<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 MARCH 31, 2000.
[ ] 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.
SABRE HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2662240
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
4255 Amon Carter Blvd.
Fort Worth, Texas 76155
(Address of principal (Zip Code)
executive offices)
Registrant's telephone (817) 963-6400
number, including area code
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 - 129,064,717 as of May 10, 2000
Class B Common Stock, $.01 par value - 0 as of May 10, 2000
<PAGE> 2
INDEX
SABRE HOLDINGS CORPORATION
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -- March 31, 2000 and December 31, 1999
Consolidated Statements of Income -- Three months ended March 31,
2000 and 1999
Condensed Consolidated Statement of Stockholders' Equity -- Three
months ended March 31, 2000
Consolidated Statements of Cash Flows -- Three months ended March
31, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SABRE HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)
<TABLE>
<CAPTION>
March December
31, 2000 31, 1999
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 9,605 $ 6,628
Short-term investments 210,888 604,498
Accounts receivable, net 396,894 295,254
Receivable from affiliates, net --- 29,093
Prepaid expenses 77,629 22,899
Deferred income taxes 25,428 18,052
Total current assets 720,444 976,424
PROPERTY AND EQUIPMENT
Buildings and leasehold improvements 342,090 337,409
Furniture, fixtures and equipment 47,289 46,485
Service contract equipment 538,010 546,200
Computer equipment 483,864 482,334
1,411,253 1,412,428
Less accumulated depreciation and
amortization (853,666) (839,874)
Total property and equipment 557,587 572,554
Investments in joint ventures 156,635 156,158
Goodwill 242,871 ---
Other assets, net 259,853 246,075
TOTAL ASSETS $1,937,390 $1,951,211
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 160,720 $121,091
Accrued compensation and related benefits 76,621 89,424
Short-term debt 200,000 ---
Other accrued liabilities 281,155 314,598
Total current liabilities 718,496 525,113
Deferred income taxes 4,119 ---
Pensions and other postretirement benefits 113,880 119,687
Long-term debt 149,000 ---
Other liabilities 39,129 44,366
Commitments and contingencies
Minority interest in Travelocity.com 261,357 ---
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; 131,411 and 23,995
shares issued, respectively 1,314 240
Class B: $0.01 par value; 107,374 shares
authorized; 0 and 107,374 shares issued and
outstanding, respectively --- 1,074
Additional paid-in capital 606,355 607,285
Retained earnings 117,431 727,050
Less treasury stock at cost; 1,634 and
1,573 shares, respectively (73,691) (73,604)
Total stockholders' equity 651,409 1,262,045
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,937,390 $1,951,211
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
SABRE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
REVENUES
Electronic Travel Distribution $434,974 $ 381,108
Information Technology Solutions 209,932 256,999
Total revenues 644,906 638,107
OPERATING EXPENSES
Cost of revenues
Electronic Travel Distribution 277,802 252,766
Information Technology Solutions 171,263 218,819
Selling, general and administrative 87,896 54,454
Amortization of Travelocity.com goodwill
and intangible assets 5,345 ---
Total operating expenses 542,306 526,039
OPERATING INCOME 102,600 112,068
OTHER INCOME (EXPENSE)
Interest income 6,091 7,105
Interest expense (2,696) (5,210)
Other, net (212) 34,887
Total other income (expense) 3,183 36,782
MINORITY INTEREST IN NET
LOSS OF TRAVELOCITY.COM 3,729 ---
INCOME BEFORE PROVISION FOR
INCOME TAXES 109,512 148,850
Provision for income taxes 43,896 56,121
NET EARNINGS $ 65,616 $ 92,729
EARNINGS PER COMMON SHARE
Basic $ .51 $ .71
Diluted $ .48 $ .71
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 5
SABRE HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000
(Unaudited) (In thousands)
<TABLE>
<CAPTION>
Class A Class B Additional
Common Common Paid-in Retained Treasury
Stock Stock Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1999 $ 240 $1,074 $607,285 $727,050 $(73,604)$1,262,045
Net earnings --- --- --- 65,616 --- 65,616
Issuance of Class A
Common Stock pursuant
to stock option,
restricted stock
incentive and stock
purchase plans --- --- (3,218) --- 8,794 5,576
Tax benefit from
exercise of employee
stock options --- --- 1,425 --- --- 1,425
Repurchase of Class A
Common Stock --- --- --- --- (8,881) (8,881)
Exchange of Class B
Common Stock for Class
A Common Stock 1,074 (1,074) --- --- --- ---
Dividends paid --- --- 863 (675,903) --- (675,040)
Unrealized gain on
investments, net of
deferred taxes --- --- --- 668 --- 668
Balance at
March 31, 2000 $1,314 $ --- $606,355 $117,431 $(73,691) $ 651,409
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 6
SABRE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $65,616 $ 92,729
Adjustments to reconcile net earnings to cash
provided by (used for) operating activities
Depreciation and amortization 61,747 63,162
Deferred income taxes 91 (778)
Gain on sale of other investments --- (34,828)
Other (760) 531
Changes in operating assets and
liabilities, net of business acquisitions
Accounts receivable (97,098) (49,630)
Receivable from and payable to affiliates 29,093 (17,901)
Prepaid expenses (53,732) (11,964)
Other assets (16,167) (1,399)
Accounts payable and other accrued
liabilities 103,206 40,841
Accrued compensation and related benefits (14,858) (33,949)
Pensions and other postretirement benefits (5,807) 6,756
Other liabilities (5,070) 6,293
Payment to US Airways (81,469) ---
Minority interest in Travelocity.com (3,729) ---
Cash provided by (used for)
operating activities (18,937) 59,863
INVESTING ACTIVITIES
Additions to property and equipment (42,910) (42,835)
Net decrease in marketable investments 401,579 245,915
Loan to affiliate --- (300,000)
Proceeds from sale of other investments --- 34,828
Other investing activities, net (7,450) (503)
Cash provided by (used for) investing
activities 351,219 (62,595)
FINANCING ACTIVITIES
Proceeds from issuance of common stock
pursuant to employee stock plans 5,576 2,473
Purchases of treasury stock (8,881) (2,239)
Dividends paid (675,000) ---
Proceeds from issuance of debt 349,000 ---
Other financing activities, net --- (376)
Cash used for financing activities (329,305) (142)
Increase (decrease) in cash 2,977 (2,874)
Cash at beginning of the period 6,628 8,008
Cash at end of the period $9,605 $ 5,134
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 7
SABRE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL INFORMATION
Sabre Holdings Corporation is a holding company. Its sole direct
subsidiary is Sabre Inc., which 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. On March 15, 2000, AMR
exchanged all of its 107,374,000 shares of the Company's Class B
Common Stock for an equal number of shares of the Company's Class A
Common Stock and distributed such shares to AMR shareholders as a
stock dividend. The distribution consisted of AMR's entire
ownership interest in the Company. Unless otherwise indicated,
references herein to the "Company" include Sabre Holdings
Corporation and its consolidated subsidiaries.
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, 1999 (including the notes thereto), set
forth in Sabre Holdings Corporation's Annual Report on Form 10-K.
Reclassifications - Certain reclassifications have been made to
the 1999 financial statements to conform to the 2000 presentation.
3. COMPREHENSIVE INCOME
Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactions and other
events and circumstances from non-owner sources. For the three
months ended March 31, 2000 and 1999, the differences between net
earnings and total comprehensive income were not significant.
<PAGE> 8
SABRE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
4. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per common share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Three months
ended
March 31,
2000 1999
<S> <C> <C>
Numerator:
Numerator for basic earnings per
common share - net earnings $ 65,616 $ 92,729
Incremental amortization of
deferred asset related to
options issued to US Airways (3,161) ---
Numerator for diluted earnings per
common share - adjusted net
earnings $ 62,455 $ 92,729
Denominator:
Denominator for basic earnings per
common share - weighted-average
shares 129,702 129,758
Dilutive effect of stock awards
and options 1,189 882
Denominator for diluted earnings
per common share - adjusted
weighted-average shares 130,891 130,640
Earnings per common share - basic $ .51 $ .71
Earnings per common share - diluted $ .48 $ .71
</TABLE>
5. SEGMENT REPORTING
The Company has three reportable segments: electronic travel
distribution, Travelocity.com and information technology solutions.
The electronic travel distribution segment distributes travel
services to travel agencies and corporate travel departments
("subscribers"). Through the Company's global distribution system,
subscribers can access information about and book reservations with
airlines and other providers of travel and travel-related products
and services. The Travelocity.com segment distributes travel
services to individual consumers. Through the Travelocity.com Web
site, individual consumers can compare prices, make travel
reservations and obtain destination information online. The
information technology solutions segment provides information
technology services, including software development and consulting,
transaction processing and comprehensive information technology
outsourcing to the travel and transportation industries. The
Company's reportable segments are strategic business units that
offer different products and services and are managed separately
because each business requires different market strategies. The
electronic travel distribution and Travelocity.com segments are
aggregated and presented as electronic travel distribution within
the consolidated statements of income for the three months ended
March 31, 2000 and 1999.
<PAGE> 9
SABRE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Selected information for the Company's three reportable segments
for the three months ended March 31, 2000 and 1999 follows (in
thousands):
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
<S> <C> <C>
Revenues from external
customers:
Electronic Travel
Distribution $413,878 $370,680
Travelocity.com 18,926 7,736
Information Technology
Solutions 209,932 256,999
Total $642,736 $635,415
Intersegment revenues:
Electronic Travel
Distribution $ 2,917 $ (3,990)
Travelocity.com 8,097 3,990
Information Technology
Solutions 534 ---
Total $ 11,548 $ ---
Equity in net income of
equity method investees:
Electronic Travel
Distribution $ 2,170 $ 2,692
Total consolidated
revenues:
Electronic Travel
Distribution $418,965 $369,382
Travelocity.com 27,023 11,726
Information Technology
Solutions 210,466 256,999
Elimination of
intersegment revenues (11,548) ---
Total $644,906 $638,107
Operating income (loss):
Electronic Travel
Distribution $114,723 $100,941
Travelocity.com (17,058) (6,927)
Information Technology
Solutions 19,717 14,427
Net corporate allocations (14,782) 3,627
Total $102,600 $112,068
</TABLE>
Net corporate allocations for the quarter ended March 31, 2000
include approximately $12 million of nonrecurring expenses
associated with the spin-off from AMR.
6. STOCK OPTIONS - US AIRWAYS, INC.
In December 1999, US Airways Inc. ("US Airways") exercised one of
its two tranches of options to acquire three million shares of the
Company's Class A Common Stock. Pursuant to the terms of the exercised
options, the Company paid approximately $81 million to US Airways on
January 5, 2000.
In connection with the Company's payment of the $675 million
dividend on February 18, 2000, the Company adjusted the terms of
the second tranche of stock options held by US Airways such that
the aggregate intrinsic value of US Airways' holdings was the same
before and after the effect of the payment of the dividend on the
Company's stock price.
<PAGE> 10
SABRE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
7. SIGNIFICANT TRANSACTIONS
On February 4, 2000, the Company entered into a $300 million,
senior unsecured, revolving credit agreement (the "Credit
Facility"), which expires on September 14, 2004. Additionally, on
February 4, 2000, the Company entered into a short-term $200
million, senior unsecured, term loan agreement (the "Interim
Loan"), which matures on August 4, 2000. The proceeds from both
the Credit Facility and Interim Loan will be used for working
capital, capital expenditures, acquisitions, payment of dividends
and other corporate purposes. The Company utilized a portion of
its available cash balance and short-term investments as well as
proceeds from both the Credit Facility and Interim Loan to fund the
$675 million dividend paid to shareholders on February 18, 2000 in
connection with the separation of the Company from AMR. Interest
on these debt agreements is variable, based upon the London
Interbank Offered Rate ("LIBOR"), the prime rate or the federal
funds rate plus a margin, at the Company's option. The weighted-
average annual interest rate of debt outstanding under the Credit
Facility and Interim Loan at March 31, 2000 was 6.33%. As of March
31, 2000, borrowings under the Credit Facility and Interim Loan
were $149 million and $200 million, respectively.
On March 7, 2000, the Company completed the merger of
Travelocity.com Inc., a subsidiary of the Company and Preview Travel,
Inc. ("Preview"), an independent publicly-traded company engaged in
consumer direct travel distribution over the Internet. Under the terms
of the merger agreement, shareholders of Preview received one share of
Travelocity.com Inc., a newly created subsidiary of the Company,
for each share of Preview held, and Preview was merged into
Travelocity.com Inc., the surviving entity. Shares of
Travelocity.com Inc. stock now trade under the symbol "TVLY" on the
NASDAQ National Market. In connection with the merger, the Company
contributed the existing assets and businesses of Travelocity.com Inc.
and approximately $100 million in cash to Travelocity.com LP, a
Delaware limited partnership (the "Partnership"). Immediately
following the merger, Travelocity.com Inc. contributed the assets
and businesses obtained from the acquisition of Preview to the
Partnership. As a result of the merger, the Company owns an
economic interest of approximately 70% in the combined businesses,
composed of a 62% direct interest in the Partnership and a 22%
interest in Travelocity.com Inc., which holds a 38% interest in the
Partnership.
The cost of the acquisition of Preview was approximately $286
million. This amount was determined by the fair market value of
Preview's outstanding common stock on the last trading day before
the merger agreement was announced plus the value of the vested
options of Preview assumed by Travelocity.com in the merger and
other direct costs associated with the transaction as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Fair market value of
Preview's common stock $ 253,395
Fair market value of vested
Preview stock options 23,368
Investment advisor, legal,
accounting and other
professional fees and
expenses 8,875
Other costs directly related
to the merger 561
Total $ 286,199
</TABLE>
The cost of the acquisition was allocated to the respective assets
and liabilities acquired with the remainder recorded as goodwill.
The Company is amortizing approximately $248 million of goodwill
and other intangible assets resulting from the acquisition over a
three-year period.
<PAGE> 11
SABRE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
During 1999, the Company entered into an agreement with America
Online, Inc. ("AOL") that became effective upon the consummation of
the merger of Travelocity.com with Preview on March 7, 2000. The
agreement provides, among other things, that the Travelocity.com
Web site will be the exclusive reservations engine for AOL's
Internet properties. Payments of up to $200 million will be made
to AOL and Travelocity.com and AOL will share advertising revenues
and commissions over the five-year term of the agreement. In
connection with this agreement, Travelocity.com paid $40 million to
AOL on March 7, 2000 for the first year of the agreement.
On March 14, 2000, the Company's Board of Directors approved a
broad-based stock option plan (the "Option Plan") effective March
15, 2000. Seven million shares are authorized under the Option
Plan for grants of options and stock appreciation rights to
employees of the Company. On March 16, 2000, the Company granted
approximately two million options under the Option Plan.
On March 15, 2000, AMR exchanged all of its 107,374,000 shares of
the Company's Class B Common Stock for an equal number of shares of
the Company's Class A Common Stock and distributed such shares to
AMR shareholders as a stock dividend. The distribution consisted
of AMR's entire ownership interest in the Company.
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SABRE HOLDINGS CORPORATION
RESULTS OF OPERATIONS
SUMMARY. The Company generates its revenue from providing electronic
travel distribution services and information technology solutions
services. During the three months ended March 31, 2000, the Company
generated approximately 67.4% of its revenue from electronic travel
distribution services and approximately 32.6% of its revenue from
information technology solutions services. The Company's operating
margins were 15.9% and 17.6% for the three months ended March 31, 2000
and 1999, respectively. Gross margins for electronic travel
distribution and information technology solutions were 36.1% and
18.4%, respectively, for the three months ended March 31, 2000, and
33.7% and 14.9%, respectively, for the three months ended March 31,
1999.
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
ELECTRONIC TRAVEL DISTRIBUTION. Electronic travel distribution
revenues for the three months ended March 31, 2000 increased
approximately $54 million, 14.2%, compared to the three months ended
March 31, 1999, from $381 million to $435 million. The increase in
revenues was primarily due to growth in booking and other fees from
associates from $346 million to $392 million. The growth in fees from
associates was driven by an increase in booking volumes and an overall
increase in the average price per booking charged to associates due to
a price increase implemented in February 2000. The increase was also
driven by increases in bookings made through the Travelocity.com Web
site. Other revenues increased approximately $8 million due to
services provided to and equity income related to the Company's joint
ventures and revenues from sales of miscellaneous products and
services.
Cost of revenues for electronic travel distribution increased
approximately $25 million, 9.9%, from $253 million to $278 million.
This increase was primarily attributable to increased subscriber
incentive and salaries and benefits expenses. Subscriber incentive
expenses increased in order to maintain and expand the Company's
travel agency subscriber base. Salaries and benefits increased to
support the Company's growth, including growth of the Travelocity.com
business.
INFORMATION TECHNOLOGY SOLUTIONS. Revenues from information
technology solutions for the three months ended March 31, 2000
decreased approximately $47 million, 18.3%, compared to the three
months ended March 31, 1999, from $257 million to $210 million.
Revenues from US Airways decreased approximately $23 million due to
services performed under the information technology services agreement
moving into a steady state. Revenues from AMR decreased approximately
$6 million, primarily due to decreased development services. The
remaining $18 million reduction in revenues was due to decreases in
transaction processing and software development sales to other
customers.
Cost of revenues for information technology solutions decreased
approximately $48 million, 21.9%, from $219 million to $171 million.
This decrease was primarily attributable to a decrease in contract
labor expenses as well as a decrease in depreciation and amortization
expenses. Contract labor expenses decreased due to the planned
reduction in contract labor headcount during 1999. Depreciation and
amortization expense decreased primarily due to the reversal of
amortization expense on the deferred asset associated with the stock
options granted to US Airways. Due to a reduction in the market price
of the Company's common stock, the value of the deferred asset
decreased during the three months ended March 31, 2000. That
reduction resulted in a credit to amortization expense during the
quarter of approximately $2 million, compared to amortization expense
of approximately $3 million recognized during the quarter ended March
31, 1999.
<PAGE> 13
SABRE HOLDINGS CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $34 million, 63.0%, from $54 million
to $88 million. Expenses for the quarter ended March 31, 2000 include
$12 million of nonrecurring charges associated with the spin-off from
AMR. Additionally, $13 million of the increase is due to higher
salaries, benefits, advertising and other administrative expenses to
support the growth of the Travelocity.com business. The remaining $9
million increase is due to higher bad debt expense and other
administrative expenses to support the Company's growth initiatives.
AMORTIZATION OF TRAVELOCITY.COM GOODWILL AND INTANGIBLE ASSETS.
Amortization of goodwill and intangible assets was $5 million for the
three months ended March 31, 2000. Goodwill and intangible assets of
$248 million were recorded in connection with the merger of
Travelocity.com and Preview on March 7, 2000.
OPERATING INCOME. Operating income decreased $9 million, 8.0%, from
$112 million to $103 million. Operating margins decreased from 17.6%
in 1999 to 15.9% in 2000 due to an increase in revenues of 1.1% while
operating expenses increased 3.1%. The decline in operating margin is
primarily due to increased selling, general and administrative
expenses.
INTEREST INCOME. Interest income decreased $1 million due to lower
average balances maintained in the Company's short-term investment
accounts.
INTEREST EXPENSE. Interest expense decreased $3 million as a result
of the settlement of the $318 million debenture payable to AMR in
1999, partially offset by interest expense on the $349
million of debt incurred in February 2000, related to the payment of
the $675 million cash dividend.
OTHER INCOME (EXPENSE). Other income (expense) decreased $35 million
due to a gain recognized during the three months ended March 31, 1999
on the liquidation of a portion of the Company's beneficial interest
in Equant, N.V.
MINORITY INTEREST IN NET LOSS OF TRAVELOCITY.COM. The minority
interest in the net loss of Travelocity.com represents minority
owners' approximate 30% share of the net loss of Travelocity.com.
INCOME TAXES. The provision for income taxes was $44 million and $56
million for the three months ended March 31, 2000 and 1999,
respectively. The decrease in the provision for income taxes
corresponds with the decrease in net income before the provision for
income taxes, partially offset by an increase in the effective tax
rate resulting from the recognition of nondeductible goodwill
amortization expense related to the merger of Travelocity.com and
Preview.
OUTLOOK FOR THE REMAINDER OF 2000
The Company expects continued profitability and revenue growth in
2000. The Company expects the revenue growth rate from electronic
travel distribution to increase over the 1999 growth rate. The
Company plans to grow market share and continue to invest in products
that will assist the travel agency community in meeting customer
demands. The Company expects revenue from information technology
solutions to decrease, compared to 1999, due to reduced US Airways
interim operations and conversion/migration services as well as the
sale of the Company's logistics business. The Company intends to
aggressively pursue additional software sales and development projects
and new outsourcing contracts. The Company expects to continue to
invest in emerging distribution channels, product development and web
hosting services. The Company also anticipates continued pressure on
subscriber incentive expenses and intends to manage such expenses to
keep them in line with any market share gains.
The Company expects improved operating margins in 2000 for the
information technology solutions business by controlling headcount and
employee-related expenses and reducing certain other expenses.
However, the Company expects selling, general and administrative
expenses to increase in 2000 as a result of the spin-off from AMR and
to support the growth of the Travelocity.com business. As a result,
operating margins for the combined electronic travel distribution
business may come under pressure versus 1999 levels due primarily to
spending within the Travelocity.com business. Additionally, interest
income should decrease and interest expense increase due to funding
requirements for the $675 million dividend paid to the Company's
shareholders in February 2000.
<PAGE> 14
SABRE HOLDINGS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had approximately $220 million in cash
and short-term investments and $2 million in working capital. At
December 31, 1999, cash and short-term investments and working capital
were $611 million and $451 million, respectively. The Company invests
cash in short-term marketable securities, consisting primarily of
certificates of deposit, bankers' acceptances, commercial paper,
corporate notes and government notes. Approximately $326 million in
cash and short-term investments was used for the payment of a $675
million cash dividend on February 18, 2000. The Company also borrowed
$349 million to fund the dividend. The funding of and subsequent
payment of the $675 million cash dividend resulted in the decrease in
working capital during the three months ended March 31, 2000.
The Company used $19 million of cash for operating activities for the
three months ended March 31, 2000 compared to cash provided by
operating activities of $60 million for the three months ended March
31, 1999. Historically, the Company has funded its operations through
cash generated from operations. The increase in cash used for
operating activities during the quarter ended March 31, 2000 was
primarily due to the impact of the acquisition of Preview, payment of
amounts due under the agreement between Travelocity.com and America
Online, Inc. as discussed below and the payment of $81 million to US
Airways upon the exercise of options in lieu of issuing shares of the
Company's common stock.
Net capital investments for the three months ended March 31, 2000 and 1999
were $50 million and $43 million, respectively. The Company has
estimated capital investments of approximately $200 million to $250
million for 2000.
On September 15, 1999, the Company's Board of Directors authorized the
repurchase of up to an additional $100 million of the Company's Class
A Common Stock during the next two years. During the three months
ended March 31, 2000, the Company purchased approximately 250,000
treasury shares at a cost of approximately $9 million. During April
2000, the Company purchased 750,000 treasury shares at a cost of
approximately $25 million.
On December 14, 1999, US Airways exercised one of its two tranches of
options to acquire three million shares of the Company's Class A
Common Stock. Pursuant to the terms of the exercised options, the
Company paid approximately $81 million to US Airways on January 5,
2000.
On February 4, 2000, the Company entered into a $300 million, senior
unsecured, revolving credit agreement (the "Credit Facility"), which
expires on September 14, 2004. Additionally, on February 4, 2000, the
Company entered into a short-term $200 million, senior unsecured, term
loan agreement (the "Interim Loan"), which matures on August 4, 2000.
The proceeds from both the Credit Facility and Interim Loan will be
used for working capital, capital expenditures, acquisitions,
dividends and other corporate purposes. On February 18, 2000, the
Company utilized a portion of its available cash balance and short-
term investments and proceeds from both the Credit Facility and
Interim Loan to fund the $675 million dividend paid to shareholders.
As of March 31, 2000, borrowings under the Credit Facility and Interim
Loan amounted to approximately $149 million and $200 million,
respectively.
On February 7, 2000, in connection with the separation from AMR, the
Company declared a one-time cash dividend on all outstanding shares of
the Company's Class A and Class B Common Stock. The aggregate amount
of the dividend was $675 million, or approximately $5.20 per share,
and was paid to shareholders on February 18, 2000. In the future, the
Company intends to retain its earnings to finance future growth and,
therefore, does not anticipate paying any additional cash dividends on
its common stock. Any determination as to the future payment of
dividends will depend upon the future results of operations, capital
requirements and financial condition of 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.
During 1999, the Company entered into an agreement with America
Online, Inc. ("AOL") that became effective upon the consummation of
the merger of Travelocity.com with Preview on March 7, 2000. The
agreement provides, among other things, that the Travelocity.com Web
site will be the exclusive reservations engine for AOL's Internet
properties. Payments of up to $200 million will be made to AOL and
Travelocity.com and AOL will share advertising revenues and
commissions over the five-year term of the agreement. In connection
with this agreement, Travelocity.com paid $40 million to AOL on March
7, 2000 for the first year of the agreement.
<PAGE> 15
SABRE HOLDINGS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
On March 10, 2000, the Company filed a registration statement on Form
S-3 with the Securities and Exchange Commission through which the
Company intends to sell certain securities from time to time after the
effective date of the registration statement. The Company intends to
use the proceeds from the sale of any securities for general corporate
purposes, including the retirement of debt, additions to working
capital, capital expenditures and for acquisitions.
The Company expects that the principal use of funds in the foreseeable
future will be for capital expenditures, software product development,
acquisitions, new facility costs and working capital. Capital
expenditures will primarily consist of purchases of equipment for the
data center, as well as computer equipment to support (i) updating
existing subscriber equipment, (ii) expansion of the subscriber base
and (iii) new product capital requirements.
The Company believes available balances of cash and short-term
investments, cash flows from operations and funds available under the
Credit Facility and Interim Loan combined with the ability to raise
funds from the sale of securities in connection with the registration
statement on Form S-3 will be sufficient to meet the Company's cash
requirements for the foreseeable future.
ACQUISITION OF PREVIEW TRAVEL, INC.
On March 7, 2000, the Company completed the merger of Travelocity.com Inc.,
a subsidiary of the Company and Preview, an independent publicly-
traded company engaged in consumer direct travel distribution over the
Internet. Under the terms of the merger agreement, shareholders of
Preview received one share of Travelocity.com Inc., a newly created
subsidiary of the Company, for each share of Preview held, and Preview
was merged into Travelocity.com Inc., the surviving entity. Shares of
Travelocity.com Inc. stock now trade under the symbol "TVLY" on the
NASDAQ National Market. In connection with the merger, the Company
contributed the existing assets and businesses of Travelocity.com and
approximately $100 million in cash to Travelocity.com LP, a Delaware
limited partnership (the "Partnership"). Immediately following the
merger, Travelocity.com Inc. contributed the assets and businesses
obtained from the acquisition of Preview to the Partnership. As a
result of the merger, the Company owns an economic interest of
approximately 70% in the combined businesses, composed of a 62% direct
interest in the Partnership and a 22% interest in Travelocity.com
Inc., which holds a 38% interest in the Partnership.
The cost of the acquisition of Preview was approximately $286 million.
This amount was determined by the fair market value of Preview's
outstanding common stock on the last trading day before the merger
agreement was announced plus the value of the vested options of
Preview assumed by Travelocity.com in the merger and other direct
costs associated with the transaction. The cost of the acquisition
was allocated to the respective assets and liabilities acquired with
the remainder recorded as goodwill. The Company recorded goodwill and
other intangible assets of approximately $248 million, which is being
amortized over a three-year period.
<PAGE> 16
SABRE HOLDING CORPORATION
CAUTIONARY STATEMENT
CAUTIONARY STATEMENT
Statements in this report which are not purely historical facts,
including statements regarding 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 in
this report include, but are not limited to: risks related to the
Company's relationships with American and US Airways and their
affiliates, including risks that they may terminate any of the
agreements with the Company, or fail or otherwise become unable to
fulfill their principal obligations thereunder, or determine not to
renew certain of the agreements; risks associated with the spin-off by
AMR of its equity interest in the Company and the related $675 million
dividend, including the increased debt service for indebtedness
incurred to effect that dividend; 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 the Company's technology; risks associated with online
commerce and doing business through an Internet Web site, such as
security issues, liability for site content, and uncertain protection
of intellectual property; risks relating to the Company's investment
in technology, including the ability of the Company to timely develop
and achieve market acceptance of new products; risks associated with
industry consolidation, including strategic alliances, in the computer
reservations system industry; 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, hotel operators and car rental
companies that participate in the Sabre system, including the
increased price of fuel; risks of a natural disaster, computer
terrorism or other calamity that may cause significant damage to the
Company's data center facilities and enterprise information systems;
risks of interruption or deterioration of third party services on
which the Company relies to provide its services; risks of
deterioration or obsolescence of the Company's current systems and
infrastructures; risks associated with the Company's international
operations, such as currency fluctuations, governmental approvals,
tariffs and trade barriers, and political instability; 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 and execute
alliances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At March 31, 2000, the Company's exposure to interest rates relates
primarily to its investment portfolio and to its variable rate debt
instruments. In February 2000, the Company entered into a long-term,
$300 million, senior unsecured, revolving credit agreement and a short-
term $200 million, senior unsecured, term loan agreement. Interest on
these debt agreements is variable, based upon LIBOR, prime rate or the
federal funds rate plus a margin, at the Company's option. The
Company's earnings are affected by changes in interest rates due to
the impact that those changes have on the interest expense associated
with the loans. The weighted-average annual interest rate of debt
outstanding at March 31, 2000 was 6.33%. If short-term interest rates
average 10% higher in 2001 than during 2000, the Company's interest
expenses would increase by approximately $2 million. This amount was
determined by applying the hypothetical interest rate change to the
Company's long-term and short-term debt balances as of March 31, 2000.
If the Company's mix of interest rate-sensitive assets and liabilities
changes significantly, the Company may enter into derivative
transactions to manage its net interest exposure.
<PAGE> 17
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
PAKISTAN INTERNATIONAL AIRLINES ARBITRATION
On March 16, 2000, the Company initiated an arbitration proceeding in
Paris, France in which it is seeking to recover, from Pakistan
International Airlines, $8.5 million for services rendered plus lost
profits and termination fees. Because the arbitration has just begun,
the Company cannot estimate the time to complete the arbitration or
its results; however, the Company believes its claims are valid and
enforceable.
WORLDSPAN DISPUTE
On January 9, 1998, Worldspan LP ("Worldspan"), the former provider of
computer reservation system services to ABACUS International Holdings
("ABACUS"), filed a lawsuit against the Company in the United States
District Court for the Northern District of Georgia, Atlanta Division,
seeking damages and an injunction, and alleging, among other things,
that the Company interfered with Worldspan's relationship with ABACUS,
violated the U.S. antitrust laws, and misappropriated Worldspan's
confidential information. The same day, Worldspan filed a parallel
lawsuit in the same court against ABACUS. On February 26, 1998, the
court denied Worldspan's motion for a preliminary injunction against
ABACUS. Thereafter, the court stayed the ABACUS case pending
arbitration between ABACUS and Worldspan. The arbitration concluded
on May 20, 1999. The Arbitration Tribunal has not yet issued a ruling
in the matter. Discovery continues in the case between Worldspan and
the Company. The Company believes that Worldspan's claims are without
merit and is vigorously defending itself. No trial date has been set.
INDIA TAX ISSUE
In 1998, the tax authority in India asserted that the Company has a
taxable presence in India. In March 1999, the Company received a $30
million USD tax assessment (including interest) for the two years
ending March 31, 1998. The Company challenged the assessment on the
grounds that it does not have a taxable presence in India and, even if
it does, the assessment is based on incorrect data. The United States
government intervened on behalf of the Company (and other U.S.
companies currently facing similar tax-related issues with the Indian
government). Pursuant to that process, the Indian tax authority
stayed efforts to collect the assessment from the Company. The
Company appealed the validity and amount of the assessment within the
Indian tax authority. Although the Company did not prevail in its
appeal at this level on merits, a reassessment based on correct data
was ordered. The Company is awaiting that redetermination. The
Company continues to believe that the position of the Indian
government is without merit and that it will ultimately prevail either
through the U.S. government's efforts or on its direct appeal. The
Company anticipates that it will appeal the case through judicial
systems in India if an unfavorable ruling is obtained from the tax
authority in India.
<PAGE 18>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
<S> <C>
3.1 Restated Certificate of Incorporation of
Registrant. (1)
3.2 Restated Bylaws of Registrant. (1)
3.3 Certificate of Amendment of Certificate of
Incorporation of The Sabre Group Holdings,
Inc. (2)
4.1 Specimen Certificate representing Class A
Common Stock.
12.1 Computation of ratio of earnings to fixed
charges for the three months ended March 31,
2000.
21.1 Subsidiaries of Registrant.
27.1 Financial Data Schedule as of March 31,
2000.
</TABLE>
(1) Incorporated by reference to exhibits 3.1 through 4.1 to the
Company's Registration Statement on Form S-1 (Registration No. 333-
09747).
(2) Incorporated by reference to Exhibit 3.3 to the Company's report
on Form 10-Q for the quarter ended June 30, 1999.
FORM 8-K
On February 9, 2000, the Company filed a current report on Form 8-K
relative to a press release to announce that on February 7, 2000, a
one-time cash dividend was declared on all outstanding shares of the
Company's Class A and Class B Common Stock. The dividend consisted of
cash payments of $675 million, or $5.20 per share of the Company's
outstanding common stock, and was paid on February 18, 2000 to
shareholders of record on February 15, 2000. Also, AMR announced that
its board of directors approved a special stock dividend to deliver
its entire ownership interest in the Company to AMR shareholders of
record at the close of business on March 1, 2000. This stock dividend
was distributed after the close of business on March 15, 2000.
On March 6, 2000, the Company filed a current report on Form 8-K
relative to a presentation to analysts and potential investors dated
as of February 28, 2000. The presentation related to the declaration
by AMR on February 7, 2000 of its intent to distribute a dividend
consisting of AMR's entire ownership interest in the Company.
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SABRE HOLDINGS CORPORATION
Date: May 15, 2000 BY: /s/ Jeffery M. Jackson
Jeffery M. Jackson
Executive Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 9,605
<SECURITIES> 210,888
<RECEIVABLES> 414,355
<ALLOWANCES> 17,461
<INVENTORY> 0
<CURRENT-ASSETS> 720,444
<PP&E> 1,411,253
<DEPRECIATION> 853,666
<TOTAL-ASSETS> 1,937,390
<CURRENT-LIABILITIES> 718,496
<BONDS> 149,000
0
0
<COMMON> 1,314
<OTHER-SE> 650,095
<TOTAL-LIABILITY-AND-EQUITY> 1,937,390
<SALES> 0
<TOTAL-REVENUES> 644,906
<CGS> 0
<TOTAL-COSTS> 449,065
<OTHER-EXPENSES> 5,345
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,696
<INCOME-PRETAX> 109,512
<INCOME-TAX> 43,896
<INCOME-CONTINUING> 65,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,616
<EPS-BASIC> .51
<EPS-DILUTED> .48
</TABLE>
3
<PAGE> 1
EXHIBIT 21.1
SABRE HOLDINGS CORPORATION
SUBSIDIARIES
Sabre Holdings Corporation SUBSIDIARY
(All subsidiaries are wholly owned unless otherwise noted in parenthesis.
Each subsidiary's subsidiaries outlined further below.)
Sabre Inc. (Delaware)
Sabre 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 Investments, Inc. (Delaware)
Sabre International, Inc. (Delaware)
Sabre International Holdings, Inc. (Delaware)
Sabre Limited (New Zealand)
Sabre Soluciones de Viaje S. de R.L. de C.V. (Mexico) (99%)
Sabre Technology Enterprises, Ltd. (Cayman Islands)
Sabre Technology Holland B.V. (Netherlands)
SST Finance, Inc. (Delaware)
SST Holding, Inc. (Delaware)
TSGL, Inc. (Delaware)
Sabre Sales (Barbados), Ltd.
Ticketnet Corporation (Canada)
Travelocity Holdings, Inc. (Delaware)
Travelocity.com LP (Delaware) (51%)
Sabre Decision Technologies International, Inc. SUBSIDIARIES
Airline Technology Services Mauritius Ltd. (Mauritius)
Sabre (Australia) Pty Ltd. (Australia)
Airline Technology Services Mauritius Ltd. SUBSIDIARY
Sabre Pakistan (Private) Limited (Pakistan) (99%)
Sabre International, Inc. SUBSIDIARIES
Sabre CIS Holdings, Inc. (Delaware)
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 Italia S.r.l. (Italy) (99%)
Sabre Marketing Nederland B.V. (Netherlands)
<PAGE> 2
Sabre International, Inc. SUBSIDIARIES - Continued
Sabre Norge AS (Norway)
Sabre Portugal Servicios Lda (Portugal) (99%)
Sabre Servicios Colombia Ltda. (Colombia) (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 International (Bahrain) W.L.L. (1%)
Sabre Italia S.r.l. (Italy) (1%)
Sabre Portugal Servicios Lda (Portugal) (1%)
Sabre Servicios Colombia Ltda. (Colombia) (1%)
Sabre UK Marketing Ltd. (UK) (1%)
STIN Luxembourg S.A. (Luxembourg) (1%)
Sabre Investments, Inc. SUBSIDIARIES
Sabre Investments - PK-1, Inc. (Delaware)
Sabre Investments - B4-1, Inc. (Delaware)
Sabre Investments - LI-1, Inc. (Delaware)
Sabre Investments - WR-1, Inc. (Delaware)
SabreMark G.P., Inc. SUBSIDIARY
SabreMark Limited Partnership (Delaware) (1%)
SabreMark L.P., Inc. SUBSIDIARY
SabreMark Limited Partnership (Delaware) (99%)
Sabre Soluciones de Viaje S. de R.L. de C.V. SUBSIDIARIES
Sabre Informacion S.A. de C.V. (Mexico) (99%)
Sabre Sociedad Tecnologica S.A. de C.V. (Mexico) (51%)
Sabre Technology Enterprises, Ltd. SUBSIDIARIES
Sabre Technology Enterprises II, Ltd. (Cayman Islands)
Sabre International (Bahrain) W.L.L. (99%)
Sabre Technology Enterprises II, Ltd. SUBSIDIARY
Abacus International Pte Ltd. (Singapore) (35%)
Sabre Technology Holland B.V. SUBSIDIARIES
Sabre Informacion S.A. de C.V. (Mexico) (1%)
Sabre Soluciones de Viaje S. de R.L. de C.V. (Mexico) (1%)
<PAGE> 3
Sabre Sociedad Tecnologica S.A. de C.V. SUBSIDIARY
Sabre Servicios Administrativos S.A. de C.V. (Mexico)
TSGL, Inc. SUBSIDIARY
TSGL Holding, Inc. (Delaware)
TSGL Holding, Inc. SUBSIDIARIES
SabreMark G.P., Inc. (Delaware)
SabreMark L.P., Inc. (Delaware)
Travelocity.com LP (Delaware) (0.5%)
Ticketnet Corporation SUBSIDIARY
148549 Canada, Inc. (Canada)
Travelocity Holdings, Inc. SUBSIDIARIES
Travelocity.com Inc.(Delaware) (70% voting interest; 22.3% equity interest)
Travelocity.com LP (Delaware) (10%)
Travelocity.com Inc. SUBSIDIARIES
Travelocity.com LP (Delaware) (1%)
Travelocity.com LP Sub Inc. (Delaware)
Travelocity.com LP Sub Inc. SUBSIDIARY
Travelocity.com LP (Delaware) (37.5%)
<PAGE> 1
EXHIBIT 12.1
SABRE HOLDINGS CORPORATION
COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(in thousands)
<TABLE>
<CAPTION>
Three
Months
Ended
March 31,
2000
<C> <S>
EARNINGS:
Earnings before taxes $ 109,512
Minority interests in consolidated
subsidiaries (3,729)
Income from equity investees (2,170)
Earnings before taxes, minority interests and
earnings from equity investees 103,613
Add: Total fixed charges (per below) 7,805
Total earnings $ 111,418
FIXED CHARGES:
Interest expensed and capitalized $ 2,696
Estimate of interest within rental expense(1) 5,109
Total fixed charges $ 7,805
Ratio of earnings to fixed charges 14.28
</TABLE>_______________________
(1) Fixed charges include the estimated interest component
of rent expense (one-third of rent expense under operating
leases).
<PAGE> 1
EXHIBIT 4.1
[FRONT OF STOCK CERTIFICATE]
CLASS A CLASS A
COMMON STOCK COMMON STOCK
PAR VALUE $.01 PAR VALUE $.01
[SABRE LOGO] [SABRE LOGO]
SEE REVERSE SIDE CUSIP 785905 10 0
FOR RIGHTS LEGEND SEE REVERSE FOR CERTAIN
DEFINITIONS
NUMBER SHARES
[STOCK CERTIFICATE SYMBOL]
SABRE HOLDINGS CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE CLASS A COMMON STOCK
of Sabre Holdings Corporation transferable on the books of
the Corporation in person or by duly authorized
attorney upon surrender of this certificate properly
endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all of the
provisions of the Certificate of Incorporation of
the Corporation (copies of which are on file with the
Transfer Agent), to all of which the holder by
acceptance hereof assents. This certificate is not valid
unless countersigned by the Transfer Agent and
registered by the Registrar.
Witness the signatures of the duly authorized officers.
/s/ William J. Hannigan
PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/ Andrew B. Steinberg
CORPORATE SECRETARY
DATED:
<PAGE> 2
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
(NEW YORK, N.Y.)
TRANSFER AGENT AND REGISTRAR,
BY
AUTHORIZED SIGNATURE
[BACK OF STOCK CERTIFICATE]
SABRE HOLDINGS CORPORATION
The following abbreviations, when used in the
inscription on the face of this certificate, shall be
construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common UNIFGIFT MIN ACT -- Custodian
TEN ENT -- as tenants by the entireties ------- -------
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gift to Minors
in common Act ---------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
STOCKHOLDER WHO SO REQUESTS, THE DESIGNATIONS, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF
THE CORPORATION, AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. SUCH
REQUEST MAY BE MADE TO THE CORPORATION OR THE TRANSFER
AGENT.
For value received, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------
- ------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL
ZIP CODE OF ASSIGNEE
- - ----------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 3
Shares of the capital stock represented by the within
Certificate, and do hereby irrevocably constitute and
appoint ___________________ Attorney to transfer the said
stock on the books of the within-named Corporation with full
power of substitution in the premises.
Dated, __________
________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the certificate in
every particular without alteration or
enlargement or any change whatever. The
signature of the person executing this
power must be guaranteed by an Eligible
Guarantor Institution such as a
Commercial Bank, Trust Company,
Securities Broker/Dealer, Credit Union,
or a Savings Association participating
in a Medallion program approved by the
Securities Transfer Association, Inc.
