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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|ý                                                  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Quarterly Period Ended September 30, 2006.
|OR                                                
|o                                                  | 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.                   

LOGO

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

Delaware(State or other jurisdiction of
incorporation or organization)

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

76092(Zip Code)


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

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 ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check One):

Large
Accelerated Filer ý                Accelerated
Filer o                Non-accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

|Class                                |  | Outstanding at October 27, 2006
|------------------------------------ |  | -------------------------------
|Class A Common Stock, $.01 par value |  | 132,375,395 Shares             



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INDEX

SABRE HOLDINGS CORPORATION



|PART I:   |  | FINANCIAL INFORMATION                                                                         |  | 3 
|--------- |  | --------------------------------------------------------------------------------------------- |  | --
|Item 1.   |  | Financial Statements (Unaudited)                                                              |  | 3 
|          |  | Consolidated Statements of IncomeThree and nine months ended September 30, 2005 and 2006     |  | 3 
|          |  | Consolidated Balance SheetsDecember 31, 2005 and September 30, 2006                          |  | 4 
|          |  | Consolidated Condensed Statement of Stockholders' EquityNine months ended September 30, 2006 |  | 5 
|          |  | Consolidated Statements of Cash FlowsNine months ended September 30, 2005 and 2006           |  | 6 
|          |  | Notes to Consolidated Financial Statements                                                    |  | 7 
|Item 2.   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations         |  | 36
|Item 3.   |  | Quantitative and Qualitative Disclosures about Market Risk                                    |  | 63
|Item 4.   |  | Controls and Procedures                                                                       |  | 64
|PART II:  |  | OTHER INFORMATION                                                                             |  | 68
|Item 1.   |  | Legal Proceedings                                                                             |  | 68
|Item 1A   |  | Risk Factors                                                                                  |  | 68
|Item 2.   |  | Unregistered Sales of Equity Securities and Use of Proceeds                                   |  | 68
|Item 3.   |  | Defaults Upon Senior Securities                                                               |  | 69
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                           |  | 69
|Item 5.   |  | Other Information                                                                             |  | 69
|Item 6.   |  | Exhibits                                                                                      |  | 69
|SIGNATURE |  | 71                                                                                           

2

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PART I. FINANCIAL INFORMATION



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

|                                           |                                         | Three Months Ended September 30, |         | Nine Months Ended September 30, |  
|------------------------------------------ | --------------------------------------- | -------------------------------- | ------- | ------------------------------- | -
|
|Revenues                                   |                                         | $                                | 746,129 |                                 | $
|                                           | Cost of revenues                        |                                  |         | 375,587                         |  
|                                           | Amortization of purchased technology    |                                  |         | 8,518                           |  
|                                           |                                         |                                  |         |                                 |  
|Total cost of revenues                     |                                         |                                  | 384,105 |                                 |  
|Gross profit                               |                                         |                                  | 362,024 |                                 |  
|Other operating expenses                   |                                         |                                  |         |                                 |  
|                                           | Selling, general and administrative     |                                  |         | 233,241                         |  
|                                           | Amortization of other intangible assets |                                  |         | 9,223                           |  
|                                           |                                         |                                  |         |                                 |  
|Total other operating expenses             |                                         |                                  | 242,464 |                                 |  
|Operating income                           |                                         |                                  | 119,560 |                                 |  
|Other income (expense)                     |                                         |                                  |         |                                 |  
|                                           | Interest income                         |                                  |         | 5,286                           |  
|                                           | Interest expense                        |                                  |         | (20,102                         | )
|                                           | Gain (loss) on sale of investment       |                                  |         |                                |  
|                                           | Gain (loss) on derivative instrument    |                                  |         |                                |  
|                                           | Other, net                              |                                  |         | 1,710                           |  
|                                           |                                         |                                  |         |                                 |  
|Total other income (expense)               |                                         |                                  | (13,106 | )                               |  
|Income before provision for income taxes   |                                         |                                  | 106,454 |                                 |  
|Provision for income taxes                 |                                         |                                  | 38,882  |                                 |  
|                                           |                                         |                                  |         |                                 |  
|Net earnings                               |                                         | $                                | 67,572  |                                 | $
|                                           |                                         |                                  |         |                                 |  
|Earnings per common share                  |                                         |                                  |         |                                 |  
|                                           | Basic                                   |                                  | $       | 0.52                            |  
|                                           | Diluted                                 |                                  | $       | 0.52                            |  
|Weighted average common shares outstanding |                                         |                                  |         |                                 |  
|                                           | Basic                                   |                                  |         | 129,769                         |  
|                                           | Diluted                                 |                                  |         | 130,245                         |  

See Notes to Consolidated Financial Statements.

3

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SABRE HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

|                                                                                                                                    |  | September 30,
2006 |           | December 31,
2005 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ----------------- | -
|
|Assets                                                                                                                              |  |                    |           |                   |  
|Current assets                                                                                                                      |  |                    |           |                   |  
|Cash                                                                                                                                |  | $                  | 327,746   |                   | $
|Restricted cash                                                                                                                     |  |                    | 8,815     |                   |  
|Marketable securities                                                                                                               |  |                    | 183,215   |                   |  
|Accounts receivable, net                                                                                                            |  |                    | 505,131   |                   |  
|Prepaid expenses                                                                                                                    |  |                    | 45,473    |                   |  
|Deferred income taxes                                                                                                               |  |                    | 18,984    |                   |  
|Other receivables                                                                                                                   |  |                    | 130,191   |                   |  
|                                                                                                                                    |  |                    |           |                   |  
|Total current assets                                                                                                                |  |                    | 1,219,555 |                   |  
|Property and equipment                                                                                                              |  |                    |           |                   |  
|Buildings and leasehold improvements                                                                                                |  |                    | 226,322   |                   |  
|Furniture, fixtures and equipment                                                                                                   |  |                    | 36,923    |                   |  
|Computer equipment                                                                                                                  |  |                    | 189,845   |                   |  
|Internally developed software                                                                                                       |  |                    | 296,669   |                   |  
|                                                                                                                                    |  |                    |           |                   |  
|                                                                                                                                    |  |                    | 749,759   |                   |  
|Less accumulated depreciation and amortization                                                                                      |  |                    | (388,241  | )                 |  
|                                                                                                                                    |  |                    |           |                   |  
|Total property and equipment                                                                                                        |  |                    | 361,518   |                   |  
|Deferred income taxes                                                                                                               |  |                    |          |                   |  
|Investments in joint ventures                                                                                                       |  |                    | 149,199   |                   |  
|Goodwill and intangible assets, net                                                                                                 |  |                    | 2,476,690 |                   |  
|Assets held for sale (See Note 3Significant Events)                                                                                |  |                    | 75,988    |                   |  
|Other assets, net                                                                                                                   |  |                    | 181,059   |                   |  
|                                                                                                                                    |  |                    |           |                   |  
|Total assets                                                                                                                        |  | $                  | 4,464,009 |                   | $
|                                                                                                                                    |  |                    |           |                   |  
|Liabilities and stockholders' equity                                                                                                |  |                    |           |                   |  
|Current liabilities                                                                                                                 |  |                    |           |                   |  
|Accounts payable                                                                                                                    |  | $                  | 166,055   |                   | $
|Travel supplier liabilities and deferred revenue                                                                                    |  |                    | 470,761   |                   |  
|Accrued compensation and related benefits                                                                                           |  |                    | 59,040    |                   |  
|Accrued subscriber incentives                                                                                                       |  |                    | 109,142   |                   |  
|Deferred revenues                                                                                                                   |  |                    | 51,734    |                   |  
|Bridge facility                                                                                                                     |  |                    |          |                   |  
|Other accrued liabilities                                                                                                           |  |                    | 394,033   |                   |  
|                                                                                                                                    |  |                    |           |                   |  
|Total current liabilities                                                                                                           |  |                    | 1,250,765 |                   |  
|Deferred income taxes                                                                                                               |  |                    | 36,070    |                   |  
|Pensions and other postretirement benefits                                                                                          |  |                    | 185,599   |                   |  
|Other liabilities                                                                                                                   |  |                    | 26,198    |                   |  
|Minority interests                                                                                                                  |  |                    | 6,085     |                   |  
|Long-term capital lease obligation                                                                                                  |  |                    | 155,960   |                   |  
|Public and other notes payable                                                                                                      |  |                    | 975,760   |                   |  
|Commitments and contingencies                                                                                                       |  |                    |           |                   |  
|Stockholders' equity                                                                                                                |  |                    |           |                   |  
|Preferred stock: $0.01 par value; 20,000 shares authorized; no shares issued                                                        |  |                    |          |                   |  
|Class A Common Stock: $0.01 par value; 250,000 shares authorized; 145,937 shares issued at September 30, 2006 and December 31, 2005 |  |                    | 1,459     |                   |  
|Additional paid-in capital                                                                                                          |  |                    | 1,281,912 |                   |  
|Retained earnings                                                                                                                   |  |                    | 847,799   |                   |  
|Accumulated other comprehensive gain (loss)                                                                                         |  |                    | 13,507    |                   |  
|Less treasury stock at cost: 13,984 and 14,281 shares, respectively                                                                 |  |                    | (317,105  | )                 |  
|                                                                                                                                    |  |                    |           |                   |  
|Total stockholders' equity                                                                                                          |  |                    | 1,827,572 |                   |  
|                                                                                                                                    |  |                    |           |                   |  
|Total liabilities and stockholders' equity                                                                                          |  | $                  | 4,464,009 |                   | $
|                                                                                                                                    |  |                    |           |                   |  

See Notes to Consolidated Financial Statements.

4

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SABRE HOLDINGS CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED September 30, 2006
(Unaudited) (In thousands)

|                                         |                                                                          | Class A
Common
Stock                                                                           |       | Additional Paid
in Capital |   | Retained
Earnings |         | Accumulated
Other
Comprehensive
(Loss) Gain |         | Treasury
Stock |         | Total   |  
|---------------------------------------- | ------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | ----- | -------------------------- | - | ----------------- | ------- | ------------------------------------------- | ------- | -------------- | ------- | ------- | -
|Balance at December 31, 2005             |                                                                          | $                                                                                              | 1,459 |                            | $ | 1,275,836         |         | $                                           | 769,231 |                | $       | (77,872 | )
|Issuances pursuant to:                   |                                                                          |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  
|                                         | Stock option plans                                                       |                                                                                                |       |                           |   |                   | (2,875  | )                                           |         |               |         |         | 
|                                         | Restricted stock (net of forfeitures)                                    |                                                                                                |       |                           |   |                   | (18,708 | )                                           |         |               |         |         | 
|                                         | Restricted stock withheld upon lapse                                     |                                                                                                |       |                           |   |                   |        |                                             |         |               |         |         | 
|                                         | Employee stock purchase plan                                             |                                                                                                |       |                           |   |                   | (17     | )                                           |         |               |         |         | 
|                                         | Tax benefit from exercise of employee stock options and restricted stock |                                                                                                |       |                           |   |                   | 1,840   |                                             |         |               |         |         | 
|Dividends, $0.10 per common share        |                                                                          |                                                                                                |      |                            |   |                  |         |                                             | (39,567 | )              |         |        |  
|Purchases of treasury stock              |                                                                          |                                                                                                |      |                            |   |                  |         |                                             |        |                |         |        |  
|Amortization of stock-based compensation |                                                                          |                                                                                                |      |                            |   | 24,389            |         |                                             |        |                |         |        |  
|                                         | Comprehensive income:                                                    |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  
|                                         |                                                                          | Net earnings                                                                                   |       |                            |  |                   |         |                                            |         |                | 118,135 |         |  
|                                         |                                                                          | Unrealized gain on foreign currency forward and option contracts, net of deferred income taxes |       |                            |  |                   |         |                                            |         |                |        |         |  
|                                         |                                                                          | Unrecognized gain on hedge settlement                                                          |       |                            |  |                   |         |                                            |         |                |        |         |  
|                                         |                                                                          | Unrealized gain on investments, net of deferred income taxes                                   |       |                            |  |                   |         |                                            |         |                |        |         |  
|                                         |                                                                          | Unrealized foreign currency translation gain, net of deferred income taxes                     |       |                            |  |                   |         |                                            |         |                |        |         |  
|                                         |                                                                          |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  
|                                         | Total comprehensive income                                               |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  
|                                         |                                                                          |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  
|                                         | Other                                                                    |                                                                                                |       |                           |   |                   | 1,447   |                                             |         |               |         |         | 
|                                         |                                                                          |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  
|Balance at September 30, 2006            |                                                                          | $                                                                                              | 1,459 |                            | $ | 1,281,912         |         | $                                           | 847,799 |                | $       | 13,507  |  
|                                         |                                                                          |                                                                                                |       |                            |   |                   |         |                                             |         |                |         |         |  

See Notes to Consolidated Financial Statements.

5

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SABRE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

|                                                                                |                                                                | Nine Months Ended September 30,                  |            
|------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------------ | -----------
|
|Operating Activities                                                            |                                                                |                                                  |            
|Net earnings                                                                    |                                                                | $                                                | 118,135    
|Adjustments to reconcile net earnings to cash provided by operating activities: |                                                                |                                                  |            
|                                                                                | Depreciation and amortization                                  |                                                  |            
|                                                                                | Stock-based compensation for employees                         |                                                  |            
|                                                                                | Allowance for doubtful accounts                                |                                                  |            
|                                                                                | Deferred income taxes                                          |                                                  |            
|                                                                                | Loss on derivative instrument                                  |                                                  |            
|                                                                                | Joint venture equity loss (income)                             |                                                  |            
|                                                                                | Gain on sale of investments                                    |                                                  |            
|                                                                                | Loss on sale of subsidiaries                                   |                                                  |            
|                                                                                | Other                                                          |                                                  |            
|                                                                                | Changes in operating assets and liabilities:                   |                                                  |            
|                                                                                |                                                                | Accounts and other receivables                   |            
|                                                                                |                                                                | Prepaid expenses                                 |            
|                                                                                |                                                                | Other assets                                     |            
|                                                                                |                                                                | Accrued compensation and related benefits        |            
|                                                                                |                                                                | Accounts payable and other accrued liabilities   |            
|                                                                                |                                                                | Travel supplier liabilities and deferred revenue |            
|                                                                                |                                                                | Pensions and other postretirement benefits       |            
|                                                                                | Excess tax benefits from stock-based compensation arrangements |                                                  |            
|                                                                                |                                                                |                                                  |            
|                                                                                | Cash provided by operating activities                          |                                                  |            
|Investing Activities                                                            |                                                                |                                                  |            
|Additions to property and equipment                                             |                                                                |                                                  | (81,231    
|Purchases of marketable securities                                              |                                                                |                                                  | (10,276,506
|Sales of marketable securities                                                  |                                                                |                                                  | 10,469,911 
|Proceeds from sale of investments                                               |                                                                |                                                  | 1,940      
|Loans to and investments in joint venture partners                              |                                                                |                                                  |           
|Acquisitions (net of cash acquired)                                             |                                                                |                                                  | (50,438    
|Proceeds from release of restricted cash                                        |                                                                |                                                  | 37,211     
|Other investing activities                                                      |                                                                |                                                  | 4,743      
|                                                                                |                                                                |                                                  |            
|                                                                                | Cash provided by (used for) investing activities               |                                                  |            
|Financing Activities                                                            |                                                                |                                                  |            
|Proceeds from issuance of Common Stock                                          |                                                                |                                                  | 11,661     
|Dividends paid                                                                  |                                                                |                                                  | (39,567    
|Proceeds from bridge facility                                                   |                                                                |                                                  |           
|Prepayment of bridge facility                                                   |                                                                |                                                  | (800,000   
|Proceeds from borrowings on revolving credit agreement                          |                                                                |                                                  | 180,000    
|Payments of borrowings on revolving credit agreement                            |                                                                |                                                  | (25,000    
|Proceeds from issuance of senior unsecured notes                                |                                                                |                                                  | 397,136    
|Excess tax benefits from stock-based compensation arrangements                  |                                                                |                                                  | 683        
|Purchases of treasury stock                                                     |                                                                |                                                  | (23,387    
|Other financing activities                                                      |                                                                |                                                  | (1,461     
|                                                                                |                                                                |                                                  |            
|                                                                                | Cash provided by (used for) financing activities               |                                                  |            
|                                                                                | Effect of exchange rate changes on cash and cash equivalents   |                                                  |            
|Increase in cash                                                                |                                                                |                                                  | 192,513    
|Cash at beginning of period                                                     |                                                                |                                                  | 135,233    
|                                                                                |                                                                |                                                  |            
|Cash at end of period                                                           |                                                                | $                                                | 327,746    
|                                                                                |                                                                |                                                  |            

See Notes to Consolidated Financial Statements.

6

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SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     General Information



---



2.     Summary of Significant Accounting Policies



7

---





8

---





9

---





Three Months Ended
September 30,

Nine Months Ended
September 30,2006

2005

2006

2005Denominator for basic earnings per common shareweighted-average shares

129,769

129,328

130,177

129,619Dilutive effect of stock awards and options

476

764

1,029

674Denominator for diluted earnings per common shareadjusted weighted-average shares

130,245

130,092

131,206

130,293




3.     Significant Events



10

---





11

---





12

---





Working capital

$
(25,257
)Tradenames (indefinite life)


5,400Tradenames (5 year useful life)


800Technology (5 year useful life)


3,130Goodwill


50,986Total purchase price

$
35,059




Working capital

$
(234,956
)Property and equipment


19,629Investments in joint ventures and other assets, net


556Tradenames (indefinite life)


281,789Tradenames (14.2 year average useful life)


45,005Technology (3.5 year useful life)


95,411Customer and contractual relationships (7 year useful life)


108,012Non-compete agreements (1 year useful life)


1,800Goodwill


855,677Non-current liabilities


(1,483
)Total purchase price

$
1,171,440


13

---





14

---





Three Months
Ended
September 30, 2005

Nine Months
Ended
September 30, 2005Pro forma revenues

$
730,434

$
2,085,206Pro forma net earnings


59,848


98,595Pro forma net earnings per common share:Basic

$
0.46

$
0.76Diluted

$
0.46

$
0.76




Assets acquired net of liabilities assumed

$
5,503Purchased technology (5 year useful life)


3,900Customer relationships (8 year useful life)


10,700Tradenames


1,800Goodwill


19,196Total purchase price

$
41,099




15

---





16

---





4.     Pension and Other Postretirement Benefit Plans



Three Months Ended
September 30,

Nine Months Ended
September 30,Components of net periodic benefit cost:2006

2005

2006

2005Service cost

$
29

$
1,510

$
86

$
4,529Interest cost


6,477


5,405


17,172


16,212Expected return on plan assets


(8,412
)

(6,332
)

(21,406
)

(18,341
)Amortization of transition asset


(3
)

(3
)

(9
)

(8
)Amortization of prior service cost





35





104Amortization of actuarial loss


603


1,189


1,941


3,565Net periodic benefit cost


(1,306
)

1,804


(2,216
)

6,061Settlement loss








307


Total net periodic benefit cost

$
(1,306
)
$
1,804

$
(1,909
)
$
6,061




Three Months Ended
September 30,

Nine Months Ended
September 30,Components of net periodic benefit cost:2006

2005

2006

2005Service cost

$
293

$
276

$
880

$
899Interest cost


1,163


1,040


3,489


3,201Amortization of transition asset


4


4


12


11Amortization of prior service cost


(1,622
)

(1,542
)

(4,866
)

(4,620
)Amortization of actuarial loss


963


661


2,889


2,253Total net periodic benefit cost

$
801

$
439

$
2,404

$
1,744




17

---





5.     Options and Other Stock-Based Awards



Three Months Ended
September 30,

Nine Months Ended
September 30,2006

2005

2006

2005Stock options

$
3,712

$
371

$
12,693

$
1,202Restricted stock


3,652


2,584


10,389


7,417Performance shares


1,181





3,138


SFAS 123R adjustment








(1,831
)

Total

$
8,545

$
2,955

$
24,389

$
8,619




18

---







Three Months Ended
September 30, 2005

Nine Months Ended
September 30, 2005Net earnings, as reported

$
58,496

$
160,064Add stock compensation expense determined under intrinsic value method, net of income taxes


1,914


5,466Less total stock-based employee compensation expense determined under fair value based method for all awards, net of income taxes


(7,736
)

(24,027
)Pro forma net earnings

$
52,674

$
141,503Net earnings per common share, as reported:Basic

$
0.45

$
1.23Diluted

$
0.45

$
1.23Net earnings per common share, pro forma:Basic

$
0.41

$
1.09Diluted

$
0.40

$
1.09




Three Months Ended
September 30, 2005

Nine Months Ended
September 30, 2005Average risk-free interest rate


4.20
%

3.65
%Expected life (in years)


4.5


4.5Sabre Holdings dividend yield


1.9
%

1.7
%Sabre Holdings implied volatility


48.9
%

49.8
%Fair value

$
7.50

$
8.26




19

---





Restricted Stock

Shares

Weighted-
Average Grant
Date Fair ValueNonvested at December 31, 2005

1,757,084

$
20.81Granted

1,169,050


23.37Vested

(543,550
)

20.64Forfeited

(261,091
)

21.17Nonvested at September 30, 2006

2,121,493

$
22.11




Sabre Holdings initial stock price

$23.62Sabre Holdings implied volatility

27.41
%Sabre Holdings dividend yield

1.67
%Risk free rate

4.63%-4.65
%




20

---







21

---





|Stock Options                     |  | Shares     |   | Weighted-
Average
Exercise Price
per Share |       | Average
Remaining
Contractual
Term (years) |      | Aggregate
Intrinsic Value
|--------------------------------- |  | ---------- | - | ------------------------------------------ | ----- | ------------------------------------------ | ---- | -------------------------
|Outstanding at December 31, 2005  |  | 16,929,727 |   | $                                          | 30.08 |                                            | 6.33 |                          
|Granted                           |  | 15,561     |   |                                            | 21.37 |                                            |      |                          
|Exercised                         |  | (776,165   | ) |                                            | 19.77 |                                            |      |                          
|Cancelled                         |  | (1,532,106 | ) |                                            | 33.38 |                                            |      |                          
|                                  |  |            |   |                                            |       |                                            |      |                          
|Outstanding at September 30, 2006 |  | 14,637,017 |   | $                                          | 30.27 |                                            | 5.57 |                          
|                                  |  |            |   |                                            |       |                                            |      |                          

|               |  | Options Outstanding |  | Options Exercisable
|-------------- |  | ------------------- |  | -------------------
|
|$0.16-$15.99   |  | 23,965              |  | 3.49               
|$16.00-$25.99  |  | 7,027,496           |  | 7.01               
|$26.00-$35.99  |  | 1,257,575           |  | 3.09               
|$36.00-$48.99  |  | 5,277,785           |  | 4.67               
|$49.00-$60.99  |  | 941,277             |  | 3.49               
|$61.00-$105.06 |  | 108,919             |  | 3.44               
|               |  |                     |  |                    
|Total          |  | 14,637,017          |  | 5.57               
|               |  |                     |  |                    



22

---





6.     Income Taxes



Three Months Ended
September 30,

Nine Months Ended
September 30,2006

2005

2006

2005Income tax provision at statutory federal income tax rate

$
37,259

$
32,729

$
64,306

$
89,066State income taxes, net of federal tax effects


585


1,454


2,374


4,640Reversal of previously accrued taxes


(919
)




(5,692
)

Other, net


1,957


831


4,607


704Total provision for income taxes

$
38,882

$
35,014

$
65,595

$
94,410


7.     Derivatives



23

---





8.     Debt



24

---





Covenant

Requirement

Level at
September 30,
2006Consolidated Leverage Ratio (Debt to EBITDA)

3.50 to 1 maximum

2.67Consolidated Net Worth

$1.3 billion

$1.7 billion




As amended on July 22, 2005

RequirementConsolidated Leverage Ratio (Debt to EBITDA) for the quarters ended:June 30, 2006 through September 30, 2006

3.50 to 1 maximumDecember 31, 2006 through March 31, 2007

3.25 to 1 maximumJune 30, 2007 and thereafter

3.00 to 1 maximum




25

---



9.     Business Segments



26

---





Three Months Ended
September 30,

Nine Months Ended
September 30,2006

2005

2006

2005Revenues from external customers, excluding adjusting items:Sabre Travel Network

$
383,134

$
388,961

$
1,224,504

$
1,220,549Travelocity


285,848


240,965


728,420


485,535Sabre Airline Solutions


71,965


67,140


204,496


196,757Total

$
740,947

$
697,066

$
2,157,420

$
1,902,841Intersegment revenues:Sabre Travel Network

$
9,829

$
7,499

$
30,017

$
22,291Travelocity


35,236


38,687


108,928


120,155Total

$
45,065

$
46,186

$
138,945

$
142,446Equity in net income (loss) of equity method investees:Sabre Travel Network

$
4,958

$
5,727

$
10,894

$
7,288Travelocity


224


(3,087
)

615


(9,280
)Total

$
5,182

$
2,640

$
11,509

$
(1,992
)Consolidated revenues:Sabre Travel Network

$
397,921

$
402,187

$
1,265,415

$
1,250,128Travelocity


321,308


276,565


837,963


596,410Sabre Airline Solutions


71,965


67,140


204,496


196,757Elimination of intersegment revenues


(45,065
)

(46,186
)

(138,945
)

(142,446
)Total

$
746,129

$
699,706

$
2,168,929

$
1,900,849




27

---





Three Months Ended
September 30,

Nine Months Ended
September 30,2006

2005

2006

2005Segment operating income (loss) excluding adjusting items:Sabre Travel Network

$
75,103

$
61,236

$
226,618

$
216,181Travelocity


57,459


40,939


59,980


33,687Sabre Airline Solutions


13,508


10,877


30,087


32,447Net corporate allocations


(796
)

(982
)

(1,493
)

(753
)Total

$
145,274

$
112,070

$
315,192

$
281,562Impact of adjusting items on operating income(increase)/decrease:Sabre Travel Network:Other intangibles amortization

$
3,407

$
3,454

$
10,054

$
12,306Stock-based compensation


4,225





12,861


Total Sabre Travel Network

$
7,632

$
3,454

$
22,915

$
12,306Travelocity:Other intangibles amortization

$
13,900

$
11,560

$
42,794

$
15,936Stock-based compensation


2,658


371


8,317


1,202Total Travelocity

$
16,558

$
11,931

$
51,111

$
17,138Sabre Airline Solutions:Other intangibles amortization

$
349

$
558

$
1,469

$
1,691Stock-based compensation


1,175





3,822


Total Sabre Airline Solutions

$
1,524

$
558

$
5,291

$
1,691Corporate:Other

$


$
(3,444
)
$


$
(3,444
)Total Corporate

$


$
(3,444
)
$


$
(3,444
)Total operating income adjusting items

$
25,714

$
12,499

$
79,317

$
27,691Consolidated operating income (loss):Sabre Travel Network

$
67,471

$
57,782

$
203,703

$
203,875Travelocity


40,901


29,008


8,869


16,549Sabre Airline Solutions


11,984


10,319


24,796


30,756Net corporate allocations


(796
)

2,462


(1,493
)

2,691Total

$
119,560

$
99,571

$
235,875

$
253,871




28

---



10.   Supplemental Guarantor/Non-Guarantor Financial Information



29

---





UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF INCOME  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006  (In thousands)

|                                         |                          | Sabre
Holdings               |        | Sabre
Inc. |        | Non-Guarantor
Subsidiaries |         | Eliminations |         | Sabre
Consolidated |      
|---------------------------------------- | ------------------------ | ---------------------------- | ------ | ---------- | ------ | -------------------------- | ------- | ------------ | ------- | ------------------ | -----
|Revenues                                 |                          | $                            |       |            | $      | 364,638                    |         | $            | 507,015 |                    | $    
|Operating expenses                       |                          |                              | 1,151  |            |        | 324,193                    |         |              | 426,749 |                    |      
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|Operating income (loss)                  |                          |                              | (1,151 | )          |        | 40,445                     |         |              | 80,266  |                    |      
|Other income (expense)                   |                          |                              |        |            |        |                            |         |              |         |                    |      
|                                         | Interest income          |                              |        | 38,804     |        |                            | 2,319   |              |         | 8,514              |      
|                                         | Interest expense         |                              |        | (16,221    | )      |                            | (47,201 | )            |         | (1,031             | )    
|                                         | Income from subsidiaries |                              |        | 53,789     |        |                            | 56,224  |              |         |                   |      
|                                         | Other, net               |                              |        |           |        |                            | 785     |              |         | 925                |      
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|                                         |                          | Total other income (expense) |        |            | 76,372 |                            |         | 12,127       |         |                    | 8,408
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|Income before provision for income taxes |                          |                              | 75,221 |            |        | 52,572                     |         |              | 88,674  |                    |      
|Provision (credit) for income taxes      |                          |                              | 7,649  |            |        | (1,217                     | )       |              | 32,450  |                    |      
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|Net earnings                             |                          | $                            | 67,572 |            | $      | 53,789                     |         | $            | 56,224  |                    | $    
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      

UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF INCOME  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005  (In thousands)

|                                         |                          | Sabre
Holdings               |        | Sabre
Inc. |        | Non-Guarantor
Subsidiaries |         | Eliminations |         | Sabre
Consolidated |      
|---------------------------------------- | ------------------------ | ---------------------------- | ------ | ---------- | ------ | -------------------------- | ------- | ------------ | ------- | ------------------ | -----
|Revenues                                 |                          | $                            |       |            | $      | 380,833                    |         | $            | 451,966 |                    | $    
|Operating expenses                       |                          |                              | 648    |            |        | 342,538                    |         |              | 390,042 |                    |      
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|Operating income (loss)                  |                          |                              | (648   | )          |        | 38,295                     |         |              | 61,924  |                    |      
|Other income (expense)                   |                          |                              |        |            |        |                            |         |              |         |                    |      
|                                         | Interest income          |                              |        | 32,935     |        |                            | 3,729   |              |         | 4,965              |      
|                                         | Interest expense         |                              |        | (12,586    | )      |                            | (38,733 | )            |         | (808               | )    
|                                         | Income from subsidiaries |                              |        | 45,588     |        |                            | 43,981  |              |         |                   |      
|                                         | Other, net               |                              |        |           |        |                            | 1,775   |              |         | 2,662              |      
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|                                         |                          | Total other income (expense) |        |            | 65,937 |                            |         | 10,752       |         |                    | 6,819
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|Income before provision for income taxes |                          |                              | 65,289 |            |        | 49,047                     |         |              | 68,743  |                    |      
|Provision for income taxes               |                          |                              | 6,793  |            |        | 3,459                      |         |              | 24,762  |                    |      
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      
|Net earnings                             |                          | $                            | 58,496 |            | $      | 45,588                     |         | $            | 43,981  |                    | $    
|                                         |                          |                              |        |            |        |                            |         |              |         |                    |      

30

---



UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF INCOME  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006  (In thousands)

|                                         |                          | Sabre
Holdings               |         | Sabre
Inc. |         | Non-Guarantor
Subsidiaries |          | Eliminations |           | Sabre
Consolidated |      
|---------------------------------------- | ------------------------ | ---------------------------- | ------- | ---------- | ------- | -------------------------- | -------- | ------------ | --------- | ------------------ | -----
|Revenues                                 |                          | $                            |        |            | $       | 1,158,029                  |          | $            | 1,386,042 |                    | $    
|Operating expenses                       |                          |                              | 3,443   |            |         | 1,039,448                  |          |              | 1,265,305 |                    |      
|                                         |                          |                              |         |            |         |                            |          |              |           |                    |      
|Operating income (loss)                  |                          |                              | (3,443  | )          |         | 118,581                    |          |              | 120,737   |                    |      
|Other income (expense)                   |                          |                              |         |            |         |                            |          |              |           |                    |      
|                                         | Interest income          |                              |         | 112,233    |         |                            | 6,524    |              |           | 20,024             |      
|                                         | Interest expense         |                              |         | (48,316    | )       |                            | (135,208 | )            |           | (2,613             | )    
|                                         | Income from subsidiaries |                              |         | 77,570     |         |                            | 77,749   |              |           |                   |      
|                                         | Other, net               |                              |         | 1,831      |         |                            | 1,071    |              |           | (7,691             | )    
|                                         |                          |                              |         |            |         |                            |          |              |           |                    |      
|                                         |                          | Total other income (expense) |         |            | 143,318 |                            |          | (49,864      | )         |                    | 9,720
|                                         |                          |                              |         |            |         |                            |          |              |           |                    |      
|Income before provision for income taxes |                          |                              | 139,875 |            |         | 68,717                     |          |              | 130,457   |                    |      
|Provision (credit) for income taxes      |                          |                              | 21,740  |            |         | (8,853                     | )        |              | 52,708    |                    |      
|                                         |                          |                              |         |            |         |                            |          |              |           |                    |      
|Net earnings                             |                          | $                            | 118,135 |            | $       | 77,570                     |          | $            | 77,749    |                    | $    
|                                         |                          |                              |         |            |         |                            |          |              |           |                    |      

UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF INCOME  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005  (In thousands)

|                                         |                          | Sabre
Holdings               |         | Sabre
Inc. |         | Non-Guarantor
Subsidiaries |         | Eliminations |           | Sabre
Consolidated |       
|---------------------------------------- | ------------------------ | ---------------------------- | ------- | ---------- | ------- | -------------------------- | ------- | ------------ | --------- | ------------------ | ------
|Revenues                                 |                          | $                            |        |            | $       | 1,179,481                  |         | $            | 1,091,527 |                    | $     
|Operating expenses                       |                          |                              | 2,474   |            |         | 1,013,071                  |         |              | 1,001,592 |                    |       
|                                         |                          |                              |         |            |         |                            |         |              |           |                    |       
|Operating income (loss)                  |                          |                              | (2,474  | )          |         | 166,410                    |         |              | 89,935    |                    |       
|Other income (expense)                   |                          |                              |         |            |         |                            |         |              |           |                    |       
|                                         | Interest income          |                              |         | 83,173     |         |                            | 11,583  |              |           | 13,160             |       
|                                         | Interest expense         |                              |         | (23,243    | )       |                            | (99,120 | )            |           | (1,584             | )     
|                                         | Income from subsidiaries |                              |         | 122,419    |         |                            | 79,420  |              |           |                   |       
|                                         | Other, net               |                              |         |           |         |                            | (7,982  | )            |           | 24,616             |       
|                                         |                          |                              |         |            |         |                            |         |              |           |                    |       
|                                         |                          | Total other income (expense) |         |            | 182,349 |                            |         | (16,099      | )         |                    | 36,192
|                                         |                          |                              |         |            |         |                            |         |              |           |                    |       
|Income before provision for income taxes |                          |                              | 179,875 |            |         | 150,311                    |         |              | 126,127   |                    |       
|Provision for income taxes               |                          |                              | 19,811  |            |         | 27,892                     |         |              | 46,707    |                    |       
|                                         |                          |                              |         |            |         |                            |         |              |           |                    |       
|Net earnings                             |                          | $                            | 160,064 |            | $       | 122,419                    |         | $            | 79,420    |                    | $     
|                                         |                          |                              |         |            |         |                            |         |              |           |                    |       

31

---





UNAUDITED CONSOLIDATING CONDENSED BALANCE SHEETS  SEPTEMBER 30, 2006  (In thousands)

|                                           |                                                  | Sabre
Holdings            |           | Sabre
Inc. |           | Non-Guarantor
Subsidiaries |          | Eliminations |           | Sabre
Consolidated
|------------------------------------------ | ------------------------------------------------ | ------------------------- | --------- | ---------- | --------- | -------------------------- | -------- | ------------ | --------- | ------------------
|Assets                                     |                                                  |                           |           |            |           |                            |          |              |           |                   
|Current Assets                             |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           | Cash and marketable securities                   |                           | $         |           |           | $                          | 197,880  |              | $         | 313,081           
|                                           | Restricted cash                                  |                           |           |           |           |                            |         |              |           | 8,815             
|                                           | Accounts receivable, net                         |                           |           |           |           |                            | 227,727  |              |           | 277,404           
|                                           | Intercompany accounts receivable (payable)       |                           |           |           |           |                            | (208,330 | )            |           | 208,330           
|                                           | Other current assets                             |                           |           |           |           |                            | 91,946   |              |           | 102,702           
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           |                                                  | Total current assets      |           |            |          |                            |          | 309,223      |           |                   
|Property and equipment                     |                                                  |                           |           |            |           |                            |          |              |           |                   
|Property and equipment, net                |                                                  |                           |          |            |           | 263,122                    |          |              | 98,396    |                   
|Investments in subsidiaries                |                                                  |                           | 910,180   |            |           | 2,808,356                  |          |              |          |                   
|Intercompany notes                         |                                                  |                           | 1,882,467 |            |           | (1,882,467                 | )        |              |          |                   
|Investments in joint ventures              |                                                  |                           |          |            |           | 4,896                      |          |              | 144,303   |                   
|Goodwill and intangible assets, net        |                                                  |                           |          |            |           | 10,927                     |          |              | 2,465,763 |                   
|Assets held for sale                       |                                                  |                           |          |            |           | 75,988                     |          |              |          |                   
|Other assets, net                          |                                                  |                           | 5,198     |            |           | 146,077                    |          |              | 29,784    |                   
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           |                                                  | Total assets              |           | $          | 2,797,845 |                            | $        | 1,736,122    |           | $                 
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|Liabilities and stockholders' equity       |                                                  |                           |           |            |           |                            |          |              |           |                   
|Current liabilities                        |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           | Accounts payable                                 |                           | $         |           |           | $                          | 76,145   |              | $         | 89,910            
|                                           | Travel supplier liabilities and deferred revenue |                           |           |           |           |                            |         |              |           | 470,761           
|                                           | Accrued compensation and related benefits        |                           |           |           |           |                            | 46,274   |              |           | 12,766            
|                                           | Other current accrued liabilities                |                           |           | 7,266      |           |                            | 336,006  |              |           | 211,637           
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           |                                                  | Total current liabilities |           |            | 7,266     |                            |          | 458,425      |           |                   
|Deferred income taxes                      |                                                  |                           | (445      | )          |           | 4,635                      |          |              | 31,880    |                   
|Pensions and other postretirement benefits |                                                  |                           |          |            |           | 185,419                    |          |              | 180       |                   
|Other liabilities                          |                                                  |                           | 2,768     |            |           | 21,503                     |          |              | 1,927     |                   
|Minority interests                         |                                                  |                           |          |            |           |                           |          |              | 6,085     |                   
|Long-term capital lease obligation         |                                                  |                           |          |            |           | 155,960                    |          |              |          |                   
|Public and other notes payable             |                                                  |                           | 960,684   |            |           |                           |          |              | 15,076    |                   
|Total stockholders' equity                 |                                                  |                           | 1,827,572 |            |           | 910,180                    |          |              | 2,808,356 |                   
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|Total liabilities and stockholders' equity |                                                  | $                         | 2,797,845 |            | $         | 1,736,122                  |          | $            | 3,648,578 |                   
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   

32

---





UNAUDITED CONSOLIDATING CONDENSED BALANCE SHEETS  DECEMBER 31, 2005  (In thousands)

|                                           |                                                  | Sabre
Holdings            |           | Sabre
Inc. |           | Non-Guarantor
Subsidiaries |          | Eliminations |           | Sabre
Consolidated
|------------------------------------------ | ------------------------------------------------ | ------------------------- | --------- | ---------- | --------- | -------------------------- | -------- | ------------ | --------- | ------------------
|Assets                                     |                                                  |                           |           |            |           |                            |          |              |           |                   
|Current Assets                             |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           | Cash and marketable securities                   |                           | $         |           |           | $                          | 380,898  |              | $         | 130,920           
|                                           | Restricted cash                                  |                           |           |           |           |                            | 11,237   |              |           | 45,782            
|                                           | Accounts receivable, net                         |                           |           |           |           |                            | 251,408  |              |           | 235,626           
|                                           | Intercompany accounts receivable (payable)       |                           |           |           |           |                            | (158,906 | )            |           | 158,906           
|                                           | Other current assets                             |                           |           |           |           |                            | 81,192   |              |           | 111,225           
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           |                                                  | Total current assets      |           |            |          |                            |          | 565,829      |           |                   
|Property and equipment, net                |                                                  |                           |          |            |           | 266,847                    |          |              | 85,389    |                   
|Investments in subsidiaries                |                                                  |                           | 744,562   |            |           | 2,583,474                  |          |              |          |                   
|Intercompany notes                         |                                                  |                           | 2,122,011 |            |           | (2,122,011                 | )        |              |          |                   
|Investments in joint ventures              |                                                  |                           |          |            |           | 4,189                      |          |              | 152,088   |                   
|Goodwill and intangible assets, net        |                                                  |                           |          |            |           | 11,361                     |          |              | 2,321,779 |                   
|Assets held for sale                       |                                                  |                           |          |            |           | 77,332                     |          |              |          |                   
|Other assets, net                          |                                                  |                           | 4,106     |            |           | 169,509                    |          |              | 33,223    |                   
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           |                                                  | Total assets              |           | $          | 2,870,679 |                            | $        | 1,556,530    |           | $                 
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|Liabilities and stockholders' equity       |                                                  |                           |           |            |           |                            |          |              |           |                   
|Current liabilities                        |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           | Accounts payable                                 |                           | $         | 3,559      |           | $                          | 77,478   |              | $         | 84,668            
|                                           | Travel supplier liabilities and deferred revenue |                           |           |           |           |                            |         |              |           | 303,557           
|                                           | Accrued compensation and related benefits        |                           |           |           |           |                            | 56,710   |              |           | 17,918            
|                                           | Other accrued liabilities                        |                           |           | 11,013     |           |                            | 309,983  |              |           | 227,577           
|                                           | Bridge Facility                                  |                           |           | 800,000    |           |                            |         |              |           |                  
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|                                           |                                                  | Total current liabilities |           |            | 814,572   |                            |          | 444,171      |           |                   
|Pensions and other postretirement benefits |                                                  |                           |          |            |           | 190,486                    |          |              | 967       |                   
|Other liabilities                          |                                                  |                           | 1,692     |            |           | 19,123                     |          |              | 2,753     |                   
|Minority interests                         |                                                  |                           |          |            |           |                           |          |              | 38,948    |                   
|Long-term capital lease obligation         |                                                  |                           |          |            |           | 158,188                    |          |              |          |                   
|Public and other notes payable             |                                                  |                           | 411,303   |            |           |                           |          |              | 15,076    |                   
|Total stockholders' equity                 |                                                  |                           | 1,643,112 |            |           | 744,562                    |          |              | 2,583,474 |                   
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   
|Total liabilities and stockholders' equity |                                                  | $                         | 2,870,679 |            | $         | 1,556,530                  |          | $            | 3,274,938 |                   
|                                           |                                                  |                           |           |            |           |                            |          |              |           |                   

33

---





UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006  (In thousands)

|                     |                                                                | Sabre
Holdings |   | Sabre
Inc. |   | Non-Guarantor
Subsidiaries |          | Eliminations |   | Sabre
Consolidated |  
|-------------------- | -------------------------------------------------------------- | -------------- | - | ---------- | - | -------------------------- | -------- | ------------ | - | ------------------ | -
|Operating Activities |                                                                |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash provided by operating activities                          |                | $ |           |   | $                          | 204,553  |              | $ | 166,130            |  
|Investing Activities |                                                                |                |   |            |   |                            |          |              |   |                    |  
|                     | Additions to property and equipment                            |                |   |           |   |                            | (43,872  | )            |   | (37,359            | )
|                     | Net sales of marketable securities                             |                |   |           |   |                            | 193,315  |              |   | 90                 |  
|                     | Proceeds from sale of investments                              |                |   |           |   |                            |         |              |   | 1,940              |  
|                     | Acquisitions (net of cash acquired)                            |                |   |           |   |                            | (19,727  | )            |   | (30,711            | )
|                     | Proceeds from release of restricted cash                       |                |   |           |   |                            |         |              |   | 37,211             |  
|                     | Other investing activities                                     |                |   |           |   |                            | (956     | )            |   | 5,699              |  
|                     |                                                                |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash provided by (used for) investing activities               |                |   |           |   |                            | 128,760  |              |   | (23,130            | )
|Financing Activities |                                                                |                |   |            |   |                            |          |              |   |                    |  
|                     | Proceeds from issuance of Common Stock                         |                |   | 11,661     |   |                            |         |              |   |                   |  
|                     | Dividends paid                                                 |                |   | (39,567    | ) |                            |         |              |   |                   |  
|                     | Contributions (distributions) from affiliates, net             |                |   | 299,674    |   |                            | (333,243 | )            |   | 33,569             |  
|                     | Prepayment of Bridge Facility                                  |                |   | (800,000   | ) |                            |         |              |   |                   |  
|                     | Proceeds from borrowings on revolving credit agreement         |                |   | 180,000    |   |                            |         |              |   |                   |  
|                     | Payment of borrowings on revolving credit agreement            |                |   | (25,000    | ) |                            |         |              |   |                   |  
|                     | Proceeds from issuance of Notes                                |                |   | 395,936    |   |                            | 1,200    |              |   |                   |  
|                     | Excess tax benefits from stock-based compensation arrangements |                |   | 683        |   |                            |         |              |   |                   |  
|                     | Purchases of treasury stock                                    |                |   | (23,387    | ) |                            |         |              |   |                   |  
|                     | Other financing activities                                     |                |   |           |   |                            | 8,992    |              |   | (10,453            | )
|                     |                                                                |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash provided by (used for) financing activities               |                |   |           |   |                            | (323,051 | )            |   | 23,116             |  
|                     | Effect of exchange rate changes on cash and cash equivalents   |                |   |           |   |                            |         |              |   | 16,135             |  
|                     | Increase in cash                                               |                |   |           |   |                            | 10,262   |              |   | 182,251            |  
|                     | Cash at beginning of period                                    |                |   |           |   |                            | 4,418    |              |   | 130,815            |  
|                     |                                                                |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash at end of period                                          |                | $ |           |   | $                          | 14,680   |              | $ | 313,066            |  
|                     |                                                                |                |   |            |   |                            |          |              |   |                    |  

34

---



UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005  (In thousands)

|                     |                                                              | Sabre
Holdings |   | Sabre
Inc. |   | Non-Guarantor
Subsidiaries |          | Eliminations |   | Sabre
Consolidated |  
|-------------------- | ------------------------------------------------------------ | -------------- | - | ---------- | - | -------------------------- | -------- | ------------ | - | ------------------ | -
|Operating Activities |                                                              |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash provided by operating activities                        |                | $ |           |   | $                          | 143,532  |              | $ | 97,043             |  
|Investing Activities |                                                              |                |   |            |   |                            |          |              |   |                    |  
|                     | Additions to property and equipment                          |                |   |           |   |                            | (41,821  | )            |   | (20,906            | )
|                     | Net sales of marketable securities                           |                |   |           |   |                            | 316,755  |              |   | 24,237             |  
|                     | Proceeds from sale of investment                             |                |   |           |   |                            |         |              |   | 40,920             |  
|                     | Loans to and investments in joint venture partners           |                |   |           |   |                            |         |              |   | (16,538            | )
|                     | Acquisitions (net of cash acquired)                          |                |   |           |   |                            | (41,708  | )            |   | (1,130,612         | )
|                     | Purchase of foreign currency options                         |                |   |           |   |                            | (10,000  | )            |   | (7,697             | )
|                     |                                                              |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash provided by (used for) investing activities             |                |   |           |   |                            | 223,226  |              |   | (1,110,596         | )
|Financing Activities |                                                              |                |   |            |   |                            |          |              |   |                    |  
|                     | Proceeds from Bridge Facility                                |                |   | 800,000    |   |                            |         |              |   |                   |  
|                     | Proceeds from issuance of Common Stock                       |                |   | 4,093      |   |                            |         |              |   |                   |  
|                     | Dividends paid                                               |                |   | (35,480    | ) |                            |         |              |   |                   |  
|                     | Contributions (distributions) from affiliates, net           |                |   | (705,400   | ) |                            | (366,702 | )            |   | 1,072,102          |  
|                     | Purchases of treasury stock                                  |                |   | (63,213    | ) |                            |         |              |   |                   |  
|                     | Other financing activities                                   |                |   |           |   |                            | (1,210   | )            |   |                   |  
|                     |                                                              |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash provided by (used for) financing activities             |                |   |           |   |                            | (367,912 | )            |   | 1,072,102          |  
|                     | Effect of exchange rate changes on cash and cash equivalents |                |   |           |   |                            |         |              |   | (2,344             | )
|                     | Increase (decrease) in cash                                  |                |   |           |   |                            | (1,154   | )            |   | 56,205             |  
|                     | Cash at beginning of period                                  |                |   |           |   |                            | 7,467    |              |   | 42,204             |  
|                     |                                                              |                |   |            |   |                            |          |              |   |                    |  
|                     | Cash at end of period                                        |                | $ |           |   | $                          | 6,313    |              | $ | 98,409             |  
|                     |                                                              |                |   |            |   |                            |          |              |   |                    |  

35

---





Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations



Overview of Business



36

---





Business Trends



37

---





38

---





39

---





Components of Revenues and Expenses



40

---





Matters affecting comparability:



Year
acquired

Entity

Segment

Purchase price
(in millions)2006

Zuji Holdings Limited(1)
TRAMS, Inc.

Travelocity
Sabre Travel Network

$$
35
222005

SynXis Corporation
lastminute.com plc

Sabre Travel Network
Travelocity

$$
41
1,171


---



41

---





42

---





Financial Results



|                                     |  | Three Months Ended September 30,
|------------------------------------ |  | --------------------------------
|
|
|Segment revenues                     |  | $                               
|Cost of revenues                     |  |                                 
|Amortization of purchased technology |  |                                 
|                                     |  |                                 
|Gross profit                         |  |                                 
|                                     |  |                                 
|Selling, general & administrative    |  |                                 
|Amortization of intangible assets    |  |                                 
|                                     |  |                                 
|Operating income (loss)              |  | $                               
|                                     |  |                                 

|                                     |  | Nine Months Ended September 30,
|------------------------------------ |  | -------------------------------
|
|
|Segment revenues                     |  | $                              
|Cost of revenues                     |  |                                
|Amortization of purchased technology |  |                                
|                                     |  |                                
|Gross profit                         |  |                                
|                                     |  |                                
|Selling, general & administrative    |  |                                
|Amortization of intangible assets    |  |                                
|                                     |  |                                
|Operating income (loss)              |  | $                              
|                                     |  |                                

43

---



Three Months Ended September 30, 2006 and 2005

|                       |  | Three Months Ended September 30, |        
|---------------------- |  | -------------------------------- | -------
|
|
|
|Revenues               |  | $                                | 791,194
|Total cost of revenues |  |                                  | 429,170



44

---





Sabre Travel Network

Three Months Ended September 30,2006

2005

change

% change(thousands)Segment revenues

$
397,921

$
402,187

$
(4,266
)
(1.1
)%Cost of revenues


269,462


273,866


(4,404
)
(1.6
)%Amortization of purchased technology


1,029


1,146


(117
)
(10.2
)%Gross profit


127,430


127,175


255

0.2
%Selling, general & administrative


57,578


66,996


(9,418
)
(14.1
)%Amortization of intangible assets


2,381


2,397


(16
)
(0.7
)%Operating income

$
67,471

$
57,782

$
9,689

16.8
%






45

---





Travelocity

Three Months Ended September 30,2006

2005

change

% change(thousands)Segment revenues

$
321,308

$
276,565

$
44,743

16.2
%Cost of revenues


100,067


98,441


1,626

1.7
%Amortization of purchased technology


7,327


5,706


1,621

28.4
%Gross profit


213,914


172,418


41,496

24.1
%Selling, general & administrative


166,440


137,555


28,885

21.0
%Amortization of intangible assets


6,573


5,855


718

12.3
%Operating income

$
40,901

$
29,008

$
11,893

41.0
%




46

---











47

---









48

---



Sabre Airline Solutions

Three Months Ended September 30,2006

2005

change

% change(thousands)Segment revenues

$
71,965

$
67,140

$
4,825

7.2
%Cost of revenues


50,314


45,131


5,183

11.5
%Amortization of purchased technology


162


147


15

10.2
%Gross profit


21,489


21,862


(373
)
(1.7
)%Selling, general & administrative


9,236


10,971


(1,735
)
(15.8
)%Amortization of intangible assets


269


572


(303
)
(53.0
)%Operating income

$
11,984

$
10,319

$
1,665

16.1
%




Non-operating Items



Three Months Ended September 30,2006

2005

change

% change(thousands)Operating income

$
119,560

$
99,571

$
19,989

20.1
%Interest income


5,286


5,303


(17
)
(0.3
)%Interest expense


(20,102
)

(15,801
)

(4,301
)
(27.2
)%Gain on sale of investment





(100
)

100

(100.0
)%Gain on derivative instrument





1,746


(1,746
)
100.0
%Other, net


1,710


2,791


(1,081
)
(38.7
)%Less: Provision for income taxes


38,882


35,014


3,868

11.0
%Net earnings

$
67,572

$
58,496

$
9,076

15.5
%


49

---



Interest Expense



Gain on Derivative Instrument



Other, net



Income Taxes



Net Earnings



Nine Months Ended September 30, 2006 and 2005

|                       |  | Nine Months Ended September 30, |          
|---------------------- |  | ------------------------------- | ---------
|
|
|
|
|
|Revenues               |  | $                               | 2,307,874
|Total cost of revenues |  |                                 | 1,368,630



50

---





Sabre Travel Network

Nine Months Ended September 30,2006

2005

change

% change(thousands)Segment revenues

$
1,265,415

$
1,250,128

$
15,287

1.2
%Cost of revenues


867,539


846,784


20,755

2.5
%Amortization of purchased technology


3,021


3,966


(945
)
(23.8
)%Gross profit


394,855


399,378


(4,523
)
(1.1
)%Selling, general & administrative


184,109


186,933


(2,824
)
(1.5
)%Amortization of intangible assets


7,043


8,570


(1,527
)
(17.8
)%Operating income

$
203,703

$
203,875

$
(172
)
(0.1
)%




51

---





The decrease in amortization of intangible assets is due to intangibles that fully amortized in 2005.

Travelocity

Nine Months Ended September 30,2006

2005

change

% change(thousands)Segment revenues

$
837,963

$
596,410

$
241,553

40.5
%Cost of revenues


325,677


244,942


80,735

33.0
%Amortization of purchased technology


22,194


6,605


15,589

236.0
%Gross profit


490,092


344,863


145,229

42.1
%Selling, general & administrative


460,623


318,984


141,639

44.4
%Amortization of intangible assets


20,600


9,330


11,270

120.8
%Operating income

$
8,869

$
16,549

$
(7,680
)
46.4
%




52

---









53

---





Sabre Airline Solutions

Nine Months Ended September 30,2006

2005

change

% change(thousands)Segment revenues

$
204,496

$
196,757

$
7,739

3.9
%Cost of revenues


148,182


133,142


15,040

11.3
%Amortization of purchased technology


485


441


44

10.0
%Gross profit


55,829


63,174


(7,345
)
(11.6
)%Selling, general & administrative


29,802


30,686


(884
)
(2.9
)%Amortization of intangible assets


1,231


1,732


(501
)
(28.9
)%Operating income

$
24,796

$
30,756

$
(5,960
)
(19.4
)%




54

---





Non-operating Items



Nine Months Ended September 30,2006

2005

change

% change(thousands)Operating income

$
235,875

$
253,871

$
(17,996
)
(7.1
)%Interest income


11,809


15,772


(3,963
)
(25.1
)%Interest expense


(59,165
)

(31,803
)

(27,362
)
(86.0
)%Gain on sale of investments





20,494


(20,494
)
(100.0
)%Loss on derivative instrument





(8,248
)

8,248

100.0
%Other, net


(4,789
)

4,388


(9,177
)
(209.1
)%Less: Provision for income taxes


65,595


94,410


(28,815
)
(30.5
)%Net earnings

$
118,135

$
160,064

$
(41,929
)
(26.2
)%


Interest Income

The $4 million decrease in interest income is due to the decrease in our cash and marketable securities balances from September 30, 2005 to
September 30, 2006 related primarily to the lastminute.com acquisition in July 2005.

Interest Expense

The increase in interest expense is due to interest on the bridge facility for the lastminute.com acquisition, which was repaid in February and March 2006,
interest on the $400 million in senior unsecured notes issued on March 13, 2006 and interest on the $180 million borrowings under our revolving credit facility, $25 million
of which was paid in May 2006 (see Note 8 to the Consolidated Financial Statements). The borrowing was related to the acquisition of lastminute.com in July 2005.
Additionally, higher interest rates resulted in increased interest expense on our $400 million of public notes issued in August 2001.

55

---





Gain on Sale of Investments



Loss on Derivative Instrument



Other, net



Income Taxes



Net Earnings



SABRE HOLDINGS CORPORATION

LIQUIDITY AND CAPITAL RESOURCES



56

---





57

---





Declaration Date

Payable Date

Amount per Share2005:February 1, 2005

February 28, 2005

$
0.090May 3, 2005

May 26, 2005


0.090July 26, 2005

August 18, 2005


0.090November 1, 2005

November 29, 2005


0.0902006:January 30, 2006

February 28, 2006

$
0.100May 1, 2006

May 25, 2006


0.100August 1, 2006

August 28, 2006


0.100October 11, 2006

November 10, 2006


0.130




Date Authorized

Authorized for
Repurchase

Repurchased

Repurchased
under ASSP

Available for
RepurchaseOctober 20, 2003

$
100 million

$
100 million

$
58 million



(1)April 19, 2004

$
100 million

$
100 million






(2)October 25, 2004

$
100 million

$
100 million






(3)May 2, 2005

$
100 million







$
100 million
(4)


---

58

---





Financing Arrangements



59

---





Covenant

Requirement

Level at
September 30,
2006Consolidated Leverage Ratio (Debt to EBITDA)

3.50 to 1 maximum

2.67Consolidated Net Worth

$1.3 billion

$1.7 billion




As amended on July 22, 2005

RequirementConsolidated Leverage Ratio (Debt to EBITDA) for the quarters ended:June 30, 2006 through September 30, 2006

3.50 to 1 maximumDecember 31, 2006 through March 31, 2007

3.25 to 1 maximumJune 30, 2007 and thereafter

3.00 to 1 maximum




60

---





Nine Months Ended
September 30,2006

2005Cash provided by operating activities

$
370,683

$
240,575Cash provided by (used for) investing activities


105,630


(887,370
)Cash provided by (used for) financing activities


(299,935
)

704,190Effect of exchange rate changes on cash and cash equivalents


16,135


(2,344
)Total cash increase

$
192,513

$
55,051




61

---





62

---







Sabre Holdings initial stock price

$23.62Sabre Holdings implied volatility

27.41
%Sabre Holdings dividend yield

1.67
%Risk free rate

4.63%-4.65
%




Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk



63

---





Foreign Currency Risk



Item 4. Controls and Procedures



64

---





65

---





66

---





67

---





PART II: OTHER INFORMATION

Item 1. Legal Proceedings



Item 1A. Risk Factors



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)-(b)    None.

(c)ISSUER PURCHASES OF EQUITY SECURITIES



68

---





|Period                               |  | Total Number
of
Shares
Purchased |  | Weighted
Average
Price Paid
per Share |   | Total Number of
Shares Purchased as
Part of Publicly
Announced Programs |   | Maximum Dollar Value
of Shares That May Yet
be Purchased Under
the Program(1)
|------------------------------------ |  | -------------------------------- |  | ------------------------------------- | - | ----------------------------------------------------------------------- | - | -----------------------------------------------------------------------------
|July 1, 2006-July 31, 2006           |  |                                 |  | $                                     |  |                                                                         |  |                                                                              
|August 1, 2006-August 31, 2006       |  |                                 |  | $                                     |  |                                                                         |  |                                                                              
|September 1, 2006-September 30, 2006 |  |                                 |  | $                                     |  |                                                                         |  |                                                                              
|                                     |  |                                  |  |                                       |   |                                                                         |   |                                                                              
|Total Third Quarter 2006 Repurchases |  |                                 |  |                                       |   |                                                                         |  |                                                                              
|                                     |  |                                  |  |                                       |   |                                                                         |   |                                                                              

---

Item 3. Defaults Upon Senior Securities



Item 4. Submission of Matters to a Vote of Security Holders



Item 5. Other Information



Item 6. Exhibits

The
following exhibits are included herein:



69

---





---

70

---





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.

|Date: November 3, 2006 |  | SABRE HOLDINGS CORPORATION
|---------------------- |  | --------------------------
|                       |  | By:                       
|                       |  | By:                       

71

---