Earnings Releases

The SABRE Group Reports Fourth Quarter Results

Significant Accomplishments For The Year Also Highlighted

FORT WORTH, Texas - The SABRE Group (NYSE: TSG) today reported revenues of $571 million for the fourth quarter ended December 31, 1998, an increase of 29.3 percent over the same period in 1997. Full year revenue for 1998 was $2.3 billion, an increase of 29 percent over the previous year.

The company's net earnings grew 9.6 percent to $20 million, or $0.16 per share on a diluted basis in the fourth quarter of 1998, in line with Wall Street expectations, and compares to net earnings of $18 million, or $0.14 per share on a diluted basis, in the same period last year. Fourth quarter 1997 includes one-time charges to income of $5 million, net of tax. Excluding these one-time items, the company's net earnings declined 12.6 percent for the fourth quarter.

Net earnings for the year, which include a one-time gain of $9 million, net of tax, in the third quarter, rose 16.1 percent to $232 million, or $1.78 per share on a diluted basis, compared to net earnings of $200 million, or $1.53 per share on a diluted basis, in 1997. Excluding the one-time items from both years, 1998 net earnings rose 9 percent to $223 million, or $1.71 per share on a diluted basis.

"Revenue growth was very strong for the fourth quarter, driven mainly by rapid growth in our outsourcing business and steady growth in our electronic travel distribution business," said Michael J. Durham, president and chief executive officer of The SABRE Group. "At the same time, expenses for the quarter were significantly higher than last year due, in part, to expenses associated with our Year 2000 preparation. While fully anticipated, these one-time expenses, along with costs associated with our growing outsourcing business and the US Airways system conversion impacted earnings for the quarter."

Operating income grew 40.7 percent to $28 million for the fourth quarter, compared to operating income of $20 million for the same period in 1997. Excluding special items in the fourth quarter of 1997, operating income declined 8.3 percent for the fourth quarter 1998.

Operating income for the year grew 12.1 percent to $350 million, compared to $313 million in 1997. Excluding special items in both years, 1998 operating income grew 8.4 percent for the year.

Total worldwide bookings processed through the SABRE computer reservations system, which includes direct bookings and joint venture bookings, were 92 million for the quarter, an increase of 11.8 percent over the same period last year. Excluding Asia/Pacific bookings, which have been transferred to Abacus International Inc., the company's joint venture in that region, direct worldwide reservations booked through the SABRE system were 77.9 million during the fourth quarter - an increase of 2.2 percent over the same period in 1997.

Direct bookings within the United States showed a slight increase of 0.3 percent for the quarter, while direct international bookings, excluding Asia/Pacific bookings, grew 7.1 percent for the quarter.

"1998 was a very successful year for The SABRE Group," said Durham. "Revenue and earnings growth were satisfactory despite the significant incremental Year 2000 costs we incurred. In addition, our company made significant strides in laying a strategic foundation for strong, sustained future growth. We see real opportunity in 1999 as we build momentum in our outsourcing business and conclude our preparations for the Year 2000."

Significant accomplishments for The SABRE Group in 1998 include:

A record $8 million sales week in December for Travelocity.com, the company's Internet travel site. This record was one of many set and later broken by the company during the year. Travelocity.com also received a People's Voice Award with recognition as the Best Travel Site;
Successfully transitioning approximately 200 U.S. Airways systems to SABRE systems - the largest migration of its kind in the aviation industry;
Signing three additional airline outsourcing agreements with Gulf Air, Aerolineas Argentinas and Pakistan International Airlines;
Completing Year 2000 readiness for substantially all internal systems, including the SABRE computer reservations system, and deploying Year 2000 compliant software to more than 80 percent of its travel agency customers; and
Creating a joint venture with ABACUS International, which positioned The SABRE Group as the computer reservations system market share leader in the Asia-Pacific region and worldwide.

The SABRE Group is a world leader in the electronic distribution of travel and travel-related services around the globe, and is a leading provider of information technology solutions for the travel and transportation industry, including customized software development and software products, transaction processing, consulting and total IT outsourcing.

Statements in this news release about anticipated or expected future revenue and earnings growth are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements in this release are based upon information available to The SABRE Group on the date of this release. 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, including risks of changes in relationships with American or US Airways and their affiliates; competition and technological innovation by competitors; risks related to the Company's technology, such as a failure to timely achieve Year 2000 or Euro currency compliance; seasonality of the travel industry and booking revenues; sensitivity to general economic conditions and events that affect airline travel; risks associated with the Company's international operations; and legal and regulatory issues . The SABRE Group undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

SABRE is a registered service mark, and the SABRE Group logo is a service mark of an affiliate of The SABRE Group Inc.

The SABRE Group - Condensed Statements of Income - Three Months Ended December 31, 1998

The SABRE Group - Statements of Income Before Special Items - Year Ended December 31, 1998

The SABRE Group - Condensed Statements of Income - Year Ended December 31, 1998

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