While our strategy hasn't been altered, our financial results have been. The effect was immediate and dramatic: In the days following the attacks, our total travel bookings dropped approximately 65 percent. Although bookings gradually improved during the fourth quarter (from a 22.9 percent year-over-year decline in October to a 15.5 percent decline in December), it's clear that recovery is far from complete for Sabre, our customers and the travel industry. But tough times can prove to be defining times for a company. At Sabre, we understand that with leadership comes responsibility. That's why we immediately implemented several relief efforts (detailed under 9/11 response) to help our customers weather the downturn they experienced in the latter part of 2001. It's also why we are continuing our work to redefine how travel will be bought and sold in years to come. Sabre is not hunkered down, waiting for the industry's storm clouds to clear. We are moving forward with purpose and resolve. Financial highlights Before we review our progress in detail, let's first look at the company's financial performance. For the year, Sabre earned $1.72* per share, excluding special items, compared to $1.98* in 2000. Our revenues from continuing operations advanced 8 percent in 2001, to total $2.1 billion. Look inside those numbers, and you'll find that our results dropped off significantly during the second half of the year. Shortly after Sept. 11, we revised our financial guidance to reflect the industry's changed circumstances. Our revised expectations proved to be very close to what we achieved: a modest decline in earnings* and modest growth in revenues for the year. Considering the unprecedented turmoil our industry experienced, the results were respectable. And we believe that a disappointing second-half financial performance shouldn't obscure all that Sabre accomplished in 2001. Still the leader Much has changed in our business in recent months. But this has not: Sabre is a leader in every channel of travel distribution. What's more, we believe our fundamental strength as the leading provider of technology, distribution and marketing services puts us in a prime position to grow over the long term - and grow profitably - as the travel industry recovers from the difficulties of the past year. Heading into 2002, the Sabre global distribution system (GDS) business still leads the industry. We have a 48 percent bookings share in North America and a 38 percent bookings share globally. Sabre is strongly positioned in emerging segments of the marketplace, too. Our GetThere business is the world's leading provider of Web-based corporate travel and meeting planning systems. In addition, we own the majority of Travelocity.com, the world's leading online consumer travel Web site, with 32 million members and more than $300 million in revenues during 2001. To further our ability to deliver products and services to travelers in multiple distribution channels, Sabre began a tender offer in March 2002 to purchase the remaining outstanding shares of Travelocity. We believe it makes sense to combine the strengths of both companies to pursue new revenue opportunities and deliver greater value to our customers and suppliers. Still, a No.1 ranking does not lead to complacency at Sabre. Just the opposite. We took steps throughout 2001 to improve the fundamentals of our business and to set the stage for long-term growth. In July, we completed a significant strategic transaction. We divested our airline infrastructure outsourcing business to EDS. And we signed a 10-year outsourcing services agreement with EDS to manage our IT systems. By selling this business to EDS and outsourcing certain IT systems, we were able to sharpen our focus on higher growth opportunities in the travel marketing and distribution businesses - while significantly reducing our data-processing costs. We also entered a marketing agreement to jointly market key Sabre travel industry software products - and EDS' technology services - giving both companies access to new customers. We restructured our Airlines Solutions business, too - making changes that led to significant revenue growth during the third quarter. This business unit added several airlines as new customers for its reservations hosting service. Airline Solutions also landed the first customers for the new Sabre® eMergo™ Web-enabled and dedicated solutions. With this promising new business targeted to small to mid-sized carriers, we act as an application service provider (ASP) - charging customers usage fees to have leading-edge software applications delivered upon request from one of our Web servers. Several investments in 2001 also promise to strengthen our hand going forward. We extended our presence in the European market by investing in Karavel.com, a new high-end consumer travel Web site based in France. We also acquired control of Sabre Pacific, a travel distribution business that strengthens our ties with travel agencies in Australia and New Zealand - the world's eighth largest travel market. Last but not least, in August we began an investment that will reach more than $100 million over the next several years and will migrate our shopping applications to an open systems computing platform. We believe our technology is the best in the industry today, and we are investing to make sure it remains the best down the road. We expect this migration to drive several benefits for our customers, including easier system access, richer content, and faster speed to market with new products and services. And we believe this investment in technology will result in a 40 percent reduction in our total cost of ownership - allowing Sabre to invest even more in products and services to serve our travel customers. What's important to note about all of these investment activities is that we did them without diluting our focus on cost management or disciplined financial performance. Even before the events of Sept. 11, we were aggressively managing costs in response to a softening travel market and a weakening economy. We stepped up those efforts in the third and fourth quarters of the year - putting in place another $100 million in cost savings for 2002. At the same time, we took steps to strengthen our balance sheet - using our strong cash flow and proceeds from the EDS transaction to pay down $859 million in debt during the year. Sabre is on solid financial footing: We carried just $400 million in long-term debt, and we had more than $650 million in cash and marketable securities on the books at year-end. Outlook Looking ahead, we believe it's still too soon to tell when the travel industry will recover completely from the turmoil created last September. So our plan for the short term is simple: We will continue to manage this business in a way that reflects the current realities of the marketplace. By doing so, we believe Sabre can - and will - achieve modest growth in revenues and earnings during 2002. And we believe it will be 2003 when we resume a growth trajectory in line with our performance expectations from the first half of 2001. In some measure, our confident outlook is the result of experience. We were tested severely in 2001, and we proved that Sabre is resilient. Still, as an industry leader, our job is not yet done. Now more than ever, we are using our vision and resources to drive the long-term growth of the travel industry - and in the process, to define a winning future for Sabre and our shareholders.
	WILLIAM J. HANNIGAN Chairman and Chief Executive Officer
	* All references to earnings are before special items, which are noted in footnote (2).