Use these links to rapidly review the documentTABLE OF CONTENTS Financial Statements and Supplementary Data TABLE OF CONTENTS 3



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

FORM 10-K

|/X/                                         | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    
|------------------------------------------- | ----------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2005
|OR                                         
|/ /                                         | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|Commission file number: 1-12175            

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, TX(Address of principal executive offices)

76092(Zip Code)


(Registrant's telephone number, including area code)682 605-1000None(Former name, former address and former fiscal year, if changed since last report)

Securities
registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registeredClass A Common Stock, $.01 par value per share

New York Stock Exchange


Securities
registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes /X/
    No / /

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes / /    No /X/ .

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /X/    No / /.

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

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. Large accelerated filer /X/ Accelerated filer / /    Non-accelerated
filer / /

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

As
of June 30, 2005, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $2,576,044,248 based on the closing sale
price of $19.95 as reported on the New York Stock Exchange.

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 February 28, 2006
|-------------------------------------- |  | --------------------------------
|Common Stock, $.01 par value per share |  | 131,847,171 shares              

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates by reference certain information from the Proxy Statement for the Annual Meeting
of Stockholders to be held May 16, 2006.



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Sabre Holdings Corporation
Annual Report of Form 10-K for the Year Ended December 31, 2005
Table of Contents



|PART I:   |  |                                                                                                             
|--------- |  | ------------------------------------------------------------------------------------------------------------
|Item 1.   |  | Business                                                                                                    
|Item 1A.  |  | Risk Factors                                                                                                
|Item 1B.  |  | Unresolved Staff Comments                                                                                   
|Item 2.   |  | Properties                                                                                                  
|Item 3.   |  | Legal Proceedings                                                                                           
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                                         
|PART II:  |  |                                                                                                             
|Item 5.   |  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|Item 6.   |  | Selected Consolidated Financial Data                                                                        
|Item 7.   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                       
|Item 7A.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                  
|Item 8.   |  | Financial Statements and Supplementary Data                                                                 
|Item 9.   |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                        
|Item 9A.  |  | Controls and Procedures                                                                                     
|Item 9B.  |  | Other Information                                                                                           
|PART III: |  |                                                                                                             
|Item 10.  |  | Directors and Executive Officers of the Registrant                                                          
|Item 11.  |  | Executive Compensation                                                                                      
|Item 12.  |  | Security Ownership of Certain Beneficial Owners and Management                                              
|Item 13.  |  | Certain Relationships and Related Transactions                                                              
|Item 14.  |  | Principal Accountant Fees and Services                                                                      
|PART IV:  |  |                                                                                                             
|Item 15.  |  | Exhibits                                                                                                    
|SIGNATURE

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PART I

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In this Annual Report on Form 10-K, the words "Sabre Holdings," "company," "we," "our," "ours" and "us" refer to Sabre Holdings Corporation and
its consolidated subsidiaries unless otherwise stated or the context otherwise requires.

ITEM 1.    BUSINESS

Overview

Sabre Holdings Corporation is a Delaware holding company incorporated on June 25, 1996. Sabre Inc. is the principal operating subsidiary and sole
direct subsidiary of Sabre Holdings Corporation. Sabre Inc. or its direct or indirect subsidiaries conduct all of our businesses.

We
are a world leader in travel commerce. Our companies and brands offer a broad portfolio of leading travel marketing, distribution and technology solutions. We support airlines,
hotels, cruise lines, car rental agencies and other travel suppliers through a distribution network that enables global marketing through tens of thousands of points of sale, sophisticated data
gathering and analysis, and robust business optimization tools. We support online and conventional travel agencies, corporate travel purchasers and consumers by providing an efficient electronic
marketplace that consolidates a wealth of travel information, and facilitates shopping and purchasing of travel components and packages. We participate in travel distribution and marketing to multiple
audiences through different methods we refer to as "channels." These channels include travel agencies, direct to consumers, and corporate or business-direct.

We
organize our businesses into three segments:



In
2005, approximately 59.7% of our revenue was generated from Sabre Travel Network, 30.7% from Travelocity and 9.6% from Sabre Airline Solutions, based on segment results that include
intersegment revenues. Compared to the year-ago period, revenues (including intersegment revenues) for the twelve months ended December 31, 2005 increased 4.1% for Sabre Travel
Network, 65.1% for Travelocity (including lastminute.com from July 20, 2005) and 7.1% for Sabre Airline Solutions.

Sabre Travel Network:OurSabre Travel Networksegment markets
and distributes travel-related products and services for its travel supplier participants through the online and offline travel agency and corporate channels. Our Sabre®global distribution system
(the "Sabresystem" or
"SabreGDS") produces more bookings for airlines and hotels than any other distribution system. Users of the Sabresystem (who we refer to as subscribers)
can access information about, book reservations for, and purchase a variety of travel offerings. These
offerings include, among other things, airline trips, hotel stays, car rentals, cruises and tour packages. We also enable corporate travel management through our GetThere®products. We provide
travel agencies with office automation tools, consortia management services and enable them to provide
services via the Internet. In addition, Sabre Travel Network provides marketing information to suppliers and reservation management and technology services to hotel properties.

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Travelocity:OurTravelocity®segment markets and distributes
travel-related products and services directly to individuals, including leisure travelers and business travelers. OurTravelocity®and lastminute.comSM branded websites and contact centers constitute one of the largest travel agencies in the world. We also provide content
and functionality to, and market and sell products and services through private-label websites for suppliers, distribution partners and travel agencies. Through our offerings, travelers can access
offerings, pricing and information about airlines, hotels, car rental companies, cruise lines, vacation and last-minute travel packages and other travel-related services. Our Travelocity BusinessSMonline corporate travel agency provides business travelers the corporate travel technology and
full-service offering of ourGetThere®products along with the online expertise of Travelocity.

Sabre Airline Solutions:OurSabre Airline Solutions®segment
is a global leader in providing passenger management solutions, software products and related services, and consulting services to help airlines simplify operations and lower costs. We provide airline
reservations, inventory and check-in hosting solutions that help airlines address the challenge of building and retaining customer loyalty while reducing costs. We supply decision-support
software and technology for airlines to improve profitability, increase revenue, streamline operations and improve workflow. In addition, we offer a complete range of consulting services to the
airline industry, ranging from one time to extended engagements. Clients include airlines, airports, manufacturers and governments, as well as individuals, travel agencies and members of the financial
community.

TheSabreGlobal Distribution System



TheSabresystem and other global distribution systems are a primary means of air travel distribution in the
United States and in many international regions. TheSabresystem, like other global distribution systems, creates an electronic marketplace where
airlines, hotels, and other travel suppliers display information about their products and services.

TheSabresystem provides subscribers a single rich source of travel information, allowing travel agents and other users to search within
seconds tens of thousands of itinerary and pricing options across multiple travel suppliers. TheSabresystem provides suppliers with data about
subscriber-generated reservations, allowing suppliers to better manage inventory and revenues. TheSabresystem enables printing airline tickets and
itineraries. Additionally, theSabresystem offers extensive travel information on matters such as currency, medical and visa requirements, weather and
sightseeing.

In
2005, more than 750 travel suppliers displayed information about their products and services through theSabresystem. We estimate that
nearly $80 billion of travel-related products and services were sold through theSabresystem during 2005. During 2005, more airline and hotel
bookings were made through theSabresystem than through any other global distribution system.

Travel Supplier Participation and Pricing Options.Airlines and other travel suppliers display and
sell their inventory in theSabresystem. We offer airlines a range of participation levels. The lowest level of participation for airlines, Sabre® Basic Booking
RequestSM, provides schedules and electronic booking functionality only. Higher levels of
participation for airlines provide enhanced levels of communication between theSabresystem and the travel supplier's inventory system, giving
subscribers more reliable information and travel suppliers improved inventory management. For an airline selecting one of the higher levels of participation, the Sabresystem provides subscribers with a
direct connection to the travel supplier's internal reservation system. This direct connection allows theSabresystem to provide real-time information about inventory and confirmed reservations and the airline to optimize revenue for each
flight. We offer car rental companies and hotel operators similar levels of participation. We also offer travel suppliers marketing data derived from the Sabresystem bookings. Travel suppliers use this
marketing information and other operational systems we sell to improve their revenue and profitability.

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We
have designed service and pricing offerings to airlines to ensure that subscribers will continue to have broad, dependable access to airline schedules, seat availability and fares.
With the deregulation of the United States GDS industry in mid-2004 (described below underComputer Reservation System Industry Regulation),
we have the flexibility to vary our pricing and other contract terms from airline to airline. We believe that airlines will see the benefits of more customizable relationships with us, including
possible reductions in transaction fees. We are setting forth various pricing options for airline suppliers, including options that may include services from each of our business segments and may
expand "net rate" or other merchandising opportunities. We also have "opt-in" agreements that offer participating airlines lower transaction fees for bookings created in certain regions,
and make certain discounted fares on those airlines available only to those subscribers that accept lowered incentive payments.

We
have already implemented new pricing models with some suppliers. For example, under our agreements with AirTran Airways, Northwest Airlines and US Airways, our subscribers obtain
broad, dependable access to all of those airlines' published content. We expect to have new agreements in place with many airlines before the expiration of their current Direct Connect Availability
("DCA") 3-Year Option agreements in 2006. As of December 31, 2005, approximately 50% of our global direct air bookings were subject to our discount pricing options. Additionally we
have transitioned many carriers from our traditional Participating Carrier Agreement to a new Travel Marketing Agreement that better aligns price with value for the airline and provides better content
guarantees to Sabre Travel Network.

Sabre Travel Network

Sabre Travel Network markets theSabreGDS to travel suppliers, travel agency subscribers (online and brick and
mortar) and corporations. As of December 31, 2005, travel agencies with approximately 50,000 locations in over 113 countries on 6 continents subscribed to the Sabresystem. We enabled these
subscribers to make reservations with over 410 airlines, 30 car rental companies, 40 tour operators, 11 cruise
lines, 6 railroads and 261 hotel companies.

Approximately
59.7%, 67.5% and 71.3% of our revenue (including intersegment revenues) in 2005, 2004 and 2003, respectively, was generated by Sabre Travel Network, primarily through
transaction fees paid by travel suppliers.

Subscribers
may access theSabresystem on their own hardware over communications circuits contracted from their telecommunications
vendors, or subscribers may contract with us for the hardware, software, technical support and other services needed to use theSabresystem.
Increasingly, travel agents are providing the majority of their own hardware. Fees for our services are payable over the term of the subscriber's agreement with us, generally five years in the United
States and Latin America, three years in Canada, and one year in Europe. In addition, we pay incentives to many travel agencies based on their booking productivity, which is our largest cost of
revenue.

We
have designed theSabresystem interface to meet the specific needs of different categories of travel agents. The Sabresystem interfaces are available in
English, Spanish, Portuguese, French, German, Italian and Japanese. We offer the MySabreweb-based travel agency portal, which combines the breadth of the Internet with the power of the
SabreGDS. It provides access to the content of theSabreGDS, as well as Web-based booking
tools for cruises, restaurants, ground transportation, theatre, local events and theme parks.Turbo Sabre®software is an advanced
point-of-sale interface and application development tool that enables advanced functionality like customized screens, automated quality control and database integration. In
addition,Turbo Sabreeliminates complex commands, reducing keystrokes and training requirements.

In
addition to theSabresystem described above, Sabre Travel Network also provides bookings solutions to serve the specific online needs
of our subscribers and travel suppliers, including website development, business logic middleware and back end processing. We also offer travel agencies back-office accounting systems and
a simplified method to develop and place their own marketing presence on the Internet. Subscriber and travel supplier product offerings range from off-the-shelf applications to
fully customized solutions. Subscribers pay license, consulting and web hosting fees that vary with the level of customization and volume generated by their sites.

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Changing our Sabre Travel Network Revenue Model.Historically, the vast majority of our travel
distribution revenues have been derived from transaction fees paid by travel suppliers measured by subscriber bookings generated through theSabreGDS.
From those fees, Sabre Travel Network has paid incentives to its travel agency subscribers as a cost of revenue. We continue to seek ways to provide more flexible and cost-effective
distribution options to suppliers and are increasingly entering into arrangements that depart from our traditional revenue model. As our business evolves, we have broadened our description of
"transaction" to include any travel reservation that generates a fee paid directly to us, including in part the following:



See
"The Sabre Global Distribution SystemTravel Supplier Participation and Pricing Options" above. For example, we have arrangements under
which some travel suppliers pay our travel agency customer (such as Travelocity), who in turn pays a transaction fee to Sabre Travel Network. We are also looking for more opportunities to market net
rate offerings, benefiting from the merchandising insight that we gain from our integrated portfolio of travel distribution and travel marketing assets. "Net rate" offerings are explained in more
detail below in "TravelocityNet Rate Program." Some of these non-traditional transactions may have a lower rate per transaction
than a traditional booking fee, and as a result the overall average revenue per transaction may be lower as these non-traditional transactions increase. See
"Item 1AChanges to our travel..."

Travelocity

Travelocity is a leading provider of consumer direct travel services for the leisure and business traveler. In 2005 we significantly expanded our presence in
Europe with the purchase of lastminute.com, a leader in European online travel marketing. Travelocity operates through theTravelocity.com®
andSite59.com® ("Site 59") websites, Travelocity's international websites including lastminute.comSM,HolidayAutos.comSM and Zuji.comSM and its contact centers, travel agency partners, and itsTravelocity Partner
NetworkSM offering. These services allow individual leisure and business travelers to shop, compare prices and make travel reservations online with airlines, car
rental agencies, hotel companies and cruise and tour providers. TheTravelocity Partner Networkoffering expands Travelocity's distribution reach
through agreements with leading online retailers, including Yahoo! Travel, America Online, American Express, Southwest Airlines, US Airways, and AARP. For example, Site 59 powers the
last-minute travel sections of Travelocity, AOL Travel, Cheap Tickets, Yahoo! Travel, American Airlines Vacations, Delta Air Lines Vacations, Continental Airlines Vacations, Northwest's
nwa.com, and Bestfares.com, among others. We also offer access to a database of information regarding specific destinations and other information of interest to travelers.

Travelocity
facilitates transactions between travel suppliers and consumers to book and pay for travel accommodations. For "net rate" transactions, we generate service fee revenue equal
to the total amount paid by the customer, minus Travelocity's payment to the travel supplier for the travel accommodations. We also generate revenue from commissions or transaction fees from travel
suppliers for the purchase of travel products and services pursuant to reservations made through our system. Other revenue sources include service fees charged to customers, advertising revenues and
GDS incentives. Losses from interests in joint ventures, which are described under "International" below, are recognized as contra-revenue. We derive
intersegment revenues from Sabre Travel Network, consisting mainly of incentives for Travelocity bookings made through theSabreGDS, and fees paid by
Sabre Travel Network and Sabre Airline Solutions for corporate and airline trips booked through Travelocity's online booking technology. During 2005, customers transacted approximately
$8 billion in travel and related services through Travelocity.

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For
our business customers, we also operateTravelocity Business, a comprehensive travel service available for corporations
and other organizations.Travelocity Businesscombines the integrated corporate travel technology and full-service offering products of GetTherewith the
online expertise of Travelocity. Travelocity also operates multiple businesses tailored to customers outside the United States, as
described under "Investments in Travelocity"and "International"below.

Investments in Travelocity.The growth and development of Travelocity continues to be a strategic
focus for us. In 2005, we continued to invest in areas that we believe offer rapid growth opportunities, such as in the business-direct channel and online distribution in Europe and Asia. For example:



See
"Item 1AWe may be unsuccessful in pursuing and integrating business combinations..."

Net Rate Program.In an effort to provide additional choices to consumers, Travelocity is
increasingly promoting our net rate program, commonly referred to in the industry as a "merchant model program" due to the fact that Travelocity is the merchant of record for credit card processing.
Under the net rate program, we facilitate transactions between travel suppliers and travelers for the booking of and payment for travel accommodations. Under this model, we generally do not purchase
and resell travel accommodations and do not have any obligations with respect to travel accommodations listed online that do not sell. Instead, we act as an intermediary by entering into agreements
with travel suppliers for the right to market their products, services and other content offerings at pre-determined net rates. Net rate travel offerings can include air travel, hotel
stays, car rentals and dynamically packaged combinations. We market these net rate offerings to travelers at a price that includes service fees that we retain, plus an amount sufficient to pay the
travel supplier for its charge for providing the travel accommodations, along with any applicable occupancy and other local taxes on that charge. For this type of business model, we require
pre-payment by the traveler at the time of booking. Net rate content is beneficial for travelers because they can often book travel at a price lower than regularly published offerings. For
us, the net rate model generally delivers higher service fee revenue per transaction than comparable transactions under an agency commission booking fee model. In addition, as long as the net rate
program is growing, we experience improved operating cash flows as a result of receiving pre-payments from customers while paying suppliers after the travel occurs. For net rate
transactions, we recognize as revenue the service fees that we retain on these transactions.

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Our
business strategy depends on net rate bookings as a significant source of future revenue growth and increased margins. Our strategy calls for us to increase or maintain the number of
hotel rooms we can market under our net rate hotel program, based upon arrangements we make directly with individual hotel properties and hotel chains. Because of Travelocity's supplier-friendly
approach, which includes timely payment to suppliers and a two-way seamless connectivity to hotels' property management systems so that reservations are not lost, our hotel program has
become successful even though it was started later than some competing programs. One example of the success of this approach was Travelocity's selection by InterContinental Hotels Group ("IHG") as the
first online third party intermediary to be certified for IHG's more than 3,500 hotels worldwide, including InterContinental Hotels and Resorts, Crowne Plaza, Holiday Inn, Holiday Inn Express,
Staybridge Suites and Candlewood Suites. Please see "Item 1ATravelocity's revenue growth largely depends on international growth and on expanding net rate
(merchant) programs."

Sabre Airline Solutions

Sabre Airline Solutions is a global leader in providing technology that allows airlines to market and sell their inventory and serve their customers. We offer
passenger management solutions, software products and related services, and consulting services. Over 200 airlines worldwide use one or more products in our broad portfolio to increase revenues and
improve operations. More than 100 airlines worldwide rely on our airline reservation suite products, with eight new carriers added and four carrier renewals in 2005 and two large wins, Frontier
Airlines and Aeroflot, a Russian air carrier, for ourSabreSonicpassenger reservations product suite. More than 100 clients worldwide have
utilized our strategic commercial and operational consulting services.

Airline Passenger Solutions.We provide airline reservations, inventory and check-in
hosting solutions that help airlines address the challenge of building and retaining customer loyalty while also reducing costs. With support of e-ticketing and passenger
self-service options, our departure control systems equip airlines with the tools to increase sales through every distribution channel. Built on open-systems technology, our
new generationSabreSonic Passenger Solutionoffers passenger-facing systems to airlines regardless of size, location, business model or
current reservations system.

Airline Products and Services.We provide decision-support software and technology for airlines to
improve profitability, increase revenue, streamline operations and improve workflow. We offer flexible product and service configurations to meet unique business needs, allowing airlines to choose a
single, stand-alone system for a specific operational area or a bundled solution of multiple systems to address a variety of functional requirements and increase information sharing across a greater
number of departments. Additionally, we offer theSabre®eMergo®web-enabled and dedicated network solutions, as well as an ASP offering to airlines. Providing convenient remote access to secure data, the eMergosolutions help significantly lower or eliminate
expenses associated with upfront capital outlay, staffing, data storage, ongoing maintenance and
installation. Our decision-support tools are designed exclusively to meet the needs of airlines, regardless of size or business model, and assist in every key functional area of an airline, such as
crew and cargo management, flight operations and revenue management.

Consulting Services.We offer a complete range of consulting services to the airline industry.
Assignments range from a one time engagement to extended engagements. Typical engagements include achieving the necessary standards to join an alliance, preparing for privatization and optimizing
current operations. Clients include airlines, airports, manufacturers and governments, as well as individuals, travel agencies and members of the financial community.

International

Sabre Travel NetworkWe market theSabresystem
internationally both directly and through joint venture and distributorship arrangements. As of December 31, 2005, travel agencies with approximately 50,000 locations in over 113 countries on 6
continents subscribed to theSabresystem. Our marketing partners outside the United States principally include airlines that have strong relationships
with travel agents in their primary markets, and entities that operate regional computer reservation systems or other travel-related network services.

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Sabre
Travel Network has long-term agreements with ABACUS International Holdings Ltd., which created ABACUS International PTE Ltd ("Abacus"), a Singapore-based
joint venture company that manages travel distribution in the Asia Pacific region. We own 35% of the joint venture and provide it with transaction processing and product development services on the Sabresystem. Sabre Travel Network also provides distribution products and services to Infini and Axess, Japan's two largest GDS travel agency marketing
companies. Infini is owned 40% by ABACUS and 60% by All Nippon Airways. Axess is owned 25% by Sabre and 75% by Japan Airlines. Sabre Travel Network also provides travel marketing and distribution
services in Mexico through our 51% owned (48% voting rights) joint venture, Sabre Sociedad Technologica S.A. de C.V. Sabre Travel Network Middle East, a joint venture owned 60% by Sabre Travel Network
and 40% by Gulf Air Company GSC ("Gulf Air"), provides technology services, bookable travel products and distribution services for travel agencies, corporations and travel suppliers in the Middle East
region.

TravelocityWe market Travelocity internationally both directly and through joint venture arrangements. In Canada, Travelocity
directly markets itsTravelocity.caSM site. With the acquisition of lastminute.com in July 2005, we market in Europe using lastminute.comas our leading brand. Our European operations also include other European travel websites, including Holiday Autos and Med Hotels,
onlinetravel.com,Travelocity.co.ukin the United Kingdom,resfeber.seSM in Sweden, rejsefeber.dkSM in Denmark,reisefeber.noSM in Norway, Boomerang VoyagesSM in France, andTravelocity.deSM in Germany. Until
December 2005, Travelocity also partnered with Otto Versand through a joint venture company that distributedTravelocityin Germany through
several brands. Travelocity retained theTravelocity.debusiness on dissolution of that joint venture.

We
operate in the Asia Pacific region throughZuji.comSM, which is hosted by Travelocity and utilizes Travelocity
technology. See"TravelocityInvestments in Travelocity"above.

Sabre Airline SolutionsSabre Airline Solutions markets software solutions and consulting services on four continents, with
primary sales offices in the Dallas/Ft. Worth area, London, Hong Kong and Sydney. We also maintain agency relationships to support sales efforts in key areas, including countries in Asia and the
Middle East. Through Stockholm, Sweden-based RM Rocade ("Rocade"), we provide software solutions, including a fully functional flight operations product suite, to international small,
medium-size and low cost carriers.

Competition

The travel marketplace is intensely competitive. Our companies and brands offer a broad portfolio of leading travel marketing, distribution and technology
solutions that are well positioned in the marketplace. Sabre Travel Network competes in the travel agency channel against other large and well-established traditional global distribution
systems, such as Amadeus Global Travel Distribution S.A. ("Amadeus"), Galileo International Inc. (owned by Cendant Corporation) and Worldspan, L.P. Each of these competitors offers many
products and services substantially similar to those offered by Sabre Travel Network. The diverging price structures of competing global distribution systems, and our ability to offer our portfolio of
solutions, may provide us with an opportunity to win additional business.

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We
routinely face new competitors and new methods of travel distribution. Suppliers and third parties seek to promote distribution systems that book directly with travel suppliers. For
example, established and start-up search engine companies are attempting to enter the travel marketplace by aggregating travel search results across supplier, travel agent and other
websites. Many alternative distribution systems offer lower costs to suppliers, but they are not global and offer travelers a limited subset of transactions from a limited subset of suppliers in one
market segment. The systems often must rely on the scale and functionality of a GDS such as ourSabresystem for a complete travel distribution solution
for suppliers and travel agencies. They do not offer comprehensive functionality and do not have the infrastructure to adequately service and support travel management companies or corporations. They
require the integration of a new, stand alone system into most existing agency or corporate booking tool workflows. Many of these alternative travel distribution channels are well financed but are in
start-up or developing mode, and have yet to fully define their functionality and costs. These alternative travel distribution systems may have the effect of diverting customers from our
online sites and ourSabreGDS, putting pressure on our revenues, pricing and operating margins. See
"Item 1ATravel suppliers are pursuing distribution options...."

Another
form of competition derives from airlines, which have worked to divert travel bookings onto channels that they control. Airlines have withheld inventory from independent travel
distributors, have greatly reduced commissions paid to online and traditional travel agencies and have conditioned independent distributors' access to inventory on their acceptance of pricing offered
by channels that those airlines control. Their collective efforts have resulted in travel bookings being diverted from traditional distribution channels toward supplier-controlled channels, such as
individual airline websites and call centers. We believe, however, that the rate of "channel shift" from the GDS channel to supplier-controlled sites has stabilized.

The
development of competing technologies or the emergence of new industry standards may also adversely affect our competitive position. Competition could result in reduced margins on
our services and products. See "Item 1AConsolidation in the travel industry...."

We
market travel in the consumer-direct channel primarily through Travelocity. Travelocity's competitors include Priceline.com (which also operates Travelweb.com), Cendant Corporation
(which owns Orbitz and ebookers.com), Expedia (which also operates Hotels.com and Hotwire.com) and Opodo (owned by nine European airlines and Amadeus). Virtually all major airlines, and many other
travel suppliers, have websites that allow consumers to book directly with that supplier, and some offer an array of products and services. Certain owners of these sites may make certain discounted
fares and prices available exclusively on their proprietary or multi-vendor websites. See further discussion under "Item 1ACustomers may
reduce..."

We
market travel in the business-direct channel principally throughTravelocity BusinessSM and our GetThere®product. The marketplace for
Internet-based corporate and government travel procurement and supply services is highly
competitive and rapidly evolving. Travelocity's competitors in the business-direct channel include traditional global distribution systems such as Amadeus' E-Travel and Galileo's
TravelPort and more recently, online travel agents such as Orbitz.com and Expedia.com.

In
the products and services business, Sabre Airline Solutions competes with a number of boutique firms in specific product areas, as well as across our portfolio with vendors such as
Lufthansa Systems. In the airline passenger solutions business, Sabre Airline Solutions competes with Amadeus, Navitaire, Worldspan, IBM and others.

Computer Reservation System Industry Regulation

Aspects of our travel marketing and distribution businesses are subject to the Computer Reservation Systems ("CRS") regulations in the European Union, Canada and
Peru. These regulations generally govern GDS services for airlines and travel agencies, but not for non-airline suppliers (except rail suppliers in limited circumstances). Among the topics
addressed in some of the current regulations are:



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All
CRS regulations in the United States expired on July 31, 2004. CRS regulations in Canada were eliminated on May 7, 2004, except rules prohibiting screen preference and
discrimination in providing the right for all airlines to participate in service enhancements. The deregulation of CRSs in both the U.S. and Canada will enhance our opportunities to creatively market
airline services and freely negotiate with travel agencies. Regulators in the European Union ("E.U.") have indicated they may propose the total repeal of their current CRS regulations even though four
large E.U.-based airlines retain substantial ownership positions in the Amadeus CRS. It is not clear whether or when any amendments in the European Union's CRS Code of Conduct will be
formally proposed, or will take effect or what form they may ultimately take. The repeal of CRS rules in a jurisdiction where a locally-strong airline retains an ownership interest in a CRS presents
significant competitive risks. See further discussion under "Item 1ARegulatory developments in Europe could limit our ability to
compete..."

Other Regulation

Our businesses continue to be subject to regulations affecting issues such as: exports of technology, telecommunications, data privacy and electronic commerce.
Any such regulations may vary among jurisdictions. We believe that we are capable of addressing these regulatory issues as they arise.

Seasonality

The travel industry is seasonal in nature. Travel bookings for our Sabre Travel Network business, and the revenue we derive from those bookings, decrease
significantly each year in the fourth quarter, primarily in December. Customers generally book their November and December holiday leisure travel earlier in the year, and business travel declines
during the holiday season. Travelocity revenues are also impacted by the seasonality of travel bookings, but to a lesser extent since commissions from car and hotel travel providers and net rate
revenue for vacation packages and hotel stays are recognized upon date of consumption. See the discussion on Seasonality in "Item 7Management's Discussion and
Analysis of Financial Condition and Results of Operations"for additional information. We believe that the acquisition of lastminute.com will cause revenues and net earnings to
become more significant in the second and third quarters for the Travelocity segment due largely to European travel patterns.

Research and Development Expenses

Research and development costs represent costs incurred to investigate and gain new knowledge that could be useful in developing a new product or service and then
translating those findings into a plan or design for a product or service. Our research and development costs approximated $26 million, $32 million and $48 million for 2005, 2004
and 2003, respectively.

Segment Information

Financial information for our operating segments and geographical revenues and assets are included in Note 13 to the Consolidated Financial Statements.

11

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Agreements with EDS

We have an agreement with Electronic Data Systems Corporation ("EDS") through which EDS manages a significant portion of our information technology systems. Under
a 10-year agreement through June 2011, EDS provides us with information technology services, including data center management, applications hosting, applications development, data
assurance and network management. Among the services provided is transaction processing for our travel marketing and distribution businesses, including operation of the Sabresystem. The agreement was
entered into as part of a 2001 sale to EDS of our infrastructure outsourcing business and information technology
infrastructure assets and the associated real estate ("Outsourcing Business"). In connection with the sale, we also entered into agreements with EDS to jointly market information technology services
and software solutions to the travel and transportation industries.

Intellectual Property

We use software, business processes and other proprietary information to carry out our business. These assets and related patents, copyrights, trade secrets,
trademarks and other intellectual property rights are significant assets of our business. We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures and
contractual provisions to protect these assets. We seek patent protection on key technology and business processes of our business. Our software and related documentation are also protected under
trade secret and copyright laws where appropriate. We also seek statutory and common-law protection of our trademarks where appropriate. The laws of some foreign jurisdictions may provide
less protection than the laws of the United States for our proprietary rights. Unauthorized use of our intellectual property could have a material adverse effect on us and there can be no assurance
that our legal remedies would adequately compensate us for the damages to our business caused by such use.

Employees

As of December 31, 2005, we had approximately 8,800 employees. This represents a substantial increase from 2004, due almost entirely to the acquisition of
lastminute.com in 2005. There were approximately 2,000 lastminute.com employees as of December 31, 2005. A central part of our philosophy is to attract and maintain a highly capable staff. We
consider our current employee relations to be good. Our employees based in the United States are not represented by a labor union.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, we file reports, proxy and
information statements and other information with the Securities and Exchange Commission ("SEC"). Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, proxy and information statements and other information and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 are available through the Investor Relations section of our Website under the links to "Financial InformationSEC Filings." Our Internet
address is www.sabre-holdings.com. Reports are available free of charge as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. In addition, our officers
and directors file with the SEC initial statements of beneficial ownership and statements of change in beneficial ownership of our securities, which are also available on our website at the same
location. We are not including this or any other information on our website as a part of, nor incorporating it by reference into, this Form 10-K or any of our other SEC filings.

In
addition to our website, you may read and copy public reports we file with or furnish to the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.
You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains our
reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov.

12

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ITEM 1A.    RISK FACTORS.

RISK FACTORS

Risks associated with an investment in our securities, and with achieving the forward-looking statements contained in this report or in our news releases,
websites, public filings, investor and analyst conferences or elsewhere, include, but are not limited to, the risk factors described below. Any of the risk factors described below could have a
material adverse effect on our business, financial condition or results of operations. We may not succeed in addressing these challenges and risks.

Our revenues are highly dependent on the travel and transportation industries, and particularly on air travel, and a prolonged substantial decrease in travel transaction
volumes could adversely affect us.

Our
revenue increases and decreases with the level of travel and transportation activity. The travel industry is seasonal and our revenue varies significantly from quarter to quarter.
Our revenue is also highly subject to declines in or disruptions to travel and transportation that may be caused by factors entirely out of our control. For example, negative perceptions held by
travelers about the following factors may adversely affect travel activity:



A
prolonged substantial decrease in travel transaction volumes could have an adverse impact on our financial performance, operations, liquidity, or capital resources.

Changes to our travel supplier relationships may reduce our revenues.

Most of our revenue is derived from airlines, hotel operators, car rental companies, cruise and tour operators and other suppliers in the travel and
transportation industry. We depend on a relatively small number of airlines for a significant portion of our revenues. To compete effectively in the travel distribution industry, we must offer broad,
dependable access to airline content and features such as schedules, seat availability and fares, including web fares. Airlines and other suppliers may choose to reduce our access to content that we
have offered in the past. In particular, since the deregulation of the CRS industry in the United States, airlines have more flexibility to limit their participation in our SabreGDS, or to not
participate. Several major airlines in the United States are experiencing liquidity problems. Some of those airlines are
consolidating, others have sought bankruptcy protection, and still others may consider bankruptcy relief. The financial instability of airlines or other travel suppliers could have a material negative
impact on our business. If our access to supplier-provided content or features were to be diminished relative to our competitors, our business could be materially adversely affected. Because offerings
from major airlines represent a large part of our business, if theSabreGDS were to lack the ability to facilitate bookings on one or more major
airlines, our distribution channels would be relatively less attractive to travel agencies and travel purchasers, which could reduce our transaction fee revenue and materially adversely affect our
business.

13

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Travel suppliers are pursuing distribution options that may reduce our access to content, which could reduce our revenues.

Some
travel suppliers are seeking to decrease their reliance on distribution intermediaries, including global distribution systems such as our SabreGDS, by promoting other distribution channels. Many
airlines, hotels, car rental companies and cruise operators have call centers and have
established their own travel distribution websites. The airline industry has experienced a shift in segment share from full-service carriers to low-price carriers, many of
which do not distribute their tickets through third-party intermediaries such as theSabreGDS and Travelocity. Travel suppliers may create or expand
commercial relationships with online and offline travel agencies that directly book travel with those suppliers, diverting bookings from our distribution channels. From time to time, travel suppliers
offer advantages, such as bonus loyalty awards, lower transaction fees, or discounted prices, when their products and services are purchased from these supplier-related channels. Some of these
offerings are not available to unrelated intermediaries, or those intermediaries must accept lower transaction fees in exchange for access to the offerings. Our SabreGDS also competes with competitors
who may offer less content, functionality and marketing reach at a relatively lower cost to suppliers. In
addition, search engine providers are attempting to enter the online travel marketplace by aggregating travel search results across supplier, travel agent and other travel-related websites. These
search engines and alternative travel distribution channels have the potential to divert customers from our distribution channels. If our access to supplier-provided content or features were to be
diminished relative to our competitors, our business could be materially adversely affected. Because offerings from major airlines represent a large part of our business, if the SabreGDS were to lack
the ability to facilitate bookings on one or more major airlines, our distribution channels would be relatively less attractive
to travel agencies and travel purchasers, which could reduce our transaction fee revenue and materially adversely affect our business. See "Business TrendsSupplier
Efforts to Control Travel Distribution" and "Business TrendsAlternative Distribution Systems."

Customers may reduce transactions through our distribution channels, which could reduce our revenues.

Our
portfolio of travel distribution businesses includes channels that support the travel agency, business-direct and consumer-direct segments of the global travel distribution
marketplace. We believe that we and our customers benefit when we broadly participate in the travel distribution industry, including our direct to traveler services. Broad participation in the
industry gives us a competitive advantage, including greater scale of our technology and other synergies. In all of these distribution channels, we face significant competition.



In
some circumstances, our business segments have objectives that lead to conflicts with customers of our other business segments. For example, our Travelocity and Travelocity Business
operations compete with travel-agency subscribers of Sabre Travel Network. That competition could cause current or potential travel agency subscribers to elect to use competing GDS providers, websites
or other channels of travel distribution, which could reduce our transaction fee revenue and materially adversely affect our business. If our competitors introduce new pricing or offerings that we
cannot meet in a timely or cost-effective manner, our customers may elect to use other travel distribution channels and our business may be materially adversely affected. In addition,
travelers and other persons may use our websites and other resources to obtain schedules, availability, pricing and other travel information and then elect to purchase travel from a competitor, which
would tend to increase our costs without producing revenue.

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Consolidation in the travel industry and increased competition for customers may increase costs and reduce revenue.

Consolidation
among participants in the travel industry may increase their negotiating leverage, thereby providing them with competitive advantages over us that may increase our costs
and reduce our revenues. Consolidation among travel suppliers, such as major hotel and airline mergers and alliances, may increase competition from these supplier-related distribution channels or give
them additional leverage to negotiate lower transaction fees payable to our travel distribution channels, including theSabreGDS. In order for our
distribution channels to obtain access to important airline content offerings, we are evaluating various pricing models for airline suppliers. It is, however, difficult to predict with certainty, in a
recently deregulated environment, the impact of new pricing models on our revenues or results of operations.

GDSs,
such as ourSabreGDS, compete to attract and retain travel agencies. Some travel suppliers have reduced or eliminated commissions
paid to travel agencies (including consumer-direct travel sites like Travelocity). The loss of supplier commissions causes travel agencies to become more dependent on other sources of revenues, such
as traveler-paid service fees and GDS-paid incentives. The reduction or elimination of supplier-paid commissions has forced some smaller travel agencies to close or
to combine with larger travel agencies. Although theSabreGDS has a leading share of large travel agencies, competition is particularly intense among
global distribution systems for larger travel agency subscribers, including online travel agencies. Consolidation of travel agencies may increase competition for these subscribers and increase the
ability of those agencies to negotiate higher GDS paid incentives. In order to compete effectively, we may need to increase incentives, pre-pay incentives, increase spending on marketing
or product development, or make significant investments to purchase strategic assets.

Travelocity's revenue growth largely depends on international growth and on expanding net rate (merchant) programs.

Travelocity's
revenue growth is driven by expanding global use of the Internet and driving purchases through our online travel websites. The online travel marketplace is highly
competitive, with both independent online travel agencies and suppliers' proprietary websites competing for customers. Travelocity's business strategy largely depends on growing its net rate program
offerings (commonly referred to in the industry as "merchant model" programs, because the online agency is the merchant of record for credit card processing). Growing the net rate programs is
particularly dependent upon our ability to offer adequate hotel rooms. Many hoteliers utilize net rate programs to dispose of excess hotel rooms at discounted rates. Demand for supplier offerings may
increase as a result of increased travel and competition from net rate offerings by our competitors. If demand increases for suppliers' products, services and other content offerings, suppliers may
limit our right to distribute their offerings or may increase the cost of those offerings. Travelocity's business strategy also depends on expanding its dynamically packaged offerings, maintaining the
breadth of its access to supplier offerings, developing its brand in a cost-effective manner in the United States, Europe, Asia and other growth regions, increasing traffic to its websites
(including direct distribution as well as through current and future distribution partners), and expanding the appeal of theTravelocity Businesstool
to business travelers. We also plan to invest strategically in growth opportunities, such as our recent acquisition of lastminute.com in Europe and Zuji.com in the Asia Pacific region. If any of these
initiatives is not successful, or requires extensive investment, Travelocity's growth may be limited and it may be unable to achieve or maintain profitability.

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We may be unsuccessful in pursuing and integrating business combinations, strategic alliances, or products and technologies, which could result in increased expenditures or
cause us to fail to achieve anticipated cost savings or revenue growth.

We
are currently seeking to integrate recently acquired businesses as described in this report, including our acquisition of lastminute.com. There are risks inherent in these types of transactions,
such as: difficulty in assimilating or integrating the operations, technology and personnel of the combined companies; difficulties and costs associated with integrating and evaluating the internal
control systems of acquired businesses; disruption of our ongoing business, including loss of management focus on existing businesses and marketplace developments; problems retaining key technical and
managerial personnel; expenses associated with the amortization of identifiable intangible assets; additional or unanticipated operating losses, expenses or liabilities of acquired businesses;
impairment of relationships with existing employees, customers and business partners; and fluctuations in value and losses that may arise from equity investments.

We
expect to realize strategic and other benefits as a result of our acquisition of lastminute.com. Our ability to realize these benefits or successfully integrate lastminute.com's
businesses, however, is subject to certain risks and uncertainties, including:



Our
failure to manage these or other risks related to the acquisition could prevent us from realizing the expected benefits of the acquisition and also may have a material adverse effect
on our results of operations and financial condition.

In
addition, we plan to continue to examine possible business combinations, investments, joint ventures or other strategic alliances with other companies in order to maintain and grow
revenue and marketplace presence. We may not be able to: identify suitable candidates for additional business combinations and strategic investments; obtain financing on acceptable terms for such
business combinations and strategic investments; or otherwise consummate such business combinations and strategic investments on acceptable terms. We may be unable to successfully complete potential
acquisitions due to multiple factors, such as issues related to regulatory review of the proposed transactions. To consummate such transactions, we may need to raise external funds through the sale of
stock and/or debt in the capital markets or through private placements, which might affect our liquidity.

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Rapid technological changes and new distribution channels or unauthorized use of intellectual property may adversely affect the value of our current or future technologies to
us and our customers, which could cause us to increase expenditures to upgrade and protect our technology or develop and protect competing offerings in new distribution
channels.

New
distribution channels, technology and customer behavior in our industry are evolving rapidly. Our ability to compete and our future results depend in part on our continued ability to
maintain and to make timely and cost-effective enhancements, upgrades and additions to our technology in response to changes in consumer preferences and increased demand for our products
and services. We must also keep pace with rapid advancements in technology, standards and practices, and protect our technology. Maintaining flexibility to respond to technological and marketplace
dynamics may require substantial expenditures and lead time. We cannot assure you that we will successfully identify and develop new products or services in a timely manner, that offerings,
technologies or services developed by others will not render our offerings obsolete or noncompetitive, or that the technologies in which we focus our research and development investments will achieve
acceptance in the marketplace and provide a return on our investment.

Unauthorized
use of our intellectual property could have a material adverse effect on us, and our legal remedies may not adequately compensate us for the damages to our business caused
by such use. Protecting our intellectual property from unauthorized use could be expensive and time-consuming. Additionally, claims that our products or services may infringe the intellectual property
rights of others may require additional expenditures in resolving such claims and/or development of alternate technologies, either or which could be expensive and time-consuming.

We will encounter risks and difficulties similar to those frequently experienced in rapidly evolving industries such as the travel distribution
industry.

Some
of these risks relate to our ability to:



If
we are unsuccessful in addressing these risks or in executing our business strategy, our business, financial condition or results of operations may suffer.

We rely on third parties to provide critical systems and infrastructure.

Our businesses are largely dependent on the computer data centers and network systems operated for us by Electronic Data Systems Corporation except for our lastminute.comoperations which uses Colt Telecom. We also rely on other providers and on the global telecommunications infrastructure. We rely on
several communications service suppliers and on the global Internet to provide network access between our computer data center and call centers and end-users of our services. The Travelocity(including
theSite59®and lastminute.comwebsites) business is dependent upon GDSs (theSabreGDS and others) to
process travel
bookings. If those providers do not enable us to provide our customers and suppliers with reliable, real-time access to our systems, our business may be materially adversely affected.

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Our success depends on maintaining the integrity of, and upgrading the quality of, our systems and infrastructure, which may suffer failures, capacity constraints and business
interruptions, which could increase our operating costs and cause us to lose customers.

In
order to be successful, we must provide reliable, real-time access to our systems for our customers and suppliers while also pursuing a low-cost model.
Consumers and suppliers will not tolerate a service hampered by slow delivery times, unreliable service levels, service outages due to the installation of upgrades, or insufficient capacity. As our
operations grow in both size and scope, we will continually need to improve and upgrade our systems and infrastructure to offer an increasing number of customers and travel suppliers enhanced
products, services, features and functionalityall while maintaining the reliability and integrity of our systems and infrastructure and while pursuing reduced costs per transaction. The
expansion of our systems and infrastructure will require us to commit substantial financial, operational and technical resources before the volume of business increases, with no assurance that the
volume of business will increase. System capacity limits or constraints arising from unexpected increases in our volume of business could cause interruptions, outages or delays in our services, or
deterioration in their performance, or could impair our ability to process transactions. We occasionally experience system interruptions that make unavailable some or all of our global distribution
system or other data processing services (including the services that Sabre Airline Solutions provides to airlines). System interruptions may prevent us from efficiently providing services to our
customers or other third parties, which could result in our losing customers and revenues, or incurring liabilities. Much of the computer and communications hardware upon which we depend is located in
a single facility. Our systems might be damaged or interrupted by fire, flood, power loss, telecommunications failure, break-ins, earthquakes, terrorist attacks, hostilities or war or
similar events. Computer viruses, denial of service attacks, physical or electronic break-ins and similar disruptions affecting the global Internet or our systems might cause service
interruptions, delays and loss of critical data, and could prevent us from providing our services. Problems affecting our systems might be expensive to remedy and could significantly diminish our
reputation and brand name and prevent us from providing services. We could be harmed by outages in, or unreliability of, the data center or network systems. The occurrence of any of these events could
result in a material adverse effect on our business.

Our collection, processing, storage, use and transmission of personal data may be restricted or result in liabilities.

In
our processing of travel transactions, we collect, process, store, use and transmit large amounts of personally identifiable data about travelers. Our handling of these types of data
is increasingly subject to legal restrictions around the world, including the European Union. In addition, the United States government is contemplating initiatives to enhance national and aviation
security. These initiatives may result in conflicting legal requirements in the United States and other jurisdictions. Companies that handle these types of data have also been subject to
investigations, lawsuits and adverse publicity due to allegedly improper disclosure of personally identifiable information. Our business could be materially adversely affected if legal restrictions on
the use of personally identifiable information are expanded or are interpreted in ways that conflict with our business practices.

Tax issues have the potential to have an adverse effect on our financial condition and results of operations.

We are subject to a variety of taxes in many jurisdictions globally. We establish reserves for our potential liability for taxes, consistent with applicable
accounting principles and in light of all current facts and circumstances. Regarding value-added taxes, we have established reserves regarding the collection of refunds which are subject to audit and
collection risks in various regions of Europe. The reserves represent our best estimate of our contingent liability for taxes. The interpretation of tax laws and the determination of any potential
liability under those laws are complex, and the amount of our liability may exceed our established reserves and could therefore have a material adverse effect on our financial results.

18

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Some
state and local taxing authorities impose taxes on the sale, use or occupancy of hotel room accommodations, which are called transient, occupancy, accommodation, sales or hotel room
taxes. Hotel operators generally collect and remit these occupancy taxes. Consistent with that practice, when a customer books a hotel room through one of our travel services under our net rate hotel
program, we collect from the customer an amount sufficient to pay the hotel its room charge and the occupancy taxes on that charge, as well as an additional amount that represents our fees. We do not
collect or remit occupancy taxes on our fees. Some tax authorities claim that occupancy taxes should be collected on some or all of those fees. We believe there are strong arguments that our fees are
not subject to occupancy taxes (although tax laws vary among the jurisdictions). We are attempting to resolve this issue with tax authorities in various jurisdictions, but we cannot predict the
resolution in any particular jurisdiction. Any actual liability we may have for occupancy taxes, or the size of the reserve we may establish for those taxes, could be affected by a variety of factors,
such as the number of jurisdictions that prevail in either assessing additional occupancy taxes or negotiating a settlement with us, the amount of fees potentially subject to tax in each jurisdiction,
changes in applicable tax laws, and the timing of any or all of the foregoing.

Regulatory developments in Europe could limit our ability to compete by removing key protections needed to safeguard competition where locally strong airlines retain ownership
interests in a CRS, and regulatory developments elsewhere could, among other things, inhibit our flexibility to contract with airlines or travel agencies, which could cause our customers to be
diverted to our competitors and adversely affect our revenue and results of operations.

The
E.U. Commission has suggested the potential elimination of its rules governing CRS systems. It is unclear when or if the E.U. Commission will make such a formal proposal, or if it
does, the final changes that might ultimately be made to those rules. Because large E.U.-based airlines retain substantial ownership interests in one CRS, we could be unfairly and adversely affected
if, for example, the E.U. Commission were to eliminate current requirements for airlines that own an interest in a CRS to participate equally in other CRSs. We also could be adversely affected in
Europe or elsewhere if restrictions were imposed or continued on CRS advertising and displays, or if additional limitations were placed upon our right to contract with travel agents or airlines. We
could also be adversely affected if changes to any of the foregoing CRS rules or to other general laws affecting our businesses, or if decisions made under such rules or laws, were to increase our
cost of doing business or otherwise impair our flexibility.

Our international operations are subject to other risks, which may impede our ability to grow internationally and adversely affect our overall results of
operations.

We
continually seek to expand the reach of our various businesses into international markets as well as to successfully integrate, operate and manage our existing and future
international operations. Our international operations are subject to risks, including those listed below, that may adversely affect our ability to conduct and grow business internationally and could
materially adversely affect our business:



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Our ongoing cost reduction plans may not continue to be successful.

Our strategy depends, to a substantial degree, on reducing and controlling operating expenses. In furtherance of this strategy, we have engaged in ongoing,
company-wide activities intended to reduce costs. These activities include personnel reductions, reductions in personnel-related costs, programs designed to reduce the growth rate of
incentive payments to travel agencies, and realigning and streamlining operations and consolidating facilities. Part of our cost reduction strategy involves leveraging our status as a global company
to conduct some of our operations outside the United States, such as customer call centers and software development, either by contracting with foreign companies that work for us or by expanding our
own operations outside the United States. We cannot assure you that our efforts will continue to result in the increased profitability, cost savings or other benefits that we expect.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

We had no unresolved SEC staff comments through December 31, 2005.

ITEM 2.    PROPERTIES

In June 2003, Sabre Inc. refinanced the syndicated lease arrangement regarding our corporate headquarters facility in Southlake, Texas, and entered
into a ten-year master lease, accounted for as a capital lease. The initial term of the lease expires in 2013 with an option to purchase these facilities prior to or upon expiration of the
lease (see Notes 5 and 8 to the Consolidated Financial Statements for additional information on our capital lease).

Additionally,
we lease office facilities in Westlake, Texas, under leases expiring in 2008. These facilities are utilized by each of our three business units. We also lease office
facilities for our business units in approximately 150 other locations worldwide. These locations serve a variety of functions including facilities for various operating subsidiaries, branch offices
in international locations and customer call centers.

In
July 2005, we acquired 31 office locations throughout Europe as a result of our acquisition of lastminute.com. These locations operate within our Travelocity segment. We
currently occupy 27 of the locations; 2 are sublet, 2 are currently vacant and 2 are scheduled to be closed/vacated sometime in 2006 as a part of our lastminute.com restructuring plan (see
Note 4 to the Consolidated Financial Statements).

EDS
subleases a large office facility from us in Fort Worth, Texas, under a sublease that will expire in 2019. We also sublease five small office facilities in North America to various
companies.

On
December 3, 2003, we sold one of our previous office facilities in Fort Worth, Texas, for proceeds of approximately $3 million and recognized a pre-tax loss
of approximately $3 million.

We
believe that our office facilities will be adequate for our immediate needs and could accommodate expansion.

ITEM 3.    LEGAL PROCEEDINGS

The litigation matters described below involve issues or claims that may be of particular interest to the Company's stockholders, regardless of whether any of
these matters may be material to the financial position or operations of the Company based upon the standard set forth in the SEC's rules.

We
previously disclosed two lawsuits (which were consolidated in federal court in Fort Worth, Texas) to which we were a party against Northwest Airlines, Inc. ("Northwest")
related to Northwest's August 24, 2004 announcement and implementation on September 1, 2004 of a fare supplement for travel reservation bookings made through a GDS (including the SabreGDS) by
traditional travel agencies and some online travel sites (such as Travelocity). On January 24, 2006, we announced that this
litigation had been settled. The bankruptcy court approved a settlement of this litigation by an order effective on February 25, 2006.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders during the fourth quarter of the fiscal year ended December 31, 2005.

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PART II

---

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Class A Common Stock, par value $0.01 per share ("Common Stock") is traded on the New York Stock Exchange (symbol TSG). The approximate number of
holders of record of our Common Stock at March 6, 2006 was 9,349.

The
range of the high and low sales prices for our Common Stock as reported by the New York Stock Exchange by quarter for the two most recent fiscal years were:

High

LowQuarter Ended:December 31, 2005

$
24.90

$
18.93September 30, 2005

$
20.45

$
18.26June 30, 2005

$
22.24

$
19.19March 31, 2005

$
22.21

$
19.84Quarter Ended:December 31, 2004

$
25.81

$
20.56September 30, 2004

$
27.99

$
21.22June 30, 2004

$
28.85

$
22.70March 31, 2004

$
24.96

$
20.10


DIVIDENDS AND SHARE REPURCHASES

On May 12, 2005, we entered into an $800 million, unsecured bridge loan agreement (the "Bridge Facility") that matures on August 12, 2006, in
order to provide short-term financing in connection with the lastminute.com acquisition and to satisfy legal requirements for certainty of funding for the acquisition. The Bridge Facility
contains various terms and conditions that are typical for a bridge credit facility of this type which, among other things, limits our ability to pay in excess of $150 million during the term
of the Bridge Facility as dividends or as repurchases of our stock. See "Liquidity and Capital Resources" in Part II, Item 7 of this Form 10-K for additional details about
the Bridge Facility.

DIVIDENDS

During 2003, 2004 and 2005 we paid out the following cash dividends:

Declaration Date

Payable Date

Amount per Share2003:April 17, 2003

May 15, 2003

$
0.070July 15, 2003

August 15, 2003


0.070October 21, 2003

November 14, 2003


0.0702004:January 20, 2004

February 17, 2004

$
0.075April 20, 2004

May 14, 2004


0.075July 20, 2004

August 16, 2004


0.075October 26, 2004

November 15, 2004


0.0752005: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


0.090


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On January 30, 2006, our Board of Directors approved a dividend of $0.10 per share payable on February 28, 2006 to stockholders of record at
February 10, 2006.

Our
Board of Directors currently intends to consider declaring and paying comparable future dividends on a regular quarterly basis, subject to our ability to pay dividends and to a
determination by management and our Board of Directors that dividends continue to be in the Company's best interests and those of our stockholders. For additional information on dividends see the
following sections of this Form 10-K: "Liquidity and Capital Resources" in Part II, Item 7; "Consolidated Statements of Cash Flows" and "Consolidated Statements of
Shareholders' Equity" in Part III, Item 8.

ISSUER PURCHASES OF EQUITY SECURITIES

On October 25, 2004, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $100 million of our Common Stock.
We completed this authorization in March 2005 with the purchase of 2,042,063 shares of our Common Stock during the first three months of 2005. All purchases were made through the open market
pursuant to 10b5-1 trading plans.

On
May 2, 2005, we received authorization from our Board of Directors to repurchase an additional $100 million of our Common Stock. Due to the acquisition of
lastminute.com, no purchases of our Common Stock have been made under this authorization as of the date of this report. As in the past, implementation of the program is at management's discretion and
will depend on the best uses for our available cash.

On
October 20, 2003 our Board of Directors issued a standing annual authorization to purchase shares of our Common Stock to satisfy our obligations to deliver shares under our
Employee Stock Purchase Plan and our Long-Term Incentive Plan (the "Alternative Share Settlement Program"). We purchased 850,000 shares of our Common Stock under this authorization in
December 2003 and 840,000 shares of our Common Stock under this authorization in January 2005 through the open market pursuant to 10b5-1 trading plans.

We
expect that the timing, volume and price of any future repurchases of our Common Stock will be made pursuant to trading plans that we intend as qualifying under
Rule 10b5-1, unless such plans are terminated at the discretion of management.

We
made no repurchases of our Common Stock during the last quarter of 2005:

|Period                             |  | Total Number
of Shares
Purchased |  | Weighted
Average
Price Paid
per Share |  | Total Number of
Shares Purchased
as Part of a
Publicly Announced
Program |  | Value of Shares
That May Yet be
Purchased Under
such Programs (1)
|---------------------------------- |  | -------------------------------- |  | ------------------------------------- |  | ------------------------------------------------------------------------ |  | -----------------------------------------------------------------
|October 1, 2005October 31, 2005   |  |                                 |  | n/a                                   |  |                                                                         |  | $                                                                
|November 1, 2005November 30, 2005 |  |                                 |  | n/a                                   |  |                                                                         |  | $                                                                
|December 1, 2005December 31, 2005 |  |                                 |  | n/a                                   |  |                                                                         |  | $                                                                
|                                   |  |                                  |  |                                       |  |                                                                          |  |                                                                  
|Total 4th Quarter 2005 Repurchases |  |                                 |  | n/a                                   |  |                                                                         |  |                                                                  
|                                   |  |                                  |  |                                       |  |                                                                          |  |                                                                  

---

For additional information on purchases of equity securities see the following sections of this Form 10-K: "Liquidity and Capital Resources" in
Part II, Item 7; "Consolidated Statements of Cash Flows" and "Consolidated Statements of Shareholders' Equity" in Part III, Item 8.

22

---



ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data should be read in conjunction with "Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Item 8: Financial Statements and Supplementary Data." We have derived the
selected financial data set forth below from our audited financial statements and related notes.



Year
acquired

Entity

Purchase price
(in millions)2005

SynXis Corporation

$
41lastminute.com plc

$
1,174Zuji Holdings Limited (1)

$
2004

RM Rocade AB and RM Rocade Assist AB

$
15All State Tours, Inc.

$
25Travelocity EuropeRemaining 50% of the non-German operations

$
33Sabre Travel Network Middle East Joint Venture60% ownership

$
312003

Dillon Communications Systems GmbH ("Dillon") remaining 49% interest

$
30World Choice Travel, Inc.

$
502002

Site59.com, Inc.

$
442001

Sabre Pacific, Pty Limited

$
46


---

23

---





The following table presents selected historical financial data for each of the five years in the period ended December 31, 2005:

|                                                                             | 
|---------------------------------------------------------------------------- | 
|
|
|
|Income Statement Data (2) (8) (10):                                          | 
|Revenues                                                                     | 
|Operating expenses, excluding amortization of goodwill and intangible assets | 
|Amortization of goodwill and intangible assets (2)                           | 
|                                                                             | 
|Operating income (loss)                                                      | 
|Other income (expense), net (9)                                              | 
|Minority interests                                                           | 
|                                                                             | 
|Income from continuing operations before provision for income taxes          | 
|Provision for income taxes                                                   | 
|                                                                             | 
|Income (loss) from continuing operations                                     | 
|Income from discontinued operations, net (1)(4)                              | 
|Cumulative effect of accounting change, net (5)                              | 
|                                                                             | 
|Net earnings                                                                 | 
|                                                                             | 
|Earnings (loss) per common sharebasic:                                      | 
|Income (loss) from continuing operations                                     | 
|Income from discontinued operations, net (1)(4)                              | 
|Cumulative effect of accounting change, net (5)                              | 
|                                                                             | 
|Net earnings                                                                 | 
|                                                                             | 
|Earnings (loss) per common sharediluted:                                    | 
|Income (loss) from continuing operations                                     | 
|Income from discontinued operations, net (1)(4)                              | 
|Cumulative effect of accounting change, net (5)                              | 
|                                                                             | 
|Net earnings                                                                 | 
|                                                                             | 
|Dividends per common share                                                   | 
|                                                                             | 

|                                                                 | 
|---------------------------------------------------------------- | 
|
|
|
|Balance Sheet Data
(at end of period) (1) (8) (10):              | 
|Current assets                                                   | 
|Goodwill and intangible assets, net (2)                          | 
|Total assets                                                     | 
|Current liabilities                                              | 
|Minority interests                                               | 
|Long-term capital lease obligation                               | 
|Public and other notes payable                                   | 
|Stockholders' equity                                             | 
|Other Data:                                                      | 
|Total transactions through theSabresystem (in thousands) (3) (6) | 
|Operating margin                                                 | 
|Ratio of earnings to fixed charges (7)                           | 
|Cash flows from operating activities                             | 
|Cash flows used for investing activities                         | 
|Cash flows provided by (used for) financing activities           | 
|Capital expenditures                                             | 
|                                                                 | 

24

---



Year Ended December 31,2005

2004

2003

2002Total transactions through theSabresystem (6)

3.7
%
4.9
%
(8.4
)%
(8.2
)%Total North America transactions through theSabresystem (6)

2.2
%
4.6
%
(10.2
)%
(10.9
)%


25

---





ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We begin Management's Discussion and Analysis of Financial Condition and Results of Operations with an overview of our business by segment. This is followed by a
discussion of various trends that are occurring in our business and how those trends are impacting our business. We follow the discussion on trends with a description of the revenues and expenses by
segment which is followed by our period over period results of operations for the described revenues and expenses. We then discuss our Consolidated Balance Sheets and Consolidated Statements of Cash
Flows in the "Liquidity and Capital Resources" section. Lastly, we discuss our Critical Accounting Policies that we believe are important in
understanding judgments and assumptions incorporated into our financial results.

The
following discussion and analysis contains forward-looking statements about trends, uncertainties and our plans and expectations of what may happen in the future. Forward-looking
statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our results could differ materially from the results anticipated
by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors discussed in "Item 1A Risk
Factors."

The
following discussion and analysis should be read in conjunction with "Item 6Selected Financial Data" and
"Item 8Financial Statements and Supplementary Data" appearing elsewhere in this report.

Overview of Business

We operate our business through the following business segments:

Sabre Travel Network:Sabre Travel Network markets and distributes travel-related products and services through the travel
agency and corporate channels. Travel agencies, both online and brick and mortar, subscribe to our services. Sabre Travel Network primarily generates revenues from transaction fees charged to airlines
and non-air travel suppliers who distribute their products and services through theSabresystem. A "transaction" is defined as any travel
reservation that generates a fee paid directly to us including the following:



Our
services provide travel agency subscribers information about, and the ability to reserve for and purchase travel-related products and services from airlines, hotels, car rental
companies, cruise lines and others. We also provide travel agency office automation tools, enable travel agencies to provide services via the Internet and provide reservation management, distribution
and technology services to hotel properties.

Travelocity:Our Travelocity segment markets and distributes travel-related products and services directly to individuals,
including leisure travelers and business travelers, through Travelocity owned websites and contact centers, and websites and contact centers owned by its supplier, travel agency and distribution
partners. Travelocity customers can access offerings, pricing and information about airlines, hotels, car rental companies, cruise lines, vacation and last-minute travel packages. All
State Tours, Inc. ("Showtickets.comSM") andlastminute.comSM offer
other travel related services such as show tickets and tours. For business travelers,Travelocity BusinessSM provides the integrated
online corporate travel technology and full-service offering of ourGetThereproduct along with the online expertise of Travelocity. For
corporations,Travelocity Businessoffers a full service corporate travel agency andGetThereprovides a
corporate online travel reservation system that works in conjunction with any travel agency a company chooses.

26

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Travelocity
facilitates transactions between travel suppliers and consumers to book and pay for travel accommodations. For "net rate" transactions we generate service fee revenue equal
to the total amount paid by the customer minus Travelocity's payment to the travel supplier for the travel accommodations. Travelocity also generates revenue from commissions or transaction fees from
travel suppliers for the purchase of travel products and services pursuant to reservations made through our system. Other revenue sources include service fees charged to customers, advertising
revenues and GDS incentives.

Sabre Airline Solutions:Sabre Airline Solutions is a global leader in providing passenger management solutions, software
products and related services, and consulting services to help airlines simplify operations and lower costs. We provide airline reservations, inventory and check-in hosting solutions that
help airlines address the challenge of building and retaining customer loyalty while also reducing costs. We also supply the decision-support software and technology necessary for airlines to improve
profitability, increase revenue, streamline operations and improve workflow. We offer a complete range of consulting services to the airline industry, ranging from one time to extended engagements.
Typical engagements include helping clients achieve the necessary standards to join an alliance, prepare for privatization and optimize current operations. Clients include airlines, airports,
manufacturers and governments, as well as individuals, travel agencies and members of the financial community.

In
2005, approximately 59.7% of our revenue was generated from Sabre Travel Network, 30.7% from Travelocity and 9.6% from Sabre Airline Solutions based on segment results that include
intersegment revenues. Compared to the year-ago period, revenues (including intersegment revenue) for the twelve months ended December 31, 2005 increased 4.1% for Sabre Travel
Network, 65.1% for Travelocity and 7.1% for Sabre Airline Solutions.

For
a more detailed discussion of our business, please refer to Item 1 of this Form 10-K.

Business Trends

The following trends represent what management believes are the most significant challenges and opportunities that are currently impacting our business and
industry. The discussion also includes management's best assessment of what effects these trends are having on our business. Potential effects of the following trends are discussed in "Item
1ARisk Factors."

Transaction Volumes.For the year ended December 31, 2005, Sabre Travel Network experienced transaction growth of 3.7%
compared to the year ended 2004 due primarily to an increase in non-traditional transactions. See"Item 1BusinessSabre Travel
NetworkChanging our Sabre Travel Network Revenue Model."

Sabre
Travel Network has performed well in an industry faced with economic downturn, travel security concerns, channel shift and continued pressures on the GDS booking fee. Sabre Travel
Network annual transactions and transaction revenue have remained relatively stable since 2002 with a compounded 0.1% decrease in annual transactions processed through the Sabresystem. Sabre Travel
Network has been able to achieve this in part due to long term content agreement with key suppliers in exchange for
discounted booking fees. We believe that this has contributed in reducing the rate at which transactions leave the GDS channel for supplier-controlled channels, including individual airline websites
and call centers, and other third-party controlled distribution points.

For
the three years ended December 31, 2005, Travelocity has experienced 34.8% compounded annual growth in revenues due to our continued growth in North America and expansion into
the European market with the acquisitions of lastminute.com and Travelocity Europe which contributed to the growth in bookings made through our websites and contact centers, and increased yields and
transaction volumes stimulated by increased net rate activity and improved packaging of offerings. Although Travelocity was negatively affected by the terrorist attacks and the negative factors noted
above and by declining internet advertising revenue, the growth in the internet travel business combined with the Travelocity net rate model and packaging initiatives and market expansion into Europe
offset the negative impacts.

27

---



Sabre
Airline Solutions has experienced 6.3% compounded annual growth in revenues for the three years ended December 31, 2005. Although Sabre Airline Solutions and its customers
were negatively affected by the terrorist attacks and the negative factors noted above, we were able to grow revenues in each of the past two years. This increase in revenues is the result of
increased sales of decision support products and services, consulting and web-enabled solutions that offer cost savings and more efficient operations to our customers. Additionally, this
increase was driven by growth in airline reservation hosting revenues.

Supplier Efforts to Control Travel Distribution.Airlines have been working aggressively for several years to divert
transactions away from GDS networks and towards alternative travel distribution channels, including websites that they control and online travel agencies that book directly with those airlines. See
"Item 1ARisk FactorsTravel Suppliers are Pursuing Distribution Options...."
The efforts of suppliers to divert transactions away from independent distributors (such as online and conventional travel agencies using ourSabreGDS)
towards supplier-direct channels (such as supplier-controlled websites and call centers) are referred to as "channel shift." Over the last several years we have experienced channel shift in air
transactions at an annualized rate of approximately two percentage points.

Alternative Distribution Systems.Travelers are being offered many systems that enable travel shopping, booking and
purchasing. Established and start-up search engine companies are attempting to enter the travel marketplace by aggregating travel search results across supplier, travel agent and other
websites. Many alternative distribution systems offer lower costs to suppliers, but they are not global and offer travelers a limited subset of transactions from a limited subset of suppliers in one
market segment. The systems often must rely on the scale and functionality of a GDS such as ourSabresystem for a complete travel distribution solution
for suppliers and travel agencies. They do not offer comprehensive functionality and do not have the infrastructure to adequately service and support travel management companies or corporations. They
require the integration of a new, stand-alone system into most existing agency or corporate booking tool workflows. Many of these alternative travel distribution channels, including limited travel
distributors or "LTDs," are well-financed but are in start-up or developing mode, and have yet to fully define their functionality and costs. These alternative travel
distribution systems may have the effect of diverting customers from our online sites and ourSabreGDS, putting pressure on our revenues, pricing and
operating margins. See "Item 1ARisk FactorsTravel Suppliers are Pursuing Distribution Options...."

Additional Business Trends.For a discussion of additional business trends, please refer to the following sections of Item
1Business:



Cost Reductions and Expense Savings.As part of our cost leadership strategy, we are, as a standard practice, evaluating
efficiency opportunities across the company to ensure that we optimally manage our operational costs. Some of these cost-saving opportunities have involved and may continue to involve
globally-sourcing some of our operations (either by contracting with companies that work for us, such as through the opening of call centers we operate abroad, or by expanding our own operations
abroad). See Note 5 to the Consolidated Financial Statements for the impact of various costs saving initiatives. We are also developing programs to reduce the growth rate of incentive payments
to travel agencies.

28

---



Mergers and Acquisitions

Our discussion of the results of operations for the years ended 2003, 2004 and 2005 will be affected by significant mergers and acquisitions that have occurred in
those same years as summarized in the following table. For a more detailed discussion of our mergers and acquisitions see Note 4 to the Consolidated Financial Statements.

|Year
acquired |  | Entity                                                               |  | Segment                
|------------- |  | -------------------------------------------------------------------- |  | -----------------------
|2005          |  | SynXis Corporation                                                   |  | Sabre Travel Network   
|              |  | lastminute.com plc                                                   |  | Travelocity            
|              |  | Zuji Holdings LimitedPrimary beneficiary                            |  | Travelocity            
|2004          |  | RM Rocade AB and RM Rocade Assist AB                                 |  | Sabre Airline Solutions
|              |  | All State Tours, Inc.                                                |  | Travelocity            
|              |  | Travelocity EuropeRemaining 50% of the non-German operations        |  | Travelocity            
|              |  | Sabre Travel Network Middle East Joint Venture60% ownership         |  | Sabre Travel Network   
|2003          |  | Dillon Communications Systems GmbH ("Dillon")remaining 49% interest |  | Sabre Travel Network   
|              |  | World Choice Travel, Inc.                                            |  | Travelocity            

Components of Revenues and Expenses

Revenues.Sabre Travel Network primarily generates revenues from transaction fees paid directly to us related to a travel
reservation including the following: traditional booking fees paid by travel suppliers, non-traditional transaction fees paid by travel suppliers, transaction fees paid by travel agency
subscribers, and transaction fees paid by corporations related to our booking tool. Sabre Travel Network earns revenue through equipment service charges paid by subscribers. In addition, Sabre Travel
Network earns revenue through the sale of other products and services (including theHotel SpotlightSM program, which offers premium
marketing opportunities to hoteliers through theSabreGDS, theJurni Network® consortia, as
well asNexion® andSynXis® offerings to hoteliers) and the Sabre®SurroundSM program (which bundles theHotel
Spotlightservices with other advertising products) to travel-suppliers, subscribers and other customers. Earnings (or losses as the case may be) derived from interests in
joint ventures and other investments are also included in revenues. Sabre Travel Network earns intersegment revenues from data processing fees and transaction fees paid by Travelocity. Travelocity
generates revenues from commissions or transaction fees from suppliers for the purchase of travel and lifestyle products and services pursuant to reservations made through our system. Travelocity also
generates net rate revenue from providing facilitation services equal to the amount paid by the customer for travel and non-travel products and services, minus Travelocity's payment to the
supplier. Additional Travelocity revenues include other fees charged to customers, advertising revenues from our websites and GDS incentives. Travelocity derives intersegment revenues from Sabre
Travel Network, consisting of incentives earned for Travelocity transactions processed through theSabreGDS, and fees paid by Sabre Travel Network for
corporate trips and Sabre Airline Solutions for airline trips booked through Travelocity's online booking technology. Sabre Airline Solutions generates revenues from the sale of airline reservations
hosting services; product revenues including inventory and check-in hosting solutions; decision-support software and technology; and airline consulting services.

29

---



Cost of Revenues.Sabre Travel Network cost of revenues consist primarily of incentives paid to subscribers, data processing
charges resulting from the operation of theSabresystem, and salaries and other operating expenses. Sabre Travel Network also incurs intersegment
expenses paid to Travelocity for incentives for Travelocity transactions processed through theSabreGDS, as well as fees for corporate trips booked
through Travelocity's online booking technology. Travelocity cost of revenues consists primarily of customer service costs, technology costs, salaries, benefits and other employee expenses, data
processing fees and transaction fees paid to Sabre Travel Network, credit card fees, charges related to fraudulent bookings, service compensation and depreciation and amortization charges. In
addition, Travelocity cost of revenues includes recovery of certain VAT payments which is treated as a contra-expense. Sabre Airline Solutions cost of revenues is comprised of labor cost incurred in
the development and delivery of software and consulting services and depreciation and amortization. Sabre Airline Solutions also incurs intersegment expenses paid to Travelocity for airline trips
booked through Travelocity's online booking technology.

Operating Expenses.Sabre Travel Network selling, general and administrative expenses and other operating expenses consist
primarily of salaries, benefits and employee related expenses for staff who sell our services to new customers and other staff functions required to support the business as well as bad debt expense.
Travelocity selling, general and administrative and other operating expenses consist primarily of advertising and promotion expenses, payments made to our travel agency and distribution partners and
salaries, benefits and employee related expenses for staff functions required to support the business. Sabre Airline Solutions operating expenses consist of the costs of the sales organization and the
staff functions required to support the business and bad debt expense.

30

---



Financial Results

The following tables present operating results for the three years ended December 31, 2005, 2004 and 2003 (in thousands of dollars). The segment revenues
and cost of revenues are shown including intersegment activity. We have included the elimination of intersegment activity below to agree to the results of operations presented in the Consolidated
Financial Statements.

|                                     |  | Year Ended December 31,
|------------------------------------ |  | -----------------------
|
|
|Segment revenues                     |  | $                      
|Cost of revenues                     |  |                        
|Amortization of purchased technology |  |                        
|                                     |  |                        
|Gross profit                         |  |                        
|                                     |  |                        
|Selling, general & administrative    |  |                        
|Amortization of intangible assets    |  |                        
|                                     |  |                        
|Operating income (loss)              |  | $                      
|                                     |  |                        
|
|
|
|Segment revenues                     |  | $                      
|Cost of revenues                     |  |                        
|Amortization of purchased technology |  |                        
|                                     |  |                        
|Gross profit                         |  |                        
|                                     |  |                        
|Selling, general & administrative    |  |                        
|Amortization of intangible assets    |  |                        
|                                     |  |                        
|Operating income (loss)              |  | $                      
|                                     |  |                        

Results of Operations 2003-2005

Management's discussion and analysis of revenues, cost of revenues, selling, general and administrative expenses, amortization of intangible assets and operating
income by business segment are based upon segment results including intersegment revenues and cost of revenues of approximately $185 million, $168 million and $142 million for the
years ended December 31, 2005, 2004 and 2003, respectively. We account for significant intersegment transactions as if the transactions were to third parties, that is, at estimated current
market prices. The majority of the intersegment revenues and cost of revenues are between Travelocity and Sabre Travel Network, consisting mainly of incentives paid to Travelocity for Travelocity
transactions processed through theSabreGDS, data processing fees and transaction fees paid by Travelocity to Sabre Travel Network (including for
transactions processed through theSabreGDS), and fees paid by Sabre Travel Network to Travelocity for corporate trips booked through Travelocity's
online booking technology. In addition, Sabre Airline Solutions pays fees to Travelocity for airline trips booked through Travelocity's online booking technology. All intersegment revenues and
corresponding cost of revenues have been eliminated in consolidation.

31

---



Revenues.The compounded annual growth rate of revenues by segment for the three years ended December 31, 2005 was a
reduction of 0.3% for Sabre Travel Network, and growth of 34.8% for Travelocity and 6.3% for Sabre Airline Solutions. Each of our business segments have benefited from generally good economic
conditions, stronger demand for travel products and acquisitions. However, each of our business segments have been negatively impacted by macroeconomic factors during this period including the war and
continued conflict in Iraq, ongoing travel security concerns, and fear of potential terrorist attacks and infectious diseases such as SARS. These negative impacts to the general economy and the travel
industry impacted each of our business segments.

Sabre
Travel Network has performed well in an industry faced with economic downturn, travel security concerns, channel shift and continued pressures on the GDS booking fee. Sabre Travel
Network annual transactions and transaction revenue have remained relatively stable since 2002 with a compounded 0.1% decrease in annual transactions processed through the Sabresystem. Sabre Travel
Network has been able to achieve this in part due to long-term content agreements with key suppliers in exchange
for discounted booking fees. We believe that this has contributed in reducing the rate at which transactions leave the GDS channel for supplier-controlled channels, including individual airline
websites and call centers, and other third-party controlled distribution points.

For
the three years ended December 31, 2005, Travelocity has experienced 34.8% compounded annual growth in revenues due to our continued growth in North America and expansion into
the European market with the acquisitions of lastminute.com and Travelocity Europe which contributed to the growth in bookings made through our websites and contact centers, and increased yields and
transaction volumes stimulated by increased net rate activity and improved packaging of offerings. Although Travelocity was negatively affected by the terrorist attacks and the negative factors noted
above and by declining internet advertising revenue, the growth in the internet travel business combined with the Travelocity net rate model and packaging initiatives and market expansion into Europe
offset the negative impacts.

Sabre
Airline Solutions has experienced 6.3% compounded annual growth in revenues for the three years ended December 31, 2005. Although Sabre Airline Solutions and its customers
were negatively affected by the terrorist attacks and the negative factors noted above, we were able to grow revenues in each of the past several years. This increase in revenues is the result of
increased sales of decision support products and services, consulting and web-enabled solutions that offer cost savings and more efficient operations to our customers. Additionally, this
increase was driven by growth in airline reservation hosting revenues.

Expenses.Our primary operating expenses consist of salaries, benefits, other employee-related costs, data processing costs,
communication costs, advertising and subscriber incentives, representing approximately 75.6%, 78.7% and 77.8% of total operating expenses in 2005, 2004 and 2003, respectively. We have seen a decline
in our expenses as a result of cost reduction initiatives across our organization. However, since 2003, we have realized a compounded increase in our operating expenses of approximately 9.1% due
primarily to the acquisition of lastminute.com in July of 2005.

Sabre
Travel Network hardware and communications costs have decreased as a result of the migration to lower cost solutions and the adoption of third-party solutions by subscribers. These
decreases were partially offset by increases in Sabre Travel Network technology spending due to the phased implementation and continuing expansion of new functionality that requires running legacy
systems as well as the new technology, and increases in Sabre Travel Network subscriber incentives. Other increases in expenses have resulted from investments in various new businesses such as our SynXishotel reservations system.

Travelocity
cost of revenues and selling, general and administrative expenses have increased due to growth in the business. Significant acquisitions during this period, including
lastminute.com in 2005 and Travelocity Europe in 2004, have contributed to the growth in expenses. We increased our expenditures for advertising in order to drive additional travelers to Travelocity's
websites, and expenses have increased as a result of increases in transaction volumes for our growing net rate offerings. Our technology infrastructure related expenses have also increased in order to
support our growth and new offerings.

32

---



Sabre
Airline Solutions operating expenses have generally grown at a rate commensurate with the growth in revenues during the 2003 to 2005 period. These expenses have been offset by
several cost reduction initiatives that have resulted in reduced headcount-related expenses as well as improvements in our receivable collection activities, particularly in 2005.

Results of Operations: 2005 Compared to 2004

|                       |  | Year Ended December 31, |          
|---------------------- |  | ----------------------- | ---------
|
|
|
|
|
|Revenues               |  | $                       | 2,706,510
|Total cost of revenues |  |                         | 1,672,627

Total revenues for the year ended December 31, 2005 after intercompany eliminations increased approximately $390 million, or 18.3%,
compared to the year ended December 31, 2004, from $2,131 million to $2,521 million. Cost of revenues after intercompany eliminations for the year ended December 31, 2005
increased approximately $215 million, or 16.9%, compared to the year ended December 31, 2004, from $1,272 million to $1,487 million.

Management's
discussion and analysis of revenues, cost of revenues, selling, general and administrative expenses, amortization of intangible assets and operating income by business
segment are based upon segment results including intersegment revenues and cost of revenues of approximately $185 million and $168 million for the years ended December 31, 2005
and 2004, respectively. We account for significant intersegment transactions as if the transactions were to third parties, that is, at estimated current market prices. The majority of the intersegment
revenues and cost of revenues are between Travelocity and Sabre Travel Network, consisting mainly of incentives paid to Travelocity for Travelocity transactions processed through the SabreGDS, data
processing fees and transaction fees paid by Travelocity to Sabre Travel Network (including for transactions processed through the SabreGDS), and fees paid by Sabre Travel Network to Travelocity for
corporate trips booked through Travelocity's online booking technology. In
addition, Sabre Airline Solutions pays fees to Travelocity for airline trips booked through Travelocity's online booking technology. All intersegment revenues and corresponding cost of revenues have
been eliminated in consolidation.

Total
revenues (including intersegment revenues) for the year ended December 31, 2005 increased approximately $408 million, or 17.7%, as compared to the year ended
December 31, 2004, from $2,299 million to $2,707 million.

Total
cost of revenues (including intersegment cost of revenues) for the year ended December 31, 2005 increased $233 million, or 16.1%, as compared to the year ended
December 31, 2004, from $1,440 million to $1,673 million.

33

---



Sabre Travel Network

|                                     |  | Year Ended December 31, |          
|------------------------------------ |  | ----------------------- | ---------
|
|
|Segment revenues                     |  | $                       | 1,615,820
|Cost of revenues                     |  |                         | 1,120,071
|Amortization of purchased technology |  |                         | 4,835    
|                                     |  |                         |          
|Gross profit                         |  |                         | 490,914  
|Selling, general & administrative    |  |                         | 254,965  
|Amortization of intangible assets    |  |                         | 12,498   
|                                     |  |                         |          
|Operating income                     |  | $                       | 223,451  
|                                     |  |                         |          

Revenues

The increase in revenues is due to the following:



Cost of Revenues

The increase in cost of revenues for the twelve months ended December 31, 2005, as compared to the twelve months ended December 31, 2004, includes
increases in technology related spending of $26 million as a result of the expiration of contractual credits of $14 million and $12 million as a result of increased transaction
volume and the continued implementation of our open system pricing and shopping engine. Subscriber support costs increased $38 million, driven almost entirely by growth in subscriber incentives
as a result of the year over year growth in transaction volume and a higher average incentive rate per transaction compared to the prior year. Other cost of revenue increases include
$29 million related to continued investment in new businesses and new business models such asSynXis, Jurni Networkand Hotel Spotlight,
$8 million for fulfillment costs forGetTheretrips as a result of year over
year volume growth, $4 million due to severance related primarily to our second quarter reorganization of our software development group, $3 million due to depreciation and amortization
and $8 million of other expenses.

34

---



Selling, General and Administrative Expenses

The decrease in selling, general and administrative expenses for the twelve months ended December 31, 2005, as compared to the twelve months ended
December 31, 2004, was primarily driven by a $10 million reduction in non-income tax accruals due to events occurring that decreased our potential liabilities for taxes and associated
interest. This decrease was offset by an increase in legal and other professional fees of $2 million due to an effort to settle litigation and in increase in other expenses of
$3 million.

Amortization of Intangible Assets (Including Amortization of Purchased Technology)

Amortization of intangible assets decreased due to intangibles that fully amortized in 2005 offset partially by increased amortization expense from newly acquired
entities.

Operating Income

The decline in operating income was largely the result of increased technology and incentive expenses and continued investments in new businesses and new business
models that exceeded our revenue growth.

Travelocity

|                                     |  | Year Ended December 31, |        
|------------------------------------ |  | ----------------------- | -------
|
|
|Segment revenues                     |  | $                       | 829,878
|Cost of revenues                     |  |                         | 354,910
|Amortization of purchased technology |  |                         | 13,593 
|                                     |  |                         |        
|Gross profit                         |  |                         | 461,375
|Selling, general & administrative    |  |                         | 449,755
|Amortization of intangible assets    |  |                         | 14,463 
|                                     |  |                         |        
|Operating loss                       |  | $                       | (2,843 
|                                     |  |                         |        

The following are important to understanding the comparability of the results of operations between 2005 and 2004 for our Travelocity segment:



35

---





Revenues

Transaction revenue, including Travelocity Europe in 2005 and lastminute.com since the acquisition, increased $295 million, or 69.1%, primarily driven by a
$252 million increase in non-air transaction revenue (including revenue resulting from sales of package offerings that include air travel as a component) and a $43 million
increase in stand-alone air transaction revenue.

The
$252 million increase in non-air transaction revenue consisted primarily of the following:



The
$43 million increase in stand-alone air transaction revenue was primarily due to a $29 million increase resulting from the acquisitions of lastminute.com and
Travelocity Europe. North American stand-alone air transaction revenue increased by $14 million driven by strong volume growth.

Non-transaction
revenue increased $32 million, or 42.5%, consisting primarily of the following:



Cost of Revenues

The increase in cost of revenues includes $84 million from the acquisitions of lastminute.com, Travelocity Europe, Showtickets.com and the consolidation of
Zuji, which we either did not own or consolidate in 2004 (lastminute.com and Zuji) or we owned for only part of 2004 (Travelocity Europe and Showtickets.com). In addition, $45 million of the
increase is associated with the volume growth of our published, net rate hotel and packaged trip programs, as explained above in transaction revenue. The $45 million increase includes a
$28 million increase in expenses associated with a rate increase for net rate credit card transactions and an increase in service compensation and a $17 million increase in customer
service costs. The remaining $2 million increase in cost of revenues is primarily due to a software write-off associated with upgrading to a new platform at Travelocity Business.

Selling, General and Administrative Expenses

The increase in selling, general and administrative expenses includes $143 million from lastminute.com, Travelocity Europe, Showtickets.com and Zuji and
$24 million due to increased advertising and customer acquisition costs to drive additional travelers to our North American websites. Headcount-related expenses increased by $7 million
driven by growth in our North American business. Other selling, general and administrative expenses increased $3 million.

Amortization of Intangible Assets (Including Amortization of Purchased Technology)

Amortization of intangible assets increased $3 million in total due to the amortization of intangibles related to the acquisition of lastminute.com
partially offset by other intangible assets becoming fully amortized in 2004.

36

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Operating Loss

Operating loss decreased due to strong revenue growth in North America, which offset the incremental losses resulting from our acquisition of lastminute.com and
Travelocity Europe.

Sabre Airline Solutions

|                                     |  | Year Ended December 31, |        
|------------------------------------ |  | ----------------------- | -------
|
|
|Segment revenues                     |  | $                       | 260,812
|Cost of revenues                     |  |                         | 176,713
|Amortization of purchased technology |  |                         | 544    
|                                     |  |                         |        
|Gross profit                         |  |                         | 83,555 
|Selling, general & administrative    |  |                         | 42,330 
|Amortization of intangible assets    |  |                         | 2,294  
|                                     |  |                         |        
|Operating income                     |  | $                       | 38,931 
|                                     |  |                         |        

Revenues

The increase in revenues was driven primarily by a $16 million increase in airline reservations hosting revenue driven by higher volumes from adding new
customers as well as volume growth from our existing customer base. Additionally, consulting revenues increased $7 million due to certain contractual objectives being met and an increase in
customer engagements, and product revenue increased $4 million as a result of higher demand for our products. This growth was offset by a $10 million decline in our
low-margin, custom-developed software business due to decreased demand.

Cost of Revenues

The slight decrease in cost of revenues is due to a $10 million decrease in development labor expenses caused primarily by a decline in demand in our
low-margin, custom-developed software business. Additionally, headcount-related expenses decreased $7 million driven by an increase in capitalized salaries and an increased
utilization of global sourcing. These decreases were offset by a $4 million increase in variable compensation due to more favorable performance, a $4 million increase in data processing
cost primarily due to transaction volume growth, a $3 million increase in communications expenses caused by an increase in data network rates, a $2 million increase in amortization of
internally-developed software and project delivery costs due to higher capitalized balances, and a $1 million increase in services purchased due primarily to the outsourcing of training and
other services. Additionally, other expenses increased $2 million.

Selling, General and Administrative Expenses

The decrease in selling, general and administrative expenses was driven by a $10 million decrease in bad debt expense caused by the receipt of payments on
accounts that had been previously reserved. This decrease was somewhat offset by increases in other expenses of $2 million.

Amortization of Intangible Assets (Including Amortization of Purchased Technology)

Amortization of intangible assets increased due to amortization associated with the acquisition of Rocade in August 2004, partially offset by other
intangible assets becoming fully amortized in 2004.

37

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Operating Income

The increase in operating income was primarily driven by higher revenues and favorable collection results.

The
following section describes our results of operations on a consolidated basis for non-operating income and expense items:

|                                 |  | Year Ended December 31, |        
|-------------------------------- |  | ----------------------- | -------
|
|
|Operating income                 |  | $                       | 260,873
|Interest income                  |  |                         | 22,411 
|Interest expense                 |  |                         | (53,075
|Gain on sale of investments      |  |                         | 27,132 
|Loss on derivative instruments   |  |                         | (8,248 
|Other, net                       |  |                         | (4,378 
|Less: Provision for income taxes |  |                         | 72,563 
|                                 |  |                         |        
|Net Earnings                     |  | $                       | 172,152
|                                 |  |                         |        

Interest Income

Interest income increased due primarily to higher interest rates on short-term investments and loans receivable, as well as interest on an
$11 million loan receivable from Zuji Holdings Limited issued on January 18, 2005.

Interest Expense

Interest expense increased $26 million, primarily from the Bridge Facility we entered into on May 12, 2005, in order to provide temporary financing
in connection with the lastminute.com acquisition and to satisfy legal requirements for certainty of funding for the acquisition.

Gain on Sale of Investments

In March 2005, we sold our interest in Karavel SA, a French tour operator and recorded a $21 million gain. Additionally, we recognized a
$7 million gain on the sale of our remaining interest in Travelocity Europe that we did not acquire. These gains were offset by a $1 million loss on the conversion of a note receivable
and warrants from TRX.

Loss on Derivative Instruments

When the lastminute.com acquisition was initially announced in May 2005, we purchased currency options for $10 million, which gave us the right to
purchase GBP and EUR currencies at a fixed USD rate near the closing date of the transaction. This capped our foreign exchange exposure on the acquisition. Due to the strengthening of the USD against
these currencies, the USD acquisition price decreased $67 million from the time we purchased the options. The options therefore expired with no value. As a result, we recorded a
$10 million loss on the premium paid for the options. When the acquisition was approved by shareholders and bondholders, the acquisition became highly certain, and we entered into forward
contracts obligating us to purchase GBP 578 million and EUR 115 million, which locked in the lower USD price of the acquisition of lastminute.com. The USD weakened slightly subsequent to
the purchase of these forwards resulting in a gain on the forwards of $2 million.

38

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Other, net

Other, net decreased due to a $15 million loss resulting from a litigation settlement with Northwest Airlines offset by minority interest income of
$8 million, primarily due to our consolidation of Zuji in the fourth quarter of 2005 and other income of $3 million. In 2004, we had a $6 million gain from settling a contract
dispute.

Income Taxes

The provision for income taxes increased primarily due to a $6 million reduction of tax benefits associated with our foreign operations. Other changes
include a reduction in income taxes of $4 million related to a decrease in pre-tax income between periods offset by additional state income tax expense of $2 million. Also
included in 2005 is a reversal of previously accrued taxes of $21 million related to contingencies that no longer meet the standards for accrual under Statement of Financial Accounting
Standards No. 5,Accounting for Contingencies. In particular, we released $16 million of previously accrued taxes due to the expiration of
certain statutes of limitation and $5 million of previously accrued taxes due to the final resolution of certain issues related to a tax audit. In 2004, we had reversed previously accrued taxes
of $23 million. Our effective tax rate for 2005 prior to the reversal was 38%. Our effective tax rate for 2004 prior to the reversal was 35%. See Note 10 to the Consolidated Financial
Statements for additional information regarding income taxes.

Net Earnings

Net earnings decreased by $18 million despite growth in our operating income of $2 million. The decrease was primarily due to $26 million
more in interest expense in 2005 due to our Bridge Facility used to provide temporary financing for our acquisition of lastminute.com and our $8 million net loss on derivative instruments also
related to our acquisition of lastminute.com. Gains from the sale of our Karavel investment and higher interest income only partially offset these other increases in expenses. In addition, 2004
contains a $6 million gain resulting from a contract dispute.

Results of Operations: 2004 Compared to 2003

|                       |  | Year Ended December 31, |          
|---------------------- |  | ----------------------- | ---------
|
|
|
|
|
|Revenues               |  | $                       | 2,298,851
|Total cost of revenues |  |                         | 1,440,113

Total revenues for the year ended December 31, 2004 increased approximately $86 million, or 4.2%, compared to the year ended
December 31, 2003, from $2,045 million to $2,131 million. Cost of revenues for the year ended December 31, 2004 decreased approximately $29 million, or 2.3%,
compared to the year ended December 31, 2003, from $1,302 million to $1,272 million. These reported revenues and expenses are net of intersegment revenues and expenses which were
eliminated in consolidation.

Management's
discussion and analysis of revenues and cost of revenues by business segment are based upon segment results including intersegment revenues and cost of revenues of
approximately $168 million and $142 million for the years ended December 31, 2004 and 2003, respectively. We account for significant intersegment transactions as if the
transactions were to third parties, that is, at estimated current market prices. The majority of the intersegment revenues and cost of revenues are between Travelocity and Sabre Travel Network,
consisting mainly of incentives for Travelocity bookings made through theSabreGDS, data processing fees paid by Travelocity to Sabre Travel Network,
and fees paid by Sabre Travel Network for corporate trips booked through Travelocity's online booking technology. All intersegment revenues and corresponding cost of revenues have been eliminated in
consolidation.

39

---



Total
revenues (including intersegment revenues) for the year ended December 31, 2004 increased approximately $112 million, or 5.1%, as compared to the year ended
December 31, 2003, from $2,187 million to $2,299 million.

Total
cost of revenues (including intersegment cost of revenues) for the year ended December 31, 2004 decreased $3 million, or less than 1%, as compared to the year ended
December 31, 2003, from $1,444 million to $1,440 million.

Sabre Travel Network

|                                     |  | Year Ended December 31, |          
|------------------------------------ |  | ----------------------- | ---------
|
|
|Segment revenues                     |  | $                       | 1,552,832
|Cost of revenues                     |  |                         | 1,004,236
|Amortization of purchased technology |  |                         | 9,325    
|                                     |  |                         |          
|Gross profit                         |  |                         | 539,271  
|Selling, general & administrative    |  |                         | 260,083  
|Amortization of intangible assets    |  |                         | 9,282    
|                                     |  |                         |          
|Operating income                     |  | $                       | 269,906  
|                                     |  |                         |          

Revenues

The
decrease in revenues is due to the following:



40

---





Cost of Revenues

The decrease in cost of revenues for the twelve months ended December 31, 2004 as compared to the twelve months ended December 31, 2003 includes
decreases in headcount-related expense of $24 million resulting from workforce reductions. Technology-related spending decreased $10 million driven almost entirely by increased
transaction volume and the continued implementation of our open system pricing and shopping engine. Subscriber support costs increased $8 million, driven by growth in subscriber incentives as a
result of the year over year growth in transaction volume and a higher average incentive rate compared to the prior year, offset by lower communications and maintenance and device expense. Other
expenses decreased by $1 million.

Selling, General and Administrative Expenses

The decrease in selling, general and administrative expenses was driven primarily by a $12 million decrease in services purchased, which were higher in
2003 due to our efforts as an advocate for the deregulation of the U.S. CRS industry. This decrease was offset by an increase in bad debt reserves of $8 million resulting from the increased
aging of receivables due from a few large customers. Other selling, general and administrative expenses for Sabre Travel Network increased $2 million.

Amortization of Intangible Assets (Including Amortization of Purchased Technology)

The increase in amortization was primarily due to a $3 million impairment write-down of technology related intangible assets in 2004 and a
$3 million increase resulting from the acquisition of the remaining 49% of Dillon Communications Systems GmbH that we did not already own in December 2003.

Operating Income

The increase in operating income is due to cost reduction initiatives related to investments in newer technology and in headcount related expenses that offset our
reduction in revenues.

Travelocity

|                                     |  | Year Ended December 31, |        
|------------------------------------ |  | ----------------------- | -------
|
|
|Segment revenues                     |  | $                       | 502,549
|Cost of revenues                     |  |                         | 224,386
|Amortization of purchased technology |  |                         | 21,077 
|                                     |  |                         |        
|Gross profit                         |  |                         | 257,086
|Selling, general & administrative    |  |                         | 273,189
|Amortization of intangible assets    |  |                         | 4,395  
|                                     |  |                         |        
|Operating loss                       |  | $                       | (20,498
|                                     |  |                         |        

Revenues

Transaction revenue increased $136 million or 46.5%, primarily driven by a $120 million increase in non-air transaction revenue
(including revenue resulting from sales of package offerings that include air travel as a component) and a $16 million increase in stand-alone air transaction revenue.

41

---



The
$120 million increase in non-air transaction revenue consisted primarily of the following:



The
$16 million increase in stand-alone air transaction revenue was primarily due to a volume increase in stand-alone air ticket sales compared to 2003. Our volume increased due
to an overall increase in online travel demand.

Non-transaction
revenue decreased $28 million, or 27.3%, consisting of the following:



Cost of Revenues

Expenses related to our net rate model offerings increased $23 million due primarily to volume growth which is referenced above in the explanation for the
46.5% increase in transaction revenue. However, expenses related to our net rate model offerings also increased due to the fact that in 2004, we incurred credit card fees, net rate credit card
chargebacks, fraud charges and other expenses that we did not incur at similar levels in 2003 due to our relationship with a third-party supplier of net rate content, which was terminated in
September 2003. Data processing expenses increased by approximately $6 million due to higher booking volumes and other cost of revenue expenses increased approximately $3 million.
These increases were offset by approximately $11 million of savings resulting from outsourcing our contact center operations agreement to WNS America Inc. beginning in 2004 (see
Note 5 to the Consolidated Financial Statements).

42

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Selling, General and Administrative Expenses

Selling, general and administrative expenses increased primarily due to increased advertising and customer acquisition costs of $14 million to drive
additional travelers to our websites. The increase also includes payments to our WCT affiliates but is offset partially by savings from the AOL agreement renegotiation. Other selling, general and
administrative expense increases for Travelocity include $4 million driven by higher corporate allocations, $2 million in services purchased, $2 million in direct headcount
related expenses and other increases totaling $1 million.

Amortization of Intangible Assets (Including Amortization of Purchased Technology)

Travelocity amortization decreased by approximately $16 million due to an approximately $9 million write-off in 2003 of an intangible
asset resulting from the termination of an agreement with a former hotel supplier in 2003. Also, there was an $11 million decrease due to the completion of amortization of intangible assets
during 2003 and 2004, partially offset by approximately $4 million of increased amortization resulting from the acquisition of assets of WCT in the fourth quarter of 2003 and the acquisition of
Showtickets.com in the third quarter of 2004. Amortization expense related to our fourth quarter 2004 acquisition of the non-German operations of Travelocity Europe was not material.

Operating Loss

Operating loss decreased due to growth of our net rate model,Travelocity TotalTripoffering (launched in
June 2003) and volume growth in our last minute deals, as well as, increased hotel bookings through WCT, which we acquired in November 2003.

Sabre Airline Solutions

|                                     |  | Year Ended December 31, |        
|------------------------------------ |  | ----------------------- | -------
|
|
|Segment revenues                     |  | $                       | 243,470
|Cost of revenues                     |  |                         | 176,902
|Amortization of purchased technology |  |                         | 1,651  
|                                     |  |                         |        
|Gross profit                         |  |                         | 64,917 
|Selling, general & administrative    |  |                         | 50,026 
|Amortization of intangible assets    |  |                         | 1,149  
|                                     |  |                         |        
|Operating income                     |  | $                       | 13,742 
|                                     |  |                         |        

Revenues

The increase in revenues was driven primarily by a $20 million increase in airline reservation hosting revenue. This $20 million increase includes
$11 million due to a shift towards online bookings for our customers and the sale of enhanced functionality to our existing hosted carrier base. The remaining $9 million is driven by
increased transaction fees due to newly signed carriers and organic growth from our existing customers. Airline consulting services revenues increased $3 million due to a higher number of
customer engagements. These increases were offset by an $8 million decrease in development labor revenues and a $4 million decrease in software products and services revenue driven by an
elongated sales cycle.

43

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Cost of Revenues

The decrease in cost of revenues was driven by reduced direct headcount-related expenses of $8 million and a $7 million reduction in indirect
headcount related expenses driven by a year over year change in the allocation of corporate resources (offset by a corresponding increase in Sabre Airlines Solutions selling, general and
administrative expenses below). These decreases were offset by increases in travel expenses of approximately $5 million partly due to the recognition of invoiced travel as revenue beginning in
2004 as opposed to an offset to cost of revenue in prior periods. Data processing expenses increased $3 million related to internet booking engine volumes. Services purchased increased
$3 million to support reservations hosting implementations and consulting engagements and development labor increased $2 million due to growth in web hosting related revenues. Other cost
of revenue expenses increased $1 million.

Selling, General and Administrative Expenses

The increase in selling, general and administrative expenses was driven by a $9 million increase in bad debt expense attributable to the economic state of
the airline industry and the bankruptcy filings of several key customers. In addition, indirect headcount related expenses increased $7 million driven by a
year-over-year change in the allocation of corporate resources (offset by a corresponding decrease in Sabre Airline Solutions cost of revenues above). Direct headcount related
expenses and development labor increased $3 million.

Amortization of Intangible Assets (Including Amortization of Purchased Technology)

Amortization of intangible assets for Sabre Airline Solutions increased approximately $1 million resulting from several small acquisitions during 2004.

Operating Income

Despite revenue growth for the year, our operating income declined due primarily to collection issues with certain customers as well as increases in various other
expenses such as data processing and development labor costs.

The
following section describes our results of operations on a consolidated basis for non-operating income and expense items:

|                                 |  | Year Ended December 31, |        
|-------------------------------- |  | ----------------------- | -------
|
|
|Operating income                 |  | $                       | 258,730
|Interest income                  |  |                         | 15,154 
|Interest expense                 |  |                         | (26,862
|Other, net                       |  |                         | 10,039 
|Less: Provision for income taxes |  |                         | 66,642 
|                                 |  |                         |        
|Net Earnings                     |  | $                       | 190,419
|                                 |  |                         |        

Interest income

Interest income decreased due primarily to lower average balances of certain short-term investments and loans receivable.

44

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Interest Expense

Interest expense increased primarily resulting from the capital lease we entered into at the end of June 2003 for our headquarters buildings.

Other, net

Other, net changed primarily due to the $28 million loss we incurred in 2003 relating to the required residual value guarantee payment in connection with
terminating our syndicated lease facility and entering into a capital lease facility for our corporate headquarters, as well as, an impairment charge on certain non-operating assets in
2003. Other net income for the year ended December 31, 2004 includes a $6 million gain from settling a contract dispute. Other changes include year over year changes in net income
allocated to minority interests.

Income Taxes

The increase in provision for income taxes resulted from the approximate $130 million increase in pre-tax income between periods offset by a
reversal of previously accrued taxes in 2004 of $23 million due to a change in our federal income tax treatment of certain subscriber contract payments and the expiration of certain statutes of
limitation. Our effective tax rate prior to the reversal was 35% for 2004. Our effective tax rate for 2003 was also 35%. See Note 10 to the Consolidated Financial Statements for additional
information regarding income taxes.

Net Earnings

Stronger travel demand, revenue growth in our net rate model and the successful implementation of cost reduction initiatives exceeded increases in subscriber
incentives, advertising and bad debt expense, resulting in an increase to net earnings of $84 million. The remaining year over year increase relates to the $23 million reversal of
previously accrued taxes discussed above.

45

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SABRE HOLDINGS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES

We require cash to pay our operating expenses, make capital expenditures, invest in our products and offerings, pay dividends, complete share repurchases and
service our debt and other long term liabilities. Although our primary source of funds has been from our operations, from time to time we have raised external funds through the sale of stock and debt
in the capital markets and through privately negotiated borrowing transactions. In assessing our liquidity, key components include our net income adjusted for non-cash and
non-operating items, and current assets and liabilities, in particular accounts receivable, accounts payable, and accrued expenses. Our current Bridge Facility, which we plan to refinance
prior to its expiration, should be considered in assessing our short-term and long-term liquidity. For the long term, our debt and long-term liabilities are also
considered key to assessing our liquidity.

Our
future minimum non-cancelable contractual obligations as of December 31, 2005 are as follows (in thousands of dollars):

|                                                      |  | Payments Due by Year
For the Years Ending December 31, |          
|----------------------------------------------------- |  | ------------------------------------------------------ | ---------
|
|Notes payable (1)                                     |  | $                                                      | 1,401,684
|Capital lease obligations (2)                         |  |                                                        | 231,352  
|Operating lease obligations                           |  |                                                        | 129,587  
|IT outsourcing agreement (3)                          |  |                                                        | 107,540  
|Yahoo! agreement (4)                                  |  |                                                        | 26,000   
|WNS agreement (5)                                     |  |                                                        | 134,541  
|Pension and other benefit obligations (Note 9)        |  |                                                        | 196,214  
|Other long-term obligations (6)                       |  |                                                        | 114,809  
|Amounts receivable under non-cancelable subleases (7) |  |                                                        | (91,466  
|                                                      |  |                                                        |          
|Total contractual cash obligations                    |  | $                                                      | 2,250,261
|                                                      |  |                                                        |          

---

46

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On February 16, 2006, we prepaid $100 million of the $800 million acquisition Bridge Facility from our available cash and marketable
securities. We will be required to repay or refinance the remaining $700 million of the Bridge Facility prior to its expiration on August 12, 2006. We are evaluating choices for repaying
and refinancing the Bridge Facility, including using additional cash, borrowing under our revolving credit agreement and accessing public and private markets for debt. The timing and choice of
refinancing options will be subject to market conditions, but we expect to repay or refinance the Bridge Facility during the first half of 2006. Other than the Bridge Facility refinancing, our current
cash flows from operations, existing balances in cash and short-term investments and funds available under our revolving credit facility are sufficient to fund our planned expenditures
which include operating expenses, capital expenditures, investments in our products and offerings, interest payments on our debt and dividends. We may also consider using our funds available or
possibly external sources of funds for additional acquisitions of, or investments in, complementary businesses, products, services and technologies when such opportunities become available (see
Note 4 to the Consolidated Financial Statements for current year acquisitions and investment activity). These types of additional activities might affect our liquidity requirements or cause us
to issue additional equity or debt securities.

In
the long term, we expect to use our existing funds and cash flows from operations to satisfy our debt and other long-term obligations. We may also use our funds, as well
as external sources of funds, to retire debt as appropriate, based upon market conditions and our desired liquidity and capital structure.

Risk
factors that could possibly affect the availability of our internally generated funds include, among other things:



See
"Risk Factors" for a more complete discussion of risk factors that might affect the availability of our internally generated funds.

As
a result of the additional debt incurred on August 1, 2005 to fund the lastminute.com acquisition, Standard & Poor's changed our credit rating from BBB+ to BBB and
maintained a stable outlook and Moody's Investors Service changed our credit rating from Baa2 to Baa3 and changed our outlook from stable to negative. We do not anticipate the ratings change will have
a material impact on our cost of borrowing.

Cash Investments

We invest cash in high-credit-quality marketable securities, including: fixed or variable rate obligations issued by the U.S. Treasury, government agencies and
municipalities, mutual funds, asset-backed securities issued by banks, corporations, and bankruptcy-remote trusts. We use some of our securities to enter into repurchase agreements. Our investment
objectives are preservation of principal, liquidity and yield. We try to invest all of our excess cash in marketable securities. Therefore, our annual investments will fluctuate depending on the
levels of cash provided or used by all of our other investing, operating and financing activities. See Note 2 to the Consolidated Financial Statements for a discussion of restricted cash.

47

---



Capital Activities



Declaration Date

Payable Date

Amount per Share2003:April 17, 2003

May 15, 2003

$
0.070July 15, 2003

August 15, 2003


0.070October 21, 2003

November 14, 2003


0.0702004:January 20, 2004

February 17, 2004

$
0.075April 20, 2004

May 14, 2004


0.075July 20, 2004

August 16, 2004


0.075October 26, 2004

November 15, 2004


0.0752005: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


0.090


On January 30, 2006, our Board of Directors approved a dividend of $0.10 per share payable on February 28, 2006 to stockholders of record at
February 10, 2006. Our Board of Directors currently intends to consider declaring and paying comparable future dividends on a regular quarterly basis, subject to our ability to pay dividends
and to a determination by management and our Board of Directors that dividends continue to be in our best interests and those of our stockholders.



Date Authorized

Authorized for
Repurchase

Repurchased

Repurchased under
ASSP

Available for
RepurchaseOctober 20, 2003

$100 million

$100 million

$35 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)


---



48

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We will generally seek to make any future share repurchases pursuant to 10b5-1 trading plans, unless such plans are terminated at the discretion of
management.

Financing Arrangements

Bridge Financing ArrangementOn May 12, 2005, we entered into an $800 million, unsecured
bridge loan agreement (the "Bridge Facility") that matures on August 12, 2006, in order to provide short-term financing in connection with the lastminute.com acquisition and to
satisfy legal requirements for certainty of funding for the acquisition. On July 22, 2005, we entered into an amendment to the Bridge Facility whereby all the rights and obligations of
Sabre Inc. under the Bridge Facility were assumed by Sabre Holdings and Sabre Inc. was discharged from its obligations thereunder.

Effective
August 1, 2005, we borrowed $800 million under the Bridge Facility in order to fund a portion of the lastminute.com acquisition.

The
interest rate on borrowings under the Bridge Facility is variable, based at our discretion on either the London Interbank Offered Rate ("LIBOR") plus a borrowing spread or the prime
rate, and is sensitive to our credit rating. The LIBOR spread at our current credit rating is 0.75%, which at December 31, 2005 equated to a borrowing rate of 5.15%.

We
may prepay all or any part of the Bridge Facility without prepayment penalties, other than any breakage costs associated with the early repayment of loans bearing interest based upon
LIBOR. We would be required to repay borrowings under the Bridge Facility with net cash proceeds we receive from (i) the issuance of capital stock and indebtedness for money borrowed with a
maturity in excess of one year (excluding, among other things, borrowings under our existing revolving credit agreement) and (ii) asset sales with proceeds of more than $200 million.

The
Bridge Facility contains other covenants, representations, terms and conditions that are typical for a bridge credit facility of this type which, among other things, restricts our
ability to incur additional debt and limits our ability to pay in excess of $150 million during the term of the Bridge Facility as dividends or as repurchases of our stock.

As
of December 31, 2005, we were in compliance with all covenants under the Bridge Facility including the following financial covenants:

Covenant

Requirement

Level at
December 31,
2005Consolidated Leverage Ratio (Debt to EBITDA)

5.0 to 1

3.23 to 1Consolidated Net Worth

$1.3 billion

$1.7 billion


49

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On February 16, 2006, we prepaid $100 million of the $800 million acquisition Bridge Facility from our available cash and marketable
securities. We will be required to repay or refinance the remaining $700 million of the Bridge Facility prior to its expiration on August 12, 2006. We are evaluating choices for repaying
and refinancing the Bridge Facility, including using additional cash, borrowing under our revolving credit agreement and accessing public and private markets for debt. The timing and choice of
refinancing options will be subject to market conditions, but we expect to repay or refinance the Bridge Facility during the first half of 2006.

Revolving Credit AgreementOn July 22, 2005, in order to facilitate the consummation of the lastminute.com acquisition
and to provide additional liquidity and flexibility in our capital structure, we entered into certain amendments to our current revolving credit agreement ("Credit Facility"). Under the amendments,
Sabre Holdings assumed all of the rights and obligations of Sabre Inc. under the Credit Facility and Sabre Inc. was discharged from its obligations thereunder. The amendments also
include, among other things: (i) amendments to certain financial and negative covenants (including amendments to provide us more flexibility under the Consolidated Leverage Ratio covenant, as
shown in the table below, and amendments that place additional restrictions on the ability of our subsidiaries to incur indebtedness), (ii) amendments that prohibit us from using proceeds from
the Credit Facility to repay the Bridge Facility to the extent such proceeds represent more than 50% of the then aggregate committed amount of the lenders under the Credit Facility,
(iii) amendments that increase the aggregate amount committed by those lenders to $360 million, and (iv) amendments that allow us to request a future increase of the aggregate
amount committed by the lenders under the Credit Facility to as much as $500 million.

As
of December 31, 2005, there are no borrowings outstanding under this agreement. As of December 31, 2005, we were in compliance with all covenants under this agreement
including the following financial covenants:

Covenant

Requirement

Level at
December 31,
2005Consolidated Leverage Ratio (Debt to EBITDA)

3.75 to 1 maximum

3.23 to 1Consolidated Net Worth

$1.3 billion

$1.7 billion


Our covenants under the amended revolving credit agreement are as follows:

As amended on July 22, 2005

RequirementConsolidated Leverage Ratio (Debt to EBITDA) for the quarters ended:July 22, 2005 through March 30, 2006

3.75 to 1 maximumJune 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


Public NotesIn August 2001, we issued through Sabre Holdings Corporation $400 million
in senior unsecured notes ("Notes"), bearing interest at 7.35% and maturing August 1, 2011, in an underwritten public offering resulting in net cash proceeds to us of approximately
$397 million. The Notes include certain non-financial covenants, including restrictions on incurring certain types of debt or entering into certain sale and leaseback transactions.
As of December 31, 2005, we were in compliance with all covenant requirements under the Notes. In conjunction with these Notes, we have entered into two interest rate swaps through 2011 for a
total of $300 million, which pay us 7.35% and on which we pay a variable rate based on a six-month LIBOR plus 231 basis points.

Capital Lease ObligationIn June 2003, Sabre Inc. entered into a ten-year master lease for our
corporate headquarters facility in Southlake, Texas, which is accounted for as a capital lease. The interest rate on the capital lease financing is fixed at 5.37%. At the inception of the lease, we
recorded an asset of approximately $168 million, along with a liability of approximately $168 million, representing the present value of the minimum lease payments due under the lease
and the residual value guarantee discussed below.

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At
any time during the lease term, we have the option to terminate the lease and purchase the properties for approximately $179 million, plus a make-whole amount, if
applicable. We also have the option at any time up to one year prior to lease expiration to cause the properties to be sold. If this sell option is exercised, we have guaranteed that proceeds on a
sale will be at least approximately $159 million, and we are responsible for the first dollar loss up to approximately $159 million due to a decrease in the value of the property below
approximately $179 million. If the sales proceeds exceed approximately $179 million plus any sales-related expenses, we retain the excess. In conjunction with this lease, we have entered
into a $100 million interest rate swap which pays us 5.37% and on which we pay a variable rate based on a six-month LIBOR plus 153 basis points. Under the lease agreement, we are
subject to certain covenants. As of December 31, 2005, we were in compliance with all covenants under this agreement including the following financial covenant:

Covenant

Requirement

Level at
December 31,
2005Consolidated Net Worth

$1.1 billion

$1.6 billion


Cash Flows (in thousands)

Year Ended December 31,2005

2004

2003Cash provided by operating activities

$
225,506

$
361,433

$
277,938Cash used for investing activities


(833,904
)

(98,992
)

(165,203
)Cash provided by (used for) financing activities


698,057


(255,393
)

(94,437
)Effect of exchange rate changes on cash and cash equivalents


(4,097
)

1,761


1,388Total cash increase

$
85,562

$
8,809

$
19,686


Operating ActivitiesCash flows provided by operating activities for the year ended
December 31, 2005 was $226 million which resulted from net income adjusted for non-cash and non-operating items of $300 million. This was offset by
unfavorable changes in our working capital of $74 million. Cash flows from operating activities decreased $136 million in the year ended December 31, 2005 compared to the same
period a year ago. This decrease was primarily driven by a $17 million reduction in our net income adjusted for non-cash and non-operating items. Another factor that
contributed significantly to the reduction in cash flow from operating activities was the timing of the acquisition of lastminute.com in the third quarter of 2005 which, along with the fourth quarter
is historically the slowest from a cash generation perspective. lastminute.com generates most of its positive cash flows during the first part of the year, from which we were unable to benefit in
2005. Therefore, we expect that this trend will be reversed in the first half of 2006, but this trend is seasonal with the booking of travel and will fluctuate accordingly. Other factors contributing
to the reduced cash flow from operating activities include collection of a $20 million receivable in 2004 related to the 2003 cancellation of two subscriber contracts and higher payouts of
variable compensation due to positive 2004 financial results. Other changes are primarily due to timing differences.

Cash
provided by operating activities during year ended December 31, 2004 was $361 million, which was primarily from net earnings of $317 million adjusted for
non-cash and non-operating items. In addition, cash provided by operating activities includes favorable changes in working capital of $45 million. Cash flows from
operations increased $83 million in the year ended December 31, 2004 from the same period a year ago. This increase was primarily driven by an increase of $49 million in our net
income adjusted for non-cash and non-operating items. In 2004 we also received $20 million related to the 2003 cancellation of two subscriber contracts. In addition,
expedited collections in our merchant model due to changing service providers provided approximately $20 million in additional cash.

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Cash
provided by operating activities for the year ended December 31, 2003 was $278 million and was primarily from net earnings of $268 million including
non-cash and non-operating items as well as favorable changes in working capital items. Non-cash and non-operating adjustments to net earnings of
$185 million for the year ended December 31, 2003 included depreciation and amortization of $127 million, a $9 million impairment of an intangible asset related to our
agreement with a former hotel supplier, $12 million in losses from asset disposals, a $28 million charge relating to the termination of our syndicated lease facility, and stock
compensation expense of $12 million, offset by deferred taxes of $4 million.

Investing ActivitiesThe $735 million increase in cash used for investing activities in the year ended
December 31, 2005 as compared to the year-ago period primarily results from a $1,109 million increase in acquisitions (net of cash acquired) which results primarily from our
acquisition of lastminute.com. Additionally, capital expenditures increased $14 million. Offsetting these cash uses for investing activities are the $318 million increase in net sales of
our portfolio of marketable securities primarily used in the purchase of lastminute.com and $41 million of proceeds from the sale of our investments in Karavel and TRX.

The
$66 million decrease in cash used for investing activities in the year ended December 31, 2004 as compared to the year-ago period primarily results from an
$85 million net increase in sales of marketable securities for our short-term investment portfolio. The net increase in sales of marketable securities is partially offset by
$36 million in investments in unconsolidated joint ventures and $10 million in loans to business partners during the year ended December 31, 2004 compared to a net use of
$12 million for similar activities in the same period a year ago. In addition, during the year ended December 31, 2004 we utilized $70 million, net of cash acquired, for
acquisitions compared to $96 million in 2003.

Financing ActivitiesCash provided by financing activities was $698 million for the year ended December 31,
2005, compared to a use of cash of $255 million for the same period a year ago. This was primarily due to the $800 million in proceeds from our Bridge Facility that we used to acquire
lastminute.com. Additionally, a reduction in the number of shares of our Common Stock that we repurchased under our Board authorized stock repurchasing plans resulted in a $165 million
reduction in cash outflows. Offsetting this decrease in shares of Common Stock repurchased was an increase in dividends paid of $6 million due to an increase in our dividend rate from $.075 per
share in 2004 to $.09 per share in 2005. Proceeds from the issuance of Common Stock decreased $6 million due to fewer employee stock option exercises resulting from a generally lower price of
our Common Stock.

The
$161 million increase in cash used for financing activities in the year ended December 31, 2004 as compared to the same period a year ago was mainly due to dividends of
$41 million paid in 2004 compared to $30 million for 2003 and $228 million used to repurchase our Common Stock during the year ended December 31, 2004 compared to
$44 million for the same period in 2003. Proceeds from the exercise of stock options in 2004 as compared to 2003 increased $5 million due to a generally higher stock price. In 2003,
$28 million was used related to the termination of our syndicated lease facility on our headquarters buildings. For the year ended December 31, 2004, cash used in financing activities of
$228 million related to Common Stock repurchases differs from the comparable change in Stockholder's Equity of $229 million due to timing differences between the recognition of share
repurchase transactions and their settlement for cash.

Off Balance Sheet Arrangements

We do not have any significant relationships or agreements as of December 31, 2005 that would be considered an off balance sheet arrangement as defined by
Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies

The preparation of our financial statements requires that we adopt and follow certain accounting policies. Certain amounts presented in the financial statements
have been determined based upon estimates and assumptions. Although we believe that our estimates and assumptions are reasonable, actual results may differ.

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We
have included below a discussion of the accounting policies involving material estimates and assumptions that we believe are most critical to the preparation of our financial
statements, how we apply such policies and how results differing from our estimates and assumptions would affect the amounts presented in our financial statements. We have discussed the development,
selection and disclosure of these accounting policies with our audit committee. Although we believe these policies to be the most critical, other accounting policies also have a significant effect on
our financial statements and certain of these policies also require the use of estimates and assumptions. Note 2 to the Consolidated Financial Statements discusses each of our significant
accounting policies.

Booking Fee Cancellation Reserve:OurSabre Travel NetworkSM
segment records revenue for airline travel reservations processed through theSabresystem at the time of the booking of the reservation. However, if
the booking is canceled in a later month, the booking fee must be refunded to the customer (less a small cancellation fee). Therefore we record revenue net of an estimated amount reserved to account
for future cancellations. This reserve is calculated based on historical cancellation rates. In estimating the amount of future cancellations that will require us to refund a booking fee, we assume
that a significant percentage of cancellations are followed immediately by a new reservation, without loss of revenue. This assumption is based on historical rates of cancellations that resulted in a
new reservation and has a significant impact on the amount reserved. If circumstances change, such as higher than expected cancellation rates or changes in booking behavior, our estimates of future
cancellations could be increased by a material amount and our revenue decreased by a corresponding amount. At both December 31, 2005 and 2004, our booking fee cancellation reserves were
$17 million. In 2005, the cancellation reserve remained the same due to immaterial changes in the rate per booking and flat booking levels for airline reservations. This reserve is sensitive to
changes in booking levels and the number of bookings priced under the terms of the DCA 3-Year Pricing Option Agreements. For example, if 2005 booking volumes had been 10% lower or the
weighted-average booking fee rate had been 10% lower, the reserve balance would have been reduced by approximately $2 million.

Car and Hotel Commission Reserves:OurTravelocity® segment
receives commissions from travel suppliers for air travel, hotel rooms, car rentals, vacation packages and cruises booked through our Travelocity websites. Commissions from air travel providers are
recognized at the time of booking the reservations except for lastminute.com entities that recognize revenue related to air travel at the time of departure. The revenue recognition method used by
lastminute.com will be changed to conform to the remainder of our Travelocity segment when adequate historical data on cancellations is developed. Commissions from car and hotel travel providers are
recognized upon the scheduled date of travel consumption. We record car and hotel commission revenue net of an estimated reserve for no-shows. If circumstances should change such that the
cancellation rates are significantly higher than expected, it could have a significant impact on the amount reserved. At December 31, 2005 and 2004 our reserve for car and hotel commissions was
approximately $8 million and $6 million, respectively.

Software Revenue Recognition:OurSabre Airline Solutions®
segment develops software that is generally sold as part of agreements which also require us to provide customization and implementation services. Such agreements are accounted for using contract
accounting under the provisions of Statement of Position 97-2,Software Revenue Recognition. Revenue from license fees, when software is
sold without associated customization or implementation services, is recognized when the software is delivered, fees are fixed and determinable, no undelivered elements are essential to the
functionality of delivered software and collection is probable. At times, determining if all of these elements have been met requires judgment. Fees for software maintenance are recognized ratably
over the life of the contract. The fees for software maintenance included in initial software license agreements is based on the vendor specific objective evidence of the fair value of the services
determined using actual renewal rates for software maintenance services. The process of allocating fees based on vendor specific evidence of fair value can require judgment.

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Accounts Receivable:We evaluate the collectibility of our accounts receivable based on a combination of factors. In
circumstances where we are aware of a specific customer's inability to meet its financial obligations to us (e.g., bankruptcy filings, failure to pay amounts due to us or others), we record a specific
reserve for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we recognize reserves for bad debts
based on past write-off history (average percentage of receivables written off historically) and the length of time the receivables are past due. Several of our airline customers are
experiencing financial difficulty, some (including United Air Lines, Inc., U.S. Airways, Inc. and ATA Holdings Corporation) have sought bankruptcy protection and still others may
consider bankruptcy relief. We believe that we have appropriately considered the effects of these factors, as well as any other known customer liquidity issues, on the ability of our customers to pay
amounts owed to us. However, if demand for commercial air travel softens, due to prevailing economic conditions, terrorist acts, war or other incidents involving commercial air transport, or other
factors, the financial condition of our customers may be adversely impacted.

Business Combinations:During 2005, 2004 and 2003, we completed a number of acquisitions of other companies using the
purchase method of accounting. The amounts assigned to the identifiable assets and liabilities acquired in connection with these acquisitions were based on estimated fair values as of the date of the
acquisition, with the remainder recorded as goodwill. The fair values were determined by our management, generally based upon information supplied by the management of the acquired entities and
valuations prepared by independent appraisal experts. The valuations have been based primarily upon future cash flow projections for the acquired assets, discounted to present value using a
risk-adjusted discount rate. For certain classes of intangible assets, the valuations have been based upon estimated cost of replacement. In connection with these acquisitions, we have
recorded a significant amount of intangible assets, including goodwill.

Goodwill and Long-Lived Assets:Pursuant to Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets("SFAS 142"), we evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis
or if impairment indicators exist. For indefinite-lived intangible assets, the evaluation requires a comparison of the estimated fair value of the asset to the carrying value of the asset. If the
carrying value of an indefinite-lived intangible asset exceeds its fair value, as generally estimated using a discounted future net cash flow projection, the carrying value of the asset is reduced to
its fair value. For goodwill, the evaluation requires a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned to the sum of the carrying value of the
assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the fair value of that reporting unit, the carrying value of the
reporting unit's goodwill is reduced to its implied fair value through an adjustment to the goodwill balance, resulting in an impairment charge. We evaluate five reporting units under SFAS 142,
which include Sabre Travel Network, Travelocity, Sabre Airline Solutions, SynXis and Emerging Businesses. Our SynXis and Emerging Businesses reporting units are included with Sabre Travel Network for
segment reporting purposes.

The
fair values used in our SFAS 142 evaluation are estimated based upon discounted future cash flow projections. These cash flow projections are based upon a number of
assumptions, including risk-adjusted discount rates, future booking and transaction volume levels, future price levels, rates of growth in our consumer and corporate direct booking
businesses and rates of increase in operating expenses. We believe that the assumptions we have made in projecting future cash flows for the evaluations described above are reasonable. However, if
future actual results do not meet our expectations, we may be required to record an impairment charge, the amount of which could be material to our results of operations.

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Intangible
assets subject to amortization are evaluated for impairment pursuant to Statement of Financial Accounting Standards No. 144,Accounting for the
Impairment or Disposal of Long-Lived Assets("SFAS 144"), which requires impairment testing whenever events or changes in circumstances indicate that the
carrying amount of an amortizable intangible asset may not be recoverable. If impairment indicators exist for an amortizable intangible asset, the undiscounted future cash flows associated with the
expected service potential of the asset are compared to the carrying value of the asset. If our projection of undiscounted future cash flows is in excess of the carrying value of the intangible asset,
no impairment charge is recorded. If our projection of undiscounted cash flows is less than the carrying value of the intangible asset, an impairment charge is recorded to reduce the intangible asset
to its fair value.

In
2004, we recorded an impairment charge of approximately $3 million on technology-related assets. In 2003, we wrote off an intangible asset of approximately $9 million
associated with a supplier agreement that was terminated early. No other significant impairments of our goodwill or intangible assets have been recorded.

Pension and Other Postretirement Benefits:Pension and other postretirement benefits are actuarially determined and are
affected by assumptions including the discount rate, the estimated future return on plan assets, the annual rate of increase in compensation for plan employees, the increase in costs of health care
benefits and other factors. The Company evaluates assumptions used on a periodic basis and makes adjustments to these liabilities as necessary. See Note 9, Employee Benefit Plans, in the Notes
to Consolidated Financial Statements for additional information regarding the assumptions used and for changes in the accrued benefit.

Income and Non-Income Taxes:The calculation of our tax liabilities involves significant judgment and evaluation
of uncertainties in the interpretation of complex tax laws. As a result, we have established reserves for taxes and associated interest that may become payable in future years as a result of audits by
tax authorities. Regarding value-added taxes, we have established reserves regarding the collection of refunds which are subject to audit and collection risks in various regions of Europe. Tax
reserves are reviewed regularly pursuant to Statement of Financial Accounting Standard No. 5,Accounting for Contingencies. Tax reserves are
adjusted as events occur that affect our potential liability for additional taxes and associated interest, such as the expiration of statutes of limitation, conclusion of tax audits, identification of
additional exposure based on current calculations, identification of new issues, or the issuance of statutory or administrative guidance or rendering of a court decision affecting a particular issue.
The amount of our liability for taxes could exceed our reserves, which could have a material adverse effect on our financial results.

Seasonality

The travel industry is seasonal in nature. Travel bookings for our Sabre Travel Network business, and the revenue we derive from those bookings, decrease
significantly each year in the fourth quarter, primarily in December. Customers generally book their November and December holiday leisure travel earlier in the year, and business travel declines
during the holiday season. Travel bookings for our Travelocity business decrease each year in the fourth quarter, primarily in December. Customers generally book their holiday leisure travel earlier
in the year. Travelocity revenues are also impacted by the seasonality of travel bookings, but to a lesser extent since commissions from car and hotel travel providers and net rate revenue for
vacation packages and hotel stays are recognized upon date of consumption. In 2005, the seasonal variations described above did continue, however, our revenues did not decline in the fourth quarter
due to the acquisition of lastminute.com. We believe that the acquisition of lastminute.com will cause revenues and net earnings to become more significant in the second and third quarters for the
Travelocity segment due largely to European travel patterns.

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The
following table sets forth our quarterly financial data (unaudited), (in thousands, except per share data). Gross profit has been adjusted for all quarters in order to conform to the
reclassification of amortization of purchased technology to cost of revenues from selling, general and administrative expenses.

|                           |         | First
Quarter |         | Second
Quarter |   | Third
Quarter |      | Fourth
Quarter
|-------------------------- | ------- | ------------- | ------- | -------------- | - | ------------- | ---- | --------------
|2005                       |         |               |         |                |   |               |      |               
|Revenues                   |         | $             | 581,888 |                | $ | 619,255       |      | $             
|Gross profit               |         |               | 241,779 |                |   | 244,047       |      |               
|Operating income           |         |               | 71,194  |                |   | 83,106        |      |               
|Net earnings               |         |               | 57,681  |                |   | 43,887        |      |               
|Earnings per common share: |         |               |         |                |   |               |      |               
|                           | Basic   |               | $       | 0.44           |   | $             | 0.34 |               
|                           |         |               |         |                |   |               |      |               
|                           | Diluted |               | $       | 0.44           |   | $             | 0.34 |               
|                           |         |               |         |                |   |               |      |               

|                           |         | First
Quarter |         | Second
Quarter |   | Third
Quarter |      | Fourth
Quarter
|-------------------------- | ------- | ------------- | ------- | -------------- | - | ------------- | ---- | --------------
|2004                       |         |               |         |                |   |               |      |               
|Revenues                   |         | $             | 539,753 |                | $ | 550,903       |      | $             
|Gross profit               |         |               | 219,497 |                |   | 231,197       |      |               
|Operating income           |         |               | 69,488  |                |   | 88,443        |      |               
|Net earnings               |         |               | 43,037  |                |   | 58,937        |      |               
|Earnings per common share: |         |               |         |                |   |               |      |               
|                           | Basic   |               | $       | 0.31           |   | $             | 0.43 |               
|                           |         |               |         |                |   |               |      |               
|                           | Diluted |               | $       | 0.31           |   | $             | 0.42 |               
|                           |         |               |         |                |   |               |      |               

Recent Accounting Pronouncements

On December 16, 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (Revised 2004),Share-Based
Payments("SFAS 123R"), which is a revision of Statement of Financial Accounting Standards No. 123,Accounting for Stock-Based
Compensation("SFAS 123"). SFAS 123R supersedes APB 25 and amends Statement of Financial Accounting Standards No. 95,Statement of
Cash Flows.Generally, the approach in SFAS 123R is similar to the approach described in SFAS 123. However, SFAS 123R requires all share-based payments to
employees, including grants of employee stock options, to be recognized on the income statement based on their fair values.

We
are adopting SFAS 123R on January 1, 2006 using the modified prospective method and, as a result, we will begin expensing options in 2006 with no restatement of prior
periods. All options granted prior to adoption will continue to be expensed using the fair value previously determined using the Black-Scholes option-pricing model and included in our pro forma
disclosures; however, options granted subsequent to our adoption of SFAS 123R will be valued using a lattice model which we believe provides us with a more reliable fair value. Stock option
expenses will be recorded on a straight-line basis over the requisite service period. SFAS 123R also requires that the benefits of tax deductions in excess of recognized compensation cost be
reported as a financing cash flow, rather than as an operating cash flow, as required under the current guidance. We cannot estimate what the impact of this will be on our financing cash flows as it
will depend on the future exercise behavior of option holders. We expect the adoption of SFAS 123R will impact pre-tax income by approximately $18 million or $.09 per share
in 2006 although this amount may change based on the level of future grants of options, unforeseeable changes in our assumptions used in the lattice model such as our stock volatility and actual
forfeiture rates not matching our current estimates.

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In
May 2005, the FASB issued Statement of Financial Accounting Standards No. 154,Accounting Changes and Error Corrections,
a replacement of APB Opinion No. 20,Accounting Changes, and Statement of Financial Accounting Standards No. 3, Reporting Accounting Changes in Interim Financial
Statements. The standard requires changing the accounting and reporting requirements of voluntary and
mandatory (unless the pronouncement provides other transition requirements) changes in accounting principle by requiring retroactive application of the change in accounting principle to prior periods'
financial statements, unless it is not practical to do so, rather than recording a cumulative catch up adjustment in net income in the year of the change. Reporting error corrections will be handled
similar to a change in accounting principles. The standard is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. This new accounting
standard is not anticipated to have a material impact on our financial results.

Inflation

We believe that inflation has not had a material effect on our results of operations.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of December 31, 2005, our exposure to interest rates relates primarily to our interest rate swaps and interest on our Bridge Facility which is variable,
based at our discretion on either the London Interbank Offered Rate ("LIBOR") plus a borrowing spread or the prime rate, and is sensitive to changes in our credit rating. Offsetting some of this
exposure is interest income received from our marketable securities portfolio. The objectives of our marketable securities are preservation of principal, liquidity and yield. As such, our investment
portfolio consists primarily of fixed or variable rate obligations issued by the U.S. Treasury, government agencies and municipalities, mutual funds, asset backed securities issued by banks,
corporations, and bankruptcy remote trusts. If short-term interest rates average 10% lower in 2006 than they were during 2005, our interest income from marketable securities would decrease
by approximately $1 million. In comparison, at December 31, 2004, we estimated that if short-term interest rates averaged 10% lower in 2005 than they were during 2004, our
interest income from marketable securities would have decreased by approximately $1 million. These amounts were determined by applying the hypothetical interest rate change to our average
marketable securities invested during 2005 and 2004.

At
December 31, 2005, we had obligations under our $800 million Bridge Facility, fixed rate notes of $400 million ("Notes") and a $168 million capital lease
obligation. We have entered into fixed to floating interest rate swaps related to $300 million of the outstanding Notes, effectively converting $300 million of the $400 million
fixed rate Notes into floating rate obligations. We also entered into a fixed to floating interest rate swap that effectively converts $100 million of the capital lease obligation into a
floating rate obligation (see Note 6 to the Consolidated Financial Statements for additional details on the swaps). If short-term interest rates average 10% higher in 2006 than they
were in 2005, our interest expense would increase by approximately $3 million. This amount was determined by applying the hypothetical interest rate change to our floating rate borrowings
balance, including the Bridge Facility, at December 31, 2005. If our mix of interest rate-sensitive assets and liabilities changes significantly, we may enter into additional
derivative transactions to manage our net interest rate exposure.

Foreign Currency Risk

We have various operations outside of the United States, primarily in North America, South America, Europe, Australia and Asia. As a result of these business
activities, we are exposed to foreign currency risk. During times of volatile currency movements this risk can materially impact our earnings. To reduce the impact of this earnings volatility, we
hedge a portion of our foreign currency exposure by entering into foreign currency forward contracts on our three largest foreign currency exposures. These forward contracts, totaling
$115 million at December 31, 2004 and $135 million at December 31, 2005, represent obligations to purchase foreign currencies at a predetermined exchange rate to fund a
portion of our expenses that are denominated in foreign currencies. We also enter into short-dated forward contracts to hedge a portion of our foreign currency exposure related to lastminute.com's
travel supplier liability payments denominated in a foreign currency. In December 2004, we purchased foreign currency-denominated government bonds to function as a hedge of a portion of our
2005 foreign currency exposure. To protect these bond investments from foreign currency risk, we purchased put options on the currencies in which the government bonds are denominated. These options
gave us the right to sell the foreign currencies at predetermined prices. There were no bonds or options outstanding as of December 31, 2005.

The
result of an immediate 10 percent appreciation of the U.S. dollar in 2006 from December 31, 2005 levels relative to our primary foreign currency exposures would result
in a negative U.S. dollar impact of approximately $0.1 million in 2006, net of hedge instruments outstanding. This sensitivity analysis was prepared based upon 2006 projections of our primary
foreign currency-denominated expenses and foreign currency forwards as of December 31, 2005.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
CONTROLS OVER FINANCIAL REPORTING

The
Board of Directors and Stockholders
Sabre Holdings Corporation

We
have audited management's assessment, included in the accompanying Management's Assessment of the Effectiveness of Internal Controls, that Sabre Holdings Corporation maintained
effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). Sabre Holdings Corporation's management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the
Company's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As
indicated in the accompanying Management's Assessment of the Effectiveness of Internal Controls, management's assessment of and conclusion on the effectiveness of internal control
over financial reporting did not include the internal controls of lastminute.com, which is included in the 2005 consolidated financial statements of the Company and constituted $1,598 million
and $1,265 million of total assets and net assets, respectively, as of December 31, 2005 and $174 million and $11 million of revenues and net loss, respectively, for the
year then ended. Management did not assess the effectiveness of internal control over financial reporting at lastminute.com because the Company acquired lastminute.com on July 20, 2005. Our
audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of lastminute.com.

In
our opinion, management's assessment that Sabre Holdings Corporation maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated,
in all material respects, based on the COSO criteria. Also, in our opinion, Sabre Holdings Corporation maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2005, based on the COSO criteria.

59

---



We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Sabre Holdings Corporation and
subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended
December 31, 2005 of Sabre Holdings Corporation and subsidiaries and our report dated February 27, 2006 expressed an unqualified opinion thereon.

Dallas,
Texas
February 27, 2006

60

---





ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



|                                                       
|-------------------------------------------------------
|Report of Independent Registered Public Accounting Firm
|Consolidated Balance Sheets                            
|Consolidated Statements of Income                      
|Consolidated Statements of Cash Flows                  
|Consolidated Statements of Stockholders' Equity        
|Notes to Consolidated Financial Statements             

61

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Board of Directors and Stockholders
Sabre Holdings Corporation

We
have audited the accompanying consolidated balance sheets of Sabre Holdings Corporation and subsidiaries as of December 31, 2005 and 2004, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed
under Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule
based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sabre Holdings Corporation and
subsidiaries at December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in
conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Sabre Holdings Corporation's internal
control over financial reporting as of December 31, 2005, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 27, 2006 expressed an unqualified opinion thereon.

Dallas,
Texas
February 27, 2006
except for Note 6, as to which 
the date is March 3, 2006

62

---





SABRE HOLDINGS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands)

---

|                                                                                                                      |  | December 31,
2005 |           | December 31,
2004 |  
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | ----------------- | -
|Assets                                                                                                                |  |                   |           |                   |  
|Current assets                                                                                                        |  |                   |           |                   |  
|Cash                                                                                                                  |  | $                 | 135,233   |                   | $
|Restricted cash                                                                                                       |  |                   | 57,019    |                   |  
|Marketable securities                                                                                                 |  |                   | 376,585   |                   |  
|Accounts receivable, net                                                                                              |  |                   | 505,662   |                   |  
|Prepaid expenses                                                                                                      |  |                   | 41,632    |                   |  
|Deferred income taxes                                                                                                 |  |                   | 23,013    |                   |  
|Other receivables                                                                                                     |  |                   | 109,144   |                   |  
|                                                                                                                      |  |                   |           |                   |  
|Total current assets                                                                                                  |  |                   | 1,248,288 |                   |  
|Property and equipment                                                                                                |  |                   |           |                   |  
|Buildings and leasehold improvements                                                                                  |  |                   | 318,880   |                   |  
|Furniture, fixtures and equipment                                                                                     |  |                   | 38,349    |                   |  
|Computer equipment                                                                                                    |  |                   | 148,965   |                   |  
|Internally developed software                                                                                         |  |                   | 257,990   |                   |  
|                                                                                                                      |  |                   |           |                   |  
|                                                                                                                      |  |                   | 764,184   |                   |  
|Less accumulated depreciation and amortization                                                                        |  |                   | (334,616  | )                 |  
|                                                                                                                      |  |                   |           |                   |  
|Total property and equipment                                                                                          |  |                   | 429,568   |                   |  
|Deferred income taxes                                                                                                 |  |                   | 32,419    |                   |  
|Investments in joint ventures                                                                                         |  |                   | 156,277   |                   |  
|Goodwill and intangible assets, net                                                                                   |  |                   | 2,333,140 |                   |  
|Other assets, net                                                                                                     |  |                   | 174,419   |                   |  
|                                                                                                                      |  |                   |           |                   |  
|Total assets                                                                                                          |  | $                 | 4,374,111 |                   | $
|                                                                                                                      |  |                   |           |                   |  
|Liabilities and stockholders' equity                                                                                  |  |                   |           |                   |  
|Current liabilities                                                                                                   |  |                   |           |                   |  
|Accounts payable                                                                                                      |  | $                 | 203,663   |                   | $
|Travel supplier liabilities and deferred revenue                                                                      |  |                   | 301,377   |                   |  
|Accrued compensation and related benefits                                                                             |  |                   | 74,628    |                   |  
|Accrued subscriber incentives                                                                                         |  |                   | 81,877    |                   |  
|Deferred revenues                                                                                                     |  |                   | 32,047    |                   |  
|Other accrued liabilities                                                                                             |  |                   | 398,871   |                   |  
|Bridge facility                                                                                                       |  |                   | 800,000   |                   |  
|                                                                                                                      |  |                   |           |                   |  
|Total current liabilities                                                                                             |  |                   | 1,892,463 |                   |  
|Pensions and other postretirement benefits                                                                            |  |                   | 191,453   |                   |  
|Other liabilities                                                                                                     |  |                   | 23,568    |                   |  
|Minority interests                                                                                                    |  |                   | 38,948    |                   |  
|Long-term capital lease obligation                                                                                    |  |                   | 158,188   |                   |  
|Public and other notes payable                                                                                        |  |                   | 426,379   |                   |  
|Commitments and contingencies (Note 8)                                                                                |  |                   |           |                   |  
|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; 145,856 shares issued at December 31, 2005 and 2004 |  |                   | 1,459     |                   |  
|Additional paid-in capital                                                                                            |  |                   | 1,275,836 |                   |  
|Retained earnings                                                                                                     |  |                   | 769,231   |                   |  
|Accumulated other comprehensive loss                                                                                  |  |                   | (77,872   | )                 |  
|Less treasury stock at cost: 14,281 and 12,913 shares, respectively                                                   |  |                   | (325,542  | )                 |  
|                                                                                                                      |  |                   |           |                   |  
|Total stockholders' equity                                                                                            |  |                   | 1,643,112 |                   |  
|                                                                                                                      |  |                   |           |                   |  
|Total liabilities and stockholders' equity                                                                            |  | $                 | 4,374,111 |                   | $
|                                                                                                                      |  |                   |           |                   |  

The accompanying notes are an integral part of these financial statements.

63

---



SABRE HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

---

|                                         |                                         | Year Ended December 31, |          
|---------------------------------------- | --------------------------------------- | ----------------------- | ---------
|
|Revenues                                 |                                         | $                       | 2,521,255
|                                         | Cost of revenues                        |                         |          
|                                         | Amortization of purchased technology    |                         |          
|                                         |                                         |                         |          
|Total cost of revenues                   |                                         |                         | 1,487,372
|Gross Profit                             |                                         |                         | 1,033,883
|Other operating expenses                 |                                         |                         |          
|                                         | Selling, general and administrative     |                         |          
|                                         | Amortization of other intangible assets |                         |          
|                                         |                                         |                         |          
|Total other operating expenses           |                                         |                         | 773,010  
|Operating income                         |                                         |                         | 260,873  
|Other income (expense)                   |                                         |                         |          
|                                         | Interest income                         |                         |          
|                                         | Interest expense                        |                         |          
|                                         | Gain on sale of investments             |                         |          
|                                         | Loss on derivative instruments          |                         |          
|                                         | Other, net                              |                         |          
|                                         |                                         |                         |          
|Total other expense                      |                                         |                         | (16,158  
|Income before provision for income taxes |                                         |                         | 244,715  
|Provision for income taxes               |                                         |                         | 72,563   
|                                         |                                         |                         |          
|Net earnings                             |                                         | $                       | 172,152  
|                                         |                                         |                         |          
|Earnings per common share                |                                         |                         |          
|                                         | Basic                                   |                         | $        
|                                         | Diluted                                 |                         | $        
|Weighted average shares outstanding      |                                         |                         |          
|                                         | Basic                                   |                         |          
|                                         | Diluted                                 |                         |          

The accompanying notes are an integral part of these financial statements.

64

---





SABRE HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

---

|                                                                                |                                                                        | Year Ended December 31,                        |            
|------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ---------------------------------------------- | -----------
|
|Operating Activities                                                            |                                                                        |                                                |            
|Net earnings                                                                    |                                                                        | $                                              | 172,152    
|Adjustments to reconcile net earnings to cash provided by operating activities: |                                                                        |                                                |            
|                                                                                | Depreciation and amortization                                          |                                                |            
|                                                                                | Loss on impaired intangible assets                                     |                                                |            
|                                                                                | Loss on sale leaseback                                                 |                                                |            
|                                                                                | Stock-based compensation for employees                                 |                                                |            
|                                                                                | Allowance for doubtful accounts                                        |                                                |            
|                                                                                | Deferred income taxes                                                  |                                                |            
|                                                                                | Tax benefit (loss) from exercise of stock options and restricted stock |                                                |            
|                                                                                | Loss on facilities lease refinancing                                   |                                                |            
|                                                                                | Loss on derivative instruments                                         |                                                |            
|                                                                                | Joint venture equity loss/(income)                                     |                                                |            
|                                                                                | Gain on sale of investments                                            |                                                |            
|                                                                                | 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 |            
|                                                                                |                                                                        | Pensions and other postretirement benefits     |            
|                                                                                |                                                                        | Other liabilities                              |            
|                                                                                |                                                                        |                                                |            
|                                                                                | Cash provided by operating activities                                  |                                                |            
|Investing Activities                                                            |                                                                        |                                                |            
|Additions to property and equipment                                             |                                                                        |                                                | (91,660    
|Purchases of marketable securities                                              |                                                                        |                                                | (10,317,265
|Sales of marketable securities                                                  |                                                                        |                                                | 10,729,382 
|Proceeds from sale of investments                                               |                                                                        |                                                | 40,920     
|Proceeds from sale of joint venture                                             |                                                                        |                                                | 13,018     
|Acquisitions (net of cash acquired)                                             |                                                                        |                                                | (1,178,939 
|Other investing activities                                                      |                                                                        |                                                | (29,360    
|                                                                                |                                                                        |                                                |            
|                                                                                | Cash used for investing activities                                     |                                                |            
|Financing Activities                                                            |                                                                        |                                                |            
|Proceeds from bridge facility                                                   |                                                                        |                                                | 800,000    
|Proceeds from issuance of common stock                                          |                                                                        |                                                | 9,750      
|Dividends paid                                                                  |                                                                        |                                                | (47,281    
|Purchases of treasury stock                                                     |                                                                        |                                                | (63,212    
|Other financing activities                                                      |                                                                        |                                                | (1,200     
|                                                                                |                                                                        |                                                |            
|                                                                                | Cash provided by (used for) financing activities                       |                                                |            
|                                                                                | Effect of exchange rate changes on cash and cash equivalents           |                                                |            
|Increase in cash                                                                |                                                                        |                                                | 85,562     
|Cash at beginning of period                                                     |                                                                        |                                                | 49,671     
|                                                                                |                                                                        |                                                |            
|Cash at end of period                                                           |                                                                        | $                                              | 135,233    
|                                                                                |                                                                        |                                                |            
|Cash payments for income taxes                                                  |                                                                        | $                                              | 50,556     
|                                                                                |                                                                        |                                                |            
|Cash payments for interest                                                      |                                                                        | $                                              | 45,330     
|                                                                                |                                                                        |                                                |            

The accompanying notes are an integral part of these financial statements.

65

---



SABRE HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

---

|                                               |                                                                       | Class A
Common
Stock                                                                           |       | Additional
Paid-in
Capital |   | Deferred
Compensation |        | Retained
Earnings |         | Accumulated
Other
Comprehensive
Loss |   | Treasury
Stock |    | Total   |        
|---------------------------------------------- | --------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ----- | -------------------------- | - | --------------------- | ------ | ----------------- | ------- | ------------------------------------ | - | -------------- | -- | ------- | -------
|Balance at December 31, 2002                   |                                                                       | $                                                                                              | 1,448 |                            | $ | 1,275,417             |        | $                 | (6,316  | )                                    | $ | 442,130        |    | $       | (16,024
|Issuance of class A common stock pursuant to:  |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Stock option plans                                                    |                                                                                                |       | 3                          |   |                       | 7,097  |                   |         |                                     |   |                |   |         |        
|                                               | Restricted stock (net of forfeitures)                                 |                                                                                                |       | 4                          |   |                       | 4,868  |                   |         | (5,127                               | ) |                |   |         |        
|                                               | Restricted stock withheld upon vesting                                |                                                                                                |       |                           |   |                       |       |                   |         |                                     |   |                |   |         |        
|                                               | Employee stock purchase plan                                          |                                                                                                |       | 2                          |   |                       | 3,468  |                   |         |                                     |   |                |   |         |        
|                                               | Tax benefit from exercise of employee stock options                   |                                                                                                |       |                           |   |                       | 736    |                   |         |                                     |   |                |   |         |        
|Dividends, $0.21 per common share              |                                                                       |                                                                                                |      |                            |   |                      |        |                   |        |                                      |   | (30,125        | )  |         |       
|Purchases of treasury stock                    |                                                                       |                                                                                                |      |                            |   |                      |        |                   |        |                                      |   |               |    |         |       
|Amortization of restricted stock               |                                                                       |                                                                                                |      |                            |   |                      |        |                   | 2,839   |                                      |   |               |    |         |       
|Amortization of other stock-based compensation |                                                                       |                                                                                                |      |                            |   | 8,747                 |        |                   |        |                                      |   |               |    |         |       
|                                               | Comprehensive income:                                                 |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               |                                                                       | Net earnings                                                                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    | 83,301  |        
|                                               |                                                                       | Minimum pension liability adjustment, net of deferred income taxes                             |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized gain on foreign currency forward and option contracts, net of deferred income taxes |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized gain on investments, net of deferred income taxes                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized foreign currency translation gain                                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Total comprehensive income                                            |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Other                                                                 |                                                                                                |       |                           |   |                       | 112    |                   |         |                                     |   |                | 66 |         |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|Balance at December 31, 2003                   |                                                                       | $                                                                                              | 1,457 |                            | $ | 1,300,445             |        | $                 | (8,604  | )                                    | $ | 495,372        |    | $       | (8,115 
|Issuance of class A common stock pursuant to:  |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Stock option plans                                                    |                                                                                                |       | 1                          |   |                       | (2,251 | )                 |         |                                     |   |                |   |         |        
|                                               | Restricted stock (net of forfeitures)                                 |                                                                                                |       | 1                          |   |                       | 3,787  |                   |         | (13,689                              | ) |                |   |         |        
|                                               | Restricted stock withheld upon vesting                                |                                                                                                |       |                           |   |                       |       |                   |         |                                     |   |                |   |         |        
|                                               | Employee stock purchase plan                                          |                                                                                                |       |                           |   |                       | (1,748 | )                 |         |                                     |   |                |   |         |        
|                                               | Tax benefit from exercise of employee stock options                   |                                                                                                |       |                           |   |                       | 1,173  |                   |         |                                     |   |                |   |         |        
|Dividends, $0.30 per common share              |                                                                       |                                                                                                |      |                            |   |                      |        |                   |        |                                      |   | (41,431        | )  |         |       
|Purchases of treasury stock                    |                                                                       |                                                                                                |      |                            |   |                      |        |                   |        |                                      |   |               |    |         |       
|Amortization of restricted stock               |                                                                       |                                                                                                |      |                            |   |                      |        |                   | 6,128   |                                      |   |               |    |         |       
|Amortization of other stock-based compensation |                                                                       |                                                                                                |      |                            |   | 5,200                 |        |                   |        |                                      |   |               |    |         |       
|                                               | Comprehensive income:                                                 |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               |                                                                       | Net earnings                                                                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    | 190,419 |        
|                                               |                                                                       | Minimum pension liability adjustment, net of deferred income taxes                             |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized gain on foreign currency forward and option contracts, net of deferred income taxes |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized loss on investments, net of deferred income taxes                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized foreign currency translation gain                                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Total comprehensive income                                            |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Other                                                                 |                                                                                                |       |                           |   |                       | (867   | )                 |         |                                     |   |                |   |         |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|Balance at December 31, 2004                   |                                                                       | $                                                                                              | 1,459 |                            | $ | 1,305,739             |        | $                 | (16,165 | )                                    | $ | 644,360        |    | $       | (9,426 
|Issuance of class A common stock pursuant to:  |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Stock option plans                                                    |                                                                                                |       |                           |   |                       | (1,572 | )                 |         |                                     |   |                |   |         |        
|                                               | Restricted stock (net of forfeitures)                                 |                                                                                                |       |                           |   |                       | (1,751 | )                 |         | (20,916                              | ) |                |   |         |        
|                                               | Restricted stock withheld upon vesting                                |                                                                                                |       |                           |   |                       |       |                   |         |                                     |   |                |   |         |        
|                                               | Employee stock purchase plan                                          |                                                                                                |       |                           |   |                       | (942   | )                 |         |                                     |   |                |   |         |        
|                                               | Tax loss from exercise of employee stock options and restricted stock |                                                                                                |       |                           |   |                       | (282   | )                 |         |                                     |   |                |   |         |        
|Dividends, $0.36 per common share              |                                                                       |                                                                                                |      |                            |   |                      |        |                   |        |                                      |   | (47,281        | )  |         |       
|Purchases of treasury stock                    |                                                                       |                                                                                                |      |                            |   |                      |        |                   |        |                                      |   |               |    |         |       
|Amortization of restricted stock               |                                                                       |                                                                                                |      |                            |   |                      |        |                   | 10,298  |                                      |   |               |    |         |       
|Amortization of other stock-based compensation |                                                                       |                                                                                                |      |                            |   | 1,437                 |        |                   |        |                                      |   |               |    |         |       
|                                               | Comprehensive income:                                                 |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               |                                                                       | Net earnings                                                                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    | 172,152 |        
|                                               |                                                                       | Minimum pension liability adjustment, net of deferred income taxes                             |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized loss on foreign currency forward and option contracts, net of deferred income taxes |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized gain on investments, net of deferred income taxes                                   |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       | Unrealized foreign currency translation loss net of deferred income taxes                      |       |                            |  |                       |        |                  |         |                                      |  |                |    |        |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Total comprehensive income                                            |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|                                               | Other                                                                 |                                                                                                |       |                           |   |                       |       |                   |         | (10                                  | ) |                |   |         |        
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        
|Balance at December 31, 2005                   |                                                                       | $                                                                                              | 1,459 |                            | $ | 1,302,629             |        | $                 | (26,793 | )                                    | $ | 769,231        |    | $       | (77,872
|                                               |                                                                       |                                                                                                |       |                            |   |                       |        |                   |         |                                      |   |                |    |         |        

The accompanying notes are an integral part of these financial statements.

66

---





SABRE HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

1.    General Information



---

1 Basic
Booking Request, Boomerang Voyages, Emergo, Hotel Spotlight, GetThere, Holidayautos.com, Jurni Network, lastminute.com, MySabre, Nexion, reisefeber.no, rejsefeber.dk,
resfeber.se, Sabre, Sabre Airline Solutions, Sabre Holdings, the Sabre Holdings logo, Sabre Travel Network, SabreSonic, Surround, Showtickets.com, Site59, Site59.com, SynXis, TotalTrip, TRAMS,
Travelocity, Travelocity Business, Travelocity Partner Network, Travelocity.ca, Travelocity.com, Travelocity.com.uk, Travelocity.de, Turbo Sabre, World Choice Travel and Zuji.com are trademarks and/or
service marks of an affiliate of Sabre Holdings Corporation. All other trademarks, service marks, or trade names are the property of their respective owners. © 2006 Sabre Holdings
Corporation. All rights reserved.

2.    Summary of Significant Accounting Policies



67

---





Property and equipment:Buildings, including buildings under capital lease

Lesser of lease term or 35 yearsFurniture and fixtures

5 to 15 yearsLeasehold improvements

Lesser of lease term or useful lifeComputer/service contract equipment

3 to 5 yearsComputer software

3 to 7 yearsOther amortizable assets:Capitalized software development costs

3 to 7 yearsIntangible assets

1 to 20 years


68

---





69

---





70

---





71

---





72

---





73

---





December 31, 2005

December 31, 2004Weighted-Average
Useful Lives

Gross Carrying
Amount, at Cost

Accumulated
Amortization

Gross Carrying
Amount, at Cost

Accumulated
AmortizationNot subject to amortization:Goodwill



$
1,743,746

$


$
899,404

$
Tradenames, trademarks and domain names




308,621





30,608


2,052,367





930,012


Subject to amortization:Purchased technology

4 years


245,855


(153,922
)

149,826


(134,874
)Acquired customer relationships and database

7 years


157,444


(43,053
)

57,145


(27,270
)Non-compete agreements

7 years


25,736


(22,005
)

24,009


(19,581
)Trademarks and brandnames

14 years


43,480


(1,839
)

300


(33
)Acquired contracts, supplier and distributor agreements

4 years


59,784


(30,707
)

30,667


(21,601
)532,299


(251,526
)

261,947


(203,359
)Total



$
2,584,666

$
(251,526
)
$
1,191,959

$
(203,359
)


74

---





2006

$
67,4662007


63,5422008


54,8462009


24,0312010-2025


70,888Total

$
280,773




Sabre Travel
Network

Travelocity

Sabre Airline
Solutions

TotalBalance at December 31, 2003

$
221,083

$
517,310

$
40,241

$
778,634Goodwill acquired


31,247


71,587


10,814


113,648Goodwill adjustments


1,414


450





1,864Foreign exchange revaluation


3,563





1,695


5,258Balance at December 31, 2004


257,307


589,347


52,750


899,404Goodwill acquired


30,828


853,899





884,727Goodwill adjustments


(14,497
)

2,867


225


(11,405
)Foreign exchange revaluation


(5,538
)

(21,250
)

(2,192
)

(28,980
)Balance at December 31, 2005

$
268,100

$
1,424,863

$
50,783

$
1,743,746




75

---





76

---





Year Ended December 31,2005

2004

2003Denominator for basic earnings per common shareweighted-average shares

129,587

136,326

142,321Dilutive effect of stock awards and options

749

1,605

1,086Denominator for diluted earnings per common shareadjusted weighted-average shares

130,336

137,931

143,407




77

---





Year ended December 31,2005

2004

2003Net earnings as reported

$
172,152

$
190,419

$
83,301Add stock compensation expense determined under intrinsic value method, net of income taxes


7,361


6,995


7,531Less total stock-based employee compensation expense determined under fair value based method for all awards, net of income taxes


(30,937
)

(31,094
)

(48,063
)Pro forma net earnings

$
148,576

$
166,320

$
42,769Net earnings per common share, as reported:Basic

$
1.33

$
1.40

$
0.59Diluted

$
1.32

$
1.38

$
0.58Net earnings per common share, pro forma:Basic

$
1.15

$
1.22

$
0.30Diluted

$
1.14

$
1.21

$
0.30




Year ended December 31,2005

2004

2003Average risk-free interest rate


4.0
%

3.3
%

2.8
%Expected life (in years)


4.5


4.5


4.5Dividend yield


1.7
%

1.3
%

0.1
%Volatility


49.3
%

51.6
%

53.6
%Fair value

$
8.27

$
9.81

$
8.60


78

---





Minimum
Pension
Liability
Adjustment

Unrealized Gains/
(Losses) on
Foreign
Currency
Forward
Contracts

Unrealized
Gains/(Losses)
on Investments

Unrealized
Foreign
Currency
Translation
Gains/
(Losses)

Total
Accumulated
Other
Comprehensive
LossBalance at December 31, 2002

$
(21,638
)
$
4,976

$
616

$
22

$
(16,024
)2003 other comprehensive income (loss), net of deferred taxes


(1,223
)

1,437


710


6,985


7,909Balance at December 31, 2003


(22,861
)

6,413


1,326


7,007


(8,115
)2004 other comprehensive income (loss), net of deferred taxes


(8,330
)

519


(1,422
)

7,922


(1,311
)Balance at December 31, 2004


(31,191
)

6,932


(96
)

14,929


(9,426
)2005 other comprehensive income (loss), net of deferred taxes


(24,433
)

(11,101
)

634


(33,546
)

(68,446
)Balance at December 31, 2005

$
(55,624
)
$
(4,169
)
$
538

$
(18,617
)
$
(77,872
)




79

---





80

---



3.    Marketable Securities



December 31,2005

2004Corporate notes

$
233,351

$
265,277Debt securities issued by U.S. Treasury, foreign governments and other government agencies (1)


103,200


416,711Mortgages


4,738


41,788Other debt securities (1)


35,296


63,577Total

$
376,585

$
787,353




December 31,2005

2004Due in one year or less

$
138,254

$
461,674Due after one year through three years


193,305


1,038Due after three years


45,026


324,641Total

$
376,585

$
787,353




---



4.    Mergers and Acquisitions



81

---





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

$
41,099




82

---





Working capital

$
(176,511
)Property and equipment


21,280Investments 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


798,408Non-current liabilities


(1,483
)Total purchase price

$
1,174,267




83

---





84

---





Year ended
December 31, 2005

Year ended
December 31, 2004Pro forma revenues

$
2,705,612

$
2,463,675Pro forma net income


110,561


137,400Pro forma net income per common share:Basic

$
0.85

$
1.01Diluted

$
0.85

$
1.00




85

---





Net liabilities assumed

$
(5,835
)Contracts (5 year useful life)


3,970Tradenames


2,227Goodwill


54,828Total

$
55,190


86

---





Subscriber contracts (3 year useful life)

$
10,679Net assets


517Goodwill


20,008Total

$
31,204




87

---





Current assets acquired

$
2,846Liabilities assumed


(5,198
)Other assets acquired


65Affiliate network (5 year useful life)


8,000Brand names and domain names (indefinite life)


3,600Purchased technology (3 year useful life)


2,100Other intangible assets (weighted average life of 3 years)


1,700Goodwill


37,353Total purchase price

$
50,466




88

---



5.    Significant Transactions and Events



89

---





2001
Restructuring
Plan

2002
Restructuring
Plan

2003
Restructuring Plan

2004
Restructuring
Plan

2005
Restructuring
PlanFacilities
Related

Severance
and
Benefits

Severance
and
Benefits

Facilities
Related

Severance
and
Benefits

Severance
and
Benefits

TotalRemaining liability at December 31, 2003


974


609


7,332


3,290








12,205Estimated cost of 2004 workforce reduction














4,411





4,411Amounts paid in 2004


(808
)

(473
)

(6,412
)

(1,929
)

(1,368
)




(10,990
)Remaining liability at December 31, 2004


166


136


920


1,361


3,043





5,626Estimated cost of 2005 workforce reduction

















6,344


6,344Amounts paid in 2005


(166
)

(136
)

(759
)

(1,241
)

(2,736
)

(1,010
)

(6,048
)Remaining liability at December 31, 2005

$


$


$
161

$
120

$
307

$
5,334

$
5,922




90

---





91

---





92

---





6.    Derivatives



93

---





94

---





December 31,2005

2004Foreign currency forwards and options

$
(6,078
)
$
11,825Interest rate swaps


(4,805
)

8,507Total

$
(10,883
)
$
20,332




7.    Debt



95

---





Covenant

Requirement

Level at
December 31, 2005Consolidated Leverage Ratio (Debt to EBITDA)

5.0 to 1

3.23 to 1Consolidated Net Worth

$1.3 billion

$1.7 billion




Covenant

Requirement

Level at
December 31, 2005Consolidated Leverage Ratio (Debt to EBITDA)

3.75 to 1 maximum

3.23 to 1Consolidated Net Worth

$1.3 billion

$1.7 billion




As amended on July 22, 2005

RequirementConsolidated Leverage Ratio (Debt to EBITDA) for the quarters ended:July 22, 2005 through March 30, 2006

3.75 to 1 maximumJune 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


96

---





8.    Commitments and Contingencies



Covenant

Requirement

Level at
December 31, 2005Consolidated Net Worth

$1.1 billion

$1.6 billion


97

---





Year Ending December 31,2006

$
9,6072007


9,6072008


9,6072009


9,6072010


9,6072011 and thereafter


183,317Total before interest


231,352Amounts representing interest


(65,532
)Total obligations under capital lease


165,820Less fair value of interest rate swap (Note 6)


(6,761
)Less current portion


(871
)Long-term capital lease obligation

$
158,188




98

---





Payments Due by Year
For the Years Ending December 31,Contractual ObligationsTotal

2006

2007-2008

2009-2010

ThereafterNotes payable (1)

$
1,401,684

$
854,684

$
58,800

$
58,800

$
429,400Capital lease obligations (2)


231,352


9,607


19,214


19,214


183,317Operating lease obligations


129,587


33,008


44,900


23,894


27,785IT outsourcing agreement (3)


107,540


92,104


15,436





Yahoo! agreement (4)


26,000


26,000








WNS agreement (5)


134,541


20,431


53,401


60,709


Pension and other benefit obligations (Note 9)


196,214


16,190


32,613


36,206


111,205Other long-term obligations (6)


114,809


61,458


24,273


10,451


18,627Amounts receivable under non-cancelable subleases (7)


(91,466
)

(6,765
)

(13,463
)

(13,037
)

(58,201
)Total contractual cash obligations

$
2,250,261

$
1,106,717

$
235,174

$
196,237

$
712,133


---



99

---





Year Ended December 31,2005

2004

2003Rent expense

$
41,809

$
34,728

$
37,012Less:Sublease rent


(6,392
)

(6,199
)

(6,127
)Total Rent expense

$
35,417

$
28,529

$
30,885




100

---





9.    Employee Benefit Plans



101

---





Pension Benefits

Other Benefits2005

2004

2005

2004Change in benefit obligation:Benefit obligation at January 1

$
(366,281
)
$
(318,785
)
$
(75,817
)
$
(121,412
)Service cost


(6,069
)

(5,556
)

(1,217
)

(2,924
)Interest cost


(21,675
)

(20,476
)

(4,459
)

(7,051
)Participant contributions








(942
)

(731
)Actuarial losses, net


(43,163
)

(27,990
)

(6,280
)

(10,827
)Plan amendments





(1,282
)




61,502Curtailments


49,124








Settlements





1,020





Benefits paid


8,723


6,788


5,307


5,626Benefit obligation at December 31

$
(379,341
)
$
(366,281
)
$
(83,408
)
$
(75,817
)Change in plan assets:Fair value of assets at January 1

$
285,615

$
252,428

$


$
Actual return on plan assets


20,533


25,089





Transfers


(83
)

171





Settlements





(976
)




Employer contributions


31,769


15,691


4,368


4,896Participant contributions








942


731Benefits paid


(8,723
)

(6,788
)

(5,310
)

(5,627
)Fair value of assets at December 31

$
329,111

$
285,615

$


$
Funded status:Funded status at December 31

$
(50,230
)
$
(80,666
)
$
(83,408
)
$
(75,817
)Unrecognized transition (asset) obligation


(144
)

(157
)

109


127Unrecognized prior service cost





1,813


(53,015
)

(59,506
)Unrecognized net losses


90,489


93,578


42,569


39,845Prepaid (accrued) cost recognized

$
40,115

$
14,568

$
(93,745
)
$
(95,351
)




Pension Benefits

Other Benefits2005

2004

2005

2004Prepaid benefit cost

$
48,050

$
23,666

$


$
Accrued benefit liability


(97,708
)

(59,186
)

(93,745
)

(95,351
)Accumulated other comprehensive loss


89,773


50,088





Prepaid (accrued) cost recognized

$
40,115

$
14,568

$
(93,745
)
$
(95,351
)


102

---





Pension Benefits

Other Benefits2005

2004

2005

2004Weighted-average assumptions:Discount rate

5.75
%
6.00
%
5.75
%
6.00
%Rate of compensation increase



4.50
%







Pension Benefits

Other Benefits2005

2004

2003

2005

2004

2003Components of total periodic benefit cost:Service cost

$
6,069

$
5,556

$
6,153

$
1,217

$
2,924

$
3,594Interest cost


21,675


20,476


20,251


4,459


7,051


6,990Expected return on plan assets


(24,490
)

(22,745
)

(21,911
)







Amortization of transition asset


(13
)

(19
)

(19
)

18


18


18Amortization of prior service cost


138


61


61


(6,491
)

299


321Amortization of net loss


4,751


3,458


2,130


3,558


1,770


1,801Net periodic benefit cost


8,130


6,787


6,665


2,761


12,062


12,724Settlement loss





339


503








Curtailment (gain)/loss


(1,907
)










126


Total periodic benefit cost

$
6,223

$
7,126

$
7,168

$
2,761

$
12,188

$
12,724




Pension Benefits

Other Benefits2005

2004

2003

2005

2004

2003Discount rate

6.00
%
6.25
%
6.75
%
6.00
%
6.25
%
6.75
%Expected return on plan assets

8.50
%
8.75
%
9.00
%




Rate of compensation increase

4.50
%
4.50
%
6.60
%







103

---





Asset Allocation at December 31,Asset Category

Target 2005
Allocation2005

2004Equity securities

52%-58
%
53
%
58
%Debt securities

42%-48
%
47
%
42
%Total plan assets



100
%
100
%




Pension

Other Benefits2006

$
11,022

$
5,1682007


7,608


5,2982008


9,849


9,8582009


13,386


5,2362010


12,645


4,9392011-2015


84,002


27,203


104

---



10.    Income Taxes



Year Ended December 31,2005

2004

2003Current portion:Federal

$
48,642

$
72,414

$
29,216State and Local


2,779


4,301


1,547Foreign


24,517


13,535


17,150Total current


75,938


90,250


47,913Deferred portion:Federal


16,988


(9,548
)

(5,119
)State


(20,363
)

(14,060
)

1,282Total deferred


(3,375
)

(23,608
)

(3,837
)Total provision for income taxes

$
72,563

$
66,642

$
44,076




Year Ended December 31,2005

2004

2003Income tax provision at statutory federal income tax rate

$
85,650

$
89,971

$
44,582State income taxes, net of federal benefit


4,793


2,387


1,839Reversal of previously accrued taxes


(21,368
)

(23,438
)

Other, net


3,488


(2,278
)

(2,345
)Total provision for income taxes

$
72,563

$
66,642

$
44,076




105

---





December 31,2005

2004Deferred tax assets:Accrued expenses

$
63,636

$
61,377Employee benefits other than pensions


34,924


36,046Deferred revenue


3,349


1,263Pension obligations


28,210


15,173Net operating loss carryforwards


20,676


19,726Deferred costs


39,041


40,298Total deferred tax assets


189,836


173,883Deferred tax liabilities:Foreign operations


(12,403
)

(6,099
)Depreciation and amortization


(19,337
)

(24,269
)Amortization of computer software and intangible assets


(84,114
)

(60,013
)Other


(18,550
)

(50,198
)Total deferred tax liabilities


(134,404
)

(140,579
)Net deferred tax asset

$
55,432

$
33,304Current deferred income tax asset

$
23,013

$
23,349Noncurrent deferred income tax asset


32,419


9,955Net deferred tax asset

$
55,432

$
33,304




106

---





107

---





11.    Capital Stock



Declaration Date

Payable Date

Amount per Share2003:April 17, 2003

May 15, 2003

$
0.070July 15, 2003

August 15, 2003


0.070October 21, 2003

November 14, 2003


0.0702004:January 20, 2004

February 17, 2004

$
0.075April 20, 2004

May 14, 2004


0.075July 20, 2004

August 16, 2004


0.075October 26, 2004

November 15, 2004


0.0752005: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


0.090




108

---





Date Authorized

Authorized for
Repurchase

Repurchased

Repurchased under
ASSP

Available for
RepurchaseOctober 20, 2003

$100 million

$100 million

$35 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)


---



109

---



12.    Options and Other Stock-Based Awards





Year Ended December 31,2005

2004

2003Outstanding at January 1

1,250,303

731,421

342,219Granted

1,077,516

753,500

654,878Issued

(485,163
)
(135,317
)
(45,358
)Canceled

(85,572
)
(99,301
)
(220,318
)Outstanding at December 31

1,757,084

1,250,303

731,421


110

---





Year Ended December 31,2005

2004

2003Outstanding at January 1





145,124Awards settled in cash





Canceled





(145,124
)Outstanding at December 31










111

---





|                                               |  | Year Ended December 31,
|---------------------------------------------- |  | -----------------------
|
|
|Outstanding at January 1                       |  | 15,881,893             
|Granted                                        |  | 2,936,879              
|Exercised                                      |  | (445,181               
|Canceled                                       |  | (1,383,531             
|                                               |  |                        
|Outstanding at December 31                     |  | 16,990,060             
|                                               |  |                        
|Exercisable options outstanding at December 31 |  | 11,707,206             
|                                               |  |                        



|                   |  | Options Outstanding |  | Options Exercisable
|------------------ |  | ------------------- |  | -------------------
|
|$  0.16 - $  15.99 |  | 25,775              |  | 4.29               
|$16.00 - $  25.99  |  | 8,342,840           |  | 7.72               
|$26.00 - $  35.99  |  | 1,445,389           |  | 3.85               
|$36.00 - $  48.99  |  | 5,957,942           |  | 5.38               
|$49.00 - $  60.99  |  | 1,084,550           |  | 4.23               
|$61.00 - $105.06   |  | 133,564             |  | 4.22               
|                   |  |                     |  |                    
|Total              |  | 16,990,060          |  | 6.32               
|                   |  |                     |  |                    



112

---





113

---



13.    Business Segments



114

---





Year Ended December 31,2005

2004

2003Revenues from external customers, excluding adjusting items:Sabre Travel Network

$
1,574,399

$
1,505,192

$
1,482,435Travelocity


684,212


387,507


286,207Sabre Airline Solutions


260,812


243,470


232,354Total

$
2,519,423

$
2,136,169

$
2,000,996Intersegment revenues:Sabre Travel Network

$
30,023

$
30,117

$
26,883Travelocity


155,232


137,763


115,048Total

$
185,255

$
167,880

$
141,931Equity in net income (loss) of equity method investees:Sabre Travel Network

$
11,398

$
17,523

$
14,456Travelocity


(9,566
)

(22,721
)

(14,583
)Total

$
1,832

$
(5,198
)
$
(127
)Segment revenues, excluding adjusting items:Sabre Travel Network

$
1,615,820

$
1,552,832

$
1,523,774Travelocity


829,878


502,549


386,672Sabre Airline Solutions


260,812


243,470


232,354Elimination of intersegment revenues


(185,255
)

(167,880
)

(141,931
)Total

$
2,521,255

$
2,130,971

$
2,000,869Revenue adjusting items:Sabre Travel Networksettlement revenue from canceled subscriber contract

$


$


$
36,458Travelocityrecognition of deferred warrant revenue upon termination of hotel supplier agreement








7,836Total

$


$


$
44,294Consolidated revenues:Sabre Travel Network

$
1,615,820

$
1,552,832

$
1,560,232Travelocity


829,878


502,549


394,508Sabre Airline Solutions


260,812


243,470


232,354Elimination of intersegment revenues


(185,255
)

(167,880
)

(141,931
)Total

$
2,521,255

$
2,130,971

$
2,045,163


115

---





Year Ended December 31,2005

2004

2003Segment operating income (loss) excluding adjusting items:Sabre Travel Network

$
240,463

$
288,709

$
230,617Travelocity


26,649


12,600


(54,900
)Sabre Airline Solutions


41,178


15,729


21,101Net corporate allocations


(2,110
)

(912
)

1,150Total

$
306,180

$
316,126

$
197,968Impact of adjusting items on operating income(increase)/decrease:Sabre Travel Network:Settlement revenue from canceled subscriber contract

$


$


$
(36,458
)Other intangibles amortization


17,012


18,526


12,789Loss on sale of equipment





277


Stock compensation








672Restructuring expenses








(288
)Facilities consolidation








222Total Sabre Travel Network

$
17,012

$
18,803

$
(23,063
)Travelocity:Recognition of deferred revenue upon termination of hotel supplier agreement

$


$


$
(7,836
)Other intangibles amortization and impairment


28,056


25,472


41,554Stock compensation


1,436


5,183


7,856Loss on sale of equipment





2,443


Restructuring expenses








(37
)Facilities consolidation








3,894Total Travelocity

$
29,492

$
33,098

$
45,431Sabre Airline Solutions:Other intangibles amortization

$
2,247

$
895

$
Loss on sale of equipment





1,092


Stock compensation








118Restructuring expenses








(231
)Facilities consolidation








42Total Sabre Airline Solutions

$
2,247

$
1,987

$
(71
)Corporate:Loss on sale of equipment

$


$
3,491

$
Stock compensation





17


63Litigation insurance








(450
)Restructuring expenses


(3,444
)




(370
)Facilities consolidation








10,198Total Corporate

$
(3,444
)
$
3,508

$
9,441Total operating income adjusting items

$
45,307

$
57,396

$
31,738Consolidated operating income (loss):Sabre Travel Network

$
223,451

$
269,906

$
253,680Travelocity


(2,843
)

(20,498
)

(100,331
)Sabre Airline Solutions


38,931


13,742


21,172Net corporate allocations


1,334


(4,420
)

(8,291
)Total

$
260,873

$
258,730

$
166,230


116

---





Year Ended December 31,2005

2004

2003Depreciation and amortization included in income (in thousands):Sabre Travel Network

$
58,299

$
59,120

$
54,489Travelocity


50,902


45,516


65,988Sabre Airline Solutions


21,442


19,085


15,527Unallocated depreciation and amortization





3,491


Total consolidated depreciation and amortization included in income

$
130,643

$
127,212

$
136,004




Year Ended December 31,2005

2004

2003Segment assets (in thousands):Sabre Travel Network

$
1,188,850

$
986,695

$
882,485Travelocity


2,334,120


775,685


677,965Sabre Airline Solutions


457,696


441,625


363,017Unallocated cash, investments, corporate headquarters and other


393,445


813,972


1,043,006Total consolidated assets

$
4,374,111

$
3,017,977

$
2,966,473


Year Ended December 31,2005

2004

2003Capital expenditures for segment assets (in thousands):Sabre Travel Network

$
45,110

$
45,168

$
37,512Travelocity


32,310


21,850


19,960Sabre Airline Solutions


14,116


9,740


13,263Unallocated capital expenditures


124


1,240


731Total capital expenditures

$
91,660

$
77,998

$
71,466


117

---





Year Ended December 31,2005

2004

2003Revenues:United States

$
1,535,366

$
1,407,578

$
1,361,161Europe


475,738


268,133


252,185Other foreign


510,151


455,260


431,817Total

$
2,521,255

$
2,130,971

$
2,045,163


Year Ended December 31,2005

2004

2003Long-lived assets:United States

$
1,422,625

$
1,357,032

$
1,349,657Europe


1,438,075


164,742


31,537Singapore (primarily investment in joint venture)


205,565


149,592


155,565Other foreign


59,558


73,096


81,985Total

$
3,125,823

$
1,744,462

$
1,618,744


118

---



14.    Quarterly Financial Information (Unaudited)



First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter2005Revenues

$
581,888

$
619,255

$
699,706

$
620,406Gross profit


241,779


244,047


320,339


227,718Operating income


71,194


83,106


99,571


7,002Net earnings


57,681


43,887


58,496


12,088Earnings per common share:Basic

$
0.44

$
0.34

$
0.45

$
0.10Diluted

$
0.44

$
0.34

$
0.45

$
0.09


First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter2004Revenues

$
539,753

$
550,903

$
544,390

$
495,925Gross profit


219,497


231,197


234,106


173,938Operating income


69,488


88,443


77,167


23,632Net earnings


43,037


58,937


67,426


21,019Earnings per common share:Basic

$
0.31

$
0.43

$
0.50

$
0.16Diluted

$
0.31

$
0.42

$
0.49

$
0.16




119

---



15.    Supplemental Guarantor/Non-Guarantor Financial Information



120

---





CONDENSED CONSOLIDATING 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      |           | $                 
| |                                      | Restricted cash                                  |                                            |            |        |                            |            | 11,237       |           |                   
| |                                      | Accounts receivable, net                         |                                            |            |        |                            |            | 251,408      |           |                   
| |                                      | Intercompany accounts receivable (payable)       |                                            |            |        |                            |            | (158,906     | )         |                   
| |                                      | Other current assets                             |                                            |            |        |                            |            | 32,263       |           |                   
| |                                      | Other receivables                                |                                            |            |        |                            |            | 48,929       |           |                   
| |                                      |                                                  |                                            |            |         |                            |            |              |           |                   
| |                                      |                                                  | Total current assets                       |            |         |                           |            |              | 565,829   |                   
| | Property and equipment, net          |                                                  |                                            |           |         |                            | 344,179    |              |           | 85,389            
| | Investment in subsidiaries           |                                                  |                                            | 744,562    |         |                            | 2,583,474  |              |           |                  
| | Intercompany notes                   |                                                  |                                            | 2,122,011  |         |                            | (2,122,011 | )            |           |                  
| | Investment in joint ventures         |                                                  |                                            |           |         |                            | 4,189      |              |           | 152,088           
| | Goodwill and intangible assets, net  |                                                  |                                            |           |         |                            | 11,361     |              |           | 2,321,779         
| | 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   |                            | $          | 102,510      |           | $                 
| |                                      | Travel supplier liabilities and deferred revenue |                                            |            |        |                            |            |             |           |                   
| |                                      | Accrued compensation and related benefits        |                                            |            |        |                            |            | 56,710       |           |                   
| |                                      | Other current accrued liabilities                |                                            |            | 11,013  |                            |            | 284,952      |           |                   
| |                                      | Bridge facility                                  |                                            |            | 800,000 |                            |            |             |           |                   
| |                                      |                                                  |                                            |            |         |                            |            |              |           |                   
| |                                      |                                                  | Total current liabilities                  |            |         | 814,572                    |            |              | 444,172   |                   
| |                                      | Pensions and other postretirement benefits       |                                            |            |        |                            |            | 190,486      |           |                   
| |                                      | Other liabilities                                |                                            |            | 1,692   |                            |            | 19,122       |           |                   
| |                                      | Minority interests                               |                                            |            |        |                            |            |             |           |                   
| |                                      | Long-term capital lease obligation               |                                            |            |        |                            |            | 158,188      |           |                   
| |                                      | Public and other notes payable                   |                                            |            | 411,303 |                            |            |             |           |                   
| |                                      |                                                  | Total stockholders' equity                 |            |         | 1,643,112                  |            |              | 744,562   |                   
| |                                      |                                                  |                                            |            |         |                            |            |              |           |                   
| |                                      |                                                  | Total liabilities and stockholders' equity |            | $       | 2,870,679                  |            | $            | 1,556,530 |                   
| |                                      |                                                  |                                            |            |         |                            |            |              |           |                   

121

---



CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2004
(in thousands)

| |                                            | Sabre
Holdings                                   |                                            | Sabre Inc. |       | Non-Guarantor
Subsidiaries |            | Eliminations |           | Sabre
Consolidated
| | ------------------------------------------ | ------------------------------------------------ | ------------------------------------------ | ---------- | ----- | -------------------------- | ---------- | ------------ | --------- | ------------------
| | Assets                                     |                                                  |                                            |            |       |                            |            |              |           |                   
| | Current Assets                             |                                                  |                                            |            |       |                            |            |              |           |                   
| |                                            | Cash and marketable securities                   |                                            | $          |      |                            | $          | 766,401      |           | $                 
| |                                            | Accounts receivable, net                         |                                            |            |      |                            |            | 234,248      |           |                   
| |                                            | Intercompany accounts receivable (payable)       |                                            |            |      |                            |            | (159,414     | )         |                   
| |                                            | Other current assets                             |                                            |            |      |                            |            | 22,288       |           |                   
| |                                            | Other receivables                                |                                            |            |      |                            |            | 1,912        |           |                   
| |                                            |                                                  |                                            |            |       |                            |            |              |           |                   
| |                                            |                                                  | Total current assets                       |            |       |                           |            |              | 865,435   |                   
| | Property and equipment, net                |                                                  |                                            |           |       |                            | 340,964    |              |           | 46,377            
| | Investment in subsidiaries                 |                                                  |                                            | 692,123    |       |                            | 1,331,046  |              |           |                  
| | Intercompany notes                         |                                                  |                                            | 1,361,035  |       |                            | (1,361,035 | )            |           |                  
| | Investment in joint ventures               |                                                  |                                            |           |       |                            | 4,348      |              |           | 171,901           
| | Goodwill and intangible assets, net        |                                                  |                                            |           |       |                            | 12,209     |              |           | 976,391           
| | Other assets, net                          |                                                  |                                            | 15,200     |       |                            | 109,312    |              |           | 67,760            
| |                                            |                                                  |                                            |            |       |                            |            |              |           |                   
| |                                            |                                                  | Total assets                               |            | $     | 2,068,358                  |            | $            | 1,302,279 |                   
| |                                            |                                                  |                                            |            |       |                            |            |              |           |                   
| | Liabilities and stockholders' equity       |                                                  |                                            |            |       |                            |            |              |           |                   
| | Current liabilities                        |                                                  |                                            |            |       |                            |            |              |           |                   
| |                                            | Accounts payable                                 |                                            | $          | 7,790 |                            | $          | 105,146      |           | $                 
| |                                            | Travel supplier liabilities and deferred revenue |                                            |            |      |                            |            |             |           |                   
| |                                            | Accrued compensation and related benefits        |                                            |            |      |                            |            | 64,386       |           |                   
| |                                            | Other current accrued liabilities                |                                            |            | 8,504 |                            |            | 128,412      |           |                   
| |                                            |                                                  |                                            |            |       |                            |            |              |           |                   
| |                                            |                                                  | Total current liabilities                  |            |       | 16,294                     |            |              | 297,944   |                   
| | Pensions and other postretirement benefits |                                                  |                                            |           |       |                            | 153,694    |              |           | 843               
| | Other liabilities                          |                                                  |                                            | 1,350      |       |                            | (2,596     | )            |           | 24,347            
| | Minority interests                         |                                                  |                                            |           |       |                            |           |              |           | 5,143             
| | Long-term capital lease obligation         |                                                  |                                            |           |       |                            | 161,114    |              |           |                  
| | Public and other notes payable             |                                                  |                                            | 424,233    |       |                            |           |              |           | 15,076            
| |                                            |                                                  | Total stockholders' equity                 |            |       | 1,626,481                  |            |              | 692,123   |                   
| |                                            |                                                  |                                            |            |       |                            |            |              |           |                   
| |                                            |                                                  | Total liabilities and stockholders' equity |            | $     | 2,068,358                  |            | $            | 1,302,279 |                   
| |                                            |                                                  |                                            |            |       |                            |            |              |           |                   

122

---



CONDENSED CONSOLIDATING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2005
(in thousands)

Sabre
Holdings

Sabre Inc.

Non-Guarantor
Subsidiaries

Eliminations

Sabre
ConsolidatedRevenues

$


$
1,523,316

$
1,510,627

$
(512,688
)
$
2,521,255Operating expenses


3,651


1,348,446


1,420,973


(512,688
)

2,260,382Operating income (loss)


(3,651
)

174,870


89,654





260,873Other income (expense)Interest income


119,738


14,744


21,174


(133,245
)

22,411Interest expense


(39,644
)

(142,793
)

(3,883
)

133,245


(53,075
)Income from subsidiaries


122,063


81,753





(203,816
)

Other, net





(22,589
)

37,095





14,506Total other income (expense)


202,157


(68,885
)

54,386


(203,816
)

(16,158
)Income before provision for income taxes


198,506


105,985


144,040


(203,816
)

244,715Provision (credit) for income taxes


26,354


(16,078
)

62,287





72,563Net income

$
172,152

$
122,063

$
81,753

$
(203,816
)
$
172,152


123

---



CONDENSED CONSOLIDATING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2004
(in thousands)

Sabre
Holdings

Sabre Inc.

Non-Guarantor
Subsidiaries

Eliminations

Sabre
ConsolidatedRevenues

$


$
1,438,988

$
1,210,180

$
(518,197
)
$
2,130,971Operating expenses


3,429


1,305,074


1,081,935


(518,197
)

1,872,241Operating income (loss)


(3,429
)

133,914


128,245





258,730Other income (expense)Interest income


104,336


12,108


8,470


(109,760
)

15,154Interest expense


(17,689
)

(117,605
)

(1,328
)

109,760


(26,862
)Income from subsidiaries


135,895


105,376





(241,271
)

Other, net





8,360


1,679





10,039Total other income


222,542


8,239


8,821


(241,271
)

(1,669
)Income before provision for income taxes


219,113


142,153


137,066


(241,271
)

257,061Provision for income taxes


28,694


6,258


31,690





66,642Net income

$
190,419

$
135,895

$
105,376

$
(241,271
)
$
190,419


124

---



CONDENSED CONSOLIDATING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2003
(in thousands)

Sabre
Holdings

Sabre Inc.

Non-Guarantor
Subsidiaries

Eliminations

Sabre
ConsolidatedRevenues

$


$
1,466,162

$
1,021,897

$
(442,896
)
$
2,045,163Operating expenses


2,632


1,327,518


991,679


(442,896
)

1,878,933Operating income (loss)


(2,632
)

138,644


30,218





166,230Other income (expense)Interest income


85,600


11,612


15,672


(96,407
)

16,477Interest expense


(17,004
)

(100,798
)

(2,682
)

96,407


(24,077
)Income from subsidiaries


39,847


33,872





(73,719
)

Other, net





(27,826
)

(3,427
)




(31,253
)Total other income (expense)


108,443


(83,140
)

9,563


(73,719
)

(38,853
)Income before provision for income taxes


105,811


55,504


39,781


(73,719
)

127,377Provision for income taxes


22,510


15,657


5,909





44,076Net income

$
83,301

$
39,847

$
33,872

$
(73,719
)
$
83,301


125

---



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2005
(in thousands)

Sabre
Holdings

Sabre
Inc.

Non-Guarantor
Subsidiaries

Eliminations

Sabre
ConsolidatedOperating ActivitiesCash provided by operating activities

$


$
99,998

$
125,508

$


$
225,506Investing ActivitiesAdditions to property and equipment





(59,752
)

(31,908
)




(91,660
)Net sales of marketable securities





383,919


28,198





412,117Proceeds from sale of investments








40,920





40,920Acquisitions (net of cash acquired)





(41,748
)

(1,137,191
)




(1,178,939
)Other investing activities





(10,000
)

(6,342
)




(16,342
)Cash provided by (used for) investing activities





272,419


(1,106,323
)




(833,904
)Financing ActivitiesProceeds from bridge facility


800,000











800,000Proceeds from exercise of common stock


9,750











9,750Dividends paid


(47,281
)










(47,281
)Contributions (distributions) from affiliates, net


(699,257
)

(374,267
)

1,073,524





Purchases of treasury stock


(63,212
)










(63,212
)Other financing activities, net





(1,200
)







(1,200
)Cash provided by (used for) financing activities





(375,467
)

1,073,524





698,057Effect of exchange rate changes on cash and cash equivalents








(4,097
)




(4,097
)Increase (decrease) in cash





(3,050
)

88,612





85,562Cash at beginning of period





7,468


42,203





49,671Cash at end of period

$


$
4,418

$
130,815

$


$
135,233


126

---



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2004
(in thousands)

Sabre
Holdings

Sabre
Inc.

Non-Guarantor
Subsidiaries

Eliminations

Sabre
ConsolidatedOperating ActivitiesCash provided by operating activities

$


$
89,154

$
272,279

$


$
361,433Investing ActivitiesAdditions to property and equipment





(56,036
)

(21,962
)




(77,998
)Net sales (purchases) of marketable securities





121,065


(26,728
)




94,337Acquisitions (net of cash acquired)





(9,274
)

(60,470
)




(69,744
)Other investing activities





397


(45,984
)




(45,587
)Cash provided by (used for) investing activities





56,152


(155,144
)




(98,992
)Financing ActivitiesProceeds from exercise of common stock


15,744











15,744Dividends paid


(41,431
)










(41,431
)Contributions (distributions) from affiliates, net


253,501


(147,971
)

(105,530
)




Purchases of treasury stock


(227,814
)










(227,814
)Other financing activities, net





(836
)

(1,056
)




(1,892
)Cash used for financing activities





(148,807
)

(106,586
)




(255,393
)Effect of exchange rate changes on cash and cash equivalents








1,761





1,761Increase (decrease) in cash





(3,501
)

12,310





8,809Cash at beginning of period





10,969


29,893





40,862Cash at end of period

$


$
7,468

$
42,203

$


$
49,671


127

---



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2003
(in thousands)

Sabre
Holdings

Sabre
Inc.

Non-Guarantor
Subsidiaries

Eliminations

Sabre
ConsolidatedOperating ActivitiesCash provided by (used for) operating activities

$


$
(148,906
)
$
426,844

$


$
277,938Investing ActivitiesAdditions to property and equipment





(52,307
)

(19,159
)




(71,466
)Net sales (purchases) of marketable securities





10,332


(832
)




9,500Acquisitions (net of cash acquired)





(11,934
)

(84,180
)




(96,114
)Proceeds from sales of investments








5,054





5,054Other investing activities








(12,177
)




(12,177
)Cash used for investing activities





(53,909
)

(111,294
)




(165,203
)Financing ActivitiesProceeds from exercise of common stock


10,541











10,541Dividends paid


(30,125
)










(30,125
)Contributions (distributions) from affiliates, net


63,711


231,109


(294,820
)




Purchases of treasury stock


(44,239
)










(44,239
)Other financing activities, net


112


(27,947
)

(2,779
)




(30,614
)Cash provided by (used for) financing activities





203,162


(297,599
)




(94,437
)Effect of exchange rate changes on cash and cash equivalents








1,388





1,388Increase in cash





347


19,339





19,686Cash at beginning of period





10,622


10,554





21,176Cash at end of period

$


$
10,969

$
29,893

$


$
40,862


128

---



16.    Subsequent Events

Acquisition of Zuji Holdings Limited



Legal Settlement



Acquisition of TRAMS Inc.



Prepayment of Bridge Facility



129

---





ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls Evaluation and Related CEO and CFO Certifications.Our management, with the
participation of our principal executive officer ("CEO") and principal financial officer ("CFO") conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this Annual Report. The controls evaluation was conducted by our Disclosure Controls Council, comprised of senior representatives from our Finance,
Accounting, Internal Audit, Tax, Investor Relations, Corporate Communications and Legal Departments under the supervision of our CEO and CFO.

Attached
as exhibits to this Annual Report are certifications of our CEO and our CFO, which are required in accordance with Rule 13a-14 of the Securities Exchange Act
of 1934, as amended ("Exchange Act"). This "Controls and Procedures" section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in
conjunction with the certifications for a more complete understanding of the topics presented.

Limitations on the Effectiveness of Controls.We do not expect that our disclosure controls and
procedures will prevent all errors and all fraud. A system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the system are met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the
Company have been detected. Furthermore, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a
cost-effective system of controls and procedures, misstatements or omissions due to error or fraud may occur and not be detected.

Scope of the Controls Evaluation.The evaluation of our disclosure controls and procedures included a
review of their objectives and design, the Company's implementation of the controls and procedures and the effect of the controls and procedures on the information generated for use in this Annual
Report. In the course of the evaluation, we sought to identify whether we had any data errors, control problems or acts of fraud and to confirm that appropriate corrective action, including process
improvements, were being undertaken if needed. This type of evaluation is performed on a quarterly basis so that conclusions concerning the effectiveness of our disclosure controls and procedures can
be reported in our Quarterly Reports on Form 10-Q, which supplement our disclosures made in our Annual Report on Form 10-K. Many of the components of our
disclosure controls and procedures are also evaluated by our Internal Audit Department, our Legal Department and by personnel in our Finance organization. The overall goals of these various evaluation
activities are to monitor our disclosure controls and procedures on an ongoing basis, and to maintain them as dynamic systems that change as conditions warrant.

Conclusions Regarding Disclosure Controls.Based on the required evaluation of our disclosure
controls and procedures, our CEO and CFO have concluded that, as of December 31, 2005, we maintain disclosure controls and procedures that are effective in providing reasonable assurance that
information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions
regarding required disclosure.

130

---



Management's Report on Internal Control over Financial Reporting.Our management is responsible for
establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Under the
supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework set forth in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework set
forth in Internal ControlIntegrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2005. Our management's
assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their report which is included in this Form 10-K.

Changes in Internal Controls Over Financial Reporting.During the three months ended
December 31, 2005, there was no change in our internal control over financial reporting (or in other factors) that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting, including any corrective actions required with regard to significant deficiencies or material weaknesses.

Exclusion of lastminute.com from 2005 Internal Controls Assessment.As noted elsewhere in this
Form 10-K, we acquired lastminute.com plc. on July 20, 2005. Pursuant to guidance from the United States Securities and Exchange Commission, we have excluded lastminute.com
from the assessment of our internal controls over financial reporting as of December 31, 2005. As of December 31, 2005, on a stand alone basis, lastminute.com constituted
$1,598 million and $1,265 million of total assets and net assets, respectively, and $174 million and $11 million of revenues and net loss, respectively for the year then
ended.

Material Weaknesses in lastminute.com Internal Control Environment Involving Internal Information Technology
Systems.Shortly after our acquisition of lastminute.com, we began to conduct our assessment of its internal controls, which had not been possible prior to the
acquisition. As part of our ongoing assessment, we recently concluded that some identified deficiencies constituted material weaknesses in the internal controls at lastminute.com, as described below.

We
determined that these material weaknesses exist at lastminute.com with respect to information technology systems, including inadequate internal system access security and controls,
inadequate change management processes and inadequate financial systems interfaces. The inadequate financial systems interfaces also result in an inability to sufficiently reconcile at a detailed
level certain accounts, primarily related to inter-company activity and account balances. We believe these weaknesses exist due to lastminute.com's complex business and information technology
structure, caused by the number of acquisitions lastminute.com made over the past several years which had not been fully integrated.

We
have begun remediation efforts based on our existing policies used elsewhere in our business, including the enhancement of information technology policies and procedures concerning
internal security, systems access and change management. In addition, we will be making system modifications and policy and procedure changes at lastminute.com to allow easier identification and
elimination of inter-company balances and more detailed monthly reconciliations of inter-company accounts.

131

---



We
continue to assess the internal controls over financial reporting at lastminute.com. To date, our ongoing assessment has not resulted in any findings that would lead us to believe
that there are any material misstatements in our financial statements as of December 31, 2005 as a result of the identified material weaknesses. To ensure that the December 31, 2005
financial statements were materially correct we performed supplementary procedures in addition to the normal recurring control procedures and financial statement close process at lastminute.com. Based
on these procedures and the normal internal control policies and procedures at lastminute.com, we concluded that our December 31, 2005 financial statements are fairly stated in accordance with
generally accepted accounting principles in all material respects. However, as we make further progress in our assessment, we might identify additional individual deficiencies, or combinations of
deficiencies, which we might characterize as a material weakness in the internal controls over financial reporting at lastminute.com. We will attempt to promptly resolve identified deficiencies, which
may involve material changes to lastminute.com's internal controls. We intend to implement remediation plans to bring the internal controls over financial reporting at lastminute.com to a standard
that is consistent with the rest of the Company. Until such time as the existing systems, processes and procedures at lastminute.com can be remediated we will continue to perform additional procedures
and reviews at lastminute.com as necessary to ensure that our financial statements are fairly stated in accordance with generally accepted accounting principles in all material respects.

ITEM 9B.    OTHER INFORMATION



132

---





PART III

---

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated herein by reference is the information set forth under the headings "Proposal 1Election of Directors," "Information Regarding the
Board and Its Committees," "Director Nomination Process" and "Executive Officers of the Registrant" in our definitive Proxy Statement for the Annual Meeting of Stockholders to be held on
May 16, 2006.

Corporate Governance Policy

Sabre Holdings Corporation is committed to conducting its business in a way that reflects best practices as well as the highest standards of legal and ethical
conduct. We want to be a company of integrity and to be perceived as such by everyone who comes in contact with us.

To
that end, the Board of Directors of the Corporation has approved a comprehensive system of corporate governance documents that collectively constitute the Corporate Governance Policyof Sabre Holdings
Corporation. These documents meet the requirements established by the New York Stock Exchange's corporate
governance listing standards and by the Securities and Exchange Commission.

The
Corporate Governance Policy describes the policies, processes and practices followed by our directors, officers and employees in governing the Corporation, and serves as a flexible
framework for sound corporate governance. The Corporate Governance Policy, which includes the Charters of each of the Committees of our Board of Directors and our Business Ethics Policy, is available
on the Corporate Governance section of our Website. Stockholders may request a free copy of the Corporate Governance Policy from:

Sabre
Holdings Corporation
Attention: Investor Relations
3150 Sabre Drive
Southlake, TX 76092
682 605 1000

133

---



Code of Ethics

Sabre Holdings Corporation and its subsidiaries endeavor to do business according to the highest ethical and legal standards, complying with both the letter and
spirit of the law. Our Board of Directors has approved a Business Ethics Policy that applies to the Corporation's directors, officers (including our principal executive officer, principal financial
officer and controller), employees and contractors around the globe. Our Business Ethics Policy, a component of the Sabre Holdings Corporation Corporate Governance Policy (described above), is
administered by our General Counsel, who acts as the Compliance Officer for the Corporation.

Our
employees are encouraged to report any suspected violations of laws, regulations and the Business Ethics Policy, and all unethical business practices. We provide continuously
monitored hotlines for anonymous reporting by employees, and also obtain annual compliance certifications from all officers and management level employees.



Stockholders
may request a free copy of the Business Ethics Policy by contacting Investor Relations at the phone number and address set forth above under "Corporate Governance Policy."

In
addition, within five business days of:



we
will provide information regarding any such amendment or waiver (including the nature of any waiver, the name of the person to whom the waiver was granted and the date of the waiver) on our Website
at the Internet address above, and such information will be available on our Website for at least a 12-month period. In addition, we will disclose any amendments and waivers to our
Business Ethics Policy as required by the listing standards of the New York Stock Exchange.

ITEM 11.    EXECUTIVE COMPENSATION

Incorporated herein by reference is the information set forth under the heading "Executive Compensation" in our definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on May 16, 2006.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated herein by reference is the information set forth under the heading "Ownership of Securities" from our definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on May 16, 2006.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated herein by reference is the information set forth under the heading "Proposal 2Ratification of Selection of AuditorsFees
Paid to Ernst & Young LLP" from our definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 16, 2006.

134

---





PART IV

---

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

|(a)(1) |  | The financial statements listed in the accompanying index to financial statements and the schedules are filed as part of this report.                                                                             
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)    |  | The schedules listed in the accompanying index to financial statements and schedules are filed as part of this report.                                                                                            
|(3)    |  | Exhibits required to be filed by Item 601 of Regulation S-K. The exhibits listed in items 10.1 through 10.29, 10.39 and 10.42 through 10.51 consist of management contracts or compensatory plans or arrangements.

|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                               
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Asset Purchase Agreement by and among EDS Information Services L.L.C., Electronic Data Systems Corporation, Sabre Inc., and Sabre Holdings Corporation.(1)                                                           
|2.2            |  | First Amendment to Asset Purchase Agreement by and among EDS Information Services L.L.C., Electronic Data Systems Corporation, Sabre Inc., and Sabre Holdings Corporation.(2)                                        
|2.3            |  | Second Amendment to Asset Purchase Agreement by and among EDS Information Services L.L.C., Electronic Data Systems Corporation, Sabre Inc., and Sabre Holdings Corporation.(3)                                       
|2.4            |  | Form of Implementation Agreement dated as of May 12, 2005 between Sabre Inc., Travelocity Europe Limited and lastminute.com plc.(4)                                                                                  
|2.5            |  | Form of Scheme of Arrangement dated as of June 6, 2005 between Sabre Inc., Travelocity Europe Limited and lastminute.com plc.(5)                                                                                     
|2.6            |  | Form of Letter dated as of June 8, 2005 to holders of options granted under the lastminute.com plc 2000 Approved Executive Share Option Scheme and 2000 Unapproved Executive Share Option Scheme.(6)                 
|2.7            |  | Form of Letter dated as of June 8, 2005 to holders of out-of-the-money options granted under the lastminute.com plc 1999 Unapproved Executive Share Option Scheme.(7)                                                
|2.8            |  | Form of Letter dated as of June 8, 2005 to Mr. A. Leighton in respect of options granted under the Non-Executive Scheme.(8)                                                                                          
|2.9            |  | Form of Letter dated as of June 8, 2005 to holders of out-of-the-money options granted under the lastminute.com plc 2000 Approved Executive Share Option Scheme and 2000 Unapproved Executive Share Option Scheme.(9)
|2.10           |  | Form of Letter dated as of June 8, 2005 to holders of options granted under the lastminute.com plc 1998 Unapproved Executive Share Option Scheme and 1999 Unapproved Executive Share Option Scheme.(10)              
|2.11           |  | Form of Letter dated as of June 8, 2005 to holders of options granted under the lastminute.com plc Sharesave Scheme.(11)                                                                                             
|2.12           |  | Form of Bondholder Circular dated as of June 6, 2005.(12)                                                                                                                                                            
|3.1            |  | Third Restated Certificate of Incorporation of Sabre Holdings Corporation.(13)                                                                                                                                       
|3.2            |  | Amended and Restated Bylaws of Sabre Holdings Corporation.(14)                                                                                                                                                       
|               |  |                                                                                                                                                                                                                      

135

---



|4.1   |  | Specimen Certificate representing Class A common stock.(15)                                                                                                                                                    
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.2   |  | Indenture, dated as of August 3, 2001, between Sabre Holdings Corporation and SunTrust Bank, as Trustee, providing for issuance of debt securities in series.(16)                                              
|4.3   |  | First Supplemental Indenture dated August 7, 2001, between Sabre Holdings Corporation and SunTrust Bank, as Trustee, relating to the 400,000,000 7.35% Senior Notes Due 2011 of Sabre Holdings Corporation.(17)
|10.1  |  | Sabre Holdings Deferred Compensation Plan, as amended May 16, 2003.(18)                                                                                                                                        
|10.2  |  | Travelocity.com LP Second Amended 1999 Long-Term Incentive Plan.(19)                                                                                                                                           
|10.3  |  | Supplemental Executive Retirement Plan, as Amended effective July 18, 2000. (Restoration).(20)                                                                                                                 
|10.4  |  | Supplemental Executive Retirement Plan, as Amended effective July 18, 2000. (Officer).(21)                                                                                                                     
|10.5  |  | Supplemental Executive Retirement Plan, as Amended (Grandfathered).(22)                                                                                                                                        
|10.6  |  | Form of Executive Termination Benefits Agreement.(23)                                                                                                                                                          
|10.7  |  | Form of Addenda to Executive Termination Benefits Agreement with respect to Michael S. Gilliland, Jeffery M. Jackson and Eric J. Speck.(24)                                                                    
|10.8  |  | Form of Addendum to Executive Termination Benefits Agreement with respect to David A. Schwarte.(25)                                                                                                            
|10.9  |  | Forms of Addendum to Executive Termination Benefits Agreement with respect to John S. Stow.(26)                                                                                                                
|10.10 |  | Form of Addendum to Executive Termination Benefits Agreement with respect to Thomas Klein.(27)                                                                                                                 
|10.11 |  | Form of Addendum to Executive Termination Benefits with respect to Michelle A. Peluso.(28)                                                                                                                     
|10.12 |  | Form of Letter Formalizing Involuntary Termination Benefits.(29)                                                                                                                                               
|10.13 |  | Form of Employment Agreement between Sabre Holdings Corporation, Sabre Inc. and Michael S. Gilliland.(30)                                                                                                      
|10.14 |  | Form of Employment Agreement between Sabre Holdings Corporation, Sabre Inc. and Michelle A. Peluso.(31)                                                                                                        
|10.15 |  | Form of Employee Intellectual Property and Confidentiality Agreement for Mark K. Miller.(32)                                                                                                                   
|10.16 |  | Form of Severance Agreement with respect to Thomas Klein.(33)                                                                                                                                                  
|10.17 |  | Bonus Criteria for Executive Officers.(34)                                                                                                                                                                     
|10.18 |  | Information regarding the Compensation of Directors.(35)                                                                                                                                                       
|10.19 |  | 2000 Stock Option Plan Amended and Restated effective November 13, 2000.(36)                                                                                                                                   
|10.20 |  | 2003 Directors Deferred Compensation and Deferred Stock Unit Plan.(37)                                                                                                                                         
|10.21 |  | Form of Sabre Holdings Corporation Cash Award Agreement.(38)                                                                                                                                                   
|10.22 |  | The Sabre Group Holdings, Inc. 1996 Directors Stock Incentive Plan.(39)                                                                                                                                        
|10.23 |  | Sabre Holdings Corporation Employee Stock Purchase Plan Amended and Restated Effective as of January 1, 2005.(40)                                                                                              
|      |  |                                                                                                                                                                                                                

136

---



|10.24 |  | Sabre Holdings Corporation Amended and Restated 1996 Long-Term Incentive Plan, as amended November 13, 2000.(41)                                                                                                                                                                                                                                                       
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.25 |  | Sabre Holdings Corporation Amended and Restated 1996 Long-Term Incentive Plan, as amended May 14, 2002.(42)                                                                                                                                                                                                                                                            
|10.26 |  | Form of Sabre Holdings Corporation 2005 Restricted Stock Agreement for Executive Officers.(43)                                                                                                                                                                                                                                                                         
|10.27 |  | Form of Sabre Holdings Corporation 2005 Stock Option Agreement for Executive Officers.(44)                                                                                                                                                                                                                                                                             
|10.28 |  | Information Regarding the Compensation of Directors of Sabre Holdings Corporation.(45)                                                                                                                                                                                                                                                                                 
|10.29 |  | 2005 Bonus Criteria for Executive Officers.(46)                                                                                                                                                                                                                                                                                                                        
|10.30 |  | Option Issuance Agreement, dated January 1, 1998 between The SABRE Group Holdings, Inc. and US Airways, Inc.(47)                                                                                                                                                                                                                                                       
|10.31 |  | Credit Agreement, dated as of June 15, 2004, by and among Sabre Inc., Bank of America, N.A., as Administrative Agent, Citibank, N.A., Sumitomo Mitsui Banking Corp., New York, UFJ Bank Limited, and JPMorgan Chase Bank, as Co-Syndication Agents, Banc
of America Securities LLC, as Sole Lead Arranger and Sole Book Manager, and the other banks party thereto.(48)
|10.32 |  | Capital Lease Facility with Various Associated Documents dated June 15, 2003, as specified below:                                                                                                                                                                                                                                                                      
|      |  | 10.32 (a) Participation Agreement dated as of June 15, 2003, among Sabre Inc., as Lessee, Sabre Holdings Corporation, as Lessee Guarantor, CSL Leasing Inc., as Lessor, the Institutional Investors named on Schedule 2, as Purchasers, and Wilmington
Trust Company, as Indenture Trustee.(49)                                                                        
|      |  | 10.32 (b) Master Lease and Deed of Trust dated as of June 15, 2003, between Sabre Inc., as Lessee, and CSL Leasing Inc., as Lessor.(49)                                                                                                                                                                                                                                
|      |  | 10.32 (c) Lease Supplement No. 1 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) dated June 26, 2003, between Sabre Inc., as the Lessee and grantor, and CSL
Leasing Inc., as Lessor and beneficiary, and to Jeffrey A. Rattikin, as trustee and grantee.(49)                      
|      |  | 10.32 (d) Trust Indenture and Security Agreement dated as of June 15, 2003, between CSL Leasing Inc. and Wilmington Trust Company, as Indenture Trustee.(49)                                                                                                                                                                                                           
|      |  | 10.32 (e) Assignment of Lease and Rent and Security Agreement dated as of June 15, 2003, made by CSL Leasing Inc., as Assignor, in favor of Wilmington Trust Company, as Indenture Trustee.(49)                                                                                                                                                                        
|      |  | 10.32 (f) Deed of Trust and Security Agreement with Assignment of Rents dated as of June 15, 2003, from CSL Leasing Inc., as grantor, and Sabre Inc., as grantor, to Jeffrey A. Rattikin, as Deed of Trust trustee, for the use and benefit of Wilmington
Trust Company, as Indenture Trustee.(49)                                                                     
|      |  | 10.32 (g) Lease Guaranty dated as of June 15, 2003, made by Sabre Holdings Corporation, as Lessee, Guarantor, in favor of CSL Leasing Inc., as Lessor, the parties who from time to time become Purchasers under the Operative Documents, and Wilmington
Trust Company, as Indenture Trustee.(49)                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                        

137

---



|10.33 |  | Master Agreement dated August 20, 2004 by and between Otto (GmbH & Co KG), Otto Freizeit und Touristik GmbH, Travelocity.com LP, Travelocity GmbH, Kommanditgesellschaft Travel Overland Flugreisen GmbH & Co., and Travelocity Holdings
Gmbh.(50)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.34 |  | Share Transfer Agreement dated October 1, 2004 by Travelocity Holdings GmbH and Travelocity Sabre GmbH.(51)                                                                                                                                       
|10.35 |  | Share Purchase and Transfer Agreement dated October 1, 2004 between Travelocity Holdings GmbH and Kommanditgesellschaft Travel Overland Flugreisen GmbH & Co.(52)                                                                                 
|10.36 |  | Share Transfer Agreement dated October 1, 2004 between Kommanditgesellschaft Travel Overland Flugreisen GmbH & Co., Otto Freizeit und Touristik GmbH and Travelocity GmbH.(53)                                                                    
|10.37 |  | Share Purchase and Transfer Agreement dated October 1, 2004 between Otto Freizeit und Touristik GmbH and Travelocity GmbH.(54)                                                                                                                    
|10.38 |  | Put Option Agreement among AGC Holdings Limited, Abacus International Pte Ltd., Travelocity.com L.P., and Zuji Holdings Limited dated January 17, 2005.(55)                                                                                       
|10.39 |  | Form of Amended and Restated 2005 Long-Term Incentive Plan.(56)                                                                                                                                                                                   
|10.40 |  | Form of Credit Agreement dated as of May 12, 2005 among Sabre Inc., Morgan Stanley Senior Funding, Inc., and Bear, Sterns & Co., Inc.(57)                                                                                                         
|10.41 |  | Form of Cash Confirmation Letter dated as of May 12, 2005 by Sabre Inc. and Travelocity Europe Limited.(58)                                                                                                                                       
|10.42 |  | Form of LTIP Letter dated as of June 21, 2005.(59)                                                                                                                                                                                                
|10.43 |  | Form of Options Cover Statement dated as of June 8, 2005.(60)                                                                                                                                                                                     
|10.44 |  | 2004 Form of Restricted Stock Unit Replacement Award Agreement.(61)                                                                                                                                                                               
|10.45 |  | 2005 Form of Restricted Stock Unit Replacement Award Agreement.(62)                                                                                                                                                                               
|10.46 |  | 2006 Salary and Bonus Criteria for Named Executive Officers.(63)                                                                                                                                                                                  
|10.47 |  | Form of Amended 2004 Executive Termination Benefits Agreement.(64)                                                                                                                                                                                
|10.48 |  | Form of Alternative Addendum to 2004 Executive Termination Benefits Agreement.(64)                                                                                                                                                                
|10.49 |  | Form of 2005 Executive Termination Benefits Agreement.(64)                                                                                                                                                                                        
|10.50 |  | Form of Addendum to 2005 Executive Termination Benefits Agreement.(64)                                                                                                                                                                            
|10.51 |  | Fifth Amendment to the Sabre Inc. Legacy Pension Plan.(64)                                                                                                                                                                                        
|12.1  |  | Computation of ratio of earnings to fixed charges for the year ended December 31, 2005.(64)                                                                                                                                                       
|14.1  |  | Sabre Holdings Corporation Business Ethics Policy revised January 25, 2005.(65)                                                                                                                                                                   
|21.1  |  | Subsidiaries of Registrant.(64)                                                                                                                                                                                                                   
|23.1  |  | Consent of Ernst & Young LLP.(64)                                                                                                                                                                                                                 
|31.1  |  | Written statement to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated March 8, 2006, signed by Michael S. Gilliland as Chief Executive Officer.(64)                                              
|      |  |                                                                                                                                                                                                                                                   

138

---



|31.2 |  | Written statement pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002, dated March 8, 2006, signed by Jeffery M. Jackson as Chief Financial Officer.(64)        
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|32.1 |  | Written statement pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated March 8, 2006, signed by Michael S. Gilliland as Chief Executive Officer.(66)
|32.2 |  | Written statement pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated March 8, 2006, signed by Jeffery M. Jackson as Chief Financial Officer.(66)  

---

139

---



140

---



141

---



|(b) |  | A list of exhibits filed or furnished with this report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished by us) is provided above under Item 15(a)(3) of this Report. We shall
furnish a copy of this Form 10-K and/or copies of exhibits for a reasonable fee (covering the expense of furnishing copies) upon request. Stockholders may request exhibits copies by contacting:
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | Sabre Holdings Corporation
Attn: Investor Relations
3150 Sabre Drive
Southlake, Texas 76092
682-605-1000                                                                                                                                                                                                                                                                                                           

PLEASE NOTE: It is inappropriate for investors to assume the accuracy of any covenants, representations or warranties that may be contained in agreements or other documents
filed as exhibits to this report. Any such covenants, representations or warranties: may have been qualified or superseded by disclosures contained in separate schedules not filed with this report,
may reflect the parties' negotiated risk allocation in the particular transaction, may be qualified by materiality standards that differ from those applicable for securities law purposes, and may not
be true as of the date of this report or any other date.

142

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SABRE HOLDINGS CORPORATION
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
[Item 15(a)]

Financial Statements



|                                                                                                    
|----------------------------------------------------------------------------------------------------
|Report of Independent Registered Public Accounting Firm                                             
|Consolidated Balance Sheets at December 31, 2005 and 2004                                           
|Consolidated Statements of Income for the Years Ended
December 31, 2005, 2004 and 2003              
|Consolidated Statements of Cash Flows for the Years Ended
December 31, 2005, 2004 and 2003          
|Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 2005, 2004 and 2003
|Notes to Consolidated Financial Statements                                                          
|Schedule IIValuation and Qualifying Accounts for the Years
Ended December 31, 2005, 2004 and 2003  



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Sabre Holdings Corporation
Schedule IIValuation and Qualifying Accounts
For Each of the Three Years in the Period Ended December 31, 2005
(in thousands)

|                             |                                      |  |   | Additions |  |   |        |    
|---------------------------- | ------------------------------------ |  | - | --------- |  | - | ------ | ---
|
|Year Ended December 31, 2005 |                                      |  |   |           |  |   |        |    
|                             | Allowance for uncollectible accounts |  | $ | 24,156    |  | $ | 6,943  |    
|                             | Booking fee cancellation reserve     |  |   | 16,714    |  |   | 349    |    
|                             | Associate reserves                   |  |   | 11,033    |  |   | 49,747 |    
|Year Ended December 31, 2004 |                                      |  |   |           |  |   |        |    
|                             | Allowance for uncollectible accounts |  | $ | 15,415    |  | $ | 19,176 |    
|                             | Booking fee cancellation reserve     |  |   | 16,953    |  |   |       |    
|                             | Associate reserves                   |  |   | 10,252    |  |   | 29,368 |    
|Year Ended December 31, 2003 |                                      |  |   |           |  |   |        |    
|                             | Allowance for uncollectible accounts |  | $ | 34,500    |  | $ | (101)  | (3)
|                             | Booking fee cancellation reserve     |  |   | 18,357    |  |   |       |    
|                             | Associate reserves                   |  |   | 7,170     |  |   | 21,247 |    

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144

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Signatures



|Date: March 8, 2006 |  | SABRE HOLDINGS CORPORATION                                                                                                           
|------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|                    |  | /s/Michael S. GillilandMichael S. Gilliland President and Chief Executive Officer (Principal
Executive Officer)                      
|                    |  | /s/Jeffery M. JacksonJeffery M. Jackson Executive Vice President, Chief Financial Officer and
Treasurer (Principal Financial Officer)
|                    |  | /s/Mark K. MillerMark K. Miller Senior Vice President and Controller (Principal Accounting
Officer)                                  



|                                                      |  |                                      
|----------------------------------------------------- |  | -------------------------------------
|                                                      |  |                                      
|/s/Paul C. Ely, Jr.Paul C. Ely, Jr.                   |  | /s/Bob L. MartinBob L. Martin        
|/s/Royce S. CaldwellRoyce S. Caldwell                 |  | /s/Pamela B. StrobelPamela B. Strobel
|/s/Michael S. GillilandMichael S. Gilliland, Chairman |  | /s/Mary Alice TaylorMary Alice Taylor
|/s/Richard G. LindnerRichard G. Lindner               |  | /s/Richard L. ThomasRichard L. Thomas
|/s/Glenn W. Marschel, Jr.Glenn W. Marschel, Jr.       |  |                                      

145

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