compared to pro forma, from $105 million to $117 million
primarily due to an increase in salaries, benefits and employee
related costs and other operating costs as a result of sales
growth initiatives for both the electronic travel distribution
and the technology solutions lines of business.
Operating Income. Actual operating income increased $4 million,
1.4%, compared to pro forma, from $285 million to $289 million.
Pro forma operating margin in 1996 was 23.0% compared to actual
operating margin of 21.5% in 1997 due to an increase in revenues
of 8.3% while operating expenses increased 10.4%.
Interest Income. Actual interest income increased $14 million,
compared to pro forma, due to higher balances maintained in the
Company's short-term investment accounts.
Interest Expense. Actual interest expense decreased $2
million, compared to pro forma, due to a decrease in interest
rates on the Debenture.
Other Income. Actual other income increased $7 million, compared
to pro forma, primarily due to growth in income from joint
ventures in which the Company owns an interest accounted for
under the equity method.
(PAGE) 16
THE SABRE GROUP HOLDINGS, INC.
PRO FORMA RESULTS OF OPERATIONS (Continued)
Income Taxes. The actual provision for income taxes was $116
million and the pro forma provision for income taxes was $105
million for the nine months ended September 30, 1997 and 1996,
respectively. The increase in the provision for income taxes
corresponds with the increase in income before the
provision for income taxes.
Net Earnings. Actual net earnings increased $17 million, 10.4%,
compared to pro forma, from $164 million to $181 million,
primarily due to the increase in operating income and other
income.
CAUTIONARY STATEMENT
Statements in this report which are not purely historical facts,
including statements regarding trends or the Company's
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 the Company on
the date of this report. The Company undertakes 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.
Risks associated with the Company's forward looking statements
include, but are not limited to: risks related to the Company's
relationships with American and its affiliates, including risks
that American may terminate any of the agreements with the
Company, or fail or otherwise become unable to fulfill its
principal obligations thereunder, or determine not to renew
certain of the agreements; risks associated with competition, and
technological innovation by competitors, which could require
the Company to reduce prices, to change billing practices, to
increase spending or marketing or product development or
otherwise to take actions that might adversely affect its
operations or earnings; risks related to seasonality of the
travel industry and booking revenues; risks of the Company's
sensitivity to general economic conditions and events that affect
airline travel and the airlines that participate in the SABRE
system; risks of a natural disaster or other calamity that may
cause significant damage to the Company's data center facility;
risks associated with the Company's international operations,
such as currency fluctuations, governmental approvals, tariffs
and trade barriers; risks of new or different legal and
regulatory requirements; and risks associated with the Company's
growth strategy, including investments in emerging markets and
the ability to successfully conclude alliances.
(PAGE) 17
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
On November 5, 1997, the Department of Transportation (DOT)
released a final rule regarding the use and enforcement of
so-called "parity" clauses in CRS participation contracts.
CRS vendor parity clauses require participating carriers to
participate at the same level of functionality in the vendor's
system as they do in any other CRS. The DOT's final rule
prohibits a CRS from enforcing such clauses unless the carrier
in question or an affiliate owns or markets a CRS. The Company
does not believe the new rule will materially affect its
business.
In connection with the Reorganization, the Company is the
successor in interest to American in the following two civil
proceedings concerning disputed booking fees.
In 1995, America West Airlines, Inc. ("America West") began
withholding SABRE booking fees that it claims were
assessed in contravention of America West's SABRE participation
agreement. American and SABRE Associates, Inc. filed a lawsuit
against America West in the District Court of Tarrant County,
Texas, 153rd Judicial District, to recover the unpaid booking
fees from America West. On April 10, 1997, the District Court
of Tarrant County, Texas, granted the Company's motion of summary
judgment as to the proper interpretation of the contract,
upholding the Company's position. On April 21, 1997, America West
paid the Company $2.9 million in past due booking fees, with a
stipulation that preserves its rights in the lawsuit. America
West has pending counter-claims against the Company claiming
breach of contract.
In June 1996, American Trans Air, Inc., ("ATA") filed a lawsuit
against American in the U.S. District Court for the Southern
District of Indiana, Indianapolis Division, seeking a refund of
over $400,000 in SABRE booking fees on similar grounds to America
West's claims. In addition, since June 1996, ATA has withheld
payment of more than $300,000 in SABRE booking fees. The
Company filed a motion for summary judgment in the ATA lawsuit
which is similar to the one granted in the America West lawsuit.
ATA has filed a cross-motion for summary judgment similar to the
one filed by America West claiming its interpretation of the
contract is the correct one.
If either ATA or America West were to prevail on their claims,
other associates might make similar claims. Nevertheless, the Company
believes that the booking fees are properly charged pursuant to
its contracts and that the claims of ATA and America West can be
successfully defended or resolved without a material adverse
effect on the Company's financial position or results of
operations.
(PAGE) 18
Item 4. Submission of Matters to a Vote of Security Holders
None.
(PAGE) 19
Item 5. Other Information
THE SABRE GROUP HOLDINGS, INC.
PRO FORMA STATEMENT OF INCOME DATA
(Unaudited) (In thousands, except per share amounts)
The pro forma statement of income data for the three and nine
months ended September 30, 1996 in the table below is based
upon the historical financial statements of the Company and
assumes the Reorganization and the Offering were consummated on
January 1, 1996. The pro forma information for the three and
nine months ended September 30, 1996 is presented for
illustrative purposes only and is not necessarily indicative of
the operating results that would have occurred if such
transactions had been consummated on January 1, 1996, nor is it
necessarily indicative of future results of operations.
The pro forma statement of income data for the three and nine
months ended September 30, 1996 should be read in conjunction
with the Consolidated Financial Statements and related notes
thereto of the Company included elsewhere herein. Pro forma
adjustments include the impact of the Information Technology
Services Agreement and the Debenture payable to AMR as well as
other adjustments associated with the Reorganization and the
Offering. Amounts shown below are in thousands, with the
exception of per share amounts.
(TABLE)
(CAPTION)
Three Months Ended Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Actual Pro Forma Actual ProForma
(S) (C) (C) (C) (C)
Revenues
Electronic travel
distribution $306,754 $280,998 $924,174 $ 855,980
Technology solutions 149,292 126,422 418,880 383,631
Total operating
revenues 456,046 407,420 1,343,054 1,239,611
Operating expenses
Cost of revenues
Electronic travel
distribution 214,119 189,690 619,097 565,068
Technology solutions 112,132 92,751 317,653 284,366
Selling, general and
administrative 41,709 37,065 117,330 105,127
Total operating
expenses 367,960 319,506 1,054,080 954,561
Operating income 88,086 87,914 288,974 285,050
Other income (expense)
Interest income 8,617 2,155 21,784 7,774
Interest expense (5,713) (5,769) (16,753) (19,396)
Other - net 873 (783) 3,139 (4,121)
3,777 (4,397) 8,170 (15,743)
Income before provision for
income taxes 91,863 83,517 297,144 269,307
Provision for income
taxes 35,664 32,543 115,724 105,017
Net earnings $ 56,199 $ 50,974 $ 181,420 $ 164,290
Pro forma earnings per
common share data:
Pro forma earnings per
common share $ .39 $ 1.26
Earnings per common share $ .43 $ 1.39
Common and common
equivalent shares used in
per share calculations 130,813 130,604 130,792 130,604
(/TABLE)
(PAGE) 20
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included herein:
The Company did not file any reports on Form 8-K during
the three months ended September 30, 1997.
Exhibit Number Description of Exhibit
3.1 Restated Certificate of Incorporation of
Registrant. (1)
3.2 Restated Bylaws of Registrant. (1)
4.1 Registration Rights Agreement between
Registrant and AMR Corporation. (1)
4.2 Specimen Certificate representing Class A
Common Stock. (1)
10.1 Registration Rights Agreement between
Registrant and AMR Corporation (See
Exhibit 4.1).
10.2 Intercompany Agreement, dated as of July 2,
1996, among Registrant, The SABRE
Group, Inc., TSGL Holding, Inc., TSGL
SCS, Inc., TSGL, Inc., SABRE
International, Inc., SABRE Servicios
Columbia, LTDA and American
Airlines, Inc. (1)
10.3 Management Services Agreement, dated as of
July 1, 1996, between The SABRE
Group, Inc. and American Airlines,
Inc. (1) (4)
10.4 Credit Agreement, dated as of July 1, 1996,
between Registrant, The SABRE
Group, Inc., AMR Corporation and
American Airlines, Inc. (1)
10.5 $850,000,000 Subordinated Debenture, dated
July 2, 1996, executed by
Registrant and payable to AMR
Corporation. (1)
10.6 Information Technology Services Agreement,
dated July 1, 1996, between The
SABRE Group, Inc. and American
Airlines, Inc. (1) (4)
10.7 Non-competition Agreement, dated July 1,
1996, among Registrant, The SABRE
Group, Inc., AMR Corporation and
American Airlines, Inc. (1)
10.8 Marketing Cooperation
Agreement dated as of July 1, 1996,
between The SABRE Group, Inc. and
American Airlines, Inc. (1) (4)
10.9 Tax Sharing Agreement, dated July
1, 1996, between The SABRE Group,
Inc. and American Airlines, Inc.
(1) 10.10 Travel Privileges
Agreement, dated as of July 1, 1996,
between The SABRE Group, Inc. and American
Airlines, Inc. (1) (4)
10.11 Corporate Travel Agreement, dated July 25,
1996, between The SABRE Group,
Inc. and American Airlines, Inc. (1)
(4)
10.12 Software Marketing Agreement, dated
September 10, 1996, among Registrant,
The SABRE Group, Inc. and AMR Corporation.
(1) (4)
10.13 Canadian Technical Services Subcontract,
dated as of July 1, 1996, between
The SABRE Group, Inc. and American
Airlines, Inc. (1) (4)
10.14 Form of Participating Carrier Agreement
between The SABRE Group, Inc.
and American Airlines, Inc. (1)
10.15 Investment Agreement, dated September 11,
1996, between The SABRE Group, Inc.
and AMR Investment Services, Inc. (1)
(4)
10.16 Assignment and Amendment Agreement, dated
as of July 1, 1996, among The SABRE
Group, Inc., American Airlines, Inc.
and the Dallas-Fort Worth International
Airport Board. (1)
10.17 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. (1)
10.18 Assignment Agreement, dated as of July 1,
1996, between The SABRE Group, Inc.
and American Airlines, Inc. (1)
10.19 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. (1)
10.20 Assignment Agreement, dated as of July 1,
1996, between The SABRE Group, Inc.
and American Airlines, Inc. (1)
(PAGE) 21
Exhibit Number Description of Exhibit
10.21 Amended and Restated Sublease Agreement,
dated May, 1996, between American
Airlines, Inc. and the Tulsa
Airports Improvement Trust. (1)
10.22 Assignment Agreement, dated as of July 1,
1996, between The SABRE Group,
Inc. and American Airlines, Inc. (1)
10.23 Office Lease Agreement, dated as of January
19, 1996, between American Airlines,
Inc. and Maguire/Thomas Partners
Westlake/Southlake Partnership. (1)
10.24 American Airlines, Inc. Supplemental
Executive Retirement Plan dated
November 16, 1994. (2)
10.25 The SABRE Group Holdings, Inc.
Long-Term Incentive Plan. (1)
10.26 The SABRE Group Holdings, Inc.
Directors Stock Incentive Plan. (1)
10.27 Form of Executive Termination Benefits
Agreement. (1)
10.28 Employment Agreement, dated August 30,
1996, between The SABRE Group, Inc. and
Michael J. Durham. (1)
10.29 Employment Agreement, dated September 7,
1995, between American Airlines,
Inc. and Thomas M. Cook. (1)
10.30 Employment Agreement, dated May 7, 1996,
between American Airlines, Inc. and
Terrell B. Jones. (1)
10.31 Letter Agreement, dated July 15, 1996,
between Registrant and Thomas M. Cook. (1)
10.32 Letter Agreement, dated July 15, 1996,
between Registrant and Terrell B. Jones. (1)
10.33 The SABRE Group Holdings, Inc. Employee
Stock Purchase Plan (3)
21.1 Subsidiaries of Registrant.
27.1 Financial Data Schedule.
(1) Incorporated by reference to exhibits 3.1 through 10.32
to the Company's Registration Statement on Form S-1(Registration
No. 33309747).
(2) Incorporated by reference to Exhibit 10(mmm) to AMR's
report on Form 10-K for the year ended December 31, 1994, (File
No. 1 8400).
(3) Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration No.
333 18851).
(4) Confidential treatment has been granted for portions of
this agreement and the omitted information has been filed
separately with the Securities and Exchange Commission
pursuant to an application for confidential treatment.
(PAGE) 22
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
THE SABRE GROUP HOLDINGS, INC.
Date: November 14, 1997 BY: /s/ T. Patrick Kelly
T. Patrick Kelly
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
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<SECURITIES> 538,879
<RECEIVABLES> 248,440
<ALLOWANCES> 7,261
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<CURRENT-ASSETS> 859,011
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<CURRENT-LIABILITIES> 311,852
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0
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<COMMON> 1,308
<OTHER-SE> 751,710
<TOTAL-LIABILITY-AND-EQUITY> 1,514,582
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<TOTAL-REVENUES> 1,343,054
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<TOTAL-COSTS> 936,750
<OTHER-EXPENSES> 117,330
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<INTEREST-EXPENSE> 16,753
<INCOME-PRETAX> 297,144
<INCOME-TAX> 115,724
<INCOME-CONTINUING> 181,420
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(PAGE) 1
Exhibit 21.1
SUBSIDIARIES
THE SABRE GROUP HOLDINGS, INC.
THE SABRE GROUP HOLDINGS, INC. SUBSIDIARIES
(EACH SUBSIDIARY'S SUBSIDIARIES OUTLINED FURTHER BELOW)*
The SABRE Group, Inc. (Delaware)
THE SABRE GROUP, INC. SUBSIDIARIES
Axess International Network, Inc. (Japan) (25%)
ENCOMPASS Holding, Inc. (Delaware)
Prize Ltd. (Latvia) (50%)
SABRE Decision Technologies International, Inc. (Delaware)
SABRE Decision Technologies Licensing, Inc. (Delaware)
SABRE International Holdings, Inc. (Delaware)
SABRE International, Inc. (Delaware)
SST Finance, Inc. (Delaware)
SST Holding, Inc. (Delaware)
TSGL, Inc. (Delaware)
Ticketnet Corporation (Canada)
SABRE Enterprises, Inc. (Delaware)
The SABRE Group Sales (Barbados), Ltd.
SABRE Technology Enterprises, Ltd. (Cayman Island)
SABRE Technology Holland B.V.
ENCOMPASS HOLDING, INC. SUBSIDIARY*
ENCOMPASS (partnership) (50%)
SABRE DECISION TECHNOLOGIES INTERNATIONAL, INC. SUBSIDIARY*
SABRE Decision Technologies (Australia) Pty Ltd.
(PAGE) 2
SABRE INTERNATIONAL, INC. SUBSIDIARIES*
SABRE Belgium (Belgium) (99%)
SABRE Computer-Reservierungssystem GmbH (Austria)
SABRE Danmark ApS (Denmark)
SABRE Deutschland Marketing GmbH (Germany)
SABRE Deutschland Services GmbH (Germany)
SABRE Espana Marketing, S.A. (Spain) (99%)
SABRE Europe Management Services Ltd. (UK) (99%)
SABRE France Sarl (France)
SABRE Hellas SA (Greece)
SABRE Ireland Limited (Ireland)
SABRE INTERNATIONAL, INC. SUBSIDIARIES* - CONTINUED
SABRE Italia S.r.l. (Italy) (99%)
SABRE Marketing Nederland B.V. (The Netherlands)
SABRE Norge AS (Norway)
SABRE Portugal Servicos LDA (Portugal) (99%)
SABRE Servicios Colombia LTDA (Columbia) (99%)
SABRE Suomi Oy (Finland)
SABRE Sverige AB (Sweden)
SABRE UK Marketing Ltd. (UK) (99%)
STIN Luxembourg S.A. (Luxembourg) (99%)
SABRE INTERNATIONAL HOLDINGS, INC. SUBSIDIARIES*
SABRE Belgium (Belgium) (1%)
SABRE Espana Marketing, S.A. (Spain) (1%)
SABRE Europe Management Services Ltd. (UK) (1%)
SABRE Italia S.r.l. (Italy) (1%)
SABRE Portugal Servicos LDA (Portugal) (1%)
SABRE Servicios Colombia LTDA (Columbia) (1%)
SABRE UK Marketing Ltd. (UK) (1%)
STIN Luxembourg SA (Luxembourg) (1%)
SST HOLDING, INC. SUBSIDIARY*
SABRE Sociedad Tecnologica S.A. (Mexico) (51%)
SABRE SOCIEDAD TECNOLOGICA S.A. SUBSIDIARY*
SABRE Services Administration (Mexico)
SABRE TECHNOLOGY ENTERPRISES, LTD. SUBSIDIARY*
SABRE Technology Enterprises II, Ltd.
The SABRE Group International (BAHRAIN) W.L.L.
TSGL, INC. SUBSIDIARIES*
TSGL Holding, Inc. (Delaware)
TSGL-SCS, Inc. (Delaware)
TICKETNET CORPORATION SUBSIDIARY*
148548 Canada, Inc. (Canada)
* All subsidiaries are wholly-owned unless otherwise noted in
parenthesis
