**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-Q**

 
| x                                                      | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|--------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|
| ** **                                             | ** ** | ** **                                                                                    |
| **For the  quarterly period ended September 30, 2006** |
| ** **                                             | ** ** | ** **                                                                                    |
| **OR**                                                 |
| ** **                                             | ** ** | ** **                                                                                    |
| **o**                                                  | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

** **

**For the transition periodfrom             To            **

** **

**Commission filenumber  333-109064**

 

**WORLDSPAN, L.P.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                              |   | **75-3125716**                        |
|-------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of          |   | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)           |   |                                  |
|                                      |   |                                  |
| **300  Galleria Parkway, N.W.**           |   | ** **                            |
| **Atlanta,  Georgia**                     |   | **30339**                             |
| (Address of  principal executive offices) |   | (Zip Code)                            |

 

Registrant’s telephone number, including area code **(770) 563-7400**

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

|  | x   Yes |   | o   No |   |
|--|------------------------|--------|-----------------------|--------|

 

Indicate by check mark whether the Registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer (asdefined in Rule 12b-2 of the Exchange Act).

| Large accelerated  filer   o | Accelerated  Filer   o | Non-accelerated  filer   x |
|---------------------------------------------|---------------------------------------|-------------------------------------------|

 

Indicate by check mark whether the Registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o   No x

Asof November 3, 2006, Registrant’s parent had outstanding 85,265,948 shares ofClass A Common Stock and 11,000,000 shares of Class B Common Stock.

 

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**WORLDSPAN,L.P.REPORT ON FORM 10-QFOR THE PERIOD ENDED SEPTEMBER 30, 2006**

**INDEX**
| **PART I:**  | ** ** | **FINANCIAL  INFORMATION**                                                                                                                                             |
|--------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                                                   |
| Item  1.     |       | Condensed  Consolidated Financial Statements (Unaudited)                                                                                                               |
|         |       |                                                                                                                                                                   |
|         |       | Condensed Consolidated Balance Sheets—September 30,  2006 and December 31, 2005                                                                                   |
|         |       |                                                                                                                                                                   |
|         |       | Condensed Consolidated Statements of Operations—Three  months and nine months ended September 30, 2006 and three months and nine  months ended September 30, 2005 |
|         |       |                                                                                                                                                                   |
|         |       | Condensed Consolidated Statements of Changes in  Partners’ Capital — Nine months ended September 30, 2006                                                    |
|         |       |                                                                                                                                                                   |
|         |       | Condensed Consolidated Statements of Cash Flows—Nine  months ended September 30, 2006 and September 30, 2005                                                      |
|         |       |                                                                                                                                                                   |
|         |       | Notes to Condensed Consolidated Financial Statements                                                                                                                   |
|         |       |                                                                                                                                                                   |
| Item 2.      |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations                                                                            |
|         |       |                                                                                                                                                                   |
| Item 3.      |       | Quantitative and Qualitative Disclosures About Market  Risk                                                                                                            |
|         |       |                                                                                                                                                                   |
| Item 4.      |       | Controls and Procedures                                                                                                                                                |
|         |       |                                                                                                                                                                   |
| **PART  II** | ** ** | **OTHER  INFORMATION**                                                                                                                                                 |
|         |       |                                                                                                                                                                   |
| Item  1.     |       | Legal  Proceedings                                                                                                                                                     |
|         |       |                                                                                                                                                                   |
| Item 1A.     |       | Risk Factors                                                                                                                                                           |
|         |       |                                                                                                                                                                   |
| Item 2.      |       | Unregistered Sales of Equity Securities and Use of  Proceeds                                                                                                           |
|         |       |                                                                                                                                                                   |
| Item 6.      |       | Exhibits                                                                                                                                                               |

 

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**PARTI.  FINANCIAL INFORMATION**

**ITEM1.****                    FINANCIALSTATEMENTS**

**Worldspan,L.P.Condensed Consolidated Balance Sheets(dollars in thousands)(Unaudited)**
| ** **                                      | ** ** | **September 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|-------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| **Assets**                                      |       |                             |       |                            |       |
| Current assets                                  |       |                             |       |                            |       |
| Cash and cash  equivalents                      |       | $                                | 76,488     |                            | $          | 58,093 |   |
| Trade accounts  receivable, net                 |       | 90,591                           |       | 97,984                          |       |
| Prepaid expenses  and other current assets      |       | 19,993                           |       | 16,992                          |       |
| Total current  assets                           |       | 187,072                          |       | 173,069                         |       |
| Property and equipment,  net                    |       | 107,064                          |       | 91,283                          |       |
| Deferred charges                                |       | 22,537                           |       | 24,392                          |       |
| Debt issuance costs,  net                       |       | 11,558                           |       | 14,626                          |       |
| Supplier and agency  relationships, net         |       | 210,110                          |       | 236,981                         |       |
| Developed technology,  net                      |       | 166,930                          |       | 183,254                         |       |
| Trade name                                      |       | 72,142                           |       | 72,142                          |       |
| Goodwill                                        |       | 111,803                          |       | 111,803                         |       |
| Other intangible  assets, net                   |       | 27,000                           |       | 29,106                          |       |
| Other long-term assets                          |       | 46,865                           |       | 52,194                          |       |
| Total assets                                    |       | $                                | 963,081    |                            | $          | 988,850 |   |
|                                            |       |                             |       |                            |       |
| **Liabilities and Partners’  Capital**     |       |                             |       |                            |       |
| Current liabilities                             |       |                             |       |                            |       |
| Accounts payable                                |       | $                                | 6,212      |                            | $          | 16,847 |   |
| Accrued expenses                                |       | 139,249                          |       | 144,738                         |       |
| Current portion  of capital lease obligations   |       | 15,309                           |       | 17,863                          |       |
| Current portion  of long-term debt              |       | 4,000                            |       | 4,000                           |       |
| Total current  liabilities                      |       | 164,770                          |       | 183,448                         |       |
| Long-term portion of  capital lease obligations |       | 64,327                           |       | 36,555                          |       |
| Long-term debt                                  |       | 562,500                          |       | 667,500                         |       |
| Pension and  postretirement benefits            |       | 56,254                           |       | 60,328                          |       |
| Other long-term  liabilities                    |       | 9,902                            |       | 9,510                           |       |
| Total  liabilities                              |       | 857,753                          |       | 957,341                         |       |
| Commitments and  contingencies                  |       |                             |       |                            |       |
| Partners’ capital                          |       | 105,328                          |       | 31,509                          |       |
| Total liabilities and  Partners’ capital   |       | $                                | 963,081    |                            | $          | 988,850 |   |

 

The accompanying notes are an integral part of thesecondensed consolidated financial statements.

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**Worldspan,L.P.Condensed Consolidated Statements of Operations(dollars in thousands)(Unaudited)**
| ** **                                                    | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                    | ** ** | **September 30,  2006**     | ** ** | **September 30,  2005**    | ** ** | **September 30,  2006** | ** ** | **September 30,  2005** | ** ** |
|                                                          |       |                             |       |                            |       |   |   |   |   |
| **Revenues**                                                  |       |                             |       |                            |       |   |   |   |   |
| Electronic  travel distribution                               |       | $                                | 194,989    |                            | $          | 222,487 |   | $ | 670,917 |   | $ | 691,926 |   |
| Information  technology services                              |       | 17,517                           |       | 17,218                          |       | 55,371 |   | 53,992 |   |
| Total revenues                                                |       | 212,506                          |       | 239,705                         |       | 726,288 |   | 745,918 |   |
| **Operating  Expenses**                                       |       |                             |       |                            |       |   |   |   |   |
| Cost of revenues                                              |       |                             |       |                            |       |   |   |   |   |
| Cost of revenues excluding developed technology  amortization |       | 138,931                          |       | 164,566                         |       | 464,606 |   | 511,177 |   |
| Developed technology amortization                             |       | 5,388                            |       | 5,420                           |       | 16,196 |   | 18,009 |   |
| Total cost of revenues                                        |       | 144,319                          |       | 169,986                         |       | 480,802 |   | 529,186 |   |
| Selling, general  and administrative                          |       | 26,996                           |       | 25,402                          |       | 84,688 |   | 83,554 |   |
| Amortization of  intangible assets                            |       | 9,037                            |       | 9,288                           |       | 28,978 |   | 27,558 |   |
| Total operating expenses                                      |       | 180,352                          |       | 204,676                         |       | 594,468 |   | 640,298 |   |
| Operating income                                              |       | 32,154                           |       | 35,029                          |       | 131,820 |   | 105,620 |   |
| **Other  Income (Expense)**                                   |       |                             |       |                            |       |   |   |   |   |
| Interest  (expense) income, net                               |       | (14,885                          | )          | (15,793                         | )          | (46,099 | ) | (43,695 | ) |
| Loss on  extinguishment of debt                               |       | —                           |       | —                          |       | — |   | (55,597 | ) |
| Other, net                                                    |       | (1,111                           | )          | (275                            | )          | (2,213 | ) | (495 | ) |
| Total other expense, net                                      |       | (15,996                          | )          | (16,068                         | )          | (48,312 | ) | (99,787 | ) |
| Income before  provision for income taxes                     |       | 16,158                           |       | 18,961                          |       | 83,508 |   | 5,833 |   |
| Income tax  expense                                           |       | 663                              |       | 860                             |       | 2,047 |   | 3,317 |   |
| **Net income**                                                |       | $                                | 15,495     |                            | $          | 18,101 |   | $ | 81,461 |   | $ | 2,516 |   |

 

The accompanying notes are an integral part of thesecondensed consolidated financial statements.

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**Worldspan,L.P.Condensed Consolidated Statements of Changes in Partners’ Capital(dollars in thousands)(Unaudited)**
| ** **                                                   | ** ** | **Partners’  Capital** | ** ** | **Accumulated  Other  Comprehensive  Income** | ** ** | **Total** | ** ** |
|--------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------------------------|------------|-----------|------------|
|                                                         |       |                        |       |                                          |       |      |       |
| Balance at December 31,  2005                                |       | $                           | 30,892     |                                          | $          | 617       |       | $ | 31,509 |   |
| Comprehensive income:                                        |       |                        |       |                                          |       |      |       |
| Net income                                                   |       | 81,461                      |       | —                                        |       | 81,461    |       |
| Change in fair  value of derivative accounted for as a hedge |       | —                      |       | 122                                           |       | 122       |       |
| Comprehensive income                                         |       |                        |       |                                          |       | 81,583    |       |
| Distribution to WTI                                          |       | (10,400                     | )          | —                                        |       | (10,400   | )          |
| Stock-based  compensation                                    |       | 2,636                       |       | —                                        |       | 2,636     |       |
| Balance at September 30, 2006                                |       | $                           | 104,589    |                                          | $          | 739       |       | $ | 105,328 |   |

 

The accompanying notes are an integral part of thesecondensed consolidated financial statements.

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**Worldspan,L.P.Condensed Consolidated Statements of Cash Flows(dollars in thousands)(Unaudited)**
| ** **                                                                         | ** ** | **Nine months ended**        | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                         | ** ** | **September 30,  2006** | ** ** | **September 30,  2005** | ** ** |
| Cash flows from  operating activities:                                             |       |                                   |       |   |   |
| Net income                                                                         |       | $                                      | 81,461     |   | $ | 2,516 |   |
| Adjustments to reconcile net income to net cash  provided by operating activities: |       |                                   |       |   |   |
| Depreciation and amortization                                                      |       | 70,825                                 |       | 76,000 |   |
| Amortization of debt issuance costs                                                |       | 3,070                                  |       | 2,479 |   |
| Loss on extinguishment of debt                                                     |       | —                                 |       | 55,597 |   |
| Stock-based compensation                                                           |       | 2,636                                  |       | 2,176 |   |
| Loss on disposal of property and equipment, net                                    |       | 103                                    |       | 359 |   |
| Other                                                                              |       | (14                                    | )          | — |   |
| Changes in operating  assets and liabilities:                                      |       |                                   |       |   |   |
| Trade accounts receivable, net                                                     |       | 7,393                                  |       | (31,933 | ) |
| Prepaid expenses and other current assets                                          |       | 2,883                                  |       | 2,502 |   |
| Deferred charges                                                                   |       | 1,855                                  |       | 6,642 |   |
| Other long-term assets                                                             |       | 472                                    |       | 1,851 |   |
| Accounts payable                                                                   |       | (10,635                                | )          | 2,194 |   |
| Accrued expenses                                                                   |       | (5,361                                 | )          | 5,982 |   |
| Pension and postretirement benefits                                                |       | (4,075                                 | )          | (3,641 | ) |
| Other long-term liabilities                                                        |       | 393                                    |       | (4,370 | ) |
| Net cash provided by operating activities                                          |       | 151,006                                |       | 118,354 |   |
| Cash flows from  investing activities:                                             |       |                                   |       |   |   |
| Purchase of property and equipment                                                 |       | (4,392                                 | )          | (9,305 | ) |
| Proceeds from sale of property and equipment                                       |       | 215                                    |       | 102 |   |
| Capitalized software for internal use                                              |       | —                                 |       | (19 | ) |
| Net cash used in investing activities                                              |       | (4,177                                 | )          | (9,222 | ) |
| Cash flows from  financing activities:                                             |       |                                   |       |   |   |
| Proceeds from issuance of debt, net of debt issuance  costs                        |       | —                                 |       | 734,727 |   |
| Principal payments on capital leases                                               |       | (13,034                                | )          | (14,516 | ) |
| Principal payments on debt                                                         |       | (105,000                               | )          | (125,488 | ) |
| Repurchase old notes                                                               |       | —                                 |       | (327,555 | ) |
| Distributions to and contributions from WTI, net                                   |       | (10,400                                | )          | (427,238 | ) |
| Net cash used in financing activities                                              |       | (128,434                               | )          | (160,070 | ) |
| Net increase  (decrease) in cash and cash equivalents                              |       | 18,395                                 |       | (50,938 | ) |
| Cash and cash  equivalents at beginning of period                                  |       | 58,093                                 |       | 100,474 |   |
| Cash and cash  equivalents at end of period                                        |       | $                                      | 76,488     |   | $ | 49,536 |   |

 

The accompanying notes are an integral part of thesecondensed consolidated financial statements.

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**Worldspan, L.P.Notes to Condensed Consolidated Financial Statements(dollars in thousands)(Unaudited)**

**1. Accounting Policies**

*Nature of Business.*  Worldspan, L.P. (“Worldspan” or the “Partnership”) is a Delaware limitedpartnership formed in 1990. On June 30, 2003, Worldspan Technologies Inc. (“WTI”),formerly named Travel Transaction Processing Corporation, formed by CitigroupVenture Capital Equity Partners, L.P. (“CVC”) and Ontario Teachers’ PensionPlan Board (“OTPP”), indirectly acquired 100% of the outstanding partnershipinterests of the Partnership from affiliates of Delta Air Lines, Inc. (“Delta”),Northwest Airlines, Inc. (“Northwest”) and American Airlines, Inc. (“American”)(the “Acquisition”). WTI owns all of the general partnership interests in thePartnership. WS Holdings LLC (“WS Holdings”), which is owned by WTI, is thesole limited partner of the Partnership, owning all of the limited partnershipinterests.

The Partnership provides information, reservations,transaction processing and related services for airlines, travel agencies andother travel-related entities. The Partnership owns and operates a globaldistribution system (“GDS”) and provides subscribers with access to and use ofthis GDS. The Partnership also charges airlines, hotels, car rental companiesand others for the use of the GDS.

*Basis of Presentation.*  The accompanying unaudited condensed consolidated financial statementshave been prepared in accordance with accounting principles generally acceptedin the United States for interim financial information and with theinstructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, theydo not include all of the information and footnotes required by accountingprinciples generally accepted in the United States for complete financialstatements. In the opinion of management these financial statements contain alladjustments, consisting of normal recurring accruals, necessary to presentfairly the financial position, results of operations and cash flows for theperiods indicated. The preparation of financial statements in accordance withaccounting principles generally accepted in the United States requiresmanagement to make estimates and assumptions that affect the amounts reportedin the financial statements and the accompanying notes. Operating results forthe three and nine months ended September 30, 2006 and September 30, 2005 arenot necessarily indicative of results that may be expected for any otherinterim period or for the year ending December 31, 2006. The Partnership’squarterly financial data should be read in conjunction with its consolidatedfinancial statements for the year ended December 31, 2005 (including the notesthereto), set forth in its annual report on Form 10-K filed with the Securitiesand Exchange Commission on March 3, 2006.

*Derivative Instruments.*  All derivatives are measured at fair value and recognized as eitherassets or liabilities on our consolidated balance sheets. Changes in the fairvalues of derivative instruments that do not qualify as hedges and/or anyineffective portion of hedges are recognized as a gain or loss in our condensedconsolidated statement of operations in the current period.  Changes inthe fair values of derivative instruments used effectively as fair value hedgesare recognized in earnings, along with the change in the value of the hedgeditem. Changes in the fair value of the effective portions of cash flow hedgesare reported in other comprehensive income and recognized in earnings when thehedged item is recognized in earnings.

*Risks and Uncertainties.*  The Partnership derives substantially all of its revenues from thetravel industry. Accordingly, events, circumstances and changes affecting thetravel industry, particularly changes in airline travel and the financialwell-being of the participating airlines, can significantly affect thePartnership’s business, financial condition and results of operations. ThePartnership’s customers are primarily located in the United States and Europe.

Travel agencies are the primary channel ofdistribution for the services offered by travel vendors. If the Partnershipwere to lose all or part of the transactions generated by any significanttravel agency and not replace such transactions, its business, financialcondition and results of operations could be adversely affected.  Oneonline agency subscriber, Expedia, generated transactions in the Partnership’selectronic travel distribution segment which resulted in revenues ofapproximately $53,533 and $66,353 for the three months ended September 30, 2006and 2005, respectively, and $195,673 and $205,966 for the nine months endedSeptember 30, 2006 and 2005, respectively.  These amounts represented 25%and 28% of total revenues for the three months ended September 30, 2006 and2005, respectively, and 27% and 28% of total revenues for the nine months endedSeptember 30, 2006 and 2005, respectively.

On May 5,2004, the Partnership announced that it had been informed by Expedia of itsintention to move a portion of its transactions in North America to another GDSprovider in order to diversify its GDS relationships beyond using a singleprovider to process substantially all of its GDS transactions.  InOctober 2005, Expedia notified the Partnership of its intention to move someportion but not all of its European transactions to another GDS provider in2006. Expedia announced in May 2006 that it had commenced booking at selectpoints of sale certain European segments through another GDS. In July 2006,Expedia announced the commencement of processing transactions in North Americawith another GDS. The Partnership has confirmed that some of Expedia’s NorthAmerican transactions are now being processed on another GDS.  Expedia’stotal transaction volume with the Partnership decreased significantly from itstransaction volume with the Partnership during the third quarter of 2005,primarily due to a large number of transactions Expedia processed on anotherGDS during September 2006. The Partnership expects Expedia to substantiallyincrease the number of its transactions processed on another 

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GDS in the fourth quarterof 2006 from the volume it processed on another GDS in the third quarter.Expedia has further indicated to the Partnership that it could process almostall of its volume on another GDS in the near future.  However, the Partnership believes that itwill continue to process a sizeable portion of Expedia’s transactions goingforward, even if less than a majority of Expedia’s total bookings.  The movement of Expedia’s transaction volumeto another GDS has had, and in the future is expected to have, a significantadverse impact on the Partnership’s financial position and results fromoperations.

Also,on July 26, 2006, Hotwire, a division of Expedia, notified the Partnership ofits intent to terminate its technology services agreement with us effectiveOctober 26, 2006. Hotwire ceased processing transactions on the Worldspan GDSin October. For the three and nine month periods ended September 30, 2006,Hotwire generated revenue of approximately $1,723 and $7,412, respectively.

Additionally,on June 13, 2006, Priceline, one of the Partnership’s largest online travelagency customers, notified the Partnership that it intended to begin processingsegments on another GDS as soon as July 28, 2006.  In October 2006, thePartnership has confirmed that some of Priceline’s North American transactionsare now being processed on another GDS. The Partnership has not received anynotification from Priceline as to the volume of transactions that it intends tomove. Currently, the Partnership cannot forecast the annual magnitude of anysuch movement of transactions and therefore is unable to estimate the impact onits financial position, results of operations and cash flows.

Furthermore as more fully discussed in Note 5, ifthe Partnership is unable to satisfactorily resolve the claims asserted againstit by Orbitz, Worldspan’s second largest online travel agency, and its lawsuitagainst the Partnership is successful, there would be few or no restrictions toprevent Orbitz from moving a significant portion of its business from Worldspan’sGDS. If Expedia, Priceline or Orbitz were to move a material portion of theirrespective transactions to other GDS providers, the Partnership’s businesswould be negatively and materially impacted.

A development within the GDS industry over the pastseveral years involves the competitive need for GDSs to maintain full content,including web fare content, for distribution to traditional and online agencysubscribers.  In 2006, Worldspan has entered into long-term contentagreements with certain major domestic airlines such as American, ContinentalAirlines, Inc. (“Continental”), Northwest, United Air Lines, Inc. (“United”),US Airways, Inc. (“US Airways”), and Delta.  Subject to terminationrights, these new agreements continue until 2011 with the exception of Deltawhich expires in 2013. See Note 11 for a discussion of Worldspan’s contentagreements.

Effective September 14, 2005, Delta and Northwest,both significant suppliers of the Partnership, entered bankruptcy protection.Revenues generated by Delta and Northwest were $43,707 and $63,460 for thethree months ended September 30, 2006 and 2005, respectively, and $160,004 and$203,444 for the nine months ended September 30, 2006 and 2005, respectively.These amounts represented approximately 21% and 26% of total revenues for thethree months ended September 30, 2006 and 2005, respectively, and 22% and 27%for the nine months ended September 30, 2006 and 2005, respectively. Individually,Delta and Northwest accounted for 12% and 9%, respectively, of total revenuefor the three months ended September 30, 2006, and 13% and 9%, respectively, oftotal revenue for the nine months ended September 30, 2006.

Pre-bankruptcy petition accounts receivable atSeptember 30, 2006 under the Partnership’s two primary agreements withNorthwest was $14,997. Pre-bankruptcy petition accounts receivable under thePartnership’s two primary agreements with Delta has been collected as ofSeptember 30, 2006. Post-bankruptcy petition accounts receivable at September30, 2006 under the Partnership’s two primary agreements with Delta andNorthwest collectively totaled $21,427. The Partnership believes that itspre-bankruptcy petition Northwest accounts receivable will likely be realizedover an extended period of time. The Partnership believes it will continue toprovide the services to the airlines and, absent further significantdeterioration in the financial condition of the airlines, post-bankruptcy petitionaccounts receivable are expected to be collected in accordance with the termsof the Partnership’s current commercial agreements.

While under bankruptcy protection, Delta and Northwestcould petition the court to reject certain or all of the existing agreementswith the Partnership, except for the Participating Carrier Agreement withNorthwest, which was assumed by Northwest and received Bankruptcy Courtapproval in June 2006. The Partnership is not aware of an action by eitherDelta or Northwest to reject any agreements with it and, accordingly continuesto operate with the two airlines under its existing commercial agreements. SeeNote 11 for a discussion of the new five-year content agreement, which is anaddendum to the Participating Carrier Agreement assumed by Northwest.Additional facts could become known or actions taken by either airline inbankruptcy that could impact the Partnership’s assessment of the collectibilityand thus result in a charge to earnings in future periods. Furthermore, thePartnership is not yet in a position to ultimately determine whether paymentspreviously made to it will be challenged or unwound in the bankruptcyproceedings.

The Partnership maintained an allowance for doubtfulaccounts of approximately $9,498 and $8,110 at September 30, 2006 and December31, 2005, respectively.

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*Accounting Pronouncements*. In December 2004, the Financial Accounting Standards Board (“FASB”) issuedStatement of Financial Accounting Standards (“SFAS”) No. 123R, *Share-Based Payment* . The statementrequires an entity to measure the cost of employee services received inexchange for an award of equity instruments based on the grant-date fair valueof the award. That cost will be recognized over the period during which anemployee is required to provide service in exchange for the award, known as therequisite service period. SFAS No. 123(R) became applicable to the Partnershipbeginning January 1, 2006. See Note 10 for a discussion of the impact ofadopting SFAS No. 123(R).

In May 2005, the FASB issued SFAS No. 154, *Accounting Changes and Error Corrections,*which supersedes APB Opinion No. 20, *AccountingChanges,* and SFAS No. 3, *ReportingAccounting Changes in Interim Financial Statements. * SFAS No. 154 changes the requirements foraccounting for and reporting of changes in accounting principles. The statementrequires the retroactive application to prior periods’ financial statements ofchanges in accounting principles, unless it is impracticable to determineeither the period specific effects or the cumulative effect of the change. SFASNo. 154 does not change the guidance for reporting the correction of an errorin previously issued financial statements or the change in an accountingestimate. SFAS No. 154 became effective for accounting changes and correctionsof errors made in fiscal years beginning after December 15, 2005. As of and forthe nine months ended September 30, 2006, SFAS No. 154 did not impact thePartnership’s consolidated financial position or results of operations.

In February 2006, the FASB issued SFASNo. 155, *Accounting for Certain HybridFinancial Instruments*. Under current generally accepted accountingprinciples an entity that holds a financial instrument with an embeddedderivative must separate the financial instrument, resulting in the hostfinancial instrument and the embedded derivative being accounted forseparately. SFAS No. 155 permits, but does not require, entities toaccount for financial instruments with an embedded derivative at fair valuethus negating the need to separate the instrument between its host and theembedded derivative. SFAS No. 155 is effective as of the beginning of thefirst annual reporting period that begins after September 15, 2006. ThePartnership believes that SFAS No. 155 will not have a material effect onits consolidated financial condition or results of operations.

In March 2006, the FASB issued SFAS No. 156,*Accounting for Servicing of Financial Assets*.SFAS No. 156 amends SFAS No. 140, *Accountingfor Transfers and Servicing of Financial Assets and Extinguishments ofLiabilities*, to require that all separately recognized servicingassets and servicing liabilities be initially measured at fair value, ifpracticable. SFAS No. 156 permits, but does not require, the subsequentmeasurement of separately recognized servicing assets and servicing liabilitiesat fair value. An entity that uses derivative instruments to mitigate the risksinherent in servicing assets and servicing liabilities is required to accountfor those derivative instruments at fair value. SFAS No. 156 is effectiveas of the beginning of the first annual reporting period that begins afterSeptember 15, 2006. The Partnership believes that SFAS No. 156 willnot have a material effect on its consolidated financial condition or resultsof operations.

In July 2006, the FASB issued FASB Interpretation No.48, *Accounting for Uncertainty in IncomeTaxes—an Interpretation of FASB Statement 109* (“FIN 48”), whichclarifies the accounting for uncertainty in tax positions.  FIN 48prescribes a comprehensive model for recognizing, measuring, presenting anddisclosing in the financial statements, tax positions taken or expected to betaken on a tax return, including a decision whether to file or not to file in aparticular jurisdiction. FIN 48 provides that the tax effects from an uncertaintax position can be recognized in an entity’s financial statements, only if theposition is more likely than not of being sustained on audit, based on thetechnical merits of the position.  The provisions of FIN 48 are effectivefor fiscal years beginning after December 15, 2006, with the cumulative effectof the change in accounting principle recorded as an adjustment to openingretained earnings. The Partnership is currently assessing the impact of FIN 48on its consolidated financial position and results of operations.

In September 2006, the SEC issued Staff AccountingBulletin No. 108 (“SAB No. 108”), which provides interpretive guidance on howthe effects of carryover or reversal of prior year misstatements should beconsidered in quantifying a current year misstatement. The SEC staff believesthat errors should be quantified using both a balance sheet approach and anincome statement approach and evaluated as to whether either approach resultsin quantifying a misstatement that, when all relevant quantitative andqualitative factors are considered, is material. SAB No. 108 is effective forthe Partnership for the year ended December 31, 2006 and allows a one-timetransitional cumulative effect adjustment to retained earnings as ofJanuary 1, 2006 for errors that were not previously deemed material, butare material under the guidance in SAB No. 108. The Partnership does not expectthat the adoption of SAB No. 108 will have a material effect on its consolidatedfinancial position or results of operations.

In September 2006, the FASB issuedSFAS No. 157, *Fair Value Measurements*,which defines fair value, establishes a framework for measuring fair value andexpands disclosure of fair value measurements. SFAS No. 157 applies under other accounting pronouncements thatrequire or permit fair value measurements and accordingly, does not require anynew fair value measurements. SFAS No. 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007. ThePartnership is currently assessing the impact, if any, that the adoption ofthis pronouncement will have on our financial statements.

9

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In September 2006, the FASB issued SFAS No. 158,Employers’ Accounting for Defined Benefit Pension and Other PostretirementPlans — an amendment of FASB Statements No. 87, 88, 106, and 132(R).  This pronouncement is effective for thePartnership as of December 31, 2007 and is required to be adoptedprospectively.  SFAS No. 158 requiresthat the Partnership recognize the funded status of its defined benefit andother postretirement benefit plans in its December 31, 2007 balance sheet, withchanges in the funded status recognized through comprehensive income, net oftax, in the year in which they occur. The funded status of a plan is measuredas the difference between plan assets at fair value and the benefit obligation,which is represented by the projected benefit obligation for pension plans andthe accumulated postretirement benefit obligation for other postretirementplans. Based on the Partnership’s funded status of plan obligations disclosedin Note 6 to the Partnership’s Consolidated Financial Statements in its AnnualReport on Form 10-K for the year ended December 31, 2005, the estimated impactof adopting SFAS No. 158 would have been an increase of approximately $9,400 inaccumulated other comprehensive income at December 31, 2005, with no impact tothe Partnership’s Consolidated Statements of Income or Cash Flows. The actualimpact of adopting SFAS No. 158 could materially differ from this estimate as aresult of changes in assumptions used in the valuation of projected planobligations and the fair value of plan assets measured as of December 31,2007.  The Partnership’s plans arecurrently in compliance with the SFAS No. 158 requirement to be measured as ofthe date of the year-end statement of financial position. The Partnership doesnot anticipate that the adoption of SFAS No. 158 will have any impact oncompliance with its financial covenants associated with its 2005 Senior CreditFacility and Indenture.

**2.  Debt**

On February 11, 2005, the Partnership, WSFinancing Corp. (“WS Financing”), the wholly-owned domestic subsidiaries of thePartnership, as guarantors (the “Guarantor Subsidiaries”) and The Bank of NewYork Trust Company, N.A., as trustee, entered into an Indenture (the “Indenture”).Pursuant to the Indenture, the Partnership, WS Financing and the GuarantorSubsidiaries issued $300,000 of Senior Second Lien Secured Floating Rate Notesdue 2011 (the “Floating Rate Notes”), secured on a second priority basis bysubstantially all of the assets of the Partnership, WS Financing and theGuarantor Subsidiaries. In addition, the Partnership, as borrower, WTI, and WSHoldings entered into a new credit agreement (the “Credit Agreement”) with asyndicate of financial institutions as lenders. In connection with the closingunder the Credit Agreement, a new senior credit facility (the “2005 SeniorCredit Facility”), consisting of a five-year revolving credit facility in theamount of $40,000 and a new term loan facility due 2010 (the “Term Loan under2005 Senior Credit Facility”) in the amount of $450,000, was made available tothe Partnership. Obligations under the 2005 Senior Credit Facility and the guaranteesare secured by a perfected first priority security interest in all of thePartnership’s tangible and intangible assets and all of the tangible andintangible assets of WTI and each of the Guarantor Subsidiaries, subject tocustomary exceptions, and a pledge of (i) all of the membership interests of WSHoldings LLC owned by WTI, (ii) all of the partnership interests owned by WTIand WS Holdings LLC, and (iii) all of the capital stock of the Partnership’sGuarantor Subsidiaries and significant portions of the Partnership’s holdingsin foreign subsidiaries.

At the Partnership’s option, the interest rate appliedto borrowings under the 2005 Senior Credit Facility is based on the LIBOR rate(as defined in the Credit Agreement) plus the initial applicable margin of2.75%. The alternative rate is a base rate (generally defined as the sum of(i) the higher of (x) the prime rate and (y) the federalfunds effective rate, plus one half percent (0.50%) per annum and (ii) aninitial applicable margin of 1.75%). Borrowings under the 2005 Senior CreditFacility are subject to quarterly interest payments with respect to loansbearing interest at the base rate described above or at the end of each one,two, three or six month interest period for loans bearing interest at the LIBORrate described above.

The interest rate applicable to borrowings under theFloating Rate Notes is based on the three-month LIBOR rate plus 6.25%. AtSeptember 30, 2006, the three-month LIBOR rate was 5.4%.

The net proceeds from the sale of the Floating RateNotes and the closing of the Term Loan under 2005 Senior Credit Facility, alongwith available cash of the Partnership, were used to (collectively referred toas the “Refinancing Transactions”):

·                  repayapproximately $57,488 of the outstanding balance of the then-existing seniorterm loan due 2007 including any accrued  and unpaid interest then outstanding under the then existing seniorcredit facility,

·                  purchasepursuant to a cash tender offer of $279,500 of the Partnership’s outstanding 95/8% Senior Notes due 2011,

·                  distribute fundsto WTI to redeem WTI’s outstanding Preferred Stock at a redemption price equalto the face amount of WTI’s   PreferredStock plus accrued and unpaid dividends to the redemption date for a totalredemption price of approximately $375,729,

·                  distribute fundsto WTI to pay a consent fee of $8,638 (the “Consent Fee”) to certain relatedparties of CVC in connection with the Holdco Notes described below, and

·                  pay fees andexpenses related to the Refinancing Transactions.

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In connection with the Refinancing Transactions, onFebruary 16, 2005, WTI issued $43,630 in new 11% Subordinated Notes due2013 (the “Holdco Notes”) to certain related parties of CVC and paid $365 inaccrued and unpaid interest in exchange for the surrender and cancellation ofall of the obligations owing by WTI related to the then outstandingsubordinated notes due 2012.

As a result of the Refinancing Transactions describedabove, the Partnership recorded a loss on extinguishment of debt of $55,597during the three months ended March 31, 2005.

On March 4, 2005, the Partnership entered into aninterest rate swap with a notional amount that began at $508,370 onNovember 15, 2005 and is amortized on a quarterly basis to $102,250 atNovember 15, 2008. The reset dates on the swap are February 15,May 15, August 15 and November 15 of each year until maturity onNovember 15, 2008. The notional amount as of September 30, 2006 was$434,880. This agreement, which has been designated as a cash flow hedge, is beingused to convert the variable component of the interest rates on certainindebtedness to a fixed rate of 4.3%, effective November 15, 2005. Becausethe critical terms of the swap match those of the debt it is hedging, the swapis considered a perfect hedge against changes in the fair value of the debt andthe hedge has resulted in no ineffectiveness being recognized in operations.Changes in the fair value of the swap are recognized as a component ofaccumulated other comprehensive income in each reporting period. As ofSeptember 30, 2006, the total value of this swap was an asset of $4,118,including accrued interest of $614. The accrued interest is included in othercurrent assets in the condensed consolidated balance sheet with the remainderof the total value included in other long-term assets.

On June 21, 2006, WTI, WS Holdings LLC, thePartnership, the lenders party thereto and JP Morgan Chase Bank, N.A., asadministrative agent (the “Administrative Agent”) entered into the SecondAmendment (the “Credit Amendment”) to the Credit Agreement.  The CreditAmendment amends the Credit Agreement to provide that the Partnership or WTI,as applicable, may, provided that no revolving credit loans are outstanding,repurchase up to a total combined $50,000 aggregate principal amount of thePartnership’s and WS Financing’s outstanding Floating Rate Notes and/or WTI’sHoldco Notes, including any such Floating Rate Notes or Holdco Notes held byaffiliates of the Partnership and WTI provided that no default or event ofdefault has occurred and is continuing.  As of November 3, 2006 thePartnership has not repurchased any Floating Rate Notes or Holdco Notes.

The 2005 Senior Credit Facility requires thePartnership to meet certain financial tests, including without limitation, aminimum interest coverage ratio and a maximum total leverage ratio.  Also,the Indenture requires the Guarantor Subsidiaries to maintain a minimum fixedcharge coverage ratio. In addition, certain non-financial covenants restrictthe activities of the Guarantor Subsidiaries.

Long-term debtconsisted of the following:
| ** **                                       | ** ** | **September 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
|                                             |       |                         |       |                        |       |
| Term loan under  2005 Senior Credit Facility (1) |       | $                            | 266,000    |                        | $          | 371,000 |   |
| Floating Rate  Notes (2)                         |       | 300,000                      |       | 300,000                     |       |
| 9 5/8% Senior Notes (1)                          |       | 500                          |       | 500                         |       |
|                                             |       | 566,500                      |       | 671,500                     |       |
| Less current  portion of long-term debt          |       | 4,000                        |       | 4,000                       |       |
| Long-term debt,  excluding current portion       |       | $                            | 562,500    |                        | $          | 667,500 |   |

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(1)             Basedon borrowing rates currently available to the Partnership, the carrying valueof the debt obligation approximates fair value.

(2)             $290,000of the Floating Rate Notes are publicly traded and at November 3, 2006 had amarket value of approximately $289,275 based on the quoted market price forsuch notes.  The remaining $10,000 of Floating Rate Notes that areoutstanding have not yet been registered with the Securities and ExchangeCommission.

During the nine months ended September 30, 2006, thePartnership paid $105,000 in principal on the term loan, of which $3,000 werescheduled principal payments.

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**3. Employee Benefit Plans**

The components of net pension and postretirement costswere as follows:
| ** **                             | ** ** | **Pension benefits**                              | ** ** | **Pension benefits**                              | ** ** |
|----------------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                             | ** ** | **Three months  ended  September 30,  2006** | ** ** | **Three months  ended  September 30,  2005** | ** ** | **Nine months  ended  September 30,  2006** | ** ** | **Nine months  ended  September 30,  2005** | ** ** |
| Service cost                           |       | $                                                      | —     |                                                   | $          | — |   | $ | — |   | $ | — |   |
| Interest cost                          |       | 2,923                                                  |       | 2,892                                                  |       | 8,769 |   | 8,677 |   |
| Expected return  on plan assets        |       | (3,948                                                 | )          | (3,656                                                 | )          | (11,844 | ) | (10,968 | ) |
| Amortization of  transition obligation |       | —                                                 |       | —                                                 |       | — |   | — |   |
| Amortization of  prior service cost    |       | —                                                 |       | —                                                 |       | — |   | — |   |
| Recognized net  actuarial loss         |       | 32                                                     |       | 27                                                     |       | 96 |   | 81 |   |
| Net periodic pension  benefit income   |       | $                                                      | (993       | )                                                      | $          | (737 | ) | $ | (2,979 | ) | $ | (2,210 | ) |

 
| ** **                             | ** ** | **Postretirement benefits**                       | ** ** | **Postretirement benefits**                       | ** ** |
|----------------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                             | ** ** | **Three months  ended  September 30,  2006** | ** ** | **Three months  ended  September 30,  2005** | ** ** | **Nine months  ended  September 30,  2006** | ** ** | **Nine months  ended  September 30,  2005** | ** ** |
| Service cost                           |       | $                                                      | 59         |                                                   | $          | 66 |   | $ | 177 |   | $ | 197 |   |
| Interest cost                          |       | 380                                                    |       | 407                                                    |       | 1,140 |   | 1,220 |   |
| Expected return  on plan assets        |       | —                                                 |       | —                                                 |       | — |   | — |   |
| Amortization of  transition obligation |       | —                                                 |       | —                                                 |       | — |   | — |   |
| Amortization of  prior service cost    |       | —                                                 |       | —                                                 |       | — |   | — |   |
| Recognized net  actuarial loss         |       | —                                                 |       | —                                                 |       | — |   | — |   |
| Net periodic pension  benefit expense  |       | $                                                      | 439        |                                                   | $          | 473 |   | $ | 1,317 |   | $ | 1,417 |   |

 

Effective January 1, 2002, the defined benefitpension plan was amended to exclude employees hired on or after January 1,2002. Effective December 31, 2003, the Partnership froze all furtherbenefit accruals under the defined benefit pension plan.

**4.  RelatedParty Transactions**

In February 2005, the Partnership entered into theRefinancing Transactions.  Certain of the parties to these transactionswere related parties, including WTI, CVC and OTPP.  See Note 2 for a fulldescription of these matters.

In connection with the Refinancing Transactions, onFebruary 16, 2005, the Partnership entered into an amendment to itsAdvisory Agreement with WTI to terminate all advisory and other fees payableunder that agreement as of January 1, 2005 in return for a prepayment of$7,700 payable on or before December 15, 2005. The prepaid advisory feesare included in “Prepaid expenses and other current assets” and “Otherlong-term assets” in the accompanying consolidated balance sheets. The prepaidadvisory fees are being amortized on a straight line basis over the remainingterm during which the services are provided. The agreement expires inJune 2013. During the three and nine month periods endedSeptember 30, 2006, the Partnership recognized $226 and $679,respectively, of expense in connection with this agreement.  During thethree and nine month periods ended September 30, 2005, the Partnershiprecognized a total of $226 and $1,054, respectively, of expense related toadvisory fees.

On January 10, 2005, WTI entered into a NoteRedemption Agreement (the “Note Redemption Agreement”) with Delta. Pursuant to the Note Redemption Agreement, WTI redeemed the 10% SubordinatedNote due 2012 in an original principal amount of $45,000 issued by WTI to Deltaon June 30, 2003, the additional notes issued in lieu of cash interest and allaccrued and unpaid interest up to January 10, 2005 for $36,137.  ThePartnership distributed $36,137 to WTI to finance this transaction.

The Partnership distributed $8,000 and $4,700 to WTIduring the nine months ended September 30, 2006 and 2005, respectively, toenable WTI to cover income taxes that it owed on the income generated by thePartnership in the United States.  During the nine months ended September 30, 2006 and 2005, thePartnership distributed $2,400 and $1,587, respectively, to enable WTI to payinterest payments on the Holdco Notes. Under the WTI stock incentive plan, WTI offers restricted shares of itsCommon Stock and grants options to purchase shares of its Common Stock tocertain employees of the Partnership. As the options and restricted shares arebeing granted to employees of 

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the Partnership, the Partnership recognizes this valueas an expense over the period in which the options and restricted shares areexpected to vest. See Note 10 for further discussion.

In 2005 the Partnership entered into a master servicesagreement for technology services with Calleo Distribution Technologies Pvt.Ltd (“Calleo”).  Additionally in 2005, the Partnership’s United Kingdomdomiciled subsidiary, Worldspan Services Limited, entered into a distributoragreement with Calleo for the distribution of Worldspan’s services in the Indiasub-continent and other countries. In 2006, the master services agreement fortechnology services with Calleo was terminated and the Partnership entered intoa similar master services agreement for technology services with InterGlobeTechnologies, Pvt. Ltd. (“IGT”). Mr. Rakesh Gangwal, Chairman, President andChief Executive Officer of the Partnership, has a greater than 10% equityownership interest in both Calleo and IGT.  The master services agreementhas an initial term of ten years, subject to termination rights. Thedistributor agreement also has an initial ten year term, subject to terminationrights.  Payments under the agreements are contingent upon bookingsgenerated by Calleo.  The Partnership has paid $974 and $718 to Calleo andIGT, respectively, during the three months ended September 30, 2006, and haspaid $1,915 and $1,686 to Calleo and IGT, respectively, during the nine monthsended September 30, 2006.  The Partnership has a total of approximately$1,320 of accrued expenses owed to Calleo and IGT as of September 30,2006.  The Partnership has also recorded a prepaid asset in the amount of$221 as of September 30, 2006 that relates to deferred costs and that will beamortized over the 120 month term of the agreement.

During the nine months ended September 30, 2006 thePartnership entered into an internet service agreement with Time WarnerTelecom, Inc. (“TWTC”). Mr. Kevin Mooney, Chief Financial Officer of thePartnership, is a director of TWTC. During the three and nine months endedSeptember 30, 2006, the Partnership paid $4 to TWTC and, as of September 30,2006, there were no accrued expenses owed to TWTC.

**5. Commitments and Contingencies**

*Litigation*

On September 19, 2005, the Partnership filed a lawsuitagainst Orbitz in the United States District Court, Northern District ofIllinois, Eastern Division (“Federal Suit”). Orbitz is one of the Partnership’slargest online travel agency customers and represented approximately 10% of itstransaction volume for the three and nine month periods ended September 30,2006. The Federal Suit alleged that Orbitz accessed and used the Partnership’sseat map data in violation of the Federal Computer Fraud and Abuse Act (“FCFAA”)and in breach of the agreement with Orbitz.  The Federal Suitcontained several additional state-law claims.  On April 19, 2006, thecourt considering the Federal Suit dismissed the claim under the FCFAA andrelinquished jurisdiction over the Partnership’s state-law claims againstOrbitz without prejudice to the Partnership refiling its state-law claims instate court.  The Partnership filed an appeal with the United States Courtof Appeals for the Seventh Circuit on May 18, 2006.

The Partnership refiled its state-law claims in theCircuit Court of Cook County, Illinois, County Department, Law Division. The complaint alleges that Orbitz’s improper accessing and use of thePartnership’s seat map data violates the Georgia Computer Systems ProtectionAct and the Partnership’s agreements with Orbitz, and that Orbitz’s use ofGalileo and ITA, competing computer reservation systems, constitutes breachesof the Partnership’s agreement with Orbitz.  The Partnership is seekinginjunctive relief to prevent the unauthorized accessing and use of its seat mapdata as well as to prevent Orbitz’s use of the services or data of Galileo andITA. The Partnership also seeks monetary damages from Orbitz in excess of$109,000 and reimbursement for its attorneys’ fees and costs.

After filing the Federal Suit, the Partnership learnedthat Orbitz filed suit against it on September 16, 2005, in the Circuit Courtof Cook County, Illinois, County Department, Law Division, purporting to asserttwo causes of action against it for violation of the Illinois Consumer FraudAct and equitable estoppel. Orbitz claimed that certain exclusivity,minimum segment fee and 100% booking requirement provisions in the agreementwere illegal and in violation of public policy. In its suit, Orbitz seeks acourt order precluding the Partnership from pursuing its breach of contractclaims against Orbitz, an order terminating and rescinding the first and secondamendments of the Partnership’s contract with Orbitz (which include, amongother things, provisions containing commitments from Orbitz with respect to itsusage of the Worldspan GDS through 2011), monetary damages in excess of $50,punitive damages and reimbursement for attorneys’ fees and costs. Orbitz filedan amended complaint against the Partnership on July 5, 2006. The amendedcomplaint adds six counts, including claims of breach of contract, fraud andrescission, in addition to a declaratory judgment request. The complaint seeksequitable and monetary relief, attorney’s fees and costs, monetary damages inexcess of $50 and prejudgment interest.  The Orbitz case has beenconsolidated with the Partnership’s state court cases. The Partnership believesthat the allegations in the Orbitz complaint are without merit and it intendsto defend against this action vigorously. If the Partnership is unable tosatisfactorily resolve the claims asserted by Orbitz and its lawsuit againstthe Partnership is successful, there would be few or no restrictions to preventOrbitz from moving a significant portion of its business from the WorldspanGDS, which would have a material adverse effect on the Partnership’s business,financial condition and results of operations.

InSeptember 2003, the Partnership received multiple assessments totaling €39,503from the tax authorities of Greece relating to tax years 1993-2002. ThePartnership filed appeals of these assessments. Pursuant to a formal taxamnesty program with the Greek authorities, the Partnership reached asettlement of the outstanding assessments in an amount of approximately €7,775.The Partnership Interest Purchase Agreement, dated March 3, 2003, providesthat each of Delta, Northwest and American (collectively, Worldspan’s “foundingairlines”) shall 

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severallyindemnify WTI and hold WTI harmless on a net after-tax basis from and againstany and all taxes of the Partnership and its subsidiaries related to periodsprior to the Acquisition. The Partnership informed the founding airlines of thereceipt of these assessments and the indemnity obligation of the foundingairlines under the Partnership Interest Purchase Agreement. Delta and Americanhave reimbursed the Partnership in full pursuant to their indemnityobligations.  As of September 30, 2006, thebalance of the amounts due from Northwest was $1,625. Because of the indemnityprovision and other remedies available under the applicable agreements, thePartnership believes that this remaining balance will be recovered fromNorthwest and will not have a material effect on the Partnership’s financialposition or results of operations.

Additionally, in connection with the Acquisition ofthe Partnership in 2003, Delta, Northwest and American agreed to retain therights and obligations of all tax matters relating to tax periods prior toJune 30, 2003. However, the exercise of these rights could be successfullychallenged in bankruptcy court.

On July 26, 2006, Expedia and its affiliate, IACGlobal LLC, (collectively, “Expedia”) filed a lawsuit against the Partnershipin the Superior Court, King County, Washington.  Among other actions andrequests for relief, the complaint requests a declaratory judgment from thecourt regarding Expedia’s use of data and information provided by thePartnership as set forth in the contract between the parties.  ThePartnership believes that the allegations in the Expedia complaint are withoutmerit and it intends to defend against this action.

In addition, the Partnership is currently involved invarious claims related to matters arising from the ordinary course of business.Management believes the ultimate disposition of these actions will notmaterially affect the financial position or results of operations of thePartnership.

*Operatingand Capital Leases*

On June 30, 2006, Worldspan signed amendments to theexisting Asset Management Offering agreement (“AMO”), Enterprise SoftwareOption agreement (“ESO”) and the Websphere Software Special Option agreement (“WSSO”),collectively referred to as the “IBM OIO Agreements”. The terms of the IBM OIOAgreements were extended from June 30, 2008 to June 30, 2011 with the optionfor two one-year renewal periods from June 30, 2011.

Consistent with prior treatment, the Partnership hasaccounted for the amended IBM OIO Agreements collectively as a multiple elementarrangement of hardware, software, and services. Under the terms of theseagreements, the Partnership has a remaining aggregate minimum commitment of$213,750 at September 30, 2006, plus additional contingent payments dependentupon the rate of growth of electronic travel distribution transaction volumes.Of the aggregate minimum commitment, approximately $163,296 represents futureminimum lease payments for leases classified as operating at September 30, 2006and approximately $50,454 represents future minimum lease payments for leasesclassified as capital at September 30, 2006.

Effective September 29, 2006, the Partnership entered aleasing arrangement with IBM to lease new mainframe and storage devices.  This leasing arrangement increased capitallease obligations and property and equipment by $11,184.

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The future minimumamounts payable under the IBM OIO Agreements are as follows at September 30,2006:
| ** **                                                                       | ** ** | **Total IBM OIO  Agreements** | ** ** | **IBM OIO  Agreements  Operating Leases at  September 30, 2006** | ** ** | **IBM OIO  Agreements  Capital Leases at  September 30,  2006** | ** ** |
|----------------------------------------------------------------------------------|------------|-----------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|
| 2006                                                                             |       | $                                       | 11,250     |                                                                                      | $          | 8,595                                                                                         |       | $ | 2,655 |   |
| 2007                                                                             |       | 45,000                                  |       | 34,378                                                                                    |       | 10,622                                                                                        |       |
| 2008                                                                             |       | 45,000                                  |       | 34,378                                                                                    |       | 10,622                                                                                        |       |
| 2009                                                                             |       | 45,000                                  |       | 34,378                                                                                    |       | 10,622                                                                                        |       |
| 2010                                                                             |       | 45,000                                  |       | 34,378                                                                                    |       | 10,622                                                                                        |       |
| Thereafter                                                                       |       | 22,500                                  |       | 17,189                                                                                    |       | 5,311                                                                                         |       |
| Total                                                                            |       | $                                       | 213,750    |                                                                                      | $          | 163,296                                                                                       |       | $ | 50,454 |   |
| Less imputed interest  (1)                                                       |       |                                    |       |                                                                                      |       | (7,579                                                                                        | )          |
| Present value of net  minimum lease payments related to IBM OIO Agreements       |       |                                    |       |                                                                                      |       | $                                                                                             | 42,875     |   |
| Present value of net  minimum lease payments related to other capital leases (2) |       |                                    |       |                                                                                      |       | 36,761                                                                                        |       |
| Total                                                                            |       |                                    |       |                                                                                      |       | $                                                                                             | 79,636     |   |
| Less current maturities                                                          |       |                                    |       |                                                                                      |       | (15,309                                                                                       | )          |
| Long-term maturities                                                             |       |                                    |       |                                                                                      |       | $                                                                                             | 64,327     |   |

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(1)                                  Theinterest rate used in computing the present value of the minimum lease paymentsranges from approximately 5.30% to 7.25% depending on the asset being leased asrequired by SFAS No. 13.

(2)                                  Theinterest rate used in computing the present value of the minimum lease paymentsranges from approximately 4.2% to 12.0% depending on the asset being leased.

**6.             Other Events**

In the first quarter of 2006, the Partnershipcollected outstanding previously disputed amounts regarding minimum bookingfees owed by certain former online travel agency subscribers. The settlementresulted in the receipt of approximately $11,290. The receipts were classifiedin the accompanying statement of operations as a reduction in cost of revenues(because payments to the agencies exceeded payments received from the agencies)in accordance with Emerging Issues Task Force Issue No. 01-9, *Accounting for Consideration Given by a Vendor to aCustomer (Including a Reseller of the Vendor’s Product*s).  Inthe second quarter of 2006, the Partnership collected an outstanding previouslydisputed amount regarding excess messaging fees owed by one of these formeronline travel agency subscribers. This final settlement resulted in the receiptof approximately $10,450 in fees which were classified in the accompanyingstatement of operations as revenue (because payments received from the agencyexceeded payments to the agency). The contracts with these agencies have beenterminated.

**7.             Business Segment Information**

The Partnership’s operations are classified into tworeportable business segments: electronic travel distribution and informationtechnology services. The Partnership’s two reportable business segments aremanaged separately based on fundamental differences in their operations. Inaddition, each business segment offers different products and services. Theelectronic travel distribution segment distributes travel services of itssuppliers to subscribers of the Worldspan GDS. By having access to the WorldspanGDS, subscribers are able to book reservations with the suppliers. Theinformation technology services segment provides technology services to Deltaand Northwest and other companies in the travel industry.

The Partnership evaluates segment performance andallocates resources based on operating income plus depreciation andamortization. The accounting policies of the reportable segments are the sameas those described in the summary of significant accounting policies. There areno intersegment sales.

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| ** **                           | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|--------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                           | ** ** | **September 30,  2006**     | ** ** | **September 30,  2005**    | ** ** | **September 30,  2006** | ** ** | **September 30,  2005** | ** ** |
| Revenues                             |       |                             |       |                            |       |   |   |   |   |
| Electronic travel distribution       |       | $                                | 194,989    |                            | $          | 222,487 |   | $ | 670,917 |   | $ | 691,926 |   |
| Information technology services      |       | 17,517                           |       | 17,218                          |       | 55,371 |   | 53,992 |   |
| Total revenues                       |       | $                                | 212,506    |                            | $          | 239,705 |   | $ | 726,288 |   | $ | 745,918 |   |
|                                 |       |                             |       |                            |       |   |   |   |   |
| Operating income  (loss)             |       |                             |       |                            |       |   |   |   |   |
| Electronic travel distribution       |       | $                                | 37,718     |                            | $          | 42,511 |   | $ | 148,899 |   | $ | 128,554 |   |
| Information technology services      |       | (5,564                           | )          | (7,482                          | )          | (17,079 | ) | (22,934 | ) |
| Total operating income               |       | $                                | 32,154     |                            | $          | 35,029 |   | $ | 131,820 |   | $ | 105,620 |   |
|                                 |       |                             |       |                            |       |   |   |   |   |
| Depreciation and  amortization       |       |                             |       |                            |       |   |   |   |   |
| Electronic travel distribution       |       | $                                | 15,980     |                            | $          | 19,481 |   | $ | 55,040 |   | $ | 58,555 |   |
| Information technology services      |       | 5,182                            |       | 5,332                           |       | 15,785 |   | 17,445 |   |
| Total  depreciation and amortization |       | $                                | 21,162     |                            | $          | 24,813 |   | $ | 70,825 |   | $ | 76,000 |   |

 

ThePartnership’s principal administrative, marketing, product development andtechnical operations are located in the United States. Areas of operationoutside of North America include EMEA, Asia and Latin America which areprimarily composed of selling and marketing functions.

The following table includes selected interimfinancial information related to our geographic areas:
| ** **       | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **       | ** ** | **September 30,  2006**     | ** ** | **September 30,  2005**    | ** ** | **September 30,  2006** | ** ** | **September 30,  2005** | ** ** |
| Geographic areas |       |                             |       |                            |       |   |   |   |   |
| Total revenues   |       |                             |       |                            |       |   |   |   |   |
| United States    |       | $                                | 180,206    |                            | $          | 205,553 |   | $ | 640,779 |   | $ | 636,427 |   |
| Foreign          |       | 32,300                           |       | 34,152                          |       | 85,509 |   | 109,491 |   |
| Total            |       | $                                | 212,506    |                            | $          | 239,705 |   | $ | 726,288 |   | $ | 745,918 |   |

 

 
|              |   | **September 30,  2006** | ** ** | **December 31,  2005** |   |    |   |   |   |
|-------------------|--------|------------------------------|------------|-----------------------------|--------|---------|--------|--------|--------|
| Long-lived assets |   |                         |       |                        |   |    |   |   |   |
| United States     |   | $                            | 750,942    |                        | $      | 787,651 |   |   |   |   |   |
| Foreign           |   | 25,067                       |       | 28,130                      |   |    |   |   |   |
| Total             |   | $                            | 776,009    |                        | $      | 815,781 |   |   |   |   |   |

 

**8.             Supplemental Guarantor/Non-GuarantorFinancial Information**

In conjunction with the closing of the RefinancingTransactions discussed in Note 2, the Term Loan under 2005 Senior CreditFacility became fully and unconditionally guaranteed on a senior secured basisby the domestic operations and assets of the Partnership (referred to as “Worldspan,L.P.—Guarantor” in the accompanying financial information). Included inWorldspan, L.P.—Guarantor are Worldspan, L.P. and all of its wholly-owneddomestic subsidiaries including WS Financing.  These domestic subsidiariesalso fully and unconditionally guarantee on a second priority basis theFloating Rate Notes.  These domestic subsidiaries collectively representless than one percent of the Partnership’s total assets, Partners’ capital,total revenues, net income, and cash flows from operating activities. Theguarantees of each of the legal entities comprised by Worldspan, L.P.—Guarantorare joint and several.  The foreign subsidiaries (referred to as “Non-GuarantorSubsidiaries” in the accompanying financial information) represent the foreignoperations of the Partnership. WS Financing does not have any substantialoperations, assets or revenues. The following financial information presentscondensed consolidating balance sheets, statements of operations and statementsof cash flows for Worldspan, L.P.—Guarantor and Non-Guarantor Subsidiaries. Theinformation has been presented as if Worldspan, L.P.—Guarantor accounted forits ownership of the Non-Guarantor Subsidiaries using the equity method ofaccounting.

16

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**CondensedConsolidating Balance Sheetsas of September 30, 2006(dollars in thousands)(Unaudited)**
| ** **                                      | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|-------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                            |       |                                      |       |                            |       |                     |       |                        |       |
| **Assets**                                      |       |                                      |       |                            |       |                     |       |                        |       |
| Current assets                                  |       |                                      |       |                            |       |                     |       |                        |       |
| Cash and cash equivalents                       |       | $                                         | 74,495     |                            | $          | 1,993                    |       | $                           | —     |   | $ | 76,488 |   |
| Trade accounts receivable, net                  |       | 88,806                                    |       | 1,785                           |       | —                   |       | 90,591                      |       |
| Prepaid expenses and other current assets       |       | 18,766                                    |       | 1,227                           |       | —                   |       | 19,993                      |       |
| Total current assets                            |       | 182,067                                   |       | 5,005                           |       | —                   |       | 187,072                     |       |
| Property and  equipment, net                    |       | 102,970                                   |       | 4,094                           |       | —                   |       | 107,064                     |       |
| Deferred charges                                |       | 14,005                                    |       | 8,532                           |       | —                   |       | 22,537                      |       |
| Debt issuance  costs, net                       |       | 11,558                                    |       | —                          |       | —                   |       | 11,558                      |       |
| Goodwill                                        |       | 111,803                                   |       | —                          |       | —                   |       | 111,803                     |       |
| Other intangible  assets, net                   |       | 476,182                                   |       | —                          |       | —                   |       | 476,182                     |       |
| Investments in  subsidiaries                    |       | 32,464                                    |       | —                          |       | (32,464                  | )          | —                      |       |
| Other long-term  assets                         |       | 34,424                                    |       | 12,441                          |       | —                   |       | 46,865                      |       |
| Total assets                                    |       | $                                         | 965,473    |                            | $          | 30,072                   |       | $                           | (32,464    | ) | $ | 963,081 |   |
|                                            |       |                                      |       |                            |       |                     |       |                        |       |
| **Liabilities  and Partners’ Capital**     |       |                                      |       |                            |       |                     |       |                        |       |
| Current  liabilities                            |       |                                      |       |                            |       |                     |       |                        |       |
| Accounts payable                                |       | $                                         | 6,236      |                            | $          | (24                      | )          | $                           | —     |   | $ | 6,212 |   |
| Intercompany accounts payable (receivable)      |       | 30,805                                    |       | (30,805                         | )          | —                   |       | —                      |       |
| Accrued expenses                                |       | 110,802                                   |       | 28,447                          |       | —                   |       | 139,249                     |       |
| Current portion of capital lease obligations    |       | 15,309                                    |       | —                          |       | —                   |       | 15,309                      |       |
| Current portion of senior debt                  |       | 4,000                                     |       | —                          |       | —                   |       | 4,000                       |       |
| Total current liabilities                       |       | 167,152                                   |       | (2,382                          | )          | —                   |       | 164,770                     |       |
| Long-term  portion of capital lease obligations |       | 64,327                                    |       | —                          |       | —                   |       | 64,327                      |       |
| Long-term debt                                  |       | 562,500                                   |       | —                          |       | —                   |       | 562,500                     |       |
| Pension and  postretirement benefits            |       | 56,254                                    |       | —                          |       | —                   |       | 56,254                      |       |
| Other long-term  liabilities                    |       | 9,912                                     |       | (10                             | )          | —                   |       | 9,902                       |       |
| Total liabilities                               |       | 860,145                                   |       | (2,392                          | )          | —                   |       | 857,753                     |       |
| Commitments and  contingencies                  |       |                                      |       |                            |       | —                   |       |                        |       |
| Partners’  capital                         |       | 105,328                                   |       | 32,464                          |       | (32,464                  | )          | 105,328                     |       |
| Total  liabilities and Partners’ capital   |       | $                                         | 965,473    |                            | $          | 30,072                   |       | $                           | (32,464    | ) | $ | 963,081 |   |

 

17

----

**CondensedConsolidating Balance Sheetsas of December 31, 2005(dollars in thousands)(Unaudited)**
| ** **                                      | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|-------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                            |       |                                      |       |                            |       |                     |       |                        |       |
| **Assets**                                      |       |                                      |       |                            |       |                     |       |                        |       |
| Current assets                                  |       |                                      |       |                            |       |                     |       |                        |       |
| Cash and cash equivalents                       |       | $                                         | 55,238     |                            | $          | 2,855                    |       | $                           | —     |   | $ | 58,093 |   |
| Trade accounts receivable, net                  |       | 95,475                                    |       | 2,509                           |       | —                   |       | 97,984                      |       |
| Prepaid expenses and other current assets       |       | 16,196                                    |       | 796                             |       | —                   |       | 16,992                      |       |
| Total current assets                            |       | 166,909                                   |       | 6,160                           |       | —                   |       | 173,069                     |       |
| Property and  equipment, net                    |       | 85,311                                    |       | 5,972                           |       | —                   |       | 91,283                      |       |
| Deferred charges                                |       | 12,984                                    |       | 11,408                          |       | —                   |       | 24,392                      |       |
| Debt issuance  costs, net                       |       | 14,626                                    |       | —                          |       | —                   |       | 14,626                      |       |
| Goodwill                                        |       | 111,803                                   |       | —                          |       | —                   |       | 111,803                     |       |
| Other intangible  assets, net                   |       | 521,483                                   |       | —                          |       | —                   |       | 521,483                     |       |
| Investments in  subsidiaries                    |       | 27,811                                    |       | —                          |       | (27,811                  | )          | —                      |       |
| Other long-term  assets                         |       | 41,444                                    |       | 10,750                          |       | —                   |       | 52,194                      |       |
| Total assets                                    |       | $                                         | 982,371    |                            | $          | 34,290                   |       | $                           | (27,811    | ) | $ | 988,850 |   |
|                                            |       |                                      |       |                            |       |                     |       |                        |       |
| **Liabilities  and Partners’ Capital**     |       |                                      |       |                            |       |                     |       |                        |       |
| Current  liabilities                            |       |                                      |       |                            |       |                     |       |                        |       |
| Accounts payable                                |       | $                                         | 12,477     |                            | $          | 4,370                    |       | $                           | —     |   | $ | 16,847 |   |
| Intercompany accounts payable (receivable)      |       | 31,461                                    |       | (31,461                         | )          | —                   |       | —                      |       |
| Accrued expenses                                |       | 111,089                                   |       | 33,649                          |       | —                   |       | 144,738                     |       |
| Current portion of capital lease obligations    |       | 17,863                                    |       | —                          |       | —                   |       | 17,863                      |       |
| Current portion of long-term debt               |       | 4,000                                     |       | —                          |       | —                   |       | 4,000                       |       |
| Total current  liabilities                      |       | 176,890                                   |       | 6,558                           |       | —                   |       | 183,448                     |       |
| Long-term  portion of capital lease obligations |       | 36,555                                    |       | —                          |       | —                   |       | 36,555                      |       |
| Long-term debt                                  |       | 667,500                                   |       | —                          |       | —                   |       | 667,500                     |       |
| Pension and  postretirement benefits            |       | 60,370                                    |       | (42                             | )          | —                   |       | 60,328                      |       |
| Other long-term  liabilities                    |       | 9,547                                     |       | (37                             | )          | —                   |       | 9,510                       |       |
| Total liabilities                               |       | 950,862                                   |       | 6,479                           |       | —                   |       | 957,341                     |       |
| Commitments and  contingencies                  |       |                                      |       |                            |       |                     |       |                        |       |
| Partners’  capital                         |       | 31,509                                    |       | 27,811                          |       | (27,811                  | )          | 31,509                      |       |
| Total  liabilities and Partners’ capital   |       | $                                         | 982,371    |                            | $          | 34,290                   |       | $                           | (27,811    | ) | $ | 988,850 |   |

 

18

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**CondensedConsolidating Statements of Operationsfor the Three Months Ended September 30, 2006(dollars in thousands)(Unaudited)**

 
| ** **                      | ** ** | **Worldspan, L.P—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|---------------------------------|------------|------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                            |       |                                     |       |                            |       |                     |       |                        |       |
| Revenues                        |       | $                                        | 180,206    |                            | $          | 32,300                   |       | $                           | —     |   | $ | 212,506 |   |
| Operating expenses              |       | 151,277                                  |       | 29, 075                         |       | —                   |       | 180,352                     |       |
| Operating income                |       | 28,929                                   |       | 3,225                           |       | —                   |       | 32,154                      |       |
| Other income (expense)          |       |                                     |       |                            |       |                     |       |                        |       |
| Interest  (expense) income, net |       | (14,893                                  | )          | 8                               |       | —                   |       | (14,885                     | )          |
| Income from  subsidiaries       |       | 1,451                                    |       | —                          |       | (1,451                   | )          | —                      |       |
| Other, net                      |       | 8                                        |       | (1,119                          | )          | —                   |       | (1,111                      | )          |
| Total other  expense, net       |       | (13,434                                  | )          | (1,111                          | )          | (1,451                   | )          | (15,996                     | )          |
| Income before income  taxes     |       | 15,495                                   |       | 2,114                           |       | (1,451                   | )          | 16,158                      |       |
| Income tax expense              |       | —                                   |       | 663                             |       | —                   |       | 663                         |       |
| Net income                      |       | $                                        | 15,495     |                            | $          | 1,451                    |       | $                           | (1,451     | ) | $ | 15,495 |   |

 

**CondensedConsolidating Statements of Operationsfor the Three Months Ended September 30, 2005(dollars in thousands)(Unaudited)**

 
| ** **                      | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|---------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                            |       |                                      |       |                            |       |                     |       |                        |       |
| Revenues                        |       | $                                         | 205,553    |                            | $          | 34,152                   |       | $                           | —     |   | $ | 239,705 |   |
| Operating expenses              |       | 173,226                                   |       | 31,450                          |       | —                   |       | 204,676                     |       |
| Operating income                |       | 32,327                                    |       | 2,702                           |       | —                   |       | 35,029                      |       |
| Other expense                   |       |                                      |       |                            |       |                     |       |                        |       |
| Interest  (expense) income, net |       | (15,810                                   | )          | 17                              |       |                     |       | (15,793                     | )          |
| Income from  subsidiaries       |       | 1,139                                     |       | —                          |       | (1,139                   | )          | —                      |       |
| Other, net                      |       | 445                                       |       | (720                            | )          | —                   |       | (275                        | )          |
| Total other  expense, net       |       | (14,226                                   | )          | (703                            | )          | (1,139                   | )          | (16,068                     | )          |
| Income before income  taxes     |       | 18,101                                    |       | 1,999                           |       | (1,139                   | )          | 18,961                      |       |
| Income tax expense              |       | —                                    |       | 860                             |       | —                   |       | 860                         |       |
| Net income                      |       | $                                         | 18,101     |                            | $          | 1,139                    |       | $                           | (1,139     | ) | $ | 18,101 |   |

 

19

----

 

**CondensedConsolidating Statements of Operationsfor the Nine Months Ended September 30, 2006(dollars in thousands)(Unaudited)**

 
| ** **                     | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|--------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                           |       |                                      |       |                            |       |                     |       |                        |       |
| Revenues                       |       | $                                         | 640,779    |                            | $          | 85,509                   |       | $                           | —     |   | $ | 726,288 |   |
| Operating  expenses            |       | 518,038                                   |       | 76,430                          |       | —                   |       | 594,468                     |       |
| Operating income               |       | 122,741                                   |       | 9,079                           |       | —                   |       | 131,820                     |       |
| Other income  (expense)        |       |                                      |       |                            |       |                     |       |                        |       |
| Interest (expense) income, net |       | (46,170                                   | )          | 71                              |       | —                   |       | (46,099                     | )          |
| Income from subsidiaries       |       | 4,653                                     |       | —                          |       | (4,653                   | )          | —                      |       |
| Other, net                     |       | 237                                       |       | (2,450                          | )          | —                   |       | (2,213                      | )          |
| Total other expense, net       |       | (41,280                                   | )          | (2,379                          | )          | (4,653                   | )          | (48,312                     | )          |
| Income before  income taxes    |       | 81,461                                    |       | 6,700                           |       | (4,653                   | )          | 83,508                      |       |
| Provision for  income taxes    |       | —                                    |       | 2,047                           |       | —                   |       | 2,047                       |       |
| Net income                     |       | $                                         | 81,461     |                            | $          | 4,653                    |       | $                           | (4,653     | ) | $ | 81,461 |   |

 

**CondensedConsolidating Statements of Operationsfor the Nine Months Ended September 30, 2005(dollars in thousands)(Unaudited)**

 
| ** **                      | ** ** | **Worldspan, L.P—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|---------------------------------|------------|------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                            |       |                                     |       |                            |       |                     |       |                        |       |
| Revenues                        |       | $                                        | 636,427    |                            | $          | 109,491                  |       | $                           | —     |   | $ | 745,918 |   |
| Operating  expenses             |       | 541,838                                  |       | 98,460                          |       | —                   |       | 640,298                     |       |
| Operating income                |       | 94,589                                   |       | 11,031                          |       | —                   |       | 105,620                     |       |
| Other income  (expense)         |       |                                     |       |                            |       |                     |       |                        |       |
| Interest  (expense) income, net |       | (43,783                                  | )          | 88                              |       | —                   |       | (43,695                     | )          |
| Loss on extinguishment of debt  |       | (55,597                                  | )          | —                          |       | —                   |       | (55,597                     | )          |
| Income from subsidiaries        |       | 6,742                                    |       | —                          |       | (6,742                   | )          | —                      |       |
| Other, net                      |       | 565                                      |       | (1,060                          | )          | —                   |       | (495                        | )          |
| Total other expense, net        |       | (92,073                                  | )          | (972                            | )          | (6,742                   | )          | (99,787                     | )          |
| Income before  income taxes     |       | 2,516                                    |       | 10,059                          |       | (6,742                   | )          | 5,833                       |       |
| Income tax  expense             |       | —                                   |       | 3,317                           |       | —                   |       | 3,317                       |       |
| Net income                      |       | $                                        | 2,516      |                            | $          | 6,742                    |       | $                           | (6,742     | ) | $ | 2,516 |   |

 

20

----

 

**CondensedConsolidating Statements of Cash Flowsfor the Nine Months Ended September 30, 2006(dollars in thousands)(Unaudited)**

 
| ** **                                           | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|------------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                                 |       |                                      |       |                            |       |                     |       |                        |       |
| Net cash  provided by (used in) operating activities |       | $                                         | 156,252    |                            | $          | (5,246                   | )          | $                           | —     |   | $ | 151,006 |   |
| Cash flows from  investing activities:               |       |                                      |       |                            |       |                     |       |                        |       |
| Purchase of property and equipment                   |       | (4,008                                    | )          | (384                            | )          | —                   |       | (4,392                      | )          |
| Proceeds from sale of property and equipment         |       | 100                                       |       | 115                             |       | —                   |       | 215                         |       |
| Investment in subsidiaries                           |       | (4,653                                    | )          | —                          |       | 4,653                    |       | —                      |       |
| Net cash used in investing activities                |       | (8,561                                    | )          | (269                            | )          | 4,653                    |       | (4,177                      | )          |
| Cash flows from  financing activities:               |       |                                      |       |                            |       |                     |       |                        |       |
| Principal payments on capital leases                 |       | (13,034                                   | )          | —                          |       | —                   |       | (13,034                     | )          |
| Principal payments on debt                           |       | (105,000                                  | )          | —                          |       | —                   |       | (105,000                    | )          |
| Distribution to WTI, net                             |       | (10,400                                   | )          | —                          |       | —                   |       | (10,400                     | )          |
| Contributions to subsidiaries                        |       | —                                    |       | 4,653                           |       | (4,653                   | )          | —                      |       |
| Net cash (used in) provided by financing activities  |       | (128,434                                  | )          | 4,653                           |       | (4,653                   | )          | (128,434                    | )          |
| Net increase (decrease) in cash and cash equivalents |       | 19,257                                    |       | (862                            | )          | —                   |       | 18,395                      |       |
| Cash and cash  equivalents at beginning of period    |       | 55,238                                    |       | 2,855                           |       | —                   |       | 58,093                      |       |
| Cash and cash  equivalents at end of period          |       | $                                         | 74,495     |                            | $          | 1,993                    |       | $                           | —     |   | $ | 76,488 |   |

 

21

----

**CondensedConsolidating Statements of Cash Flowsfor the Nine Months Ended September 30, 2005(dollars in thousands)(Unaudited)**
| ** **                                                  | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|-------------------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Net cash provided by (used  in) operating activities        |       | $                                         | 129,192    |                            | $          | (10,838                  | )          | $                           | —     |   | $ | 118,354 |   |
| Cash flows from  investing activities:                      |       |                                      |       |                            |       | —                   |       |                        |       |
| Purchase of  property and equipment                         |       | (6,926                                    | )          | (2,379                          | )          | —                   |       | (9,305                      | )          |
| Proceeds from  sale of property and equipment               |       | 102                                       |       | —                          |       | —                   |       | 102                         |       |
| Capitalized  software development costs                     |       | (19                                       | )          | —                          |       | —                   |       | (19                         | )          |
| Investment in  subsidiaries                                 |       | (12,265                                   | )          | —                          |       | 12,265                   |       | —                      |       |
| Net cash used in  investing activities                      |       | (19,108                                   | )          | (2,379                          | )          | 12,265                   |       | (9,222                      | )          |
| Cash flows from  financing activities:                      |       |                                      |       |                            |       |                     |       |                        |       |
| Proceeds from  issuance of debt, net of debt issuance costs |       | 734,727                                   |       | —                          |       | —                   |       | 734,727                     |       |
| Principal  payments on capital leases                       |       | (14,516                                   | )          | —                          |       | —                   |       | (14,516                     | )          |
| Principal  payments on debt                                 |       | (125,488                                  | )          | —                          |       | —                   |       | (125,488                    | )          |
| Repurchase old  notes                                       |       | (327,555                                  | )          | —                          |       | —                   |       | (327,555                    | )          |
| Distribution to  and contributions from WTI, net            |       | (427,238                                  | )          | —                          |       | —                   |       | (427,238                    | )          |
| Contributions to  subsidiaries                              |       | —                                    |       | 12,265                          |       | (12,265                  | )          | —                      |       |
| Net cash (used  in) provided by financing activities        |       | (160,070                                  | )          | 12,265                          |       | (12,265                  | )          | (160,070                    | )          |
| Net decrease in  cash and cash equivalents                  |       | (49,986                                   | )          | (952                            | )          |                     |       | (50,938                     | )          |
| Cash and cash  equivalents at beginning of period           |       | 96,504                                    |       | 3,970                           |       | —                   |       | 100,474                     |       |
| Cash and cash equivalents at end of period                  |       | $                                         | 46,518     |                            | $          | 3,018                    |       | $                           | —     |   | $ | 49,536 |   |

 

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**9. Goodwill and Other Intangible Assets**

Goodwill and other intangible assets consisted of thefollowing:
| ** **                                 | ** ** | ** **                      | ** ** | **September 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                 | ** ** | **Estimated  Useful Life** | ** ** | **Cost**                         | ** ** | **Accumulated  Amortization**   | ** ** | **Cost** | ** ** | **Accumulated  Amortization** | ** ** |
| Supplier and  agency relationships         |       | 8-11 years                      |       | $                                | 318,467    |                            | $          | 108,357 |   | $ | 321,618 |   | $ | 84,637 |   |
| Information  technology services contracts |       | 5-15 years                      |       | 36,126                           |       | 9,126                           |       | 36,126 |   | 7,020 |   |
| Developed  technology                      |       | 5-11 years                      |       | 238,850                          |       | 71,920                          |       | 238,979 |   | 55,725 |   |
| Goodwill                                   |       | Indefinite                      |       | 111,803                          |       |                            |       | 111,803 |   | — |   |
| Trade name                                 |       | Indefinite                      |       | 72,142                           |       | —                          |       | 72,142 |   | — |   |
|                                       |       |                            |       | $                                | 777,388    |                            | $          | 189,403 |   | $ | 780,668 |   | $ | 147,382 |   |

During the three months ended March 31, 2006, thePartnership recorded $1,615 in acceleration of amortization of agencyrelationship intangibles related to two online agencies. The contracts with thePartnership were terminated by the agencies.  The write-off was recordedas additional amortization in the statement of operations. During the threemonths ended June 30, 2005, the Partnership recorded a $1,500 write-down ofcertain purchased software to be enhanced and ultimately used in multi-hostingservices for smaller carriers. The carrying value of the software was writtendown to zero as a result of management’s decision to pursue other third partysolutions as a means to provide these services to smaller carriers as well asmanagement’s current evaluation of the current and potential revenue stream,among other factors. The write-down is included in “Developed technologyamortization” in the accompanying consolidated statement of operations.

As discussed in Note 1, Delta and Northwest, bothsignificant suppliers of the Partnership, entered bankruptcy protection inSeptember 2005.  In connection with the Acquisition, the Partnershiprecorded an intangible asset in the amount of $33,152 related to its founding airlineservices agreements (“FASAs”) with Delta and Northwest.  As of September30, 2006, the unamortized portion of the intangible asset related to the Deltaand Northwest FASAs was $25,976.  This amount is included in “Otherintangible assets, net” in the accompanying consolidated balance sheets. The services provided to Delta and Northwest under the terms of theirrespective FASAs include internal reservation services, development servicesand other support services.  The Partnership continues to provide servicesto the airlines in accordance with the terms of the respective FASA. ThePartnership believes that these services are essential to the continuedoperation of the airlines. In addition, the Partnership believes that the costof the services provided to Delta and Northwest are competitive to currentmarket rates for these services given the cost formula and the monthly creditthe airlines receive as a part of the FASA. The Partnership does not believethat the long term value of the FASA has changed based solely on the bankruptcyfilings and any additional facts currently available to it. Additional factscould become known or actions taken by the airlines in bankruptcy that couldimpact the long term value of the FASA and possibly result in an impairment ofthe intangible asset in the future.

In connection with the Acquisition, the Partnershipalso recorded additional intangible assets of approximately $318,467 related tothe value of its existing relationships with online travel agencies,traditional travel agencies and travel suppliers. The Partnership believes todate that the Delta and Northwest bankruptcy filings are not expected to have amaterially adverse impact on cash flows because the travel customer would beable to select another supplier if Delta and Northwest were to selectivelyreduce their flight capacity. Alternatively, in connection with theirbankruptcy related restructuring, Delta and Northwest could pursue a GDSalternative allowing them to bypass the Worldspan GDS.  If either Delta orNorthwest were successful in bypassing the Worldspan GDS or significantlyreducing their flight capacity, the Partnership’s cash flow and financialcondition could be materially, adversely affected and possibly result in animpairment of the intangible asset in the future.

Of the $318,467 recorded for the Partnership’sexisting relationships with travel agencies and travel suppliers, thePartnership estimates that $35,234, $76,174 and $14,223 were related to theExpedia, Orbitz and Priceline contracts, respectively. Based on theseestimates, the portions of these intangible assets that were unamortized as ofSeptember 30, 2006 were $20,920, $45,228 and $8,445. The Partnership willcontinue to monitor the outcome of the Orbitz claims against it and any movementin Expedia and/or Priceline to another GDS provider in order to assess theimpact, if any, on the overall financial condition as prescribed by Statementof Financial Accounting Standards (“SFAS”) No. 144, *Accounting for the Impairment or Disposal of Long-LivedAssets*, and SFAS No. 142, *Goodwilland Other Intangible Assets*. See Note 1 for a discussion of thepotential movement of Expedia, Priceline and Orbitz transactions to anotherGDS.

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ThePartnership recorded amortization expense for its intangible assets of $14,425and $14,708 for the three months ended September 30, 2006 and 2005,respectively, and $45,173 and $45,567 for the nine months ended September 30,2006 and 2005, respectively. Estimated amortization expense for the Partnership’sintangible assets, excluding the $45,173 amortization recorded for the ninemonths ended September 30, 2006, is as follows:

| Year Ended December 31, | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------------|------------|------------|------------|------------|------------|
| Remaining in  2006                     |       | $          | 14,478     |       |
| 2007                                   |       | 57,771     |       |
| 2008                                   |       | 56,871     |       |
| 2009                                   |       | 57,171     |       |
| 2010                                   |       | 57,171     |       |
| Thereafter                             |       | 160,578    |       |
|                                   |       | $          | 404,040    |       |

 

**10. Stock-BasedCompensation**

Under the WTI stock incentive plan, WTI offersrestricted shares of its Class A Common Stock and grants options topurchase shares of its Class A Common Stock to selected management employeesof the Partnership. On June 15, 2006, the Human Resources Committee of theBoard of Directors of WTI approved the Second Amendment to the WTI Stockincentive plan thereby authorizing a reserve of 13,250,000 shares of itsClass A Common Stock for issuance under the stock incentive plan. The securities underlying the options are not traded on an establishedexchange. The exercise price of any options granted or the purchase price forrestricted stock offered under the stock incentive plan is determined by theBoard of Directors. Restricted stock awards and options generally vestquarterly over a five-year period which is deemed to be the service period overwhich the stock-based compensation expense is recognized. Options expire tenyears from date of grant. Option grants consist of “Series 1” and “Series 2”options.

In the event of an employee termination, WTI has theright to repurchase all or any of the shares of Common Stock acquired by anemployee under the WTI stock incentive plan for a cash payment equal to thefair market value (as determined by the Board of Directors) of the shares ofCommon Stock on the day of repurchase. If, however, the employee is terminatedfor cause, then the cash payment will be the lower of the fair market value andthe employee’s original purchase price.

Prior to January 1, 2006, WTI accounted for employeestock options and restricted stock awards in accordance with SFAS No. 123, *Accounting for Stock- Based Compensation* (“SFASNo. 123”). Under SFAS No. 123, WTI valued the stock options based upon abinomial option-pricing model. As the options to purchase Class A Common Stockwere being granted to employees of the Partnership, the Partnership recognizedthe grant-date fair value as an expense ratably over the period in which theoptions vest, with a corresponding increase in Partners’ capital.

In December 2004, the FASB issued SFAS No. 123(R), *Share-Based Payment* (“SFAS No. 123(R)”),which is a revision of SFAS No. 123. The Partnership adopted the provisions ofSFAS No. 123(R) effective at the beginning of 2006. The Partnership elected touse the modified-prospective transition method which had no significant impacton income before income taxes, net income, cash flow from operations or cashflow from financing activities.

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Stockoption activity under the WTI stock incentive plan for the nine-month periodended September 30, 2006 is summarized as follows:
| ** **                                  | ** ** | **Series 1**          | ** ** | **Series 2**                         | ** ** |
|---------------------------------------------|------------|----------------------------|------------|-------------------------------------------|------------|
| ** **                                  | ** ** | **Number of  Shares** | ** ** | **Weighted-Average  Exercise Price** | ** ** | **Number of  Shares** | ** ** | **Weighted-  Average  Exercise Price** | ** ** |
| Outstanding at  December 31, 2005      |       | 2,102,500                  |       | $                                         | 1.48       |   | 2,102,500 |   | $ | 6.49 |   |
| Granted (1)                                 |       | 72,500                     |       | 3.90                                      |       | 72,500 |   | 7.90 |   |
| Exercised (2)                               |       | (304,750                   | )          | 1.20                                      |       | — |   | 0.00 |   |
| Forfeited                                   |       | (39,000                    | )          | 1.39                                      |       | (39,000 | ) | 6.18 |   |
| Expired                                     |       | (11,500                    | )          | 1.29                                      |       | (16,250 | ) | 6.31 |   |
|                                        |       |                       |       |                                      |       |   |   |   |   |
| Outstanding at  September 30, 2006 (3) |       | 1,819,750                  |       | $                                         | 1.26       |   | 2,119,750 |   | $ | 6.22 |   |
|                                        |       |                       |       |                                      |       |   |   |   |   |
| Exercisable at  September 30, 2006 (4)      |       | 826,250                    |       | $                                         | 1.05       |   | 1,126,250 |   | $ | 6.20 |   |

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(1)             Asallowed under SFAS No. 123(R), WTI has continued to apply the binomial option-pricingmodel in valuing the options granted in the third quarter of 2006 with theresulting fair value being amortized straight-line over the service period. Theweighted-average exercise price and weighted-average grant-date fair value ofthe Series 1 options reflected above as being granted during the ninemonths ended September 2006, were $3.90 and $1.83, respectively, per share.These options were granted with an exercise price equal to or lower than themarket value of the underlying Class A Common Stock. The weighted-averageexercise price and weighted-average grant-date fair value of the Series 2options reflected above as being granted during the nine months ended September2006, were $7.90 and $0, respectively, per share. These options were grantedwith an exercise price higher than the market value of the underlying Class ACommon Stock. During the nine months ended September 30, 2005, there were285,000 Series 1 options granted with a weighted-average exercise price of$1.87 and a weighted-average grant-date fair value of $0.33; additionally,there were 285,000 Series 2 options granted with a weighted-average exerciseprice of $5.93 and a weighted-average grant-date fair value of $0.

(2)             WTIreceived $365 in cash upon exercise of these options. The intrinsic value ofthe 304,750 Series 1 options exercised during the nine months ended September30, 2006 was approximately $932.9, which represents the amount by which themarket value of the underlying stock exceeds the exercise price of the option. Theweighted average market value of the underlying stock was approximately $4.26on the dates of exercise. There were no options exercised during the ninemonths ended September 30, 2005.

(3)             Theaggregate intrinsic value of the Series 1 and Series 2 options expected to vestat September 30, 2006 was approximately $2,793 and $0, respectively. See item(2) above regarding the definition of “intrinsic value.” The weighted-averageexercise prices of the Series 1 and Series 2 options expected to vest were$1.44 and $6.25, respectively. The weighted-average remaining contractual termof the Series 1 and Series 2 options expected to vest at September 30, 2006 was7.7 years for both Series. The total compensation cost to be recognized underSFAS 123(R) related to Series 1 and Series 2 options at September 30, 2006expected to vest is approximately $587 and $107, respectively, which will beexpensed over the remaining weighted-average vesting period of 3.0 years forboth Series.

(4)             Thetotal fair value of Series 1 and Series 2 options vested at September 30, 2006was approximately $406 and approximately $119, respectively. At September 30,2005, there were 633,500 Series 1 options vested with a total fair value ofapproximately $201 and 633,500 Series 2 options vested with a total fair valueof approximately $62. The aggregate intrinsic value of the Series 1 and Series2 options vested at September 30, 2006 was approximately $2,405 and $0,respectively. See item (2) above regarding the definition of “intrinsic value.” The weighted-average remaining contractual term of the Series 1 and Series 2options exercisable at September 30, 2006 was 7.0 years for both series.

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For grants of options awarded during the nine monthsended September 30, 2006 and 2005, the weighted-average assumptions usedin the binomial option-pricing model were as follows:
| ** ** | ** ** | **Risk-Free  Interest Rate  (1)** | ** ** | **Expected  Life (2)** | ** ** | **Expected  Volatility (3)** | ** ** | **Expected  Dividend Yield** | ** ** |
|------------|------------|----------------------------------------|------------|-----------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| 2006       |       | 4.96                                   | %          | 6.5 years                   |       | 35.4                              | %          | 0                                 | %          |
| 2005       |       | 3.54                                   | %          | 5.0 years                   |       | 0.30                              | %          | 0                                 | %          |

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(1)             Representsthe rate of a U.S. Treasury security maturing from the grant date over a periodof time approximating the expected life of the option.

(2)             Priorto January 1, 2006, the Partnership estimated the expected life to approximatethe vesting period. However, due to a lack of substantial history regarding thetiming of exercises (the Partnership was formed only recently — June 30, 2003),the Partnership has elected to use the simplified method allowed by StaffAccounting Bulletin (SAB) No. 107 *, Share-BasedPayment* , for estimating the expected term equal to the midpointbetween the vesting period and the contractual term. This change of estimatewas effective January 1, 2006.

(3)             Priorto January 1, 2006, the Partnership estimated expected volatility to approachzero as the underlying stock is not publicly traded. Effective January 1, 2006,as required under SFAS No. 123 (R), the Partnership has estimated thevolatility of the underlying stock. The Partnership has determined that thehistorical volatility experienced by one of its major competitor’spublicly-traded stock reflects a more accurate forecast of volatility.

During the first nine months of 2006, the Partnershipgranted 72,500 Series 1 options, with weighted average exercise prices andweighted average grant date fair values as follows:
| ** **                                                                                                                   | ** ** | **Weighted Average  Exercise Price** | ** ** | **Weighted-  Average  Grant-Date Fair  Value (1)** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------|------------|--------------------------------------------------------------|------------|
| Options whose  exercise price was less than the market value of the underlying Class A  Common Stock on the date of grant    |       | $                                              | 3.79       |                                                         | $          | 1.89 |   |
| Options whose  exercise price was equal to the market value of the underlying Class A Common  Stock on the date of grant     |       | $                                              | 3.96       |                                                         | $          | 1.78 |   |
| Options whose exercise  price was greater than the market value of the underlying Class A Common  Stock on the date of grant |       | N/A                                            |       | N/A                                                          |       |

----

(1)             Grant-datefair value was calculated using the binomial option-pricing model.

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Non-vested restricted share activity under the WTIstock incentive plan for the nine-month period ended September 30, 2006 issummarized as follows:
| ** **                                                                      | ** ** | **Number of  Shares** | ** ** | **Weighted-  Average  Grant-Date Fair  Value (1)** | ** ** |
|---------------------------------------------------------------------------------|------------|----------------------------|------------|--------------------------------------------------------------|------------|
| Non-vested  restricted shares of Class A Common Stock at December 31, 2005 |       | 3,139,046                  |       | $                                                            | 2.54       |   |
| Granted                                                                         |       | 2,000,000                  |       | 3.96                                                         |       |
| Vested (2)                                                                      |       | (580,500                   | )          | .36                                                          |       |
| Forfeited                                                                       |       | —                     |       | —                                                       |       |
|                                                                            |       |                       |       |                                                         |       |
| Non-vested restricted  shares of Class A Common Stock at September 30, 2006 (3) |       | 4,558,546                  |       | $                                                            | 3.44       |   |

----

(1)             Underboth SFAS No. 123(R) and SFAS No. 123, the fair value of restricted stockawards is measured as being the intrinsic value of the shares on the day ofgrant — i.e. the amount by which the market value of the shares on the day ofgrant exceeds the exercise/purchase price of the shares.

(2)             Thefair value of restricted stock awards vested during the nine months endedSeptember 30, 2006 was approximately $208. No restricted stock awards vestedduring the nine months ended September 30, 2005.

(3)             Ofthe non-vested shares at September 30, 2006, 4,558,546, are expected to vest.The total compensation cost to be recognized under SFAS 123(R) related to theshares at September 30, 2006 expected to vest is approximately $13,693, whichwill be expensed over the remaining weighted-average service period of 2.2years.

During the three months ended September 30, 2006 and2005, the Partnership recorded $1,279 and $768, respectively, in totalstock-based employee compensation expense, of which $176 and $232,respectively, was attributable to stock options. During the nine months endedSeptember 30, 2006 and 2005, the Partnership recorded $2,636 and $2,176,respectively, in total stock-based employee compensation expense, of which $535and $465, respectively, was attributable to stock options. The Partnershiprecognized stock-based compensation expense (benefit) of $703 and ($42) duringthe three month periods ended September 30, 2006 and 2005 attributable torestricted stock grants. The Partnership recognized stock-based compensationexpense of $789 and $93 during the nine month periods ended September 30, 2006and 2005 attributable to restricted stock grants. The Partnership recognizedstock-based compensation expense of $400 and $578 during the three monthperiods ended September 30, 2006 and 2005, respectively, attributable torestricted stock subscription agreements. The Partnership recognizedstock-based compensation expense of $1,312 and $1,618 during the nine monthperiods ended September 30, 2006 and 2005, respectively, attributable torestricted stock subscription agreements.

On June 15, 2006, WTI entered into a Restricted StockSubscription Agreement with the Partnership’s Chairman, President, and ChiefExecutive Officer, Rakesh Gangwal.  Pursuant to the agreement, Mr. Gangwalreceived 2,000,000 shares of WTI Class A Common Stock.  These shares aredeemed to be Restricted Stock and will vest on June 30, 2009.  Acceleratedvesting will occur prior to the June 30, 2009 vesting date if there is a changein control of WTI, if Mr. Gangwal’s employment is terminated by Worldspan “withoutcause” or if Mr. Gangwal terminates his employment with Worldspan for “goodreason,” as those terms are defined in the employment agreement between Mr.Gangwal and Worldspan. The Restricted Stock is subject to forfeiture if Mr.Gangwal’s employment is terminated for cause or if he resigns for any reasonother than good reason prior to June 30, 2009.

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**11. Airline Content Agreements**

During the firstquarter of 2006, the Partnership signed a five-year content agreement withAmerican.  During the second quarter of2006, the Partnership signed five-year content agreements with Continental,United and Northwest.  And, during thethird quarter of 2006, the Partnership signed a five-year content agreementwith US Airways and a seven-year content agreement with Delta.  The Northwest agreement received BankruptcyCourt approval on June 15, 2006.  Inconjunction with the agreements, Worldspan has developed two new optionalproducts which were introduced into the marketplace in September 2006.  Through these new agreements, travel agencieshave the opportunity to access the airlines’ comprehensive published fares andinventory. The new content agreements have resulted in reduced transaction feesfrom participating airlines and reduced inducement fees paid to travel agencieswithin the territory as defined in the agreements.  Since the effective date of the new contentagreements, traditional travel agencies who adopted the optional productscomprised almost all of total U.S. traditional travel agency transactions.  For the third quarter, these new agreementshad, and are expected to continue to have, a significant negative impact on thePartnership’s U.S. traditional agency business and also on the Partnership’soverall financial position and results from operations.  However, as to the Partnership’s onlinetravel agency business, the Partnership cannot predict at this time theultimate impact of these agreements on its operating income, as the overallimpact will be determined upon both the adoption of the Partnership’s two newoptional product offerings by online travel agencies within the territory andthe accompanying inducement payments required to be made to the online travelagencies by the Partnership, if any.  ThePartnership is evaluating various measures to mitigate the adverse financialimpact of these agreements while offering the new products to its agency baseand performing its obligations under the new airline content agreements.  However, there is no guarantee that thesemeasures, if implemented by the Partnership, will be successful.

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**ITEM 2.****                                     MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*References to “WTI” refer toWorldspan Technologies Inc. References to the “Company” or “Partnership”refer to Worldspan, L.P. The terms “we”, “us”, “our” and other similar termsrefer to the consolidated businesses of the Company and all of itssubsidiaries. References to the “Acquisition” refer to the acquisition by WTI,of our general partnership interests and, through its wholly-*owned *subsidiaries, limited partnershipinterests. The following discussion and analysis of the financial condition andresults of operations should be read in conjunction with the consolidatedfinancial statements and related notes included in our annual report on Form10-K filed with the Securities and Exchange Commission (the “SEC”) on March 3,2006.*

**Overview**

We are a provider of mission-critical transactionprocessing and information technology services to the global travel industry.We provide subscribers (including traditional travel agencies, online travelagencies and corporate travel departments) with real-time access to schedule,price, availability and other travel information and the ability to processbookings and issue tickets for the products and services of  travel suppliers (such as airlines, hotels,car rental companies, tour companies and cruise lines) throughout the world.Globally, we are the largest transaction processor for online travel agencies,having processed approximately 56% of all global distribution system, or GDS,online air transactions during the twelve months ended September 30, 2006. Inthe United States (the world’s largest travel market), we are the secondlargest transaction processor for travel agencies, accounting for approximately31% of GDS air transactions and approximately 59% of online GDS airtransactions processed during the twelve months ended September 30, 2006.During the twelve months ended September 30, 2006, we processed approximately194 million transactions. We also provide information technology services tothe travel industry, primarily airline internal reservation systems, flightoperations technology and software development.

We depend upon a relatively small number of airlinesand online travel agencies for a significant portion of our revenues. Our fivelargest airline relationships represented an aggregate of approximately 49% and52% of our total revenues for the twelve months ended September 30, 2006and December 31, 2005, respectively, while our top ten largest airline relationshipsrepresented an aggregate of approximately 61% and 64% of our total revenues forthe twelve months ended September 30, 2006 and December 31, 2005,respectively. Our relationships with four online travel agencies, Expedia,Orbitz, Hotwire and Priceline, represented 52% of our total transactions duringthe twelve months ended September 30, 2006. We expect to continue todepend upon a relatively small number of airlines and online travel agenciesfor a significant portion of our revenues.

In September 2005,we and Orbitz LLC (“Orbitz”) each filed separate complaints against the otherwith respect to certain disputes arising under our online agreement withOrbitz.  See “Item 1. Legal Proceedings” in Part II.  In addition, onMay 5, 2004, we announced that we had been informed by Expedia of itsintention to move a portion of its transactions in North America to another GDSprovider in order to diversify its GDS relationships beyond using a singleprovider to process substantially all of its GDS transactions.  InOctober 2005, Expedia notified us of its intention to move some portionbut not all of its European transactions to another GDS provider in 2006.Expedia announced in May 2006 that it had commenced booking at select points ofsale certain European segments through another GDS. In July 2006, Expediaannounced the commencement of processing transactions in North America withanother GDS. We have confirmed that some of Expedia’s North Americantransactions are now being processed on another GDS. Expedia’s totaltransaction volume with us decreased significantly from its transaction volumewith us during the third quarter of 2005, primarily due to a large number oftransactions Expedia processed on another GDS during September 2006.  We expect Expedia to substantially increasethe number of its transactions processed on another GDS in the fourth quarterof 2006 from the volume it processed on another GDS in the third quarter.  Expedia has further indicated to us that itcould process almost all of its volume on another GDS in the near future.  However, we believe that we will continue toprocess a sizeable portion of Expedia’s transactions going forward, even ifless than a majority of Expedia’s total bookings.  The movement of Expedia’s transaction volumeto another GDS has had, and in the future is expected to have, a significantadverse impact on our financial position and results from operations.

Also, on July 26, 2006, Hotwire, a division ofExpedia, notified us of its intent to terminate its technology servicesagreement with us effective October 26, 2006. Hotwire ceased processingtransactions on the Worldspan GDS in October. For the three and nine monthperiods ended September 30, 2006, Hotwire transactions generated approximately$1.7 million and $7.4 million, respectively, in revenue.

Additionally, on June 13, 2006, Priceline, one of ourlargest online travel agency customers, notified us that it intended to beginprocessing segments on another GDS as soon as July 28, 2006. In October2006, we have confirmed that some of Priceline’s North American transactionsare now being processed on another GDS. We have not received any notificationfrom Priceline as to the volume of transactions that it intends to move.Currently, we cannot forecast the annual magnitude of any such movement oftransactions and therefore we are unable to estimate the impact on ourfinancial position, results of operations and cash flows.

Effective September 14, 2005, Delta Air Lines,Inc. and Northwest Airlines, Inc., both significant suppliers of ours, enteredbankruptcy protection. For a more complete discussion of the bankruptcies, seethe section captioned “Liquidity and Capital Resources.”

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***Supplier Content and Transaction Fees***

A development within the GDS industry over the past severalyears involves the competitive need for GDSs to maintain full content fordistribution to traditional and online agency subscribers. Historically, wehave increased the transaction fees we collect from our airline suppliers. Asour business evolves and we continue to explore new ways to offer effectivedistribution options to our travel suppliers and travel agencies, we areentering into new content arrangements that depart from our traditionalbusiness model. As a result, we do not anticipate that the historic trend ofannual transaction fee increases will continue in the future and in fact coulddecrease substantially.

During the firstquarter of 2006, we signed a five-year content agreement with American.  During the second quarter of 2006, we signedfive-year content agreements with Continental, United and Northwest.  And, during the third quarter of 2006, wesigned a five-year content agreement with US Airways and a seven-year contentagreement with Delta.  The Northwestagreement received Bankruptcy Court approval on June 15, 2006.  In conjunction with the agreements, Worldspanhas developed two new optional products which were introduced into themarketplace in September 2006.  Throughthese new agreements, travel agencies have the opportunity to access theairlines’ comprehensive published fares and inventory. The new contentagreements have resulted in reduced transaction fees from participatingairlines and reduced inducement fees paid to travel agencies within theterritory as defined in the agreements. Since the effective date of the new content agreements, traditionaltravel agencies who adopted the optional products comprised almost all of totalU.S. traditional travel agency transactions. For the third quarter, these new agreements had, and are expected tocontinue to have, a significant negative impact on our U.S. traditional agencybusiness and also on our overall financial position and results fromoperations.  However, as to our onlinetravel agency business, we cannot predict at this time the ultimate impact ofthese agreements on our operating income, as the overall impact will bedetermined upon both the adoption of our two new optional product offerings byonline travel agencies within the territory and the accompanying inducement paymentsrequired to be made to the online travel agencies by us, if any.  We are evaluating various measures tomitigate the adverse financial impact of these agreements while offering thenew products to our agency base and performing our obligations under the newairline content agreements.  However,there is no guarantee that these measures, if implemented by us, will besuccessful.

We believe that obtaining similar content from ourother major airline travel suppliers is important to our ability to compete,since other GDSs have also entered into content agreements with variousairlines. We expect that future content agreements will require us to make, inthe aggregate, significant payments or other concessions to the participatingairlines, which we expect will reduce our revenues. Further, should we fail tomaintain competitive content, our traditional and online agency subscriberscould move transactions from us to competitors with access to this content,thus negatively affecting our business, financial condition and results ofoperation.

***Financial Conditions in the Airline Industry***

The downturn in the commercial airline market,together with, and resulting from, the ongoing threat of terrorist acts, theglobal economic downturn, the continuing conflict in Iraq and rising fuel costsfor commercial airlines, among other issues, have adversely affected thefinancial condition of many commercial airlines. Several major airlines areexperiencing liquidity problems, some have sought bankruptcy protection andstill others are considering, or may consider, bankruptcy relief. We derive asubstantial portion of our revenues from transaction fees received directlyfrom airlines and from the sale of products and services directly to airlines.In circumstances where an airline declares bankruptcy, we may be unable tocollect our outstanding accounts receivable from the airline. In addition, thebankruptcy of the airline might result in reduced transaction fees and otherrevenues from the airline, a rejection by the airline of some or all of ouragreements with it, or loss of the revenue by other means such as an airlineliquidation, all of which could have a material adverse effect on our business,financial condition and results of operation. In September 2005, Delta andNorthwest entered bankruptcy protection. For further discussion of thepotential impact of these bankruptcy filings, see “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Liquidity and CapitalResources.”

***Channel Shift***

An increasing number of travel transactions are beingmade online. During the twelve months ended September 30, 2006, airlinetransactions generated through online travel agencies accounted forapproximately 35% of all airline transactions in the United States processed bya GDS, up from approximately 34% in fiscal year 2005, approximately 31% in2004, approximately 28% in 2003, and approximately 23% in 2002. Between 2002and 2005, the number of airline transactions in the United States generated throughonline travel agencies and processed by us increased at a compound annualgrowth rate of 11.6%. We believe that this shift to online travel agencybookings will continue, but the extent and pace of the shift is difficult toanticipate. Other industry developments, such as the announcements by Expediaand Priceline, that they intend to move a portion of their transactions toother GDSs, compound our difficulty in forecasting the volume of ourtransactions from online travel agencies.

***Uncertainty in Transaction Volumes from Online TravelAgencies***

Although we havehistorically processed most of the airline transactions for our online travelagencies, these agencies may move a portion of their business to othertechnologies and technology providers, subject to some contractual limitations.For example, on May 5, 2004, we announced that we had been informed byExpedia of its intention to move a portion of its transactions in North Americato another GDS provider in order to diversify its GDS relationships beyondusing a single provider to process substantially all of its GDStransactions.  In October 2005, Expedia notified us of its intentionto move some portion but not all of its European transactions to another GDSprovider in

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2006. Expedia announced in May 2006 that it hadcommenced booking at select points of sale certain European segments throughanother GDS. In July 2006, Expedia announced the commencement of processingtransactions in North America with another GDS. We have confirmed that some ofExpedia’s North American transactions are now being processed on anotherGDS.  Expedia’s total transaction volumewith us decreased significantly from its transaction volume with us during thethird quarter of 2005, primarily due to a large number of transactions Expediaprocessed on another GDS during September 2006. We expect Expedia to substantially increase the number of itstransactions processed on another GDS in the fourth quarter of 2006 from thevolume it processed on another GDS in the third quarter. Expedia has furtherindicated to us that it could process almost all of its volume on another GDSin the near future.  However, we believethat we will continue to process a sizeable portion of Expedia’s transactionsgoing forward, even if less than a majority of Expedia’s total bookings.  The movement of Expedia’s transaction volumeto another GDS has had, and in the future is expected to have, a significantadverse impact on our financial position and results from operations.

 Also, on July26, 2006, Hotwire, a division of Expedia, notified us of its intent toterminate its technology services agreement with us effective October 26,2006.  Hotwire ceased processingtransactions on the Worldspan GDS in October. For the three and nine month periods ended September 30, 2006, Hotwiregenerated approximately $1.7 million and $7.4 million, respectively, inrevenue.

In addition, on February 10, 2006, Pricelineannounced that it had signed an agreement with another GDS and, in June 2006,announced that it intended to begin moving transactions to this other GDS assoon as July 28, 2006. In October 2006, we have confirmed that some ofPriceline’s North American transactions are now being processed on anotherGDS.  We have not received anynotification from Priceline as to the volume of transactions that it intendedto move. Currently, we cannot forecast the magnitude of any such movement oftransactions and therefore are unable to estimate the annual impact on ourfinancial position, results of operations and cash flows.

In addition, Orbitz has developed direct connectionswith travel suppliers which bypass our GDS. Further, Orbitz is owned byTravelport, who also owns Galileo (a competitor of ours). Orbitz is one of ourlargest online travel agency customers. Our contract with Orbitz extends into2011 subject to standard termination rights held by Orbitz including for-causetermination rights. Also, in September 2005, we and Orbitz each filedseparate complaints against the other with respect to certain disputes arising underour online agreement with Orbitz. See “Item 1. Legal Proceedings” in Part II.

Furthermore, in connection with the Acquisition werecorded an intangible asset related to online customer contracts of$131.9 million, of which we estimate $35.2 million, $76.2 millionand $14.2 million were related to the Expedia, Orbitz and Pricelinecontracts, respectively. Based on these estimates, the portions of theseintangible assets that were unamortized as of September 30, 2006 were$20.9 million, $45.2 million and $8.4 million. We will continueto monitor the outcome of the Orbitz claims against us and any movement inExpedia and/or Priceline to another GDS provider in order to assess the impact,if any, on the overall financial condition as prescribed by Statement ofFinancial Accounting Standards (“SFAS”) No. 144, *Accounting for the Impairment or Disposal of Long-Lived Assets*,and SFAS No. 142, *Goodwill and OtherIntangible Assets*.

Although we currently continue to operate under theseagreements, it is uncertain as to whether or not these and our other majoronline travel agencies will not attempt to terminate their respectiveagreements with us or otherwise move business to another GDS in the future.With this uncertainty, we cannot reliably forecast the volume of suchtransactions and may experience transaction volume decreases that result in amaterial adverse effect on our financial condition and operating results.

***FASA Credits***

Pursuant to the terms of our founder airline servicesagreements, or FASAs, we provide FASA credits to Delta and Northwest to beapplied against FASA service fee payments due from these airlines to us. TheFASA credits are structured and will be applied through June 2012 inscheduled monthly installments up to an aggregate total of approximately$70.8 million to each of Delta and Northwest as of September 30,2006, and are reflected as reductions of FASA revenue in the correspondingperiods. In the event that the monthly FASA credits deliverable by us to Deltaor Northwest are more than the FASA service fee payments due from theapplicable airline, then we will be obligated to pay such excess to suchairline in cash. See the section captioned “Liquidity and Capital Resources”below for further information on the FASA credits. At this time we cannotpredict how the Delta and Northwest bankruptcies may affect the FASAs. Therejection of those agreements in bankruptcy by one or both airlines could havea material adverse effect on our business, financial condition and results ofoperations.

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**BusinessSegment Summary**

Our revenues are primarily derived from transactionfees paid by our travel suppliers for electronic travel distribution services,and to a lesser extent, other transaction and subscription fees from ourinformation technology services operations:

·            Electronictravel distribution revenues are generated by charging a fee per transaction,which is generally paid by the travel supplier, based upon the number oftransactions involved in the booking. We record and charge one transaction foreach segment of an air travel itinerary (e.g., four transactions for around-trip airline ticket with one connection each way). We record and chargeone transaction for each car rental, hotel, cruise or tour company booking,regardless of the length of time associated with the booking. Fees paid bytravel suppliers vary according to the levels of functionality at which theycan participate in our GDS. These levels of functionality generally depend uponthe type of communications and real-time access allowed with respect to theparticular travel supplier’s internal systems.

·            Revenuesare based on the volume of transactions and are not dependent on the revenueearned by the supplier for that booking. We recognize revenue for airlinetravel transactions in the month the transactions are processed, net of currentactual and estimated future cancellations for transactions processed in thatmonth. Revenues for other types of travel transactions are recognized at thetime the booking is used by the traveler.

Set forth below isa chart illustrating the flow of payments in a typical consumer travel bookingprocessed by us pursuant to our traditional business model.

 
| 1 roundtrip airline ticket (one connection each way) |   | 4 transactions |
|------------------------------------------------------|--------|----------------|
| 1 car rental (3 days)                                |   | 1 transaction  |
| 1 hotel reservation (3 days)                         |   | 1 transaction  |
|                                                 |   | 6 transactions |

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*                                         Transactionand inducement fees are for illustrative purposes only.

·       Information technologyservices revenues are generated by charging a fee for hosting travel supplierinventory, reservations, flight operations and other computer applicationswithin our data center and by providing software development and maintenanceservices on those applications. Fees paid by hosted travel suppliers aregenerally based upon the volume of messages processed on behalf of the travelsupplier or software development hours performed on the travel supplier’sapplications. In some cases, we charge fees for access to and usage of certainof our proprietary applications on a per transaction basis. Revenues forinformation technology services are recognized in the month that the servicesare provided and are recorded net of the value of the FASA credits earned byDelta and Northwest in the corresponding month.

Our costs and expenses consist of the cost ofelectronic travel distribution and information technology services revenues,selling, general and administrative expenses and depreciation and amortization:

·       Cost of electronic traveldistribution revenues consists primarily of inducements paid to travelagencies, technology development and operations personnel, software costs,network costs, hardware leases, maintenance of computer and network hardware,the data center building, help desk and other travel agency supportheadcount.  Cost of information technology services revenues consistsprimarily of technology development and operations personnel, software costs,network costs, hardware leases, depreciation of computer hardware and the datacenter building, amortization of capitalized software and maintenance of computerand network hardware.

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·       Selling, general andadministrative expenses consist primarily of sales and marketing, labor andassociated costs, advertising services, professional fees, a portion of theexpenses associated with our facilities, depreciation of computer equipment,furniture and fixtures and leasehold improvements, internal management costsand expenses for finance, legal, human resources and other administrativefunctions.

**CriticalAccounting Policies**

The discussion and analysis of our financial conditionand results of operations is based on our consolidated financial statements,which have been prepared in accordance with accounting principles generallyaccepted in the United States. The preparation of these financial statementsrequires us to make estimates and judgments that affect our reported assets andliabilities, revenues and expenses, and other financial information. Actualresults may differ significantly from these estimates, and our reportedfinancial condition and results of operations could vary under different assumptions and conditions. In addition, ourreported financial condition and results of operations could vary due to achange in the application of a particular accounting standard.

We regard an accounting estimate underlying ourfinancial statements as a “critical accounting estimate” if the accountingestimate requires us to make assumptions about matters that are highlyuncertain at the time of estimation and if different estimates that reasonablycould have been used in the current period, or changes in the estimate that arereasonably likely to occur from period to period, would have had a materialeffect on the presentation of financial condition, changes in financialcondition, or results of operations.

Prior to January 1, 2006, the Partnership accountedfor employee stock options and restricted stock awards in accordance with SFASNo. 123, *Accounting for Stock- BasedCompensation* (“SFAS No. 123”). In December 2004, the FASB issuedSFAS No. 123(R), *Share-Based Payment*(“SFAS No. 123(R)”), which is a revision of SFAS No. 123. The Partnershipadopted the provisions of SFAS No. 123(R) effective January 1, 2006. Like SFASNo. 123, SFAS No. 123(R) requires the use of various assumptions in determiningthe amount of compensation expense to recognize. Upon adoption of SFAS No.123(R), the Partnership changed certain of its assumptions, including thefollowing:

·                  *Forfeiture rates* — The Partnership changedfrom using actual forfeitures as allowed by SFAS No. 123 to using estimatedforfeitures as required by SFAS No. 123(R).

·                  *Expected life*—Due to a lack of substantialhistory regarding the timing of exercises (the Partnership was formed onlyrecently—June 30, 2003), the Partnership changed from using an estimateapproximating the vesting period to using the simplified method allowed byStaff Accounting Bulletin (SAB) No. 107 *,Share-Based Payment* , for estimating the expected term equal to themidpoint between the vesting period and the contractual term.

·                  *Expected volatility*—Prior to January 1,2006, the Partnership estimated expected volatility to approach zero as theunderlying stock is not publicly traded. As required by SFAS No. 123(R), thePartnership has estimated the volatility of the underlying stock using thehistorical volatility experienced by one of its major competitor’spublicly-traded stock, an estimate which the Partnership has determinedreflects a more accurate forecast of volatility.

The Partnership elected to use themodified-prospective transition method in adopting SFAS No. 123(R). Theadoption of SFAS No. 123(R), including the changes in the above assumptions,had no significant impact on income before income taxes, net income, cash flowfrom operations or cash flow from financing activities.

Other than as discussed above regarding the adoptionof SFAS No. 123(R), there have been no changes to our critical accountingpolicies or significant changes in assumptions or estimates that would affectsuch policies in the nine months ended September  30, 2006. Our critical accounting policiesare described in Item 7, “*Management’sDiscussion and Analysis of Financial Condition and Results of Operations”*in our Annual Report on Form 10-K for the year ended December 31, 2005.

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**Resultsof Operations**

The following table shows information derived from ourconsolidated statements of operations expressed as a percentage of revenues forthe periods presented.
| ** **                                                   | ** ** | **Three months ended**  | ** ** | **Nine months ended**   | ** ** |
|--------------------------------------------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| ** **                                                   | ** ** | **September 30,  2006** | ** ** | **September 30,  2005** | ** ** | **September 30,  2006** | ** ** | **September 30,  2005** | ** ** |
| Revenues:                                                    |       |                              |       |                              |       |   |   |   |   |
| Electronic travel  distribution                              |       | 91.8                              | %          | 92.8                              | %          | 92.4 | % | 92.8 | % |
| Information technology  services                             |       | 8.2                               |       | 7.2                               |       | 7.6 |   | 7.2 |   |
| Total revenues                                               |       | 100.0                             |       | 100.0                             |       | 100.0 |   | 100.0 |   |
| Operating expenses:                                          |       |                              |       |                              |       |   |   |   |   |
| Cost of revenues excluding developed technology amortization |       | 65.4                              |       | 68.6                              |       | 64.0 |   | 68.5 |   |
| Developed technology amortization                            |       | 2.5                               |       | 2.3                               |       | 2.2 |   | 2.4 |   |
| Total cost of revenues                                       |       | 67.9                              |       | 70.9                              |       | 66.2 |   | 70.9 |   |
| Selling, general and administrative expenses                 |       | 12.7                              |       | 10.6                              |       | 11.7 |   | 11.2 |   |
| Amortization of intangible assets                            |       | 4.3                               |       | 3.9                               |       | 4.0 |   | 3.7 |   |
| Total operating  expenses                                    |       | 84.9                              |       | 85.4                              |       | 81.9 |   | 85.8 |   |
| Operating income                                             |       | 15.1                              |       | 14.6                              |       | 18.1 |   | 14.2 |   |
| Total other expense, net                                     |       | 7.5                               |       | 6.7                               |       | 6.7 |   | 13.4 |   |
| Income before provision for income taxes                     |       | 7.6                               |       | 7.9                               |       | 11.5 |   | 0.8 |   |
| Income tax expense                                           |       | 0.3                               |       | 0.4                               |       | 0.3 |   | 0.4 |   |
| Net income                                                   |       | 7.3                               | %          | 7.5                               | %          | 11.2 | % | 0.4 | % |

 

The following table shows total transactions using theWorldspan GDS for the periods presented. The historical transaction data setforth below reflects the designations which were in effect for each periodpresented. We evaluate the classification of our travel agencies periodicallyand reclassify as appropriate.

**Worldspan Transaction Summary**

**(in millions)**
| ** **          | ** ** | **Three months ended** | ** ** | ** **                             | ** ** | **Nine months ended** | ** ** | ** **                       | ** ** |
|---------------------|------------|----------------------------------|------------|----------------------------------------|------------|---------------------------------|------------|----------------------------------|------------|
| ** **          | ** ** | **September 30,**

**2006** | ** ** | **September 30,**

** 2005** | ** ** | **%  Change**                   | ** ** | **September 30,**

**2006** | ** ** | **September 30,**

**2005** | ** ** | **%  Change** | ** ** |
| Traditional         |       | 22.5                             |       | 23.4                                   |       | (3.8                            | )%         | 73.5                             |       | 76.1 |   | (3.4 | )% |
| Online              |       | 22.4                             |       | 27.0                                   |       | (17.0                           | )          | 77.8                             |       | 84.1 |   | (7.5 | ) |
| Total  transactions |       | 44.9                             |       | 50.4                                   |       | (10.9                           | )%         | 151.3                            |       | 160.2 |   | (5.6 | )% |

 

**WorldspanRevenue Summary**

**(in millions)**
| ** **                       | ** ** | **Three months ended** | ** ** | ** **                       | ** ** | **Nine months ended** | ** ** | ** **                       | ** ** |
|----------------------------------|------------|----------------------------------|------------|----------------------------------|------------|---------------------------------|------------|----------------------------------|------------|
| ** **                       | ** ** | **September 30,**

**2006** | ** ** | **September 30,**

**2005** | ** ** | **%  Change**                   | ** ** | **September 30,**

**2006** | ** ** | **September 30,**

**2005** | ** ** | **%  Change** | ** ** |
|                             |       |                             |       |                             |       |                            |       |                             |       |   |   |   |   |
| Electronic  travel distribution  |       | $                                | 195.0      |                             | $          | 222.5                           |       | (12.4                            | )%         | $ | 670.9 |   | $ | 691.9 |   | (3.0 | )% |
| Information  technology services |       | 17.5                             |       | 17.2                             |       | 1.7                             |       | 55.4                             |       | 54.0 |   | 2.6 |   |
| Total revenue                    |       | $                                | 212.5      |                             | $          | 239.7                           |       | (11.3                            | )%         | $ | 726.3 |   | $ | 745.9 |   | (2.6 | )% |

 

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**WorldspanRevenue per Transaction Summary**
| ** **               | ** ** | **Three months ended** | ** ** | ** **                       | ** ** | **Nine months ended** | ** ** | ** **                       | ** ** |
|--------------------------|------------|----------------------------------|------------|----------------------------------|------------|---------------------------------|------------|----------------------------------|------------|
| ** **               | ** ** | **September 30,**

**2006** | ** ** | **September 30,**

**2005** | ** ** | **%  Change**                   | ** ** | **September 30,**

**2006** | ** ** | **September 30,**

** 2005** | ** ** | **%  Change** | ** ** |
| Revenue per  transaction |       | $                                | 4.34       |                             | $          | 4.41                            |       | (1.6                             | )%         | $ | 4.43 |   | $ | 4.32 |   | 2.5 | % |
|                     |       |                             |       |                             |       |                            |       |                             |       |   |   |   |   |
|                          |            |                                  |            |                                  |            |                                 |            |                                  |            |  |  |  |  |  |  |  |  |

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(1)                                  Revenueper transaction calculated as Electronic travel distribution revenue divided bytotal transactions.

***Comparison of theThree Months Ended September 30, 2006 and September 30, 2005***

*Revenues*

Total revenues decreased $27.2 million or 11.3% to$212.5 million from $239.7 million for the three months endedSeptember 30, 2006 and 2005, respectively.  Electronic traveldistribution revenues decreased $27.5 million or 12.4% to $195.0 million from$222.5 million for the three months ended September 30, 2006 and2005, respectively. This decrease was due to a 10.9% decline in total transactions,driven primarily by Expedia, and a 1.6% decrease in the average fee pertransaction, driven primarily by the new content agreement pricing which becameeffective in September 2006.  Informationtechnology services revenues increased $0.3 million or 1.7% to $17.5 millionfrom $17.2 million for the three months ended September 30, 2006 and 2005,respectively. The increase was primarily attributable to increased revenueassociated with the use of Worldspan Rapid RepriceSM Electronic Ticketing and Fares andPricing, partially offset by lower FASA revenue.

*Cost of Revenues Excluding DevelopedTechnology Amortization*

Cost of revenues excluding developed technologyamortization decreased $25.6 million or 15.6% to $138.9 million from$164.6 million for the three months ended September 30, 2006 and2005, respectively. Cost of revenues excluding developed technologyamortization as a percentage of total revenues decreased to 65.4% from 68.6%for the three months ended September 30, 2006 and 2005, respectively. The$25.6 million decrease was primarily driven by lower travel agency inducementexpenses and technology costs.

Cost of electronic travel distribution revenuesexcluding developed technology amortization decreased $23.5 million or 16.4% to$120.0 million from $143.5 million for the three months endedSeptember 30, 2006 and 2005, respectively. Cost of electronic traveldistribution revenues excluding developed technology amortization as apercentage of total electronic travel distribution revenue decreased to 61.6%from 64.5% for the three months ended September 30, 2006 and 2005,respectively. The $23.5 million decrease was primarily attributable to adecrease in inducements paid to travel agencies and a decrease in technologycosts. Inducements decreased due to fewer overall transactions due primarily tothe Expedia transaction movement to another GDS and lower overall inducementrates paid to agencies primarily in connection with the implementation of thenew content agreements in September 2006. Technology costs decreased due to therenegotiated IBM OIO Agreements (see “Operatingand Capital Lease Obligations” under the heading “Liquidity and CapitalResources”) and the continued migration of traditional travel agencies tothird-party owned equipment and networks and the migration of supplierconnections to less expensive IP-based connections.

Costof information technology services revenues excluding developed technologyamortization decreased $2.2 million or 10.2% to $18.9 million from$21.1 million for the three months ended September 30, 2006 and 2005,respectively. Cost of information technology services revenues excludingdeveloped technology amortization was 107.8% of information technology servicesrevenue for the three months ended September 30, 2006 as compared to122.7% for the three months ended September 30, 2005. This decrease wasprimarily caused by the reduced costs attributable to the hosting operationsand development resources for Delta and Northwest.

*Selling, General and Administrative Expenses*

Selling, general and administrative expenses increased$1.6 million or 6.3% to $27.0 million from $25.4 million for the threemonths ended September 30, 2006 and 2005, respectively. The increase wasprimarily attributable to a $3.7 million increase in bad debt expense,partially offset by decreased outside services of $1.2 million and employeecosts of $0.7 million. During the three months ended September 30, 2005, baddebt expense benefited from the full recovery on an outstanding customerbalance. As a percentage of total revenue, selling, general andadministrative expenses increased to 12.7% in the three months endedSeptember 30, 2006 from 10.6% in the prior year.

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Excluding theincrease in bad debt expense, selling, general and administrative expensesdecreased $2.1 million or 7.2% and were 12.1% of total revenue for the threemonths ended September 30, 2005 due primarily to lower revenues as a result ofthe factors discussed above.

*OperatingIncome*

Operating income decreased $2.9 million or 8.2% to$32.2 million from $35.0 million for the three months endedSeptember 30, 2006 and 2005, respectively. As a percentage of totalrevenue, operating income increased to 15.1% from 14.6% for the three monthsended September 30, 2006 and 2005, respectively. The dollar decrease isdue primarily to the above mentioned decrease in revenue, partially offset bythe decrease in cost of revenue excluding developed technology amortization.

*Net Interest Expense*

Net interest expense decreased $0.9 million or 5.7% to$14.9 million from $15.8 million for the three months endedSeptember 30, 2006 and 2005, respectively. The decrease in net interestexpense was primarily related to an increase in investment income.

*Income Tax Expense*

Income tax expense attributable to foreignjurisdictions decreased $0.2 million to $0.7 million from $0.9 million forthe three months ended September 30, 2006 and 2005, respectively. Thedecrease in income tax expense primarily relates to a decrease in taxableincome of our foreign subsidiaries during the three months ended September 30,2006.

*Net Income*

Net income decreased $2.6 million or 14.4% to $15.5million from $18.1 million for the three months ended September 30,2006 and 2005, respectively. The decrease was primarily due to a $2.9 milliondecline in operating income.

***Comparison of NineMonths Ended September 30, 2006 and September 30, 2005***

*Revenues*

Total revenues decreased $19.6 million or 2.6% to$726.3 million from $745.9 million for the nine months ended September 30, 2006and 2005, respectively. The decrease included the $10.5 million received duringthe second quarter of 2006 related to a contractual payment that was receivedfrom a certain former online travel agency in final settlement of adispute.  Excluding this receipt, revenue for the nine months endedSeptember 30, 2006 would have been $715.8 million or a $30.1 milliondecline.  This decrease was primarily due to a decline in transactions,partially offset by an increase in subscription-based technology servicesrevenues.

Electronictravel distribution revenues decreased $21.0 million or 3.0% to $670.9 millionfrom $691.9 million for the nine months ended September 30, 2006 and 2005,respectively. Absent the $10.5 million contractual payment mentioned above,electronic travel distribution revenues of $660.4 million were $31.5 million or4.6% lower than the same period in 2005. This decrease was due to a 5.6%decline in total transactions, partially offset by a 2.5% increase in theaverage fee per transaction. The 2.5% increase in average fee per transactionincludes the impact of the non-transaction based $10.5 million contractualpayment discussed above.  Without this contractual payment, the averagefee per transaction was essentially unchanged from the prior year.

Information technology services revenues increased$1.4 million or 2.6% to $55.4 million from $54.0 million for the nine monthsended September 30, 2006 and 2005, respectively. The increase was primarilyattributable to increased revenue associated with the use of Worldspan RapidReprice SM,Electronic Ticketing and Fares and Pricing partially offset by lower FASArevenue.

*Costof Revenues Excluding Developed Technology Amortization*

Cost of revenues excluding developed technologyamortization decreased $46.6 million or 9.1% to $464.6 million from $511.2million for the nine months ended September 30, 2006 and 2005, respectively.Cost of revenues excluding developed technology amortization as a percentage oftotal revenues decreased to 64.0% for the nine months ended September 30, 2006compared to 68.5% for the nine months ended September 30, 2005. The $46.6million decrease was primarily driven by lower inducements paid to travel agenciesdue to

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fewer transactionsand due to $11.3 million of minimum booking fees that were received fromcertain former online travel agencies related to the settlement of previouslydisputed amounts as well as lower technology costs and employee related costs.

Cost of electronic travel distribution revenuesexcluding developed technology amortization decreased $42.5 million or 9.5% to$404.5 million from $447.0 million for the nine months ended September 30, 2006and 2005, respectively. Cost of electronic distribution revenues excludingdeveloped technology amortization as a percentage of total electronic traveldistribution revenue was 60.3% for the nine months ended September 30, 2006compared to 64.6% for the nine months ended September 30, 2005. The decreasewas primarily attributable to decrease in inducement costs paid to travelagencies as well as decreases in technology costs, employee related costs, anddepreciation expense, partially offset by an increase in outside service costs.Inducements decreased due to the $11.3 million of minimum booking feesdiscussed above that were received in the first quarter of 2006. This agencyrevenue has been reclassified to inducement expense in accordance with EmergingIssues Task Force Issue No. 01-9, *Accountingfor Consideration Given by a Vendor to a Customer (Including a reseller of theVendor’s Products).* Excluding this agency revenue, inducementexpense would have decreased $16.3 million primarily due to fewer overalltransactions, partially offset by higher overall inducement rates. Technologycosts decreased due to the continued migration of traditional travel agenciesto third-party owned equipment and networks and the migration of supplierconnections to less expensive IP-based connections as well as the renegotiatedIBM OIO Agreements. Employee related costs declined from prior year due tolower headcount as a result of improved organizational effectiveness andefficiency and workforce reductions. Depreciation expense declined due to adecrease in agency equipment owned by us and various assets becoming fullydepreciated in July 2006 that existed at Acquisition. Outside service costsincreased primarily due to a higher volume of transactions in distributormarkets globally.

Cost of information technology services revenuesexcluding developed technology amortization decreased $4.1 million or 6.3% to$60.1 million from $64.2 million for the nine months ended September 30, 2006and 2005, respectively. Cost of information technology services revenuesexcluding developed technology amortization was 108.6% of informationtechnology services revenue for the nine months ended September 30, 2006as compared to 118.9% for the nine months ended September 30, 2005. Thisdecrease was primarily caused by the reduced costs attributable to the hostingoperations and development resources for Delta and Northwest.

*DevelopedTechnology Amortization*

Developed technology amortization decreased $1.8million or 10.1% to $16.2 million from $18.0 million for the nine months endedSeptember 30, 2006 and 2005, respectively. Developed technology amortizationwas 2.2% of total revenues for the nine months ended September 30, 2006 ascompared to 2.4% for the nine months ended September 30, 2005. The $1.8 milliondecrease was primarily the result of the write-down in the second quarter of2005 of certain purchased software to be enhanced and ultimately used inmulti-hosting services for smaller carriers. The carrying value of the softwarewas written down as a result of management’s decision to pursue other thirdparty solutions as a means to provide these services to smaller carriers aswell as management’s current evaluation of the current and potential revenuestream of the software, among other factors.

*Selling,General and Administrative Expenses*

Selling, general and administrative expenses increased$1.1 million or 1.4% to $84.7 million from $83.6 million for the nine monthsended September 30, 2006 and 2005, respectively. This $1.1 million increaseincluded a $5.3 million increase in bad debt expense due to a prior yearsettlement received on an outstanding customer balance.  Absent theincrease in bad debt expense, expenses for the current year decreased $4.2million or 4.7% from selling, general and administrative expenses for the prioryear period. The decrease is primarily due to a 5.1% decline in employee costsand  a 20.5% decline in rent andutilities. Employee costs declined due to a lower headcount from the prioryear.  Rent and utilities declined due to a reduction in the amount of officespace leased.   As a percentage of total revenue, selling, generaland administrative expenses increased to 11.7% from 11.2% in the prior year.Excluding the reduction in bad debt expense in the prior year, selling, generaland administrative expenses were 11.9% of total revenue for the nine monthsended September 30, 2005.

*Amortizationof Intangible Assets*

Amortization of intangible assets increased $1.4million or 5.2% to $29.0 million from $27.6 million for the nine months endedSeptember 30, 2006 and 2005, respectively. As a percentage of total revenue,amortization of intangible assets increased to 4.0% from 3.7% for the ninemonths ended September 30, 2006 and 2005, respectively. The $1.4 millionincrease is due to the acceleration of amortization in March 2006 of intangibleassets related to two online agencies with whom we no longer have an agreement.

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*OperatingIncome*

Operating income increased $26.2 million or 24.8% to$131.8 million from $105.6 million for the nine months ended September 30, 2006and 2005, respectively. As a percentage of total revenue, operating incomeincreased to 18.1% from 14.2% for the nine months ended September 30, 2006 and2005, respectively. The increase is due primarily to a decrease in operatingexpenses of $45.8 million or 7.2%, partially offset by a decrease of $19.6million or 2.6% in total revenue.

*Net Interest Expense*

Net interest expense increased $2.3 million or 5.5% to$46.0 million from $43.7 million for the nine months ended September 30, 2006and 2005, respectively. The increase in net interest expense was primarilyrelated to the increase in the interest rate on the Floating Rate Notes (asdefined below under the heading “—Liquidity and Capital Resources—Floating RateNotes and Senior Credit Facility”) and an increase in debt issuance costspartially offset by an increase in investment income.

*TotalOther Expense, Net*

Total other expense, net decreased $51.5 million to$48.3 million from $99.8 million for the nine months ended September 30, 2006and 2005, respectively. The decrease was primarily due to a $55.6 million losson extinguishment of debt in connection with the Refinancing Transactions (asdefined below under the heading “—Liquidity and Capital Resources—Use ofProceeds”) in February 2005.

*IncomeTax Expense*

Income tax expense decreased $1.3 million to $2.0million from $3.3 million for the nine months ended September 30, 2006 and2005, respectively. The decrease in income tax expense primarily relates to adecrease in taxable income of our foreign subsidiaries during the nine monthsended September 30, 2006.

*NetIncome*

Net income increased $78.9 million to $81.5 millionfrom $2.5 million for the nine months ended September 30, 2006 and 2005,respectively. The increase was primarily due to a $55.6 million loss on theextinguishment of debt associated with the Refinancing Transactions and to thereceipt of $11.3 million and $10.5 million, respectively, during the quartersended March 31, 2006 and June 30, 2006 in contractual payments from certain formeronline travel agencies in settlement of previous disputes.

**Liquidity and Capital Resources**

Our principal source of liquidity will be cash flowgenerated from operations, borrowings under capital lease obligations andborrowings under our 2005 Senior Credit Facility (as defined below). Ourprincipal uses of cash will be to fund our planned operating expenditures whichinclude operating expenses, capital expenditures, investments in our current aswell as future products and offerings, interest payments on our debt and anymandatory or discretionary principal payments of our debt. Based on our currentlevel of operations, we believe that our cash flow from operations, availablecash of $76.5 million and available borrowings under our revolving credit facilitywill be adequate to meet our future liquidity needs for the next12 months, although no assurance can be given. As of November 3, 2006, wehave $40.0 million in available borrowings under our revolving credit facilitywhich is a part of our 2005 Senior Credit Facility.  Our future operating performance and abilityto extend or refinance our indebtedness will be dependent on future economicconditions and financial, business and other factors that are beyond our control.Risk factors that could possibly affect the ability of our internally generatedfunds include, among other things:

·       reduced sales due todeclines in transaction volumes, movement of transactions to another GDS orreductions in price,

·       acts of global terrorism,and

·       bankruptcy filings of anyof the airlines that comprise a significant portion of our revenues.

EffectiveSeptember 14, 2005, Delta and Northwest, two of our significant suppliers,entered bankruptcy protection. Revenues generated by Delta and Northwest were$43.7 million and $63.5 million for the three months ended September 30, 2006 and2005,

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respectively, and $160.0million and $203.4 million for the nine months ended September 30, 2006 and2005, respectively.  These amounts represented approximately 21% and 26%of total revenues for the three months ended September 30, 2006 and 2005,respectively, and 22% and 27% for the nine months ended September 30, 2006 and2005, respectively. Individually, Delta and Northwest accounted for 12% and 9%,respectively, of total revenue for the three months ended September 30, 2006,and 13% and 9%, respectively, for the nine months ended September 30, 2006.

Pre-bankruptcy petition accounts receivable atSeptember 30, 2006 under our two primary agreements with Northwest was $15.0million, collectively. Pre-bankruptcy petition accounts receivable under thePartnership’s two primary agreements with Delta has been collected as ofSeptember 30, 2006. Post-bankruptcy petition accounts receivable at September30, 2006 under our two primary agreements with Delta and Northwest are $21.4million. We believe that our pre-bankruptcy petition accounts receivable fromNorthwest will likely be realized over an extended period of time. We believewe will continue to provide the services to the airlines and, absent furthersignificant deterioration in the financial condition of the airlines,post-bankruptcy petition accounts receivable are expected to be collected inaccordance with the terms of our current commercial agreements.

While under bankruptcy protection, Delta and Northwestcould petition the court to reject certain or all of the existing agreementswith us except for the Participating Carrier Agreement with Northwest, whichwas assumed by Northwest and received Bankruptcy court approval in June 2006. We are not aware of an action by either Delta or Northwest to reject anyagreements with us and, accordingly, continue to operate with the two airlinesunder our existing commercial agreements. See the heading “Airline ContentAgreements” for a discussion of the new five-year content agreement, which isan addendum to the Participating Carrier Agreement assumed by Northwest.Additional facts could become known or actions taken by either airline inbankruptcy that could impact our assessment of the collectibility and thusresult in a charge to earnings in future periods. Furthermore, we are not yetin a position to ultimately determine whether payments previously made to uswill be challenged or unwound in the bankruptcy proceedings.

Additionally, it is not possible for us to determinethe long term impacts of the Delta and Northwest bankruptcies at this time.Actions taken in the future by the airlines in the bankruptcy proceedings couldhave a material, adverse impact on our financial condition and cash flows. IfDelta was to reject our Participating Carrier Agreement (“PCA”), whichrepresent $18.1 million or 74% of total revenue generated by Delta for thethree months ended September 30, 2006, and $72.3 million or 77% of totalrevenue generated by Delta for the nine months ended September 30, 2006, itwould have a material, adverse impact on our financial condition and cashflows.

Should these airlines fail to successfully emerge frombankruptcy, there can be no assurance that our cash flow from operations andborrowings available under our senior credit facility would be adequate to meetour future liquidity needs without additional capital. Such capital may or maynot be available to us. For a more complete discussion of risk factors thatmight affect the availability of our internally generated funds, see “Item 1A.Risk Factors” in this report and in our annual report on Form 10-K for the yearended December 31, 2005.

At September 30, 2006, we had cash and cashequivalents of $76.5 million and working capital of $22.3 million ascompared to $49.5 million in cash and cash equivalents and working capitalof $1.4 million at September 30, 2005. The $27.0 million increase incash was primarily the result of increased operating income,  decreased costs associated with theRefinancing Transactions that occurred in February 2005 and the timing ofthe receipt of payments for international airline receivables from a clearinghouse before September 30, 2006. During 2005 these payments were not receiveduntil the middle of the subsequent month. The $20.9 million increase in workingcapital is primarily the result of higher cash and lower accrued expenses andaccounts payable, partially offset by lower accounts receivable.

Historically, we have funded our operations throughinternally generated cash. We generated cash from operating activities of$151.0 million for the nine months ended September 30, 2006 ascompared to $118.4 million for the nine months ended September 30,2005. The $32.6 million increase in cash flows from operating activities duringthe first nine months of 2006 as compared to the first nine months of 2005 isprimarily a result of receipts of minimum booking fees and contractual paymentsfrom certain former online travel agencies totaling $21.8 million during thefirst and second quarters of 2006 and the timing of the receipt of payments forinternational airline receivables as discussed above.

We used cash for investing activities of approximately$4.2 million for the nine months ended September 30, 2006 as comparedto $9.2 million for the nine months ended September 30, 2005. The$5.0 million decrease in cash used for investing activities during the firstnine months of 2006 as compared to the first nine months of 2005 primarilyresulted from decreased capital expenditures.

We used cash for financing activities of approximately$128.4 million for the nine months ended September 30, 2006 ascompared to $160.1 million for the nine months ended September 30,2005. The $31.7 million decrease in cash used for financing activities duringthe first nine months of 2006 as compared to the first nine months of 2005primarily resulted from the Refinancing Transactions that occurred inFebruary 2005. To finance the redemption of the WTI Preferred Stock andthe payment of the Consent Fee (as defined below under the heading “—Use ofProceeds”), we distributed $375.7 million and $8.6 million, respectively, toWTI. In addition, WTI redeemed the Delta subordinated note in January 2005and we distributed $36.1 million to WTI to finance this transaction.

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*FloatingRate Notes and Senior Credit Facility*

On February 11, 2005, we, WS Financing Corp. (“WSFinancing”), our wholly-owned domestic subsidiaries, as guarantors (the “GuarantorSubsidiaries”) and The Bank of New York Trust Company, N.A., as trustee,entered into an Indenture (the “Indenture”). Pursuant to the Indenture, theGuarantor Subsidiaries issued $300.0 million of Senior Second Lien SecuredFloating Rate Notes due 2011 (the “Floating Rate Notes”), secured on a second prioritybasis by substantially all of our assets and those of WS Financing and theGuarantor Subsidiaries. In addition, we, as borrower, WTI, and WS Holdingsentered into a new credit agreement (the “Credit Agreement”) with a syndicateof financial institutions as lenders. In connection with the closing under theCredit Agreement, a new senior credit facility (the “2005 Senior CreditFacility”), consisting of a five-year revolving credit facility in the amountof $40.0 million and a new term loan facility due 2010 (the “Term Loan under2005 Senior Credit Facility”) in the amount of $450.0 million, was madeavailable to us. Obligations under the 2005 Senior Credit Facility and theguarantees are secured by a perfected first priority security interest in all ofour tangible and intangible assets and all of the tangible and intangibleassets of WTI and each of the Guarantor Subsidiaries, subject to customaryexceptions, and a pledge of (i) all of the membership interests of WS HoldingsLLC owned by WTI, (ii) all of the partnership interests owned by WTI and WSHoldings LLC, and (iii) all of the capital stock of our Guarantor Subsidiariesand significant portions of our holdings in foreign subsidiaries.

At our option, the interest rate applied to borrowingsunder the 2005 Senior Credit Facility is based on the LIBOR rate (as defined inthe Credit Agreement) plus the initial applicable margin of 2.75%. Thealternative rate is a base rate (generally defined as the sum of (i) thehigher of (x) the prime rate and (y) the federal funds effectiverate, plus one half percent (0.50%) per annum and (ii) an initialapplicable margin of 1.75%). Our borrowings under the 2005 Senior CreditFacility are subject to quarterly interest payments with respect to loansbearing interest at the base rate described above or at the end of each one,two, three or six month interest period for loans bearing interest at the LIBORrate described above.

The interest rate applicable to borrowings under theFloating Rate Notes is based on the three-month LIBOR rate plus 6.25%. AtSeptember 30, 2006, the three-month LIBOR rate was 5.4%.

On March 4, 2005, we entered into an interestrate swap with a notional amount that started at $508.4 million onNovember 15, 2005 and is amortized on a quarterly basis to $102.3 millionat November 15, 2008. The reset dates on the swap are February 15,May 15, August 15 and November 15 of each year until maturity onNovember 15, 2008. The notional amount as of September 30, 2006 is $434.9million. This agreement, which has been designated as a cash flow hedge, isbeing used to convert the variable component of the interest rates on certainindebtedness to a fixed rate of 4.3%, effective November 15, 2005. Becausethe critical terms of the swap match those of the debt it is hedging, the swapis considered a perfect hedge against changes in the fair value of the debt andthe hedge has resulted in no ineffectiveness being recognized in operations.Changes in the fair value of the swap are recognized as a component of accumulatedother comprehensive income in each reporting period. As of September 30, 2006,the total value of this swap was an asset of $4.1 million, including accruedinterest of $0.6 million. The accrued interest is included in other currentassets in the condensed consolidated balance sheet with the remainder of thetotal value included in other long-term assets.

On June 21, 2006, WTI, WS Holdings LLC, thePartnership, the lenders party thereto and JP Morgan Chase Bank, N.A., asadministrative agent (the “Administrative Agent”) entered into the SecondAmendment (the “Credit Amendment”) to the Credit Agreement.  The CreditAmendment amends the Credit Agreement to provide that the Partnership or WTI,as applicable, may, provided that no revolving credit loans are outstanding,repurchase up to a total combined $50.0 million aggregate principal amount ofthe Partnership’s and WS Financing’s outstanding Floating Rate Notes and/or WTI’sHoldco Notes (as defined below), including any such Floating Rate Notes orHoldco Notes held by affiliates of the Partnership and WTI provided that nodefault or event of default has occurred and is continuing.  As ofNovember 3, 2006 the Partnership has not repurchased any Floating Rate Notes orHoldco Notes.

The 2005 Senior Credit Facility requires us to meetfinancial tests, including without limitation, a minimum interest coverageratio and a maximum total leverage ratio. Also, the Indenture requires theGuarantor Subsidiaries to maintain a minimum fixed charge coverage ratio. In addition,the 2005 Senior Credit Facility contains customary covenants which, among otherthings, limit the incurrence of additional indebtedness, prepayments of otherindebtedness, liens and encumbrances and other matters customarily restrictedin a senior credit facility. The Indenture also includes certain restrictionson distributions from certain of our subsidiaries. As of September 30, 2006, webelieve we were in compliance with the applicable covenants under both the 2005Senior Credit Facility and the Indenture.

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*Useof Proceeds*

The net proceeds from the sale of the Floating RateNotes and the closing of the Term Loan under 2005 Senior Credit Facility, alongwith available cash, were used to (collectively referred to as the “RefinancingTransactions”):

·                  repay approximately $57.5 million ofthe outstanding balance of the then-existing senior term loan due 2007including any accrued and unpaid interest then outstanding under the thenexisting senior credit facility,

·                  purchasepursuant to a cash tender offer of $279.5 million of our outstanding 9 5/8%Senior Notes due 2011,

·                  distribute fundsto WTI to redeem WTI’s outstanding Preferred Stock at a redemption price equalto the face amount of WTI’s Preferred Stock plus accrued and unpaid dividendsto the redemption date for a total redemption price of approximately $375.7million,

·                  distribute fundsto WTI to pay a consent fee of $8.6 million (the “Consent Fee”) to certainrelated parties of CVC in connection with the Holdco Notes described below, and

·                  pay fees andexpenses related to the Refinancing Transactions.

As a result of the Refinancing Transactions describedabove, we recorded a loss on extinguishment of debt of $55.6 million during thethree months ended March 31, 2005.

Also in connection with the Refinancing Transactions,on February 16, 2005, we entered into an amendment to our AdvisoryAgreement with WTI to terminate all advisory and other fees payable under thatagreement as of January 1, 2005 in return for a prepayment of $7.7 millionpayable on or before December 15, 2005**.**We paid a total of $7.7 million in the third and fourth quarters of 2005.

*HoldcoNotes*

In connection with the Refinancing Transactions, onFebruary 16, 2005, WTI issued $43.6 million in new 11% Subordinated Notesdue 2013 (the “Holdco Notes”) to certain related parties of CVC and paid $0.4million in accrued and unpaid interest in exchange for the surrender andcancellation of all of the obligations owing by WTI related to the thenoutstanding subordinated notes due 2012. We periodically distribute funds toWTI to pay the interest on the Holdco notes. During the nine months endedSeptember 30, 2006 and 2005 we distributed $2.4 million and $2.1 million,respectively, to WTI for this purpose. For 2006 we expect to distribute $4.8million to WTI for this purpose.

*Operating and Capital LeaseObligations*

The Partnership has operating lease agreements whichare principally for software, equipment and office facilities. We also leaseequipment and software under capital lease obligations. As ofSeptember 30, 2006, our obligations under capital leases totaled$79.6 million.

On June 30, 2006, we signed amendments to the existingAsset Management Offering agreement (“AMO”), Enterprise Software Optionagreement (“ESO”) and the Websphere Software Special Option agreement (“WSSO”),collectively referred to as the “IBM OIO Agreements”.  The IBM OIOAgreements were extended from June 30, 2008 to June 30, 2011 with the optionfor two one-year renewal periods from June 30, 2011. We expect the amendmentsto reduce its operating expenses and cash out flows for the remainder of theterm of the amended agreements.

Consistent with prior treatment, we have accounted forthe amended IBM OIO Agreements collectively as a multiple element arrangementof hardware, software, and services. Under the terms of these agreements, wehave a remaining aggregate minimum commitment of $213.8 million at September30, 2006, plus additional contingent payments dependent upon the rate of growthof electronic travel distribution transaction volumes. Of the aggregate minimumcommitment, approximately $163.3 million represents future minimum leasepayments for leases classified as operating at September 30, 2006 andapproximately $50.5 million represents future minimum lease payments for leasesclassified as capital at September 30, 2006.

Effective September 29, 2006, we entered a leasingarrangement with IBM to lease new mainframe and storage devices.  This leasing arrangement increased capitallease obligations and property and equipment by $11,184.

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The future minimum amounts payable under the IBM OIOAgreements are as follows at September 30, 2006:

(dollars inthousands)
| ** **                                                                       | ** ** | **Total IBM OIO  Agreements** | ** ** | **IBM OIO Agreements  Operating Leases at  September 30, 2006** | ** ** | **IBM OIO Agreements  Capital Leases at  September 30, 2006** | ** ** |
|----------------------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|------------|
| 2006                                                                             |       | $                                       | 11,250     |                                                                                          | $          | 8,595                                                                                       |       | $ | 2,655 |   |
| 2007                                                                             |       | 45,000                                  |       | 34,378                                                                                        |       | 10,622                                                                                      |       |
| 2008                                                                             |       | 45,000                                  |       | 34,378                                                                                        |       | 10,622                                                                                      |       |
| 2009                                                                             |       | 45,000                                  |       | 34,378                                                                                        |       | 10,622                                                                                      |       |
| 2010                                                                             |       | 45,000                                  |       | 34,378                                                                                        |       | 10,622                                                                                      |       |
| Thereafter                                                                       |       | 22,500                                  |       | 17,189                                                                                        |       | 5,311                                                                                       |       |
| Total                                                                            |       | $                                       | 213,750    |                                                                                          | $          | 163,296                                                                                     |       | $ | 50,454 |   |
| Less imputed  interest (1)                                                       |       |                                    |       |                                                                                          |       | (7,579                                                                                      | )          |
| Present value of  net minimum lease payments related to IBM OIO Agreements       |       |                                    |       |                                                                                          |       | $                                                                                           | 42,875     |   |
| Present value of  net minimum lease payments related to other capital leases (2) |       |                                    |       |                                                                                          |       | 36,761                                                                                      |       |
| Total                                                                            |       |                                    |       |                                                                                          |       | $                                                                                           | 79,636     |   |
| Less current  maturities                                                         |       |                                    |       |                                                                                          |       | (15,309                                                                                     | )          |
| Long-term maturities                                                             |       |                                    |       |                                                                                          |       | $                                                                                           | 64,327     |   |

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(1)                                  Theinterest rate used in computing the present value of the minimum lease paymentsranges from approximately 5.30% to 7.25% depending on the asset being leased asrequired by SFAS No. 13.

(2)                                  Theinterest rate used in computing the present value of the minimum lease paymentsranges from approximately 4.2% to 12.0% depending on the asset being leased.

*FASAs*

Pursuant to the terms of the FASAs, we provide FASAcredits to Delta and Northwest to be applied against FASA service fee paymentsdue from these airlines to us. The FASA credits are structured and will beapplied through June 2012 in an amount up to an aggregate total of$70.8 million to each of Delta and Northwest as of September 30,2006, and are reflected as reductions to our FASA revenues in the correspondingperiods. The FASA credits are provided to Delta and Northwest in monthlyinstallments, with an annual amount of $16.7 million scheduled to beprovided to each of these founding airlines during the first six years of therespective FASA term, an annual amount of $9.2 million scheduled to beprovided to each of these founding airlines during the seventh and eighth yearsof the respective FASA term and an annual amount of $6.7 million scheduledto be provided to each of these founding airlines during the ninth year of therespective FASA term. In the event that the monthly FASA credits deliverable byus to Delta or Northwest are more than the FASA service fee payments due fromthe applicable airline, then we will be obligated to pay such excess to suchairline in cash.

Delta or Northwest may terminate its FASA due to afailure by us to satisfy the mainframe processing time, system availability orcritical production data performance standards under that agreement (whichrepresent performance standards which we have historically met under ourpredecessor services agreements with Delta and Northwest). Furthermore, such atermination by Delta or Northwest of its FASA constitutes an event of defaultunder our 2005 Senior Credit Facility. In the event that the event of defaultis waived by the applicable lenders under our senior credit facilities (asdefined in the subordination agreement executed by the founding airlines) orour senior credit facilities are no longer outstanding, then any remaining FASAcredits deliverable by us to the terminating airline will not be providedaccording to the initial nine year schedule specified above and willinstead be payable in cash to such airline as and when, and only to the extentthat, we are permitted to make such payments as “Restricted Payments” under therestricted payment covenant test contained in the indenture governing our 95/8% Senior Notes and the Floating Rate Notes. If a FASA is otherwiseterminated in accordance with its terms prior to the expiration of its term,such as a termination by either Delta or Northwest without cause, or isrejected by Delta or Northwest in bankruptcy, then the obligation to provide theremaining FASA credits or to make the remaining FASA credit payments thendeliverable or payable to the airline under the applicable FASA will terminate.See discussion of the Delta and Northwest bankruptcies under “Item2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations—Overview.” Our obligations to provide FASA credits or to make theFASA

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credit paymentswill not terminate if either or both of Delta and Northwest reduce or ceaseoperations in a way that reduces or eliminates the amount of airline serviceseither founding airline obtains under the FASAs, although an airline’s failureto comply with its software development minimum and exclusivity obligationswould constitute a breach of its agreement. If we terminate a FASA other thanas expressly permitted by the agreement, then we will be obligated to providethe scheduled FASA credits to the applicable airline by way of a monthly cashpayment rather than applying the FASA credits against FASA service fee paymentsdue from the airline. In the event that the monthly FASA credits deliverable byus to Delta or Northwest are more than the FASA service fee payments due fromthe applicable airline, then we will be obligated to pay such excess to suchairline in cash. In the event of our bankruptcy or insolvency, holders of oursenior debt (as defined in the subordination agreement executed by the foundingairlines), including the 9 5/8% Senior Notes and the Floating Rate Notes, willbe entitled to receive payments in full in cash before we may make any FASAcredit payments in cash. In that event, Delta and Northwest will, however,retain their rights to apply the scheduled FASA credit payments against theirobligations to pay us fees for our services under the FASAs. In the event thatwe wrongfully terminate a FASA, we will remain obligated to deliver the FASAcredits to the applicable airline by paying the credit amounts to theapplicable airline in cash on a monthly basis according to the nine-yearschedule described above. However, if we reject a FASA in a bankruptcy ofthe company, our FASA credit payment obligations to the applicable airline willmatch the obligations described above in a termination of a FASA by suchairline due to our failure to satisfy performance standards. Any FASA creditpayment obligations by us to an airline in such a bankruptcy will besubordinated to our senior debt (as defined in the subordination agreementexecuted by the founding airlines), including the 9 5/8% Senior Notes and theFloating Rate Notes.

*Taxes*

Because we are a limited partnership, our partnerswill owe taxes on all of the income that we generate in the United States. Weexpect that WTI will cause us to make distributions to it from time to timesufficient to cover all income taxes owed by WTI. Under the terms of our 2005Senior Credit Facility and the indentures governing our 9 5/8% Senior Notes andthe Floating Rate Notes, we are specifically permitted to make these taxdistributions. During the nine months ended September 30, 2006 we distributed$8.0 million to WTI for U.S. income taxes. We expect to distribute anadditional $8.0 million to WTI for 2006 taxes, although actual results ofoperations could cause this amount to differ materially.

**Capital Expenditures**

    Capital expenditures for propertyand equipment, including purchased assets, assets acquired under capital leasesand capitalized software, totaled $41.7 million (of which $4.4 millionwere cash capital expenditures) for the nine months ended September 30, 2006. Thisis an increase of $31.7 million from capital expenditures of $10.0 millionfor the nine months ended September 30, 2005. The increase is primarily due tothe renegotiation of the IBM OIO Agreements and the new IBM leasing arrangementas discussed above. We have estimated approximately $43.7 million forcapital expenditures in 2006, which relates to the renegotiation of the IBM OIOAgreements as well as normal growth in capacity requirements and routinereplacement and upgrades of equipment.

**Off-Balance Sheet Arrangements**

At September 30, 2006 and 2005, we did not haveany relationships with unconsolidated entities or financial partnerships, suchas entities often referred to as structured finance or special purposeentities, which would have been established for the purpose of facilitatingoff-balance sheet arrangements or other contractually narrow or limitedpurposes. We are, therefore, not materially exposed to any financing,liquidity, market or credit risk that could arise if we had engaged in suchrelationships.

**Effect of Inflation**

Inflation generally affects us by increasing our costsof labor, equipment and new materials. We do not believe that inflation has hadany material effect on our results of operations during the three months endedSeptember 30, 2006.

**Airline Content Agreements**

During the firstquarter of 2006, we signed a five-year content agreement with American.  During the second quarter of 2006, we signedfive-year content agreements with Continental, United and Northwest.  And, during the third quarter of 2006, wesigned a five-year content agreement with US Airways and a seven-year contentagreement with Delta. The Northwest agreement received Bankruptcy Courtapproval on June 15, 2006.  Inconjunction with the agreements, Worldspan has developed two new optionalproducts which were introduced into the marketplace in September 2006.  Through these new agreements, travel agencieshave the opportunity to access the airlines’ comprehensive published fares andinventory. The new content agreements have resulted in reduced transaction feesfrom participating airlines and reduced inducement fees paid to travel agencieswithin the territory as defined in the agreements.  Since the effective date of the new contentagreements, traditional travel agencies who adopted the optional productscomprised almost all of total U.S. traditional travel agency transactions.  For the third quarter, these new agreementshad, and are expected to continue to have, a significant negative impact on ourU.S. traditional agency business and also on our overall financial position andresults from operations.  However, as toour online travel agency business, we cannot predict at this time the ultimateimpact of these agreements on our operating income, as the overall impact willbe determined upon both the adoption of our two new optional product offeringsby online travel agencies within the territory and the accompanying inducementpayments required to be made to the online travel agencies by us, if any.  We are evaluating various measures tomitigate the adverse financial impact of these agreements while offering thenew products to our agency base and performing our obligations under the newairline content agreements.  However,there is no guarantee that these measures, if implemented by us, will besuccessful.

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**WorldspanCautionary Statement**

Statements in this report and the exhibits heretowhich are not purely historical facts, including statements about forecastedfinancial projections or other statements about anticipations, beliefs,expectations, hopes, intentions or strategies for the future, may beforward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended (the “Securities Act”) and Section 21Eof the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Readers are cautioned not to place undue reliance on forward-lookingstatements. All forward-looking statements are based upon information availableto the Company on the date this report was submitted. We undertake noobligation to publicly update or revise any forward-looking statements, whetheras a result of new information, future events or otherwise. Any forward-lookingstatements involve risks and uncertainties that could cause actual events orresults to differ materially from the events or results described in theforward-looking statements, including, but not limited to, risks oruncertainties related to: our revenues being highly  dependent on thetravel and transportation industries; airlines limiting their participation intravel marketing and distribution services; airlines altering their content orchanging the pricing of such content; or other changes within, or affecting,the travel industry. We may not succeed in addressing these and other risks.

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**ITEM 3.**                    QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of changes in value ofa financial instrument, derivative or non-derivative, caused by fluctuations ininterest rates, foreign exchange rates and equity prices. Changes in thesefactors could cause fluctuations in the results of our operations and cashflows. In the ordinary course of business, we are exposed to foreign currencyand interest rate risks. These risks primarily relate to the sale of productsand services to foreign customers and changes in interest rates on ourlong-term debt.

**ForeignExchange Rate Market Risk**

We consider the U.S. dollar to be the functionalcurrency for all of our entities. Substantially all of our net sales and themajority of our expenses during the three months ended September 30, 2006 and2005 were denominated in U.S. dollars. Therefore, foreign currency fluctuationsdid not materially impact our financial results in those periods. We haveforeign currency exposure arising from the remeasurement of our foreignsubsidiaries’ financial statements into U.S. dollars. The primary currencies towhich we are exposed to fluctuations include the euro and the British poundsterling. The fair value of our net foreign investments would not be materiallyaffected by a 10% adverse change in foreign currency exchange rates fromSeptember 30, 2006 levels.

**InterestRate Market Risk**

Our 2005 Senior Credit Facility is variable rate debt.Interest rate changes therefore generally do not affect the market value ofsuch debt but do impact the amount of our interest payments and, therefore, ourfuture earnings and cash flows, assuming other factors are held constant. As ofSeptember 30, 2006, we had variable rate debt of approximately $566.0 million,of which $434.9 million was hedged through an interest rate swap. Holding othervariables constant, including levels of indebtedness, a one hundred basis pointincrease in interest rates on our variable debt would have an estimated impacton 2006 pre-tax earnings and cash flows of approximately $1.3 million.

On March 4, 2005, we entered into an interestrate swap with a notional amount that will start at $508.4 million onNovember 15, 2005 and amortize on a quarterly basis to $102.2 millionat November 15, 2008. The reset dates on the swap are February 15,May 15, August 15 and November 15 each year until maturity onNovember 15, 2008. The notional amount as of September 30, 2006 is $434.9million. This agreement, which has been designated as a cash flow hedge, isbeing used to convert the variable component of interest rates on certainindebtedness to a fixed rate of 4.3%. As of September 30, 2006, the fair valueof the interest rate swap was $4.1 million including accrued interest of $0.6million.

**ITEM4.****                    CONTROLSAND PROCEDURES**

As of the end of the period covered by this report, weconducted an evaluation, under the supervision and with the participation ofour principal executive officer and principal financial officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) underthe Exchange Act). Based on this evaluation, our principal executive officerand principal financial officer concluded that our disclosure controls andprocedures are effective. There were no changes in our internal control overfinancial reporting that occurred during the quarter ended September 30,2006 which have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting.

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**PART II. OTHERINFORMATION**

**ITEM1.****                    LEGALPROCEEDINGS**

On September 19, 2005, we filed a lawsuit againstOrbitz in the United States District Court, Northern District of Illinois,Eastern Division (“Federal Suit”). Orbitz is one of our largest online travelagency customers and represented approximately 10% of our transaction volumefor the three and six month periods ended June 30, 2006. Our Federal Suitalleged that Orbitz accessed and used our seat map data in violation of the FederalComputer Fraud and Abuse Act (“FCFAA”) and in breach of our agreement withOrbitz.  Our Federal Suit contained several additional state-lawclaims.  On April 19, 2006, the court considering our Federal Suitdismissed our claim under the FCFAA and relinquished jurisdiction over ourstate-law claims against Orbitz without prejudice to us refiling our state-lawclaims in state court.  We filed an appeal with the United States Court ofAppeals for the Seventh Circuit on May 18, 2006.

We refiled our state-law claims in the Circuit Courtof Cook County, Illinois, County Department, Law Division.  Our complaintalleges that Orbitz’s improper accessing and use of our seat map data violatesthe Georgia Computer Systems Protection Act and our agreements with Orbitz, andthat Orbitz’s use of Galileo and ITA, competing computer reservation systems,constitutes breaches of our agreement with Orbitz.  We are seekinginjunctive relief to prevent the unauthorized accessing and use of our seat mapdata as well as to prevent Orbitz’s use of the services or data of Galileo andITA. We also seek monetary damages from Orbitz in excess of $109.0 million andreimbursement for our attorneys’ fees and costs.

After filing our Federal Suit, we learned that Orbitzfiled suit against us on September 16, 2005, in the Circuit Court of CookCounty, Illinois, County Department, Law Division, purporting to assert twocauses of action against us for violation of the Illinois Consumer Fraud Actand equitable estoppel. Orbitz  claimed that certain exclusivity, minimumsegment fee and 100% booking requirement provisions in our agreement wereillegal and in violation of public policy. In its suit, Orbitz seeks a courtorder precluding us from pursuing our breach of contract claims against Orbitz,an order terminating and rescinding the first and second amendments of ourcontract with Orbitz (which include, among other things, provisions containingcommitments from Orbitz with respect to its usage of our GDS through 2011),monetary damages in excess of $0.05 million, punitive damages and reimbursementfor attorneys’ fees and costs. Orbitz filed an amended complaint against us onJuly 5, 2006.  The amended complaint adds six counts, including claims ofbreach of contract, fraud and rescission, in addition to a declaratory judgmentrequest. ** ** The complaintseeks equitable and monetary relief, attorney’s fees and costs, monetarydamages in excess of $0.05 million and prejudgment interest. The Orbitz casehas been consolidated with our state court case. We believe that theallegations in the Orbitz complaint are without merit and we intend to defendagainst this action vigorously. If we are unable to satisfactorily resolve theclaims asserted by Orbitz and its lawsuit against us is successful, there wouldbe few or no restrictions to prevent Orbitz from moving a significant portionof its business from our GDS, which would have a material adverse effect on ourbusiness, financial condition and results of operations.

On July 26, 2006, Expedia and its affiliate, IACGlobal LLC, (collectively, “Expedia”) filed a lawsuit against us in theSuperior Court, King County, Washington.  Among other actions and requestsfor relief, the complaint requests a declaratory judgment from the courtregarding Expedia’s use of data and information provided by us as set forth inthe contract between the parties.  We believe that the allegations in theExpedia complaint are without merit and we intend to defend against thisaction.

We are involved in various other litigation proceedingsas both plaintiff and defendant.  In theopinion of our management, none of these other litigation matters, individuallyor in the aggregate, if determined adversely to us, would have a materialadverse effect on our business, financial condition, or results of operations.

**ITEM1A.****           RISKFACTORS**

*Asfurther described herein, our performance and financial results are subject torisks and uncertainties including, but not limited to, the following specificrisks. There are no material changes to the risk factors included in our annualreport on Form 10-K filed with the Securities and Exchange Commission on March3, 2006 as updated in our quarterly report on Form 10-Q filed with the SEC onMay 15, 2006 other than the risk factors below entitled** “Travel Supplier Cost Savings—Travel supplier cost savings efforts mayshift business away from us or cause us to reduce the fees we charge tosuppliers or increase the inducements we offer to travel agencies, therebyadversely affecting our electronic travel distribution revenues and inducementexpense,” “Content Agreements—Our efforts to obtainmore comprehensive content through airline content agreements may causedownward pressure on pricing and adversely affect our electronic traveldistribution revenue”and “Dependence on a Small Number ofOnline Travel Agencies—We are highly dependent on a small number of largeonline travel agencies, and the success of our business depends on continuingthese relationships and the continued growth of online travel commerce.”*

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**Risks Relating toOur Business**

**TravelSupplier Cost Savings—Travel supplier cost savings efforts may shift businessaway from us or cause us to reduce the fees we charge to suppliers or increasethe inducements we offer to travel agencies, thereby adversely affecting ourelectronic travel distribution revenues and inducement expense.**

Travel suppliers, particularly airlines, areaggressively seeking ways to reduce distribution costs and, through the use ofthe Internet and otherwise, are seeking to decrease their reliance on globaldistribution systems including us. There is ongoing pressure by airlines tosignificantly reduce their distribution costs. During the first quarter of 2006, we signed a five-year contentagreement with American.  During thesecond quarter of 2006, we signed five-year content agreements withContinental, United and Northwest.  And,during the third quarter of 2006, we signed a five-year content agreement withUS Airways and a seven-year content agreement with Delta.  The Northwest agreement received BankruptcyCourt approval on June 15, 2006.  Inconjunction with the agreements, Worldspan has developed two new optionalproducts which were introduced into the marketplace in September 2006.  Through these new agreements, travel agencieshave the opportunity to access the airlines’ comprehensive published fares andinventory. The new content agreements have resulted in reduced transaction feesfrom participating airlines and reduced inducement fees paid to travelagencies  within the territory as definedin the agreements.  Since the effectivedate of the new content agreements, traditional travel agencies who adopted theoptional products comprised almost all of total U.S. traditional travel agencytransactions.  For the third quarter, thesenew agreements had, and are expected to continue to have, a significantnegative impact on our U.S. traditional agency business and also on our overallfinancial position and results from operations. However, as to our online travel agency business, we cannot predict atthis time the ultimate impact of these agreements on our operating income, asthe overall impact will be determined upon both the adoption of our two newoptional product offerings by online travel agencies within the territory and theaccompanying inducement payments required to be made to the online travelagencies by us, if any.  We areevaluating various measures to mitigate the adverse financial impact of theseagreements while offering the new products to our agency base and performingour obligations under the new airline content agreements.  However, there is no guarantee that thesemeasures, if implemented by us, will be successful.

If a reduction in airline payments to us was coupledwith an increase in inducements or maintenance of present levels of paymentspaid by us, our business, financial condition and results of operations couldbe materially and adversely impacted. Further, travel suppliers haveincreasingly been providing direct access to their inventory through their ownwebsites through travel agencies and through travel supplier joint ventures,which potentially bypass GDSs. See the section captioned “RiskFactors—Competition—We operate in highly competitive markets, and we may not beable to compete effectively” under our Form 10-K Item 1 for furtherinformation. Some of these travel suppliers offer lower prices when theirproducts and services are purchased directly from these supplier-relateddistribution channels. These lower prices are not always available to us. Someof these travel suppliers are also not providing their lowest fares or othercontent to GDSs unless the GDSs agree to provide them with significantly lowertransaction fees or sometimes none at all. These practices may have the effectof diverting customers away from us to other distribution channels, includingwebsites, forcing us to significantly reduce our transaction fees or not havecontent available in our system, all of which could have a material adverseeffect on our electronic travel distribution revenues, inducement expense andfinancial condition. Moreover, consolidation among travel suppliers, includingairline mergers and alliances, may increase competition from thesesupplier-related distribution channels. In addition, some travel suppliers havereduced or eliminated commissions paid to both traditional and online travelagencies. The reduction or loss of commissions may cause travel agencies tobecome more dependent on other sources of revenues, such as traveler-paidservice fees and GDS-paid inducements. We may have to increase inducementpayments or incur other expenses in order to compete for travel agencybusiness.

**ContentAgreements—Our efforts to obtain more comprehensive content through airlinecontent agreements will cause downward pressure on pricing and may materiallyand adversely affect our electronic travel distribution revenues.**

Some airlines have differentiated the content thatthey provide to us and to our GDS competitors. Some content has been providedto GDSs at no additional charge under standard participation agreements, andother content, such as web fares, has been withheld unless the GDS agrees toprovide discounts, payments or other benefits to the airline. We have existingcontent agreements with most major carriers in the United States. Generally, inthese agreements, the airlines commit (subject to the exceptions contained inthe agreements) to provide traditional and online travel agencies covered bythe agreements in the territories covered by the agreements with substantiallythe same content (including web fares) it provides to the travel agencies ofother GDSs in exchange for payments from us and/or discounts to transactionfees to each airline and subject to us keeping steady the average transactionfees paid by each airline for travel agency transactions in the territoriescovered by the agreements. Further, we have executed a three-year contentagreement with British Airways to provide access to virtually all of theirpublished fares (including web fares) to some of our U.K. travel agencies. Webelieve that obtaining similar content from other major airline travelsuppliers and renewing existing content agreements is important to our abilityto compete, since other GDSs have also entered into content agreements withvarious airlines. Most of the content agreements we originally entered intowere for an initial three year period, and expire in 2006 and early 2007. Weare actively in discussions with our airline suppliers to renew or extend theseagreements. In fact, during the first quarter of 2006, we signed a five-yearcontent agreement with American.  Duringthe second quarter of 2006, we signed five-year content agreements withContinental, United and Northwest.  And,during the third quarter of 2006, we signed a five-year content agreement withUS Airways and a seven-year content agreement with Delta.  The Northwest agreement received BankruptcyCourt approval on June 15, 2006.  Theterms of these agreements became effective in the third quarter of 2006.  In conjunction with the agreements, Worldspanhas developed two new optional products which were introduced into themarketplace in September 2006.  Throughthese new agreements, travel agencies have the opportunity to access theairlines’ comprehensive published fares and inventory. The new content agreementshave resulted in reduced

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transaction fees from participating airlines andreduced inducement fees paid to travel agencies within the territory as definedin the agreements.  Since the effectivedate of the new content agreements, traditional travel agencies who adopted theoptional products comprised almost all of total U.S. traditional travel agencytransactions.  For the third quarter,these new agreements had, and are expected to continue to have, a significantnegative impact on our U.S. traditional agency business and also on our overallfinancial position and results from operations However, as to our online travel agency business, we cannot predict atthis time the ultimate impact of these agreements on our operating income, asthe overall impact will be determined upon both the adoption of our two newoptional product offerings by online travel agencies within the territory andthe accompanying inducement payments required to be made to the online travelagencies by us, if any.  We areevaluating various measures to mitigate the adverse financial impact of theseagreements while offering the new products to our agency base and performingour obligations under the new airline content agreements.  However, there is no guarantee that thesemeasures, if implemented by us, will be successful.

In addition, our content agreements, both existing andnew, are subject to several conditions, exceptions, term limitations andtermination rights. As existing content agreements come up for renewal, thereis no guarantee that the participating airlines will continue to provide theircontent to us to the same extent as they do at the current time. The loss orsubstantial reduction in the amount of content received from the participatingairlines could negatively affect our electronic travel distribution revenuesand financial condition. Further, should we fail to maintain competitivecontent and/or make acceptable inducement payments, our traditional and onlineagency subscribers could move transactions from us to competitors, thusnegatively affecting our business, financial condition and results ofoperations.  See “Supplier Content andTransaction Fees” under “Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations” for further detail.

**Dependenceon a Small Number of Online Travel Agencies—We are highly dependent on a smallnumber of large online travel agencies, and the success of our business dependson continuing these relationships and the continued growth of online travelcommerce.**

In 2005, Expedia, Orbitz, and Priceline representedapproximately 48% of our total transactions, with Expedia representingapproximately 32% of our total transactions and Orbitz representing approximately9% of our total transactions. If we were to lose all or a significant portionof, and not replace, the transactions generated by any of our material onlinetravel agencies, our electronic travel distribution revenues and financialcondition would be materially adversely impacted. In addition, if other onlinetravel agencies become more successful or new online travel agencies emerge andwe lose online transaction volumes as a result, our electronic traveldistribution revenues and financial condition (including the carrying value ofcertain intangibles) could be materially adversely impacted. See the sectioncaptioned “Uncertainty in Transaction Volumes from Online Travel Agencies”under “Item 7. Management’s Discussion and Analysis of Financial Condition andResults of Operations” for further information.

While we havelong-term contracts with Expedia, Orbitz, and Priceline, these agencies have avariety of termination rights and other rights to reduce their business withus.  Expedia has the right to renegotiatethe inducements payable to it by us every three years, and it can terminate itscontract with us if we cannot reach an agreement on inducements. Expediaannounced in May 2004 that it intends to diversify its GDS relationshipsbeyond using a single provider to process substantially all of its GDStransactions and that it intends to move a portion of its transactions toanother GDS provider. In October 2005, Expedia notified us of itsintention to move some portion but not all of its European transactions toanother GDS provider in 2006 Expedia announced in May 2006 that it hadcommenced booking at select points of sale certain European segments throughanother GDS. In July 2006, Expedia announced the commencement of processingtransactions in North America with another GDS. We have confirmed that some ofExpedia’s North American transactions are now being processed on anotherGDS. Expedia’s total transaction volume with us decreased significantlyfrom its transaction volume with us during the third quarter of 2005, primarilydue to a large number of transactions Expedia processed on another GDS duringSeptember 2006. We expect Expedia to substantially increase the number of itstransactions processed on another GDS in the fourth quarter of 2006 from thevolume it processed on another GDS in the third quarter. Expedia has furtherindicated to us that it could process almost all of its volume on another GDSin the near future. However, we believe that we will continue to process asizeable portion of Expedia’s transactions going forward, even if less than amajority of Expedia’s total bookings. The movement of Expedia’s transaction volume to another GDS has had, andin the future is expected to have, a significant adverse impact on ourfinancial position and results from operations.

Also, on July 26, 2006, Hotwire, a division ofExpedia, notified the Partnership of its intent to terminate its technologyservices agreement with us effective October 26, 2006. Hotwire ceasedprocessing transactions on the Worldspan GDS in October. For the three and ninemonth periods ended September 30, 2006, Hotwire generated revenue ofapproximately $1,723 and $7,412, respectively.

Pricelineannounced on February 10, 2006 that it signed an agreement with anotherGDS. Additionally, on June 13, 2006, Priceline notified us that it intended tobegin processing segments on another GDS as soon as July 28, 2006.  InOctober 2006, we confirmed that some of Priceline’s North American transactionsare now being processed on another GDS. We have not received any notificationfrom Priceline as to the volume of transactions that it intends to move.Currently, we cannot forecast the annual magnitude of any such movement oftransactions and therefore are unable to estimate the impact on its financialposition, results of operations and cash flows.

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Further,Orbitz is owned by Travelport, who also owns Galileo (a competitor of ours).Orbitz is one of our largest online travel agency customers. Our contract withOrbitz extends into 2011 subject to standard termination rights held by Orbitzincluding for-cause termination rights. Although we currently continue tooperate under these agreements, we cannot assure you that any travel agencywill not attempt to terminate its agreement with us or otherwise move businessto another GDS in the future. Any such termination or a significant reductionin transaction volumes would have a material adverse effect on our electronictravel distribution revenues and financial condition (including the carryingvalue of certain intangibles).

In September 2005, we and Orbitz each filedseparate complaints against the other with respect to certain disputes arisingunder our online agreement with Orbitz. If we are unable to satisfactorilyresolve the claims asserted against us by Orbitz, and its lawsuit against us issuccessful, there would be few or no restrictions to prevent Orbitz from movinga significant portion of its business from our GDS. See “Item 3. LegalProceedings.”

If Expedia, Priceline or Orbitz were to move amaterial portion of their respective transactions to other GDS providers, thePartnership’s business would be negatively and materially impacted.

In addition, ourgrowth strategy relies on the continuing growth in the travel industry of theInternet as a distribution channel. If consumers’ use of the Internet as amedium of commerce for travel transactions does not continue to grow or growsmore slowly than expected, our revenues and profit may be adversely affected.Consumers have historically relied on traditional travel agencies and travelsuppliers and are accustomed to a high degree of human interaction inpurchasing travel products and services. The growth of our business isdependent on the number of consumers who use the Internet to process traveltransactions increasing significantly.

**ITEM 2.    UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

We are wholly-owned by Worldspan Technologies Inc., orWTI, a privately owned corporation. There is no public trading market for ourequity securities or for those of WTI. As of November 3, 2006, there were 46holders of WTI Class A Common Stock and 1 holder of WTI Class B Common Stock.

On September 22, 2006, WTI entered into a stocksubscription agreement in connection with the exercise by an employee of hisoption to purchase 3,500 shares of WTI Class A Common Stock for an aggregatepurchase price of $0.04.  On September 27, 2006, WTI entered into a stocksubscription agreement in connection with the exercise by an employee of her optionto purchase 1,250 shares of WTI Class A Common Stock for an aggregate purchaseprice of $0.01.  These sales were exemptfrom registration under the Securities Act in reliance on Rule 506 promulgatedthereunder.

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**ITEM 6.    EXHIBITS**
| 10.101 |   | Content Agreement, dated as of July 10, 2006, by and  between Worldspan, L.P. and US Airways, Inc. and America West Airlines,  Inc.*** |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                   |
| 10.102 |   | Content Agreement, dated as of September 29, 2006,  by and between Worldspan, L.P. and Delta Air Lines, Inc.***                        |
|   |   |                                                                                                                                   |
| 31.1   |   | Certification of the Principal Executive Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                           |
|   |   |                                                                                                                                   |
| 31.2   |   | Certification of the Principal Financial Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                           |
|   |   |                                                                                                                                   |
| 32.1   |   | Certifications pursuant to 18 U.S.C. Section 1350,  as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.              |

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***                           Certainportions of this document have been omitted pursuant to a confidentialtreatment request.

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**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 
|                    |   | WORLDSPAN, L.P. |                                                                                |
|--------------------|--------|-----------------|-------------------------------------------------------------------------------------|
|               |   |            |                                                                                |   |
|               |   |            |                                                                                |   |
| November 10,  2006 |   | By:             | /s/ Rakesh Gangwal                                                                  |   |
| DATE               |   |            | Rakesh Gangwal                                                                      |   |
|               |   |            | Chairman, President and Chief Executive Officer  (principal executive officer) |   |
|               |   |            |                                                                                |   |
|               |   |            |                                                                                |   |
| November 10,  2006 |   | By:             | /s/ Kevin W. Mooney                                                                 |   |
| DATE               |   |            | Kevin W. Mooney                                                                     |   |
|               |   |            | Chief Financial Officer                                                             |   |
|               |   |            | (principal financial and accounting officer)                                        |   |

 

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