**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 June 30, 2006**                                                                                                                                        |
| ** **                                                                                                                                                                               | ** ** | ** **                                                                                    |
| **OR**                                                                                                                                                                                   |
| ** **                                                                                                                                                                               | ** ** | ** **                                                                                    |
| **o**                                                                                                                                                                                    | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                                                                     |       |                                                                                          |
| **For the  transition period from               To            ** |

** **

**Commission file number  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 August 8, 2006, Registrant’s parent had outstanding 85,257,698 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 JUNE 30, 2006**

**INDEX**

 
| **PART I:**  | ** ** | **FINANCIAL  INFORMATION**                                                                                                                                   |   |   |   |
|--------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|         |       |                                                                                                                                                         |   |   |   |
| Item  1.     |       | Condensed  Consolidated Financial Statements (Unaudited)                                                                                                     |   |   |   |
|         |       |                                                                                                                                                         |   |   |   |
|         |       | Condensed Consolidated Balance Sheets — June 30, 2006  and December 31, 2005                                                                            |   |   |   |
|         |       |                                                                                                                                                         |   |   |   |
|         |       | Condensed Consolidated Statements of Operations —  Three months and six months ended June 30, 2006 and three months and six  months ended June 30, 2005 |   |   |   |
|         |       |                                                                                                                                                         |   |   |   |
|         |       | Condensed Consolidated Statements of Changes in  Partners’ Capital — Six months ended June 30, 2006                                                |   |   |   |
|         |       |                                                                                                                                                         |   |   |   |
|         |       | Condensed Consolidated Statements of Cash Flows — Six  months ended June 30, 2006 and June 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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**PART I. FINANCIAL INFORMATION**

**ITEM 1.**                    FINANCIALSTATEMENTS

**Worldspan, L.P.Condensed Consolidated Balance Sheets(dollars in thousands)(Unaudited)**

 
| ** **                                      | ** ** | **June 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|-------------------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| **Assets**                                      |       |                        |       |                            |       |
| Current assets                                  |       |                        |       |                            |       |
| Cash and cash equivalents                       |       | $                           | 81,637     |                            | $          | 58,093 |   |
| Trade accounts receivable, net                  |       | 99,209                      |       | 97,984                          |       |
| Prepaid expenses and other current assets       |       | 15,676                      |       | 16,992                          |       |
| Total current assets                            |       | 196,522                     |       | 173,069                         |       |
| Property and  equipment, net                    |       | 99,748                      |       | 91,283                          |       |
| Deferred charges                                |       | 24,859                      |       | 24,392                          |       |
| Debt issuance  costs, net                       |       | 12,498                      |       | 14,626                          |       |
| Supplier and  agency relationships, net         |       | 218,445                     |       | 236,981                         |       |
| Developed  technology, net                      |       | 172,318                     |       | 183,254                         |       |
| Trade name                                      |       | 72,142                      |       | 72,142                          |       |
| Goodwill                                        |       | 111,803                     |       | 111,803                         |       |
| Other intangible  assets, net                   |       | 27,702                      |       | 29,106                          |       |
| Other long-term  assets                         |       | 55,865                      |       | 52,194                          |       |
| Total assets                                    |       | $                           | 991,902    |                            | $          | 988,850 |   |
|                                            |       |                        |       |                            |       |
| **Liabilities and Partners’  Capital**     |       |                        |       |                            |       |
| Current liabilities                             |       |                        |       |                            |       |
| Accounts payable                                |       | $                           | 10,574     |                            | $          | 16,847 |   |
| Accrued expenses                                |       | 156,901                     |       | 144,738                         |       |
| Current portion of capital lease obligations    |       | 13,510                      |       | 17,863                          |       |
| Current portion of long-term debt               |       | 4,000                       |       | 4,000                           |       |
| Total current liabilities                       |       | 184,985                     |       | 183,448                         |       |
| Long-term  portion of capital lease obligations |       | 57,497                      |       | 36,555                          |       |
| Long-term debt                                  |       | 582,500                     |       | 667,500                         |       |
| Pension and  postretirement benefits            |       | 57,501                      |       | 60,328                          |       |
| Other long-term  liabilities                    |       | 9,890                       |       | 9,510                           |       |
| Total liabilities                               |       | 892,373                     |       | 957,341                         |       |
| Commitments and  contingencies                  |       |                        |       |                            |       |
| Partners’  capital                         |       | 99,529                      |       | 31,509                          |       |
| Total  liabilities and Partners’ capital   |       | $                           | 991,902    |                            | $          | 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** | ** ** | **Six months ended** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                    | ** ** | **June 30, 2006**      | ** ** | **June 30, 2005**    | ** ** | **June 30, 2006** | ** ** | **June 30, 2005** | ** ** |
|                                                          |       |                             |       |                           |       |   |   |   |   |
| **Revenues**                                                  |       |                             |       |                           |       |   |   |   |   |
| Electronic  travel distribution                               |       | $                                | 233,200    |                           | $          | 227,481 |   | $ | 475,928 |   | $ | 469,439 |   |
| Information  technology services                              |       | 18,484                           |       | 18,150                         |       | 37,854 |   | 36,774 |   |
| Total revenues                                                |       | 251,684                          |       | 245,631                        |       | 513,782 |   | 506, 213 |   |
| **Operating Expenses**                                        |       |                             |       |                           |       |   |   |   |   |
| Cost of revenues                                              |       |                             |       |                           |       |   |   |   |   |
| Cost of revenues excluding developed technology  amortization |       | 161,853                          |       | 168,470                        |       | 325,675 |   | 346,612 |   |
| Developed technology amortization                             |       | 5,388                            |       | 6,891                          |       | 10,808 |   | 12,589 |   |
| Total cost of revenues                                        |       | 167,241                          |       | 175,361                        |       | 336,483 |   | 359,201 |   |
| Selling, general  and administrative                          |       | 30,049                           |       | 25,535                         |       | 57,692 |   | 58,151 |   |
| Amortization of  intangible assets                            |       | 9,037                            |       | 9,135                          |       | 19,941 |   | 18,270 |   |
| Total operating expenses                                      |       | 206,327                          |       | 210,031                        |       | 414,116 |   | 435,622 |   |
| Operating income                                              |       | 45,357                           |       | 35,600                         |       | 99,666 |   | 70,591 |   |
| **Other Income (Expense)**                                    |       |                             |       |                           |       |   |   |   |   |
| Interest  expense, net                                        |       | (14,950                          | )          | (15,573                        | )          | (31,214 | ) | (27,902 | ) |
| Loss on  extinguishment of debt                               |       | —                           |       | —                         |       | — |   | (55,597 | ) |
| Other, net                                                    |       | (157                             | )          | (11                            | )          | (1,102 | ) | (220 | ) |
| Total other expense, net                                      |       | (15,107                          | )          | (15,584                        | )          | (32,316 | ) | (83,719 | ) |
| Income (loss)  before provision for income taxes              |       | 30,250                           |       | 20,016                         |       | 67,350 |   | (13,128 | ) |
| Income tax  expense                                           |       | 741                              |       | 1,539                          |       | 1,384 |   | 2,457 |   |
| **Net income (loss)**                                         |       | $                                | 29,509     |                           | $          | 18,477 |   | $ | 65,966 |   | $ | (15,585 | ) |

 

Theaccompanying notes are an integral part of these condensed consolidatedfinancial 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                                                   |       | 65,966                      |       | —                                        |       | 65,966    |       |
| Change in fair value of derivative accounted for as  a hedge |       | —                      |       | 3,098                                         |       | 3,098     |       |
| Comprehensive  income                                        |       |                        |       |                                          |       | 69,064    |       |
| Distribution to  WTI                                         |       | (2,400                      | )          | —                                        |       | (2,400    | )          |
| Stock-based  compensation                                    |       | 1,356                       |       | —                                        |       | 1,356     |       |
| Balance at June 30,  2006                                    |       | $                           | 95,814     |                                          | $          | 3,715     |       | $ | 99,529 |   |

 

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)**

 
| ** **                                                                                | ** ** | **Six months ended** | ** ** |
|-------------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                                | ** ** | **June 30, 2006**    | ** ** | **June 30, 2005** | ** ** |
| Cash flows from  operating activities:                                                    |       |                           |       |   |   |
| Net income (loss)                                                                         |       | $                              | 65,966     |   | $ | (15,585 | ) |
| Adjustments to reconcile net income (loss) to net  cash provided by operating activities: |       |                           |       |   |   |
| Depreciation and amortization                                                             |       | 49,663                         |       | 51,187 |   |
| Amortization of debt issuance costs                                                       |       | 2,129                          |       | 1,594 |   |
| Loss on extinguishment of debt                                                            |       | —                         |       | 55,597 |   |
| Stock-based compensation                                                                  |       | 1,356                          |       | 1,408 |   |
| Loss on disposal of property and equipment, net                                           |       | 128                            |       | 322 |   |
| Other                                                                                     |       | (15                            | )          | — |   |
| Changes in  operating assets and liabilities:                                             |       |                           |       |   |   |
| Trade accounts receivable, net                                                            |       | (1,225                         | )          | (31,882 | ) |
| Prepaid expenses and other current assets                                                 |       | 1,314                          |       | 2,419 |   |
| Deferred charges                                                                          |       | (467                           | )          | 6,249 |   |
| Other long-term assets                                                                    |       | 332                            |       | 1,673 |   |
| Accounts payable                                                                          |       | (6,274                         | )          | (588 | ) |
| Accrued expenses                                                                          |       | 12,291                         |       | 3,217 |   |
| Pension and postretirement benefits                                                       |       | (2,827                         | )          | (2,385 | ) |
| Other long-term liabilities                                                               |       | 380                            |       | (209 | ) |
| Net cash provided by operating activities                                                 |       | 122,751                        |       | 73,017 |   |
| Cash flows from  investing activities:                                                    |       |                           |       |   |   |
| Purchase of property and equipment                                                        |       | (2,953                         | )          | (6,601 | ) |
| Proceeds from sale of property and equipment                                              |       | 150                            |       | 77 |   |
| Capitalized software for internal use                                                     |       | —                         |       | (19 | ) |
| Net cash used in investing activities                                                     |       | (2,803                         | )          | (6,543 | ) |
| Cash flows from  financing activities:                                                    |       |                           |       |   |   |
| Proceeds from issuance of debt, net of debt issuance  costs                               |       | —                         |       | 734,801 |   |
| Principal payments on capital leases                                                      |       | (9,004                         | )          | (9,517 | ) |
| Principal payments on debt                                                                |       | (85,000                        | )          | (92,488 | ) |
| Repurchase old notes                                                                      |       | —                         |       | (327,555 | ) |
| Distributions to and contributions from WTI, net                                          |       | (2,400                         | )          | (427,238 | ) |
| Net cash used in financing activities                                                     |       | (96,404                        | )          | (121,997 | ) |
| Net increase  (decrease) in cash and cash equivalents                                     |       | 23,544                         |       | (55,523 | ) |
| Cash and cash  equivalents at beginning of period                                         |       | 58,093                         |       | 100,474 |   |
| Cash and cash  equivalents at end of period                                               |       | $                              | 81,637     |   | $ | 44,951 |   |

 

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 limited partnership formed in1990. On June 30, 2003, Worldspan Technologies Inc. (“WTI”), formerly namedTravel Transaction Processing Corporation, formed by Citigroup Venture CapitalEquity Partners, L.P. (“CVC”) and Ontario Teachers’ Pension Plan Board (“OTPP”),indirectly acquired 100% of the outstanding partnership interests of thePartnership from affiliates of Delta Air Lines, Inc. (“Delta”), NorthwestAirlines, Inc. (“Northwest”) and American Airlines, Inc. (“American”) (the “Acquisition”).WTI owns all of the general partnership interests in the Partnership. WSHoldings LLC (“WS Holdings”), which is owned by WTI, is the sole limitedpartner of the Partnership, owning all of the limited partnership interests.

ThePartnership provides information, reservations, transaction processing and relatedservices for airlines, travel agencies and other travel-related entities. ThePartnership owns and operates a global distribution system (“GDS”) and providessubscribers with access to and use of this GDS. The Partnership also chargesairlines, hotels, car rental companies and others for the use of the GDS.

*Basis of Presentation.*   Theaccompanying unaudited condensed consolidated financial statements have beenprepared in accordance with accounting principles generally accepted in theUnited States for interim financial information and with the instructions toForm 10-Q and Article 10 of Regulation S-X. Accordingly, they do not includeall of the information and footnotes required by accounting principlesgenerally accepted in the United States for complete financial statements. Inthe opinion of management these financial statements contain all adjustments,consisting of normal recurring accruals, necessary to present fairly thefinancial position, results of operations and cash flows for the periods indicated.The preparation of financial statements in accordance with accountingprinciples generally accepted in the United States requires management to makeestimates and assumptions that affect the amounts reported in the financialstatements and the accompanying notes. Operating results for the three and sixmonths ended June 30, 2006 and June 30, 2005 are not necessarily indicative ofresults that may be expected for any other interim period or for the yearending December 31, 2006. ****The Partnership’s quarterlyfinancial data should be read in conjunction with its consolidated financialstatements for the year ended December 31, 2005 (including the notes thereto),set forth in its annual report on Form 10-K filed with the Securities andExchange Commission on March 3, 2006.

*Derivative Instruments.*   Allderivatives are measured at fair value and recognized as either assets orliabilities on our consolidated balance sheets. Changes in the fair values ofderivative instruments that do not qualify as hedges and/or any ineffectiveportion 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.*   ThePartnership derives substantially all of its revenues from the travel industry.Accordingly, events, circumstances and changes affecting the travel industry,particularly changes in airline travel and the financial well-being of theparticipating airlines, can significantly affect the Partnership’s business,financial condition and results of operations. The Partnership’s customers areprimarily located in the United States and Europe.

Travelagencies are the primary channel of distribution for the services offered bytravel vendors. If the Partnership were to lose all or part of the transactionsgenerated by any significant travel agency and not replace such transactions,its business, financial condition and results of operations could be adverselyaffected.  One online agency subscriber, Expedia, generated transactionsin the Partnership’s electronic travel distribution segment which resulted inrevenues of approximately $66,554 and $66,185 for the three months ended June30, 2006 and 2005, respectively, and $142,140 and $139,547 for the six monthsended June 30, 2006 and 2005, respectively. These amounts represented 26% and 27% of total revenues for the threemonths ended June 30, 2006 and 2005, respectively, and 28% of total revenuesfor each of the six months ended June 30, 2006 and 2005, respectively.

On May 5, 2004, the Partnership announced thatit had been informed by Expedia of its intention to move a portion of itstransactions in North America to another GDS provider in order to diversify itsGDS relationships beyond using a single provider to process substantially allof its GDS transactions.  InOctober 2005, Expedia notified the Partnership of its intention to movesome portion but not all of its European transactions to another GDS providerin 2006. 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 has not specified the total worldwidevolumes or total percentages of worldwide volumes it intends to process throughother GDS providers. Currently, the Partnership cannot forecast the totalmagnitude of any such movement of transactions and therefore is unable toestimate the impact on its financial position, results of operations and cashflows. Also, on July 26, 2006, Hotwire, a division of Expedia notified thePartnership of its intent to terminate its technology services agreementeffective October 26, 2006. For the six months ended June 30, 2006, Hotwiretransactions generated approximately $5.7 million in revenue.

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Additionally, on June 13, 2006, Priceline, one of thePartnership’s largest online travel agency customers, notified the Partnershipthat it intends to begin processing segments on another GDS as soon as July 28,2006.  To date, there has not been anysignificant movement of Priceline’s transactions to another GDS nor has thePartnership received any notification from Priceline as to the volume oftransactions that it intends to move. Currently, the Partnership cannotforecast the magnitude of any such movement of transactions and therefore isunable to estimate the impact on its financial position, results of operationsand cash flows.

Furthermore as morefully discussed in Note 5, if the Partnership is unableto satisfactorily resolve the claims asserted against it by Orbitz, Worldspan’ssecond largest online travel agency, and its lawsuit against the Partnership issuccessful, there would be few or no restrictions to prevent Orbitz from movinga significant portion of its business from Worldspan’s GDS. If Expedia,Priceline or Orbitz were to move a material portion of their respectivetransactions to other GDS providers, the Partnership’s business would benegatively and materially impacted.

Adevelopment within the GDS industry over the past several years involves thecompetitive need for GDSs to maintain full content, including web fare content,for distribution to traditional and online agency subscribers.  In 2006,Worldspan has entered into long-term content agreements with certain majordomestic airlines such as, American, Continental, United, Northwest and U.S.Airways.  Subject to termination rights, these new agreements continueuntil 2011.  Should Worldspan fail to maintain competitive content, itstraditional and online agency subscribers could move transactions tocompetitors with access to this content, thus negatively affecting thePartnership’s business, financial condition and results of operations and cashflows. See Note 11 for a discussion of Worldspan’s content agreements.

Furthermore,the Partnership charges airline carriers, rental car companies, hotels andother providers of travel products and services (collectively referred to as “suppliers”)for electronic travel distribution services and information technologyservices.

EffectiveSeptember 14, 2005, Delta and Northwest, both significant suppliers of thePartnership, entered bankruptcy protection. Revenues generated by Delta andNorthwest were $53,908 and $64,135 for the three months ended June 30, 2006 and2005, respectively, and $116,297 and $139,984 for the six months ended June 30,2006 and 2005, respectively. These amounts represented approximately 22% and26% of total revenues for the three months ended June 30, 2006 and 2005,respectively, and 22% and 28% for the six months ended June 30, 2006 and 2005,respectively. Individually, Delta and Northwest accounted for 13% and 9%,respectively, of total revenue for the three and six months ended June 30,2006.

Pre-bankruptcypetition accounts receivable at June 30, 2006 under the Partnership’s twoprimary agreements with Northwest was $15,978. Pre-bankruptcy petition accountsreceivable under the Partnership’s two primary agreements with Delta has beencollected as of June 30, 2006. Post-bankruptcy petition accounts receivable atJune 30, 2006 under the Partnership’s two primary agreements with Delta andNorthwest are $26,566, collectively. 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-bankruptcypetition accounts receivable are expected to be collected in accordance withthe terms of the Partnership’s current commercial agreements.

Whileunder bankruptcy protection, Delta and Northwest could petition the court toreject certain or all of the existing agreements with the Partnership, exceptfor the Participating Carrier Agreement with Northwest, which was assumed byNorthwest and received Bankruptcy Court approval in June 2006. The Partnershipis not aware of an action by either Delta or Northwest to reject any agreementswith it and, accordingly continues to operate with the two airlines under itsexisting commercial agreements. See Note 11 for a discussion of the newfive-year content agreement, which is an addendum to the Participating Carrier Agreementassumed by Northwest. Additional facts could become known or actions taken byeither airline in bankruptcy that could impact the Partnership’s assessment ofthe collectibility and thus result in a charge to earnings in future periods.Furthermore, the Partnership is not yet in a position to ultimately determinewhether payments previously made to it will be challenged or unwound in thebankruptcy proceedings.

ThePartnership maintained an allowance for doubtful accounts of approximately$8,486 and $8,110 at June 30, 2006 and December 31, 2005, respectively.

*Accounting Pronouncements* .  InDecember 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 supersedesAPB Opinion No. 20, *Accounting Changes,*and SFAS No. 3, *Reporting Accounting Changes in InterimFinancial Statements*. SFAS No. 154 changes the requirements foraccounting for and reporting of changes in accounting principles. The statementrequires the retroactive application to prior 

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periods’ financial statements of changes in accountingprinciples, unless it is impracticable to determine either the period specificeffects or the cumulative effect of the change. SFAS No. 154 does not changethe guidance for reporting the correction of an error in previously issuedfinancial statements or the change in an accounting estimate. SFAS No. 154became effective for accounting changes and corrections of errors made infiscal years beginning after December 15, 2005. As of and for the six monthsended June 30, 2006, SFAS No. 154 did not impact the Partnership’s consolidatedfinancial position or results of operations.

InFebruary 2006, the FASB issued SFAS No. 155, *Accountingfor Certain Hybrid Financial Instruments*. Under current generallyaccepted accounting principles an entity that holds a financial instrument withan embedded derivative must bifurcate the financial instrument, resulting inthe host and the embedded derivative being accounted for separately. SFASNo. 155 permits, but does not require, entities to account for financialinstruments with an embedded derivative at fair value thus negating the need tobifurcate the instrument between its host and the embedded derivative. SFASNo. 155 is effective as of the beginning of the first annual reportingperiod that begins after September 15, 2006. The Partnership believes thatSFAS No. 155 will not have a material effect on its consolidated financialcondition or results of operations.

InMarch 2006, the FASB issued SFAS No. 156, *Accountingfor Servicing of Financial Assets*. SFAS No. 156 amends SFASNo. 140, *Accounting for Transfers and Servicing ofFinancial Assets and Extinguishments of Liabilities*, to require thatall separately recognized servicing assets and servicing liabilities beinitially measured at fair value, if practicable. SFAS No. 156 permits,but does not require, the subsequent measurement of separately recognized servicingassets and servicing liabilities at fair value. An entity that uses derivativeinstruments to mitigate the risks inherent in servicing assets and servicingliabilities is required to account for those derivative instruments at fairvalue. SFAS No. 156 is effective as of the beginning of the first annualreporting period that begins after September 15, 2006. The Partnershipbelieves that SFAS No. 156 will not have a material effect on itsconsolidated financial condition or results of operations.

In July 2006, the FASB issued FASB InterpretationNo. 48, *Accounting for Uncertainty in Income Taxes—anInterpretation of FASB Statement 109* (“FIN 48”), which clarifies theaccounting for uncertainty in tax positions. FIN 48 prescribes a comprehensive model for recognizing, measuring,presenting and disclosing in the financial statements, tax positions taken orexpected to be taken on a tax return, including a decision whether to file ornot to file in a particular jurisdiction. This interpretation seeks to reducethe diversity in practice associated with certain aspects of the recognitionand measurement related to accounting for income taxes. FIN 48 provides thatthe tax effects from an uncertain tax position can be recognized in an entity’sfinancial statements, only if the position is more likely than not of beingsustained on audit, based on the technical merits of the position.  The provisions of FIN 48 are effective forfiscal years beginning after December 15, 2006, with the cumulative effect ofthe 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.

**2. Debt**

OnFebruary 11, 2005, the Partnership, WS Financing Corp. (“WS Financing”),the wholly-owned domestic subsidiaries of the Partnership, 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, thePartnership, WS Financing and the Guarantor Subsidiaries issued $300,000 ofSenior Second Lien Secured Floating Rate Notes due 2011 (the “Floating RateNotes”), secured on a second priority basis by substantially all of the assetsof the Partnership, WS Financing and the Guarantor Subsidiaries. In addition,the Partnership, as borrower, WTI, and WS Holdings entered into a new creditagreement (the “Credit Agreement”) with a syndicate of financial institutionsas lenders. In connection with the closing under the Credit Agreement, a newsenior credit facility (the “2005 Senior Credit Facility”), consisting of afive-year revolving credit facility in the amount of $40,000 and a new termloan facility due 2010 (the “Term Loan under 2005 Senior Credit Facility”) inthe amount of $450,000, was made available to the Partnership. Obligationsunder the 2005 Senior Credit Facility and the guarantees are secured by aperfected first priority security interest in all of the Partnership’s tangibleand intangible assets and all of the tangible and intangible assets of WTI andeach of the Guarantor Subsidiaries, subject to customary exceptions, and apledge of (i) all of the membership interests of WS Holdings LLC owned by WTI,(ii) all of the partnership interests owned by WTI and WS Holdings LLC, and(iii) all of the capital stock of the Partnership’s Guarantor Subsidiaries andsignificant portions of the Partnership’s holdings in foreign subsidiaries.

At thePartnership’s option, the interest rate applied to borrowings under the 2005Senior Credit Facility is based on the LIBOR rate (as defined in the CreditAgreement) plus the initial applicable margin of 2.75%. The alternative rate isa base rate (generally defined as the sum of (i) the higher of (x) theprime rate and (y) the federal funds effective rate, plus one halfpercent (0.50%) per annum and (ii) an initial applicable margin of1.75%).The interest rate applicable to borrowings under the Floating Rate Notesis based on the three-month LIBOR rate plus 6.25%. At June 30, 2006, thethree-month LIBOR rate was 5.5%. 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.

Thenet proceeds from the sale of the Floating Rate Notes and the closing of theTerm Loan under 2005 Senior Credit Facility, along with available cash of thePartnership, were used to (collectively referred to as the “RefinancingTransactions”):

9

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·                  repay approximately $57,488 of theoutstanding balance of the then-existing senior term loan due 2007 includingany accrued and unpaid interest then outstanding under the then existing seniorcredit facility,

·                  purchase pursuant to a cash tenderoffer of $279,500 of the Partnership’s outstanding 9 5/8% Senior Notes due2011,

·                  distribute funds to WTI to redeem WTI’soutstanding Preferred Stock at a redemption price equal to the face amount ofWTI’s Preferred Stock plus accrued and unpaid dividends to the redemption datefor a total redemption price of approximately $375,729,

·                  distribute funds to WTI to pay aconsent fee of $8,638 (the “Consent Fee”) to certain related parties of CVC inconnection with the Holdco Notes described below, and

·                  pay fees and expenses related to theRefinancing Transactions.

Inconnection with the Refinancing Transactions, on February 16, 2005, WTIissued $43,630 in new 11% Subordinated Notes due 2013 (the “Holdco Notes”) tocertain related parties of CVC and paid $365 in accrued and unpaid interest inexchange for the surrender and cancellation of all of the obligations owing byWTI related to the then outstanding subordinated notes due 2012.

As aresult of the Refinancing Transactions described above, the Partnershiprecorded a loss on extinguishment of debt of $55,597 during the three monthsended March 31, 2005.

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 Credit Amendment amends the CreditAgreement to provide that the Partnership or WTI, as applicable, may, providedthat no revolving credit loans are outstanding, repurchase up to a totalcombined $50,000 aggregate principal amount of the Partnership’s and WSFinancing’s outstanding Floating Rate Notes and/or WTI’s Holdco Notes,including any such Floating Rate Notes or Holdco Notes held by affiliates ofthe Partnership and WTI provided that no default or event of default hasoccurred and is continuing.  As of August8, 2006 the Partnership has not repurchased any Floating Rate Notes or HoldcoNotes.

OnMarch 4, 2005, the Partnership entered into an interest rate swap with anotional amount that began at $508,370 on November 15, 2005 and is amortized on a quarterly basisto $102,250 at November 15, 2008. The reset dates on the swap areFebruary 15, May 15, August 15 and November 15 of each yearuntil maturity on November 15, 2008. The notional amount as of June 30,2006 is $455,680. This agreement, which has been designated as a cash flowhedge, is being used to convert the variable component of the interest rates oncertain indebtedness to a fixed rate of 4.3%, effective November 15, 2005.Because the critical terms of the swap match those of the debt it is hedging,the swap is considered a perfect hedge against changes in the fair value of thedebt and the hedge has resulted in no ineffectiveness being recognized inoperations. Changes in the fair value of the swap are recognized as a componentof accumulated other comprehensive income in each reporting period. As of June30, 2006, the fair value of this swap was an asset of $6,986, which is includedin other long-term assets in the condensed consolidated balance sheet.

The2005 Senior Credit Facility requires the Partnership to meet financial tests,including without limitation, a minimum interest coverage ratio and a maximumtotal leverage ratio.  Also, the Indenture requires the GuarantorSubsidiaries to maintain a minimum fixed charge coverage ratio. In addition,certain non-financial covenants restrict the activities of the GuarantorSubsidiaries.

Long-term debt consistedof the following: 
| ** **                                       | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
|                                             |       |                    |       |                        |       |
| Term loan under  2005 Senior Credit Facility (1) |       | $                       | 286,000    |                        | $          | 371,000 |   |
| Floating Rate  Notes (2)                         |       | 300,000                 |       | 300,000                     |       |
| 9 5/8% Senior Notes (1)                          |       | 500                     |       | 500                         |       |
|                                             |       | 586,500                 |       | 671,500                     |       |
| Less current  portion of long-term debt          |       | 4,000                   |       | 4,000                       |       |
| Long-term debt,  excluding current portion       |       | $                       | 582,500    |                        | $          | 667,500 |   |
|                                             |       |                    |       |                        |       |

----

(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 August 8, 2006 had amarket value of approximately $285,650 basedon the quoted market price for such notes.  The remaining $10,000 ofFloating Rate Notes have not yet been registered with the Securities andExchange Commission.

10

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Duringthe six months ended June 30, 2006, the Partnership paid $85,000 in principalon the term loan, of which $2,000 were scheduled principal payments.

**3. Employee Benefit Plans**

The components of netpension and postretirement costs were as follows:
| ** **                                     | ** ** | **Pension benefits**    | ** ** | **Pension benefits**    | ** ** |
|------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                     | ** ** | **Three months  ended** | ** ** | **Three months  ended** | ** ** | **Six months  ended** | ** ** | **Six months  ended** | ** ** |
| ** **                                     | ** ** | **June 30,  2006**      | ** ** | **June 30,  2005**      | ** ** | **June 30,  2006** | ** ** | **June 30,  2005** | ** ** |
| Service cost                                   |       | $                            | —     |                         | $          | — |   | $ | — |   | $ | — |   |
| Interest cost                                  |       | 2,923                        |       | 2,892                        |       | 5,846 |   | 5,785 |   |
| Expected return  on plan assets                |       | (3,948                       | )          | (3,656                       | )          | (7,896 | ) | (7,312 | ) |
| Amortization of  transition obligation         |       | —                       |       | —                       |       | — |   | — |   |
| Amortization of  prior service cost            |       | —                       |       | —                       |       | — |   | — |   |
| Recognized net  actuarial loss                 |       | 32                           |       | 27                           |       | 64 |   | 54 |   |
| Net periodic pension  benefit (income) expense |       | $                            | (993       | )                            | $          | (737 | ) | $ | (1986 | ) | $ | (1,473 | ) |

 
| ** **                                     | ** ** | **Postretirement benefits**                  | ** ** | **Postretirement benefits**                  | ** ** |
|------------------------------------------------|------------|---------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                     | ** ** | **Three months  ended  June 30,  2006** | ** ** | **Three months  ended  June 30,  2005** | ** ** | **Six months  ended  June 30,  2006** | ** ** | **Six months  ended  June 30,  2005** | ** ** |
| Service cost                                   |       | $                                                 | 59         |                                              | $          | 66 |   | $ | 118 |   | $ | 132 |   |
| Interest cost                                  |       | 380                                               |       | 407                                               |       | 760 |   | 813 |   |
| Expected return  on plan assets                |       | —                                            |       | —                                            |       | — |   | — |   |
| Amortization of  transition obligation         |       | —                                            |       | —                                            |       | — |   | — |   |
| Amortization of  prior service cost            |       | —                                            |       | —                                            |       | — |   | — |   |
| Recognized net  actuarial loss                 |       | —                                            |       | —                                            |       | — |   | — |   |
| Net periodic pension  benefit (income) expense |       | $                                                 | 439        |                                              | $          | 473 |   | $ | 878 |   | $ | 945 |   |

 

EffectiveJanuary 1, 2002, the defined benefit pension plan was amended to excludeemployees hired on or after January 1, 2002. Effective December 31,2003, the Partnership froze all further benefit accruals under the definedbenefit pension plan.

**4. Related Party Transactions**

InFebruary 2005, the Partnership entered into the Refinancing Transactions. Certain of the parties to these transactions were related parties, includingWTI, CVC and OTPP.  See Note 2 for a full description of these matters.

Inconnection with the Refinancing Transactions, on February 16, 2005, thePartnership entered into an amendment to its Advisory Agreement with WTI toterminate all advisory and other fees payable under that agreement as ofJanuary 1, 2005 in return for a prepayment of $7,700 payable on or beforeDecember 15, 2005. The prepaid advisory fees are included in “Prepaidexpenses and other current assets” and “Other long-term assets” in theaccompanying consolidated balance sheets. The prepaid advisory fees are beingamortized on a straight line basis over the remaining term during which theservices are provided. The agreement expires in June 2013. During thethree and six month periods ended June 30, 2006, the Partnershiprecognized $226 and $453, respectively, of expense in connection with thisagreement.  During the three and six month periods ended June 30, 2005,the Partnership recognized a total of $226 and $828, respectively, of expenserelated to advisory fees.

OnJanuary 10, 2005, WTI entered into a Note Redemption Agreement (the “NoteRedemption Agreement”) with Delta.  Pursuant to the Note RedemptionAgreement, WTI redeemed the 10% Subordinated Note due 2012 in an originalprincipal amount of $45,000 issued by WTI to Delta on June 30, 2003, theadditional notes issued in lieu of cash interest and all accrued and unpaidinterest up to January 10, 2005 for $36,137.  The Partnership distributed$36,137 to WTI to finance this transaction.

Duringthe six months ended June 30, 2005, the Partnership distributed $4,700 to WTIto enable WTI to cover income taxes that it owed on the income generated by thePartnership in the United States and $1,587 to enable WTI to pay interestpayments on the Holdco Notes. 

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On June 15, 2006, thePartnership distributed a total of $2,400 to WTI to enable WTI to pay intereston its Holdco notes. No distributions were made to WTI during the six monthsended June 30, 2006 for income taxes.

Underthe WTI stock incentive plan, WTI offers restricted shares of its Common Stockand grants options to purchase shares of its Common Stock to certain employeesof the Partnership. As the options and restricted shares are being granted toemployees of the Partnership, the Partnership recognizes this value as anexpense over the period in which the options and restricted shares vest. SeeNote 10 for further discussion.

In2005 the Partnership entered into a master services agreement for technologyservices with Calleo Distribution Technologies Pvt. Ltd (“Calleo”). Additionally in 2005, the Partnership’s United Kingdom domiciled subsidiary,Worldspan Services Limited, entered into a distributor agreement with Calleofor the distribution of Worldspan’s services in the India sub-continent andother countries. In 2006, the master services agreement for technology serviceswith Calleo was terminated and the Partnership entered into a similar masterservices agreement for technology services with InterGlobe Technologies, Pvt.Ltd. (“IGT”). Mr. Rakesh Gangwal, Chairman, President and Chief ExecutiveOfficer of the Partnership, has a greater than 10% equity ownership interest inboth Calleo and IGT.  The master services agreement has an initial term often years, subject to termination rights. The distributor agreement alsohas an initial ten year term, subject to termination rights.  Paymentsunder the agreements are contingent upon bookings generated by Calleo. The Partnership has paid $691 and $481 to Calleo and IGT, respectively, duringthe three months ended June 30, 2006, and has paid $941 and $968 to Calleo andIGT, respectively, during the six months ended June 30, 2006.  The Partnership has a total of approximately$655 of accrued expenses owed to Calleo and IGT as of June 30, 2006.  The Partnership has also recorded a prepaidasset in the amount of $227 as of June 30, 2006 that relates to deferred costsand that will be amortized over the 120 month term of the agreement.

Duringthe three months ended June 30, 2006 the Partnership entered into an internetservice agreement with Time Warner Telecom, Inc. (“TWTC”). Mr. Kevin Mooney,Chief Financial Officer of the Partnership, is a director of TWTC. During thethree months ended June 30, 2006 there were no payments to TWTC and as of June30, 2006 there were no accrued expenses owed to TWTC.

**5. Commitments and Contingencies**

*Litigation*

On September 19, 2005, the Partnership filed a lawsuit against Orbitzin the United States District Court, Northern District of Illinois, EasternDivision (“Federal Suit”). Orbitz is one of the Partnership’s largest onlinetravel agency customers and represented approximately 10% of its transactionvolume for the three and six month periods ended June 30, 2006. The Partnership’sFederal Suit alleged that Orbitz accessed and used the Partnership’s seat mapdata in violation of the Federal Computer Fraud and Abuse Act (“FCFAA”) and inbreach of the  agreement withOrbitz.  The Partnership’s Federal Suitcontained several additional state-law claims. On April 19, 2006, the court considering the Partnership’s Federal Suitdismissed the claim under the FCFAA and relinquished jurisdiction over thePartnership’s state-law claims against Orbitz without prejudice to thePartnership refiling its state-law claims in state court.  The Partnership filed an appeal with theUnited States Court of Appeals for the Seventh Circuit on May 18, 2006.

On April 24, 2006, the Partnership refiled its state-law claims inthe Circuit Court of Cook County, Illinois, County Department, LawDivision.  The complaint alleges thatOrbitz’s improper accessing and use of the Partnership’s seat map data violatesthe agreements with Orbitz, and that Orbitz’s use of Galileo and ITA, competingcomputer reservation systems, constitutes breaches of the Partnership’sagreement with Orbitz.  The Partnershipis seeking injunctive relief to prevent the unauthorized accessing and use ofits seat map data as well as to prevent Orbitz’s use of the services or data ofGalileo and ITA. The Partnership also seeks monetary damages from Orbitz inexcess of $50,000 and reimbursement for its attorneys’ fees and costs.

After filing the Federal Suit, the Partnershiplearned that Orbitz filed suit against it on September 16, 2005, in the CircuitCourt of Cook County, Illinois, County Department, Law Division, purporting toassert two causes of action against it for violation of the Illinois ConsumerFraud Act and equitable estoppel. Orbitz claimed that certain exclusivity, minimum segment fee and 100% bookingrequirement provisions in the agreement were illegal and in violation of publicpolicy. In its suit, Orbitz seeks a court order precluding the Partnership frompursuing its breach of contract claims against Orbitz, an order terminating andrescinding the first and second amendments of the Partnership’s contract withOrbitz (which include, among other things, provisions containing commitments fromOrbitz with respect to its usage of the Worldspan GDS through 2011), monetarydamages in excess of $50, punitive damages and reimbursement for attorneys’fees and costs. Orbitz filed an amendedcomplaint against the Partnership on July 5, 2006. The amended complaint addssix counts, including claims of breach of contract, fraud and rescission, inaddition to a declaratory judgment request.****Thecomplaint seeks equitable and monetary relief, attorney’s fees and costs,monetary damages in excess of $50 and prejudgment interest.  The Partnership believes that the allegationsin the Orbitz complaint are without merit and it intends to defend against thisaction vigorously. If the Partnership is unable to satisfactorily resolve theclaims asserted by Orbitz and its lawsuit against the Partnership issuccessful, there would be few or no restrictions to prevent Orbitz from movinga significant portion of its business from the Worldspan GDS, which would havea material adverse effect on the Partnership’s business, financial conditionand results of operations.

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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 severally indemnify WTI and hold WTI harmless on a netafter-tax basis from and against any and all taxes of the Partnership and itssubsidiaries related to periods prior to the Acquisition. The Partnershipinformed the founding airlines of the receipt of these assessments and theindemnity obligation of the founding airlines under the Partnership InterestPurchase Agreement. As of June 30, 2006, the balance of the amounts due fromthe founding airlines was $1,892 based on the June 30, 2006 exchange rate.Because of the indemnity provision and other remedies available under theapplicable agreements, the Partnership believes that amounts paid to settle theGreek assessment will be recovered from the founding airlines and will not havean effect on the Partnership’s financial position or results of operations.

Additionally,in connection with the Acquisition of the Partnership in 2003, Delta, Northwestand American agreed to retain the rights and obligations of all tax mattersrelating to tax periods prior to June 30, 2003. However, the exercise ofthese rights could be successfully challenged in bankruptcy court.

On July 26, 2006, Expedia and its affiliate, IACGlobal LLC, (collectively, “Expedia”) filed a lawusit against the Partnershipin the Superior Court, King County, Washington. Among other actions and requests for relief, the complaint requests adeclaratory judgment from the court regarding Expedia’s use of data and informationprovided by the Partnership as set forth in the contract between theparties.  The Partnership believes thatthe allegations in the Expedia complaint are without merit and it intends todefend against this action vigourously.

Inaddition, the Partnership is currently involved in various claims related tomatters arising from the ordinary course of business. Management believes theultimate disposition of these actions will not materially affect the financialposition or results of operations of the Partnership.

*Operatingand Capital Leases*

OnJune 30, 2006, Worldspan signed amendments to the existing Asset ManagementOffering agreement (“AMO”), Enterprise Software Option agreement (“ESO”) andthe Websphere Software Special Option agreement (“WSSO”), collectively referredto as the “IBM Agreements”. The IBM Agreements were extended from June 30, 2008to June 30, 2011 with the option for two one-year renewal periods from June 30,2011.

Consistentwith prior treatment, the Partnership has accounted for the amended IBMAgreements collectively as a multiple element arrangement of hardware,software, and services. Under the terms of these agreements, the Partnershiphas a remaining aggregate minimum commitment of $225,000 at June 30, 2006, plusadditional contingent payments dependent upon the rate of growth of electronictravel distribution transaction volumes. Of the aggregate minimum commitment,approximately $171,890 represents future minimum lease payments for leasesclassified as operating at June 30, 2006 and approximately $53,110 representsfuture minimum lease payments for leases classified as capital at June 30,2006.

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The future minimum amounts payable under the IBMAgreements are as follows at June 30, 2006:
| ** **                                                                       | ** ** | **Total IBM  Agreements** | ** ** | **IBM Agreements  Operating Leases at  June 30, 2006** | ** ** | **IBM Agreements  Capital Leases at  June 30, 2006** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|
| 2006                                                                             |       | $                              | 22,500     |                                                                            | $          | 17,189                                                                        |       | $ | 5,311 |   |
| 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                                                                            |       | $                              | 225,000    |                                                                            | $          | 171,890                                                                       |       | $ | 53,110 |   |
| Less imputed interest  (1)                                                       |       |                           |       |                                                                            |       | (8,347                                                                        | )          |
| Present value of  net minimum lease payments related to IBM Agreements           |       |                           |       |                                                                            |       | $                                                                             | 44,763     |   |
| Present value of  net minimum lease payments related to other capital leases (2) |       |                           |       |                                                                            |       | 26,244                                                                        |       |
| Total                                                                            |       |                           |       |                                                                            |       | $                                                                             | 71,007     |   |
| Less current  maturities                                                         |       |                           |       |                                                                            |       | (13,510                                                                       | )          |
| Long-term  maturities                                                            |       |                           |       |                                                                            |       | $                                                                             | 57,497     |   |

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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 thefirst quarter of 2006, the Partnership collected outstanding previouslydisputed amounts regarding minimum booking fees owed by certain former onlinetravel agencies. The settlement resulted in the receipt of approximately$11,290 in minimum booking fees.  The receipts were classified in theaccompanying 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 a Customer (Includinga Reseller of the Vendor’s Product*s).  In the second quarter of 2006, the Partnershipcollected an outstanding previously disputed amount regarding excess messagingfees owed by one of these former online travel agencies. This final settlementresulted in the receipt of approximately $10,450 in fees which were classifiedin the accompanying statement of operations as revenue (because paymentsreceived from the agency exceeded payments to the agency). The contracts withthese agencies have been terminated.

**7. Business Segment Information**

ThePartnership’s operations are classified into two reportable business segments:electronic travel distribution and information technology services. ThePartnership’s two reportable business segments are managed separately based onfundamental differences in their operations. In addition, each business segmentoffers different products and services. The electronic travel distributionsegment distributes travel services of its suppliers to subscribers of theWorldspan GDS. By having access to the Worldspan GDS, subscribers are able tobook reservations with the suppliers. The information technology servicessegment provides technology services to Delta and Northwest and other companiesin the travel industry.

ThePartnership evaluates segment performance and allocates resources based onoperating income plus depreciation and amortization. The accounting policies ofthe reportable segments are the same as those described in the summary ofsignificant accounting policies. There are no intersegment sales.

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| ** **                           | ** ** | **Three months ended** | ** ** | **Six months ended** | ** ** |
|--------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                           | ** ** | **June 30,  2006**          | ** ** | **June 30,  2005**        | ** ** | **June 30,  2006** | ** ** | **June 30,  2005** | ** ** |
|                                 |       |                             |       |                           |       |   |   |   |   |
| Revenues                             |       |                             |       |                           |       |   |   |   |   |
| Electronic travel distribution       |       | $                                | 233,200    |                           | $          | 227,481 |   | $ | 475,928 |   | $ | 469,439 |   |
| Information technology services      |       | 18,484                           |       | 18,150                         |       | 37,854 |   | 36,774 |   |
| Total revenues                       |       | $                                | 251,684    |                           | $          | 245,631 |   | $ | 513,782 |   | $ | 506,213 |   |
| Operating income                     |       |                             |       |                           |       |   |   |   |   |
| Electronic travel distribution       |       | $                                | 51,208     |                           | $          | 44,261 |   | $ | 111,259 |   | $ | 86,043 |   |
| Information technology services      |       | (5,851                           | )          | (8,661                         | )          | (11,593 | ) | (15,452 | ) |
| Total operating income               |       | $                                | 45,357     |                           | $          | 35,600 |   | $ | 99,666 |   | $ | 70,591 |   |
| Depreciation and  amortization       |       |                             |       |                           |       |   |   |   |   |
| Electronic travel distribution       |       | $                                | 18,412     |                           | $          | 19,399 |   | $ | 39,060 |   | $ | 39,074 |   |
| Information technology services      |       | 5,431                            |       | 6,889                          |       | 10,603 |   | 12,113 |   |
| Total  depreciation and amortization |       | $                                | 23,843     |                           | $          | 26,288 |   | $ | 49,663 |   | $ | 51,187 |   |

 

ThePartnership’s principal administrative, marketing, product development and technicaloperations are located in the United States. Areas of operation outside ofNorth America include EMEA, Asia and Latin America which are primarily composedof selling and marketing functions.

Thefollowing table includes selected interim financial information for the threeand six months ended June 30, 2006 and June 30, 2005, respectively,related to our geographic areas.

 
| ** **       | ** ** | **Three months ended** | ** ** | **Six months ended** | ** ** |
|------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **       | ** ** | **June 30,  2006**          | ** ** | **June 30,  2005**        | ** ** | **June 30,  2006** | ** ** | **June 30,  2005** | ** ** |
| Geographic areas |       |                             |       |                           |       |   |   |   |   |
| Total revenues   |       |                             |       |                           |       |   |   |   |   |
| United States    |       | $                                | 218,806    |                           | $          | 207,708 |   | $ | 460,573 |   | $ | 430,874 |   |
| Foreign          |       | 32,878                           |       | 37,923                         |       | 53,209 |   | 75,339 |   |
| Total            |       | $                                | 251,684    |                           | $          | 245,631 |   | $ | 513,782 |   | $ | 506,213 |   |
|             |       |                             |       |                           |       |   |   |   |   |

 
| ** **        | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------|------------|-------------------------|------------|-----------------------------|------------|------------|------------|------------|------------|
|              |       |                    |       |                        |       |       |       |       |       |
| Long-lived assets |       |                    |       |                        |       |       |       |       |       |
| United States     |       | $                       | 770,208    |                        | $          | 787,651    |       |       |       |   |   |
| Foreign           |       | 25,172                  |       | 28,130                      |       |       |       |       |       |
| Total             |       | $                       | 795,380    |                        | $          | 815,781    |       |       |       |   |   |

 

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

Inconjunction with the closing of the Refinancing Transactions discussed in Note2, the Term Loan under 2005 Senior Credit Facility became fully andunconditionally guaranteed on a senior secured basis by the domestic operationsand assets of the Partnership (referred to as “Worldspan, L.P.—Guarantor” inthe accompanying financial information). Included in Worldspan, L.P.—Guarantorare Worldspan, L.P. and all of its wholly-owned domestic subsidiaries includingWS Financing.  These domestic subsidiaries also fully and unconditionallyguarantee on a second priority basis the Floating Rate Notes.  Thesedomestic subsidiaries collectively represent less than one percent of thePartnership’s total assets, Partners’ capital, total revenues, net income, andcash flows from operating activities. The guarantees of each of the legal entitiescomprised by Worldspan, L.P.—Guarantor are joint and several.  The foreignsubsidiaries (referred to as “Non-Guarantor Subsidiaries” in the accompanyingfinancial information) represent the foreign operations of the Partnership. WSFinancing does not have any substantial operations, assets or revenues. Thefollowing financial information presents condensed consolidating balancesheets, statements of operations and statements of cash flows for Worldspan,L.P.—Guarantor and Non-Guarantor Subsidiaries. The information has beenpresented as if Worldspan, L.P.—Guarantor accounted for its ownership of theNon-Guarantor Subsidiaries using the equity method of accounting.

15

----

 

**CondensedConsolidating Balance Sheetsas of June 30, 2006(dollars in thousands)(Unaudited)**

 
| ** **                                      | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|-------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                            |       |                                      |       |                            |       |                     |       |                        |       |
| **Assets**                                      |       |                                      |       |                            |       |                     |       |                        |       |
| Current assets                                  |       |                                      |       |                            |       |                     |       |                        |       |
| Cash and cash equivalents                       |       | $                                         | 79,482     |                            | $          | 2,155                    |       | $                           | —     |   | $ | 81,637 |   |
| Trade accounts receivable, net                  |       | 97,289                                    |       | 1,920                           |       | —                   |       | 99,209                      |       |
| Prepaid expenses and other current assets       |       | 14,482                                    |       | 1,194                           |       | —                   |       | 15,676                      |       |
| Total current assets                            |       | 191,253                                   |       | 5,269                           |       | —                   |       | 196,522                     |       |
| Property and equipment,  net                    |       | 95,112                                    |       | 4,636                           |       | —                   |       | 99,748                      |       |
| Deferred charges                                |       | 15,080                                    |       | 9,779                           |       | —                   |       | 24,859                      |       |
| Debt issuance  costs, net                       |       | 12,498                                    |       | —                          |       | —                   |       | 12,498                      |       |
| Goodwill                                        |       | 111,803                                   |       | —                          |       | —                   |       | 111,803                     |       |
| Other intangible  assets, net                   |       | 490,607                                   |       | —                          |       | —                   |       | 490,607                     |       |
| Investments in  subsidiaries                    |       | 31,013                                    |       | —                          |       | (31,013                  | )          | —                      |       |
| Other long-term  assets                         |       | 45,107                                    |       | 10,758                          |       | —                   |       | 55,865                      |       |
| Total assets                                    |       | $                                         | 992,473    |                            | $          | 30,442                   |       | $                           | (31,013    | ) | $ | 991,902 |   |
|                                            |       |                                      |       |                            |       |                     |       |                        |       |
| **Liabilities and Partners’  Capital**     |       |                                      |       |                            |       |                     |       |                        |       |
| Current liabilities                             |       |                                      |       |                            |       |                     |       |                        |       |
| Accounts payable                                |       | $                                         | 10,257     |                            | $          | 317                      |       | $                           | —     |   | $ | 10,574 |   |
| Intercompany accounts payable (receivable)      |       | 32,016                                    |       | (32,016                         | )          | —                   |       | —                      |       |
| Accrued expenses                                |       | 125,609                                   |       | 31,292                          |       | —                   |       | 156,901                     |       |
| Current portion of capital lease obligations    |       | 13,510                                    |       | —                          |       | —                   |       | 13,510                      |       |
| Current portion of senior debt                  |       | 4,000                                     |       | —                          |       | —                   |       | 4,000                       |       |
| Total current liabilities                       |       | 185,392                                   |       | (407                            | )          | —                   |       | 184,985                     |       |
| Long-term  portion of capital lease obligations |       | 57,497                                    |       | —                          |       | —                   |       | 57,497                      |       |
| Long-term debt                                  |       | 582,500                                   |       | —                          |       | —                   |       | 582,500                     |       |
| Pension and  postretirement benefits            |       | 57,501                                    |       | —                          |       | —                   |       | 57,501                      |       |
| Other long-term  liabilities                    |       | 10,054                                    |       | (164                            | )          | —                   |       | 9,890                       |       |
| Total liabilities                               |       | 892,944                                   |       | (571                            | )          | —                   |       | 892,373                     |       |
| Commitments and  contingencies                  |       |                                      |       |                            |       |                     |       |                        |       |
| Partners’  capital                         |       | 99,529                                    |       | 31,013                          |       | (31,013                  | )          | 99,529                      |       |
| Total  liabilities and Partners’ capital   |       | $                                         | 992,473    |                            | $          | 30,442                   |       | $                           | (31,013    | ) | $ | 991,902 |   |

 

16

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**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 |   |

 

17

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

 
| ** **                     | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|--------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                           |       |                                      |       |                            |       |                     |       |                        |       |
| Revenues                       |       | $                                         | 218,806    |                            | $          | 32,878                   |       | $                           | —     |   | $ | 251,684 |   |
| Operating  expenses            |       | 176,425                                   |       | 29,902                          |       | —                   |       | 206,327                     |       |
| Operating income               |       | 42,381                                    |       | 2,976                           |       | —                   |       | 45,357                      |       |
| Other income (expense)         |       |                                      |       |                            |       |                     |       |                        |       |
| Interest (expense) income, net |       | (14,996                                   | )          | 46                              |       | —                   |       | (14,950                     | )          |
| Income from subsidiaries       |       | 1,946                                     |       | —                          |       | (1,946                   | )          | —                      |       |
| Other, net                     |       | 178                                       |       | (335                            | )          | —                   |       | (157                        | )          |
| Total other expense, net       |       | (12,872                                   | )          | (289                            | )          | (1,946                   | )          | (15,107                     | )          |
| Income before  income taxes    |       | 29,509                                    |       | 2,687                           |       | (1,946                   | )          | 30,250                      |       |
| Provision for  income taxes    |       | —                                    |       | 741                             |       | —                   |       | 741                         |       |
| Net income                     |       | $                                         | 29,509     |                            | $          | 1,946                    |       | $                           | (1,946     | ) | $ | 29,509 |   |
|                           |       |                                      |       |                            |       |                     |       |                        |       |

 

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

 
| ** **                        | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|-----------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                              |       |                                      |       |                            |       |                     |       |                        |       |
| Revenues                          |       | $                                         | 207,708    |                            | $          | 37,923                   |       | $                           | —     |   | $ | 245,631 |   |
| Operating  expenses               |       | 178,510                                   |       | 31,521                          |       | —                   |       | 210, 031                    |       |
| Operating income                  |       | 29,198                                    |       | 6,402                           |       | —                   |       | 35,600                      |       |
| Other income (expense)            |       |                                      |       |                            |       |                     |       |                        |       |
| Interest (expense) income, net    |       | (15,584                                   | )          | 11                              |       | —                   |       | (15,573                     | )          |
| Income from subsidiaries          |       | 5,070                                     |       | —                          |       | (5,070                   | )          | —                      |       |
| Other, net                        |       | (207                                      | )          | 196                             |       | —                   |       | (11                         | )          |
| Total other (expense) income, net |       | (10,721                                   | )          | 207                             |       | (5,070                   | )          | (15,584                     | )          |
| Income before  income taxes       |       | 18,477                                    |       | 6,609                           |       | (5,070                   | )          | 20,016                      |       |
| Income tax  expense               |       | —                                    |       | 1,539                           |       | —                   |       | 1,539                       |       |
| Net income                        |       | $                                         | 18,477     |                            | $          | 5,070                    |       | $                           | (5,070     | ) | $ | 18,477 |   |

 

18

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

** **
| ** **                     | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|--------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                           |       |                                      |       |                            |       |                     |       |                        |       |
| Revenues                       |       | $                                         | 460,573    |                            | $          | 53,209                   |       | $                           | —     |   | $ | 513,782 |   |
| Operating  expenses            |       | 366,761                                   |       | 47,355                          |       | —                   |       | 414,116                     |       |
| Operating income               |       | 93,812                                    |       | 5,854                           |       | —                   |       | 99,666                      |       |
| Other income (expense)         |       |                                      |       |                            |       |                     |       |                        |       |
| Interest (expense) income, net |       | (31,277                                   | )          | 63                              |       | —                   |       | (31,214                     | )          |
| Income from subsidiaries       |       | 3,202                                     |       | —                          |       | (3,202                   | )          | —                      |       |
| Other, net                     |       | 229                                       |       | (1,331                          | )          | —                   |       | (1,102                      | )          |
| Total other expense, net       |       | (27,846                                   | )          | (1,268                          | )          | (3,202                   | )          | (32,316                     | )          |
| Income before income  taxes    |       | 65,966                                    |       | 4,586                           |       | (3,202                   | )          | 67,350                      |       |
| Income tax  expense            |       | —                                    |       | 1,384                           |       | —                   |       | 1,384                       |       |
| Net (loss) income              |       | $                                         | 65,966     |                            | $          | 3,202                    |       | $                           | (3,202     | ) | $ | 65,966 |   |

 

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

** **
| ** **                         | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                               |       |                                      |       |                            |       |                     |       |                        |       |
| Revenues                           |       | $                                         | 430,874    |                            | $          | 75,339                   |       | $                           | —     |   | $ | 506,213 |   |
| Operating  expenses                |       | 368,611                                   |       | 67,011                          |       | —                   |       | 435,622                     |       |
| Operating income                   |       | 62,263                                    |       | 8,328                           |       | —                   |       | 70,591                      |       |
| Other income (expense)             |       |                                      |       |                            |       |                     |       |                        |       |
| Interest  (expense) income, net    |       | (27,973                                   | )          | 71                              |       | —                   |       | (27,902                     | )          |
| Loss on extinguishment of debt     |       | (55,597                                   | )          | —                          |       | —                   |       | (55,597                     | )          |
| Income from subsidiaries           |       | 5,603                                     |       | —                          |       | (5,603                   | )          | —                      |       |
| Other, net                         |       | 119                                       |       | (339                            | )          | —                   |       | (220                        | )          |
| Total other expense, net           |       | (77,848                                   | )          | (268                            | )          | (5,603                   | )          | (83,719                     | )          |
| (Loss) income  before income taxes |       | (15,585                                   | )          | 8,060                           |       | (5,603                   | )          | (13,128                     | )          |
| Income tax  expense                |       | —                                    |       | 2,457                           |       | —                   |       | 2,457                       |       |
| Net (loss) income                  |       | $                                         | (15,585    | )                               | $          | 5,603                    |       | $                           | (5,603     | ) | $ | (15,585 | ) |

 

19

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

 
| ** **                                          | ** ** | **Worldspan, L.P.—  Guarantor** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminating  Entries** | ** ** | **Worldspan  Consolidated** | ** ** |
|-----------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                                |       |                                      |       |                            |       |                     |       |                        |       |
| Net cash  provided by operating activities          |       | $                                         | 126,502    |                            | $          | (3,751                   | )          | $                           | —     |   | $ | 122,751 |   |
| Cash flows from  investing activities:              |       |                                      |       |                            |       |                     |       |                        |       |
| Purchase of property and equipment                  |       | (2,721                                    | )          | (232                            | )          | —                   |       | (2,953                      | )          |
| Proceeds from sale of property and equipment        |       | 68                                        |       | 82                              |       | —                   |       | 150                         |       |
| Investment in subsidiaries                          |       | (3,202                                    | )          | —                          |       | 3,202                    |       | —                      |       |
| Net cash used in investing activities               |       | (5,855                                    | )          | (150                            | )          | 3,202                    |       | (2,803                      | )          |
| Cash flows from  financing activities:              |       |                                      |       |                            |       |                     |       |                        |       |
| Principal payments on capital leases                |       | (9,004                                    | )          | —                          |       | —                   |       | (9,004                      | )          |
| Principal payments on debt                          |       | (85,000                                   | )          | —                          |       | —                   |       | (85,000                     | )          |
| Distribution to WTI, net                            |       | (2,400                                    | )          | —                          |       | —                   |       | (2,400                      | )          |
| Contributions to subsidiaries                       |       | —                                    |       | 3,202                           |       | (3,202                   | )          | —                      |       |
| Net cash (used in) provided by financing activities |       | (96,404                                   | )          | 3,202                           |       | (3,202                   | )          | (96,404                     | )          |
| Net increase in cash and cash equivalents           |       | 24,243                                    |       | (699                            | )          | —                   |       | 23,544                      |       |
| Cash and cash  equivalents at beginning of period   |       | 55,238                                    |       | 2,855                           |       | —                   |       | 58,093                      |       |
| Cash and cash  equivalents at end of period         |       | $                                         | 79,481     |                            | $          | 2,156                    |       | $                           | —     |   | $ | 81,637 |   |

 

20

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**CondensedConsolidating Statements of Cash Flowsfor the Six Months Ended June 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        |       | $                                         | 80,446     |                            | $          | (7,429                   | )          | $                           | —     |   | $ | 73,017 |   |
| Cash flows from  investing activities:                      |       |                                      |       |                            |       |                     |       |                        |       |
| Purchase of property and equipment                          |       | (5,240                                    | )          | (1,361                          | )          | —                   |       | (6,601                      | )          |
| Proceeds from sale of property and equipment                |       | 77                                        |       | —                          |       | —                   |       | 77                          |       |
| Capitalized software development costs                      |       | (19                                       | )          | —                          |       | —                   |       | (19                         | )          |
| Investment in subsidiaries                                  |       | (11,126                                   | )          | —                          |       | 11,126                   |       | —                      |       |
| Net cash provided by (used in) investing activities         |       | (16,308                                   | )          | (1,361                          | )          | 11,126                   |       | (6,543                      | )          |
| Cash flows from  financing activities:                      |       |                                      |       |                            |       |                     |       |                        |       |
| Proceeds from issuance of debt, net of debt issuance  costs |       | 734,801                                   |       | —                          |       | —                   |       | 734,801                     |       |
| Principal payments on capital leases                        |       | (9,517                                    | )          | —                          |       | —                   |       | (9,517                      | )          |
| Principal payments on debt                                  |       | (92,488                                   | )          | —                          |       | —                   |       | (92,488                     | )          |
| Repurchase old notes                                        |       | (327,555                                  | )          | —                          |       | —                   |       | (327,555                    | )          |
| Distribution to and contributions from WTI, net             |       | (427,238                                  | )          | —                          |       | —                   |       | (427,238                    | )          |
| Contributions to subsidiaries                               |       | —                                    |       | 11,126                          |       | (11,126                  | )          | —                      |       |
| Net cash (used in) provided by financing activities         |       | (121,997                                  | )          | 11,126                          |       | (11,126                  | )          | (121,997                    | )          |
| Net increase (decrease) in cash and cash equivalents        |       | (57,859                                   | )          | 2,336                           |       | —                   |       | (55,523                     | )          |
| Cash and cash  equivalents at beginning of period           |       | 96,504                                    |       | 3,970                           |       | —                   |       | 100,474                     |       |
| Cash and cash  equivalents at end of period                 |       | $                                         | 38,645     |                            | $          | 6,306                    |       | $                           | —     |   | $ | 44,951 |   |

 

21

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**9. Goodwill and Other Intangible Assets**

Goodwilland other intangible assets consisted of the following:

 
| ** **                                 | ** ** | ** **                      | ** ** | **June 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                                 | ** ** | **Estimated  Useful Life** | ** ** | **Cost**                    | ** ** | **Accumulated  Amortization**   | ** ** | **Cost** | ** ** | **Accumulated  Amortization** | ** ** |
| Supplier and  agency relationships         |       | 8-11 years                      |       | $                           | 318,467    |                            | $          | 100,022 |   | $ | 321,618 |   | $ | 84,637 |   |
| Information  technology services contracts |       | 5-15 years                      |       | 36,126                      |       | 8,424                           |       | 36,126 |   | 7,020 |   |
| Developed  technology                      |       | 5-11 years                      |       | 238,850                     |       | 66,532                          |       | 238,979 |   | 55,725 |   |
| Goodwill                                   |       | Indefinite                      |       | 111,803                     |       | —                          |       | 111,803 |   | — |   |
| Trade name                                 |       | Indefinite                      |       | 72,142                      |       | —                          |       | 72,142 |   | — |   |
|                                       |       |                            |       | $                           | 777,388    |                            | $          | 174,978 |   | $ | 780,668 |   | $ | 147,382 |   |

 

Duringthe three months ended March 31, 2006, the Partnership recorded $1,615 inacceleration of amortization of agency relationship intangibles related to twoonline agencies. The contracts with the Partnership were terminated by theagencies.  The write-off was recorded as additional amortization in thestatement of operations. During the three months ended June 30, 2005, the Partnershiprecorded a $1,500 writedown of certain purchased software to be enhanced andultimately used in multi-hosting services for smaller carriers. The carryingvalue of the software was written down to zero as a result of management’sdecision to pursue other third party solutions as a means to provide theseservices to smaller carriers as well as management’s current evaluation of thecurrent and potential revenue stream, among other factors. The writedown isincluded in “Developed technology amortization” in the accompanyingconsolidated statement of operations.

Asdiscussed in Note 1, Delta and Northwest, both significant suppliers of thePartnership, entered bankruptcy protection in September 2005.  Inconnection with the Acquisition, the Partnership recorded an intangible assetin the amount of $33,152 related to its founding airline services agreements (“FASAs”)with Delta and Northwest.  As of June 30, 2006, the unamortized portion ofthe intangible asset related to the Delta and Northwest FASAs was $26,528. This amount is included in “Other intangible assets, net” in the accompanyingconsolidated balance sheets.  The services provided to Delta and Northwestunder the terms of their respective FASAs include internal reservationservices, development services and other support services.  ThePartnership continues to provide services to the airlines in accordance withthe terms of the respective FASA. The Partnership believes that these servicesare essential to the continued operation of the airlines. In addition, thePartnership believes that the cost of the services provided to Delta andNorthwest are competitive to current market rates for these services given thecost formula and the monthly credit the airlines receive as a part of the FASA.The Partnership does not believe that the long term value of the FASA haschanged based solely on the bankruptcy filings and any additional factscurrently available to it. Additional facts could become known or actions takenby the airlines in bankruptcy that could impact the long term value of the FASAand possibly result in an impairment of the intangible asset in the future.

Inconnection with the Acquisition, the Partnership also recorded additionalintangible assets of approximately $318,467 related to the value of itsexisting relationships with online travel agencies, traditional travel agenciesand travel suppliers. The Partnership believes to date that the Delta andNorthwest bankruptcy filings are not expected to have a materially adverseimpact on cash flows because the travel customer would be able to selectanother supplier if Delta and Northwest were to selectively reduce their flightcapacity. Alternatively, in connection with their bankruptcy relatedrestructuring, Delta and Northwest could pursue a GDS alternative allowing themto bypass the Worldspan GDS.  If either Delta or Nothwest were successfulin bypassing the Worldspan GDS or significantly reducing their flight capacity,the Partnership’s cash flow and financial condition could be materially, adverselyaffected and possibly result in an impairment of the intangible asset in thefuture.

Of the$318,467 recorded for the Parnership’s existing relationships with travelagencies and travel suppliers, the Partnership estimates that $35,234, $76,174and $14,223 were related to the Expedia, Orbitz and Priceline contracts,respectively. Based on these estimates, the portions of these intangible assetsthat were unamortized as of June 30, 2006 were $22,021, $47,609 and$8,889. Upon determination of the specific volumes (or percentage of volumes)and timing relating to Expedia’s or Priceline’s announced agreements withanother GDS provider and the outcome of the Orbitz claims against us, thePartnership will further assess the impact, if any, on the overall financialcondition as prescribed by Statement of Financial Accounting Standards (“SFAS”)No. 144, *Accounting for the Impairmentor Disposal of Long-Lived Assets* , and SFAS No. 142, *Goodwill and Other Intangible Assets* . SeeNote 1 for a discussion of the potential movement of Expedia, Priceline andOrbitz transactions to another GDS.

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ThePartnership recorded amortization expense for its intangible assets of $14,425and $16,026 for the three months ended June 30, 2006 and 2005, respectively,and $30,749 and $30,859 for the six months ended June 30, 2006 and 2005,respectively. Estimated amortization expense for the Partnership’s intangibleassets, excluding the $30,749 amortization recorded for the six months endedJune 30, 2006, is as follows:

 

| **Year Ended December 31,** |   |    |    |
|-----------------------------|--------|---------|---------|
| Remaining in  2006          |   | $       | 28,903  |   |
| 2007                        |   | 57,771  |    |
| 2008                        |   | 56,871  |    |
| 2009                        |   | 57,171  |    |
| 2010                        |   | 57,171  |    |
| Thereafter                  |   | 160,578 |    |
|                        |   | $       | 418,465 |   |

 

**10.Stock-Based Compensation**

Underthe WTI stock incentive plan, WTI offers restricted shares of its Class ACommon Stock and grants options to purchase shares of its Class A CommonStock to selected management employees of the Partnership. On June 15, 2006,the Human Resources Committee of the Board of Directors of WTI approved theSecond Amendment to the WTI Stock incentive plan thereby authorizing a reserveof 13,250,000 shares of its Class A Common Stock for issuance under thestock incentive plan.  The securitiesunderlying the options are not traded on an established exchange. The exerciseprice of any options granted or the purchase price for restricted stock offeredunder the stock incentive plan is determined by the Board of Directors.Restricted stock awards and options generally vest quarterly over a five-yearperiod which is deemed to be the service period over which the stock-basedcompensation expense is recognized. Options expire ten years from date ofgrant. Option grants consist of “Series 1” and “Series 2” options.

In theevent of an employee termination, WTI has the right to repurchase all or any ofthe shares of Common Stock acquired by an employee under the WTI stockincentive plan for a cash payment equal to the fair market value (as determinedby the Board of Directors) of the shares of Common Stock on the day of repurchase.If, however, the employee is terminated for cause, then the cash payment willbe the lower of the fair market value and the employee’s original purchaseprice.

Priorto January 1, 2006, WTI accounted for employee stock options and restrictedstock awards in accordance with SFAS No. 123, *Accountingfor Stock- Based Compensation* (“SFAS No. 123”). Under SFAS No. 123,WTI valued the stock options based upon a binomial option-pricing model. As theoptions to purchase Class A Common Stock were being granted to employees of thePartnership, the Partnership recognized the grant-date fair value as an expenseratably over the period in which the options vest, with a correspondingincrease in Partners’ capital.

InDecember 2004, the FASB issued SFAS No. 123(R), *Share-Based Payment* (“SFAS No. 123(R)”), which is a revisionof SFAS No. 123. The Partnership adopted the provisions of SFAS No. 123(R)effective at the beginning of 2006. The Partnership elected to use themodified-prospective transition method which had no significant impact onincome before income taxes, net income, cash flow from operations or cash flowfrom financing activities.

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Stockoption activity under the WTI stock incentive plan for the six-month periodended June 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)                            |       | 60,000                     |       | 3.88                                      |       | 60,000 |   | 7.88 |   |
| Exercised (2)                          |       | (300,000                   | )          | 1.20                                      |       | — |   | — |   |
| Forfeited                              |       | (47,500                    | )          | 1.47                                      |       | (47,500 | ) | 6.20 |   |
| Unexercised                            |       | (4,000                     | )          | 1.20                                      |       | (4,000 | ) | 6.42 |   |
|                                   |       |                       |       |                                      |       |   |   |   |   |
| Outstanding at  June 30, 2006 (3) |       | 1,811,000                  |       | $                                         | 1.40       |   | 2,111,000 |   | $ | 6.38 |   |
|                                   |       |                       |       |                                      |       |   |   |   |   |
| Exercisable at  June 30, 2006 (4)      |       | 765,500                    |       | $                                         | 1.24       |   | 1,065,500 |   | $ | 6.40 |   |
|                                   |       |                       |       |                                      |       |   |   |   |   |

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(1)             Asallowed under SFAS No. 123(R), WTI has continued to apply the binomialoption-pricing model in valuing the options granted in the second quarter of2006 with the resulting fair value being amortized straight-line over theservice period. The weighted-average exercise price and weighted-averagegrant-date fair value of the Series 1 options reflected above as beinggranted during the six months ended June 2006, were $3.88 and $1.84,respectively, per share. These options were granted with an exercise priceequal to or lower than the market value of the underlying Class A Common Stock.The weighted-average exercise price and weighted-average grant-date fair valueof the Series 2 options reflected above as being granted during the sixmonths ended June 2006, were $7.88 and $0, respectively, per share. Theseoptions were granted with an exercise price higher than the market value of theunderlying Class A Common Stock. During the six months ended June 30, 2005,there were 257,500 Series 1 options granted with a weighted-average exerciseprice of $1.86 and a weighted-average grant-date fair value of $0.32;additionally, there were 257,500 Series 2 options granted with aweighted-average exercise price of $5.93 and a weighted-average grant-date fairvalue of $0.

(2)             WTIreceived $360 in cash upon exercise of these options. The intrinsic value ofthe 300,000 Series 1 options exercised during the quarter ended June 30, 2006was approximately $921.0, which represents the amount by which the market valueof the underlying stock exceeds the exercise price of the option. The weightedaverage market value of the underlying stock was approximately $4.27 on thedates of exercise. There were no options exercised during the six months endedJune 30, 2005.

(3)             Theaggregate intrinsic value of the Series 1 and Series 2 options expected to vestat June 30, 2006 was approximately $2,907 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$1.52 and $6.37, respectively. The weighted-average remaining contractual termof the Series 1 and Series 2 options expected to vest at June 30, 2006 was 7.9years for both Series. The total compensation cost to be recognized under SFAS123(R) related to Series 1 and Series 2 options at June 30, 2006 expected tovest is approximately $601 and $111, respectively, which will be expensed overthe remaining weighted-average vesting period of 3.0 years for both Series.

(4)             Thetotal fair value of Series 1 and Series 2 options vested at June 30, 2006 wasapproximately $406 and approximately $125, respectively. At June 30, 2005,there were 564,000 Series 1 options vested with a total fair value ofapproximately $189 and 564,000 Series 2 options vested with a total fair valueof approximately $62. The aggregate intrinsic value of the Series 1 and Series2 options vested at June 30, 2006 was approximately $2,332 and $0, respectively.See item (2) above regarding the definition of “intrinsic value.”  Theweighted-average remaining contractual term of the Series 1 and Series 2options exercisable at June 30, 2006 was 7.2 for both series.

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Forgrants of options awarded during the six months ended June 30, 2006 and2005, the weighted-average assumptions used in the binomial option-pricingmodel were as follows:
| ** ** | ** ** | **Risk-Free  Interest Rate  (1)** | ** ** | **Expected  Life (2)** | ** ** | **Expected  Volatility (3)** | ** ** | **Expected  Dividend Yield** | ** ** |
|------------|------------|----------------------------------------|------------|-----------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| 2006       |       | 4.98                                   | %          | 6.5 years                   |       | 35.3                              | %          | 0                                 | %          |
| 2005       |       | 3.92                                   | %          | 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-Based Payment* , for estimating the expected term equal to themidpoint between the vesting period and the contractual term. This change ofestimate was 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 six months of 2006, the Partnershipgranted 60,000 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                                |       | $1.79                                                        |       |
| 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                                                          |       |
|                                                                                                                         |       |                                 |       |                                                         |       |

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

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Non-vestedrestricted share activity under the WTI stock incentive plan for the six-monthperiod ended June 30, 2006 is summarized 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 June 30, 2006 (3)      |       | 4,558,546                  |       | $                                                            | 3.44       |   |
|                                                                            |       |                       |       |                                                         |       |

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(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 six months ended June30, 2006 was approximately $208. No restricted stock awards vested during thesix months ended June 30, 2005.

(3)             Ofthe non-vested shares at June 30, 2006, 4,558,546, are expected to vest. Thetotal compensation cost to be recognized under SFAS 123(R) related to theshares at June 30, 2006 expected to vest is approximately $14,796, which willbe expensed over the remaining weighted-average service period of 2.5 years.

Duringthe three months ended June 30, 2006 and 2005, the Partnership recorded $694and $764, respectively, in total stock-based employee compensation expense, ofwhich $140 and $116, respectively, was attributable to stock options. Duringthe six months ended June 30, 2006 and 2005, the Partnership recorded $1,357and $1,408, respectively, in total stock-based employee compensation expense,of which $359 and $233, respectively, was attributable to stock options. ThePartnership recognized stock-based compensation expense of $43 and $69 duringthe three month periods ended June 30, 2006 and 2005 attributable to restrictedstock grants. The Partnership recognized stock-based compensation expense of$86 and $134 during the six month periods ended June 30, 2006 and 2005attributable to restricted stock grants. The Partnership recognized stock-basedcompensation expense of $511 and $578 during the three month periods ended June30, 2006 and 2005, respectively, attributable to restricted stock subscriptionagreements. The Partnership recognized stock-based compensation expense of $912and $1,041 during the six month periods ended June 30, 2006 and 2005,respectively, attributable to restricted stock subscription agreements.

OnJune 15, 2006,  WTI entered into aRestricted Stock Subscription Agreement with the Partnership’s, Chairman,President, and Chief Executive Officer, Rakesh Gangwal.  Pursuant to the agreement, Mr. Gangwalreceived 2,000,000 shares of WTI Class A Common Stock.  These shares are deemed to be RestrictedStock and will vest on June 30, 2009. Accelerated vesting will occur prior to the June 30, 2009 vesting dateif there is a change in control of WTI, if Mr. Gangwal’s employment isterminated by Worldspan “without cause” or if Mr. Gangwal terminates hisemployment with Worldspan for “good reason,” as those terms are defined in theemployment agreement between Mr. Gangwal and Worldspan. The Restricted Stock issubject to forefeiture if Mr. Gangwal’s employment is terminated for cause orif he resigns for any reason other than good reason prior to June 30, 2009.

**11.Airline Content Agreements**

Duringthe first quarter of 2006, the Partnership signed a five-year content agreementwith American.  During the second quarterof 2006, the Partnership signed five-year content agreements with Continental,United and Northwest. The Northwest agreement received Bankruptcy Courtapproval on June 15, 2006. In July 2006, the Partnership signed a five-yearagreement with U.S. Airways. The terms of these agreements will becomeeffective in the third quarter of 2006. In conjunction with the agreements,Worldspan has developed two new optional products to introduce into themarketplace. Through these new agreements, travel agencies will have the opportunityto access the airlines’ comprehensive published fares and inventory. The newcontent agreements will result in reduced transaction fees from participatingairlines which could have a material adverse effect on revenue, however, thePartnership cannot predict at this time the ultimate impact of these agreementson earnings as the impact will depend on the adoption rate by travel agenciesof the Partnership’s two new optional product offerings.

**12.Subsequent Events**

On July 21, 2006 the Partnership made a $10,000discretionary payment on the Term Loan.

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

*References to “WTI” refer to WorldspanTechnologies Inc. References to the “Company” or “Partnership” refer to Worldspan,L.P. The terms “we”, “us”, “our” and other similar terms refer to theconsolidated businesses of the company and all of its subsidiaries. Referencesto the “Acquisition” refer to the acquisition by WTI, of our generalpartnership interests and, through its wholly-*owned*subsidiaries, limited partnership interests. Thefollowing discussion and analysis of the financial condition and results ofoperations should be read in conjunction with the consolidated financialstatements and related notes included in our annual report on Form 10-K filedwith the Securities and Exchange Commission (the “SEC”) on March 3, 2006.*

**Overview**

We area provider of mission-critical transaction processing and informationtechnology services to the global travel industry. We provide subscribers(including traditional travel agencies, online travel agencies and corporatetravel departments) with real-time access to schedule, price, availability andother travel information and the ability to process bookings and issue ticketsfor the products and services of over 700 travel suppliers (such as airlines,hotels, car rental companies, tour companies and cruise lines) throughout theworld. Globally, we are the largest transaction processor for online travelagencies, having processed approximately 58% of all global distribution system,or GDS, online air transactions during the twelve months ended June 30, 2006.In the 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 61% of online GDS airtransactions processed during the twelve months ended June 30, 2006. During thetwelve months ended June 30, 2006, we processed approximately 199 milliontransactions. We also provide information technology services to the travelindustry, primarily airline internal reservation systems, flight operationstechnology and software development.

Wedepend upon a relatively small number of airlines and online travel agenciesfor a significant portion of our revenues. Our five largest airlinerelationships represented an aggregate of approximately 51% and 52% of ourtotal revenues for the twelve months ended June 30, 2006 and December 31,2005, respectively, while our top ten largest airline relationships representedan aggregate of approximately 62% and 64% of our total revenues for the twelvemonths ended June 30, 2006 and December 31, 2005, respectively. Ourrelationships with four online travel agencies, Expedia, Orbitz, Hotwire andPriceline, represented 50% of our total transactions during the twelve monthsended June 30, 2006. We expect to continue to depend upon a relativelysmall number of airlines and online travel agencies for a significant portionof our revenues.

In September 2005, we and Orbitz LLC (“Orbitz”)each filed separate complaints against the other with respect to certaindisputes arising under our online agreement with Orbitz.  See “Item 1. Legal Proceedings” in PartII.  In addition, on May 5, 2004, weannounced that we had been informed by Expedia of its intention to move aportion of its transactions in North America to another GDS provider in orderto diversify its GDS relationships beyond using a single provider to processsubstantially all of its GDS transactions. In October 2005, Expedia notified us 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 America withanother GDS. We have confirmed that some of Expedia’s North Americantransactions are now being processed on another GDS.  Expedia has not specified the total worldwidevolumes or total percentages of worldwide volumes it intends to process throughother GDS providers. Currently, we cannot forecast the total magnitude of anysuch movement of transactions and therefore are unable to estimate the impacton our financial position, results of operations and cash flows. Also, on July26, 2006, Hotwire, a division of Expedia notified us of its intent to terminateits technology services agreement effective October 26, 2006. For the sixmonths ended June 30, 2006, Hotwire transactions generated approximately $5.7million in revenue.

Additionally,on June 13, 2006, Priceline, one of our largest online travel agency customers,notified us that it intends to begin processing segments on another GDS as soonas July 28, 2006.  To date, there has notbeen any significant movement of Priceline’s transactions to another GDS norhave we received any notification from Priceline as to the volume oftransactions that it intends to move. Currently, we cannot forecast themagnitude of any such movement of transactions and therefore are unable toestimate the impact on our financial position, results of operations and cashflows.

EffectiveSeptember 14, 2005, Delta and Northwest, both significant suppliers ofours, entered bankruptcy protection. For a more complete discussion of thebankruptcies, see the section captioned “Liquidity and Capital Resources.”

***Supplier Content and Transaction Fees***

Adevelopment within the GDS industry over the past several years involves thecompetitive need for GDSs to maintain full content for distribution totraditional and online agency subscribers. Historically, we have increased thetransaction fees we collect from our airline suppliers. As our business evolvesand we continue to explore new ways to offer effective distribution options toour travel suppliers and travel agencies, we are entering into new contentarrangements that depart from our traditional business model. As a result, wedo not anticipate that the historic trend of annual transaction fee increaseswill continue in the future and in fact could decrease substantially. Recently,we have 

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entered into long-termcontent agreements with American Airlines, Continental Airlines, United AirLines, Northwest Airlines and U.S. Airways. The Northwest agreement was subjectto Bankruptcy Court approval, which was received in June 2006. Generally, inthese agreements, the airlines commit (subject to the exceptions contained inthe agreements) to provide the traditional and online travel agencies coveredby the agreements in the territories covered by the agreements with fullcontent subject to certain restrictions in exchange for payments from us and/ordiscounts in transaction fees to each airline. In addition, pursuant to theseagreements, the airlines mentioned above have agreed, among other things, tocommit to the highest level of participation in our GDS. Subject to terminationrights, the obligations continue until 2011. These content agreements areintended to provide our travel agencies in the territories covered by theagreements with access to improved content concerning the flights and fares ofthe participating airlines and other forms of non-discriminatory treatment. Weare currently in discussions with certain other airlines, including Delta,regarding the renewal of their content agreements that are due to expire by theend of 2006. In addition, we expect to negotiate new content agreements withour other major airline suppliers as the original content agreements with theseairlines expire in 2006 and 2007. As we continue to enter into these newagreements, we believe that transaction fees paid to us by the airlines will belower than the terms of our current agreements. The nature and extent of anyreductions in supplier transaction fees is also dependent on the rate at whichtravel agencies elect to participate in the varying levels of contentavailability in the future. The outcome of these negotiations and the financialimpact they may have are difficult to predict and could be material to ourrevenues, operating profit, financial condition and cash flows. The inabilityto renegotiate our content agreements with Delta and other airlines could havea material adverse effect on our business, financial condition and results ofoperations.

We believethat obtaining similar content from our other major airline travel suppliers isimportant to our ability to compete, since other GDSs have also entered intocontent agreements with various airlines. We expect that future contentagreements will require us to make, in the aggregate, significant payments orother concessions to the participating airlines, which we expect will reduceour revenues. Further, should we fail to maintain competitive content, ourtraditional and online agency subscribers could move transactions from us tocompetitors with access to this content, thus negatively affecting thePartnership’s business, financial condition and results of operation.

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

Thedownturn in the commercial airline market, together with, and resulting from,the ongoing threat of terrorist acts, the global economic downturn, thecontinuing conflict in Iraq and rising fuel costs for commercial airlines,among other issues, have adversely affected the financial condition of manycommercial airlines. Several major airlines are experiencing liquidityproblems, some have sought bankruptcy protection and still others areconsidering, or may consider, bankruptcy relief. We derive a substantialportion of our revenues from transaction fees received directly from airlinesand from the sale of products and services directly to airlines. Incircumstances where an airline declares bankruptcy, we may be unable to collectour 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***

Anincreasing number of travel transactions are being made online. During thetwelve months ended June 30, 2006, airline transactions generated throughonline travel agencies accounted for approximately 35% of all airlinetransactions in the United States processed by a GDS, up from approximately 34%in fiscal year 2005, approximately 31% in 2004, approximately 28% in 2003, andapproximately 23% in 2002. Between 2002 and 2005, the number of airlinetransactions in the United States generated through online travel agencies andprocessed by us increased at a compound annual growth rate of 11.6%. We believethat this shift to online travel agency bookings will continue, but the extentand pace of the shift is difficult to anticipate. Other industry developments,such as the announcements by Expedia and Priceline, that they intend to move aportion of their transactions to other GDSs, compound our difficulty inforecasting the growth of our transactions from online travel agencies.Historically, we typically pay a higher inducement per transaction to our largeonline travel agency customers than our traditional agencies.

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

Although we have historically processed most of theairline transactions for our online travel agencies, these agencies may move aportion of their business to other technologies and technology providers,subject to some contractual limitations. For example, on May 5, 2004, weannounced that we had been informed by Expedia of its intention to move aportion of its transactions in North America to another GDS provider in orderto diversify its GDS relationships beyond using a single provider to processsubstantially all of its GDS transactions. In October 2005, Expedia notified us 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, 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 has not specified the total worldwidevolumes or total 

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percentages of worldwide volumes it intends toprocess through other GDS providers. Currently, we cannot forecast the totalmagnitude of any such movement of transactions and therefore are unable toestimate the impact on our financial position, results of operations and cashflows. Also, on July 26, 2006, Hotwire, a division of Expedia notified us ofits intent to terminate its technology services agreement effective October 26,2006. For the six months ended June 30, 2006, Hotwire transactions generatedapproximately $5.7 million in revenue. In addition, on February 10, 2006,Priceline announced that it had signed an agreement with another GDS and, inJune 2006, announced that it intends to begin moving transactions to this otherGDS as soon as July 28, 2006. To date, there has not been any significantmovement of Priceline’s transactions to another GDS nor have we received anynotification from Priceline as to the volume of transactions that it intends tomove. Currently, we cannot forecast the magnitude of any such movement oftransactions and therefore are unable to estimate the impact on our financialposition, results of operations and cash flows. In addition, Orbitz hasdeveloped direct connections with travel suppliers which bypass our GDS.Further, Orbitz is owned by Cendant Corporation’s subsidiary, Travelport, whoalso owns Galileo (a competitor of ours). Orbitz is one of our largest onlinetravel agency customers. Our contract with Orbitz extends into 2011 subject tostandard termination rights held by Orbitz including for-cause terminationrights. Also, in September 2005, we and Orbitz each filed separatecomplaints against the other with respect to certain disputes arising under ouronline agreement with Orbitz. See “Item 1. Legal Proceedings” in Part II.Furthermore, in connection with the Acquisition we recorded an intangible assetrelated to online customer contracts of $131.9 million, of which weestimate $35.2 million, $76.2 million and $14.2 million wererelated to the Expedia, Orbitz and Priceline contracts, respectively. Based onthese estimates, the portions of these intangible assets that were unamortizedas of June 30, 2006 were $22.0 million, $47.6 million and$8.9 million. Upon determination of the specific volumes, percentage ofvolumes or timing relating to Expedia's or Priceline's announced agreementswith other GDS providers and the outcome of the Orbitz claims against us, wewill further assess the impact, if any, on the overall financial condition asprescribed by Statement of Financial Accounting Standards ("SFAS")No. 144, *Accounting for the Impariment orDisposal of Long-Lived Assets* , and SFAS No. 142, *Goodwill and Other Intangible Assets* .

Althoughwe currently continue to operate under these agreements, it is uncertain as towhether or not these and our other major online travel agencies will notattempt to terminate their respective agreements with us or otherwise movebusiness to another GDS in the future. With this uncertainty, we cannotreliably forecast the volume of such transactions and may experiencetransaction volume decreases that result in a material adverse effect on ourfinancial condition and operating results.

***Neutrality***

We donot own an online travel agency. Unlike our competitors, we have intentionallynot pursued a strategy of vertical integration and instead have forgedstrategic partnerships with leading online travel agencies. Given the highlycompetitive nature of the travel agency business, we believe our customersvalue our neutrality. As the shift towards the online travel agency channelcontinues, we believe the traditional travel agencies will increasingly viewthe GDS-owned online travel agencies as competitive to their core business. Asa result, our neutrality gives us an opportunity to capture additional businessfrom both online and traditional travel agencies not owned by a GDS. However,to the extent that such agencies are acquired by or become affiliated with oneof our competitors, the likelihood of our capturing additional business fromthose agencies may be reduced and our existing business with those agencies maybe at risk.

***FASA Credits***

Pursuantto the terms of our founder airline services agreements, or FASAs, we provideFASA credits to Delta and Northwest to be applied against FASA service feepayments due from these airlines to us. The FASA credits are structured andwill be applied through June 2012 in scheduled monthly installments up toan aggregate total of approximately $75.0 million to each of Delta andNorthwest as of June 30, 2006, and are reflected as reductions of FASArevenue in the corresponding periods. In the event that the monthly FASAcredits deliverable by us to Delta or Northwest are more than the FASA servicefee payments due from the applicable airline, then we will be obligated to paysuch excess to such airline in cash. See the section captioned “Liquidity andCapital Resources” below for further information on the FASA credits. At thistime we cannot predict how the Delta and Northwest bankruptcies may affect theFASAs. Our agreements with Delta and Northwest provide that we have the rightto recoup service fees owed to us by Delta and Northwest against our FASAcredit obligations. We will continue to exercise our recoupment rights forservice fees owed to us for the period preceding the Delta and Northwestbankruptcies, although we cannot assure you that the exercise of these rightswill not be successfully challenged by the airlines in bankruptcy court. Therejection of those agreements in bankruptcy by one or both airlines could havea material adverse effect on our business, financial condition and results ofoperations.

**BusinessSegment Summary**

Ourrevenues are primarily derived from transaction fees paid by our travelsuppliers for electronic travel distribution services, and to a lesser extent,other transaction and subscription fees from our information technologyservices operations:

·    Electronic travel distribution revenues aregenerated by charging a fee per transaction, which is generally paid by thetravel supplier, based upon the number of transactions involved in the booking.We record and charge one transaction for each segment of an air travelitinerary (e.g., four transactions for a round-trip airline ticket with oneconnection each way). We record and charge one transaction for each car rental,hotel, cruise or tour company booking, regardless of the length of timeassociated with the booking. Fees paid by travel suppliers vary according tothe levels of functionality at which they can participate in our GDS. Theselevels of functionality generally depend upon the type of communications andreal-time access allowed with respect to the particular travel supplier’sinternal systems. 

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Revenues are basedon the volume of transactions and are not dependent on the revenue earned bythe supplier for that booking. We recognize revenue for airline traveltransactions in the month the transactions are processed, net of current actualand estimated future cancellations for transactions processed in that month.Revenues for other types of travel transactions are recognized at the time thebooking is used by the traveler. Although the substantial majority of ourelectronic travel distribution revenues are derived from transaction fees paidby travel suppliers, we have an agreement with Hotwire which does not followthis traditional business model. Under our agreement with Hotwire, we generallyderive revenues from a service fee payable by Hotwire (rather than the travelsupplier) based upon the number of travel transactions booked.

Setforth below is a chart illustrating the flow of payments in a typical consumertravel booking processed 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 technology services revenues aregenerated by charging a fee for hosting travel supplier inventory,reservations, flight operations and other computer applications within our datacenter and by providing software development and maintenance services on thoseapplications. Fees paid by hosted travel suppliers are generally based upon thevolume of messages processed on behalf of the travel supplier or softwaredevelopment hours performed on the travel supplier’s applications. In somecases, we charge fees for access to and usage of certain of our proprietaryapplications on a per transaction basis. Revenues for information technologyservices are recognized in the month that the services are provided and arerecorded net of the value of the FASA credits earned by Delta and Northwest inthe corresponding month.

Ourcosts and expenses consist of the cost of electronic travel distribution andinformation technology services revenues, selling, general and administrativeexpenses and depreciation and amortization:

·       Cost of electronic travel distribution revenuesconsists primarily of inducements paid to travel agencies, technologydevelopment and operations personnel, software costs, network costs, hardwareleases, maintenance of computer and network hardware, the data center building,help desk and other travel agency support headcount.  Cost of information technology servicesrevenues consists primarily of technology development and operations personnel,software costs, network costs, hardware leases, depreciation of computerhardware and the data center building, amortization of capitalized software andmaintenance of computer and network hardware.

·       Selling, general and administrative expensesconsist primarily of sales and marketing, labor and associated costs,advertising services, professional fees, a portion of the expenses associatedwith our facilities, depreciation of computer equipment, furniture and fixturesand leasehold improvements, internal management costs and expenses for finance,legal, human resources and other administrative functions.

**CriticalAccounting Policies**

Thediscussion and analysis of our financial condition and results of operations isbased on our consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States.The preparation of these financial statements requires us to make estimates andjudgments that affect our reported assets and liabilities, revenues andexpenses, and other financial information. Actual results may differsignificantly from these estimates, and our reported financial condition andresults of operations 

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could vary under differentassumptions and conditions. In addition, our reported financial condition andresults of operations could vary due to a change in the application of aparticular accounting standard.

Weregard an accounting estimate underlying our financial statements as a “criticalaccounting estimate” if the accounting estimate requires us to make assumptionsabout matters that are highly uncertain at the time of estimation and ifdifferent estimates that reasonably could have been used in the current period,or changes in the estimate that are reasonably likely to occur from period toperiod, would have had a material effect on the presentation of financialcondition, changes in financial condition, or results of operations.

Priorto January 1, 2006, the Partnership accounted for employee stock options andrestricted stock awards in accordance with SFAS No. 123, *Accounting for Stock- Based Compensation* (“SFASNo. 123”). 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 January 1, 2006. Like SFAS No. 123, SFAS No. 123(R)requires the use of various assumptions in determining the amount ofcompensation expense to recognize. Upon adoption of SFAS No. 123(R), thePartnership changed certain of its assumptions, including the following:

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

*·**                  Expected life*— Due to a lack of substantial history regarding the timing of exercises (thePartnership was formed only recently — June 30, 2003), the Partnership changedfrom using an estimate approximating the vesting period to using the simplifiedmethod allowed by Staff Accounting Bulletin (SAB) No. 107*, Share-Based Payment*, for estimating theexpected term equal to the midpoint between the vesting period and thecontractual term.

*·**                  Expectedvolatility* - Prior to January 1, 2006, the Partnership estimated expectedvolatility to approach zero as the underlying stock is not publicly traded. Asrequired by SFAS No. 123(R), the Partnership has estimated the volatility ofthe underlying stock using the historical volatility experienced by one of itsmajor competitor’s publicly-traded stock, an estimate which the Partnership hasdetermined reflects a more accurate forecast of volatility.

ThePartnership elected to use the modified-prospective transition method inadopting SFAS No. 123(R). The adoption of SFAS No. 123(R), including thechanges in the above assumptions, had no significant impact on income beforeincome taxes, net income, cash flow from operations or cash flow from financingactivities.

Otherthan as discussed above regarding the adoption of SFAS No. 123(R), there havebeen no changes to our critical accounting policies or significant changes inassumptions or estimates that would affect such policies in the six monthsended June 30, 2006. Our critical accounting policies are described in Item 7, “*Management’s Discussion and Analysis ofFinancial Condition and Results of Operations* “ in our Annual Reporton Form 10-K for the year ended December 31, 2005.

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**Resultsof Operations**

Thefollowing table shows information derived from our consolidated statements ofoperations expressed as a percentage of revenues for the periods presented.
| ** **                                                    | ** ** | **Three months ended** | ** ** | **Six months ended** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                    | ** ** | **June 30, 2006**      | ** ** | **June 30, 2005**    | ** ** | **June 30, 2006** | ** ** | **June 30, 2005** | ** ** |
|                                                          |       |                             |       |                           |       |   |   |   |   |
| Revenues:                                                     |       |                             |       |                           |       |   |   |   |   |
| Electronic travel distribution                                |       | 92.7                             | %          | 92.6                           | %          | 92.6 | % | 92.7 | % |
| Information technology services                               |       | 7.3                              |       | 7.4                            |       | 7.4 |   | 7.3 |   |
| Total revenues                                                |       | 100.0                            |       | 100.0                          |       | 100 |   | 100.0 |   |
| Operating expenses:                                           |       |                             |       |                           |       |   |   |   |   |
| Cost of revenues  excluding developed technology amortization |       | 64.3                             |       | 68.6                           |       | 63.4 |   | 68.5 |   |
| Developed  technology amortization                            |       | 2.1                              |       | 2.8                            |       | 2.1 |   | 2.5 |   |
| Total cost of revenues                                        |       | 66.4                             |       | 71.4                           |       | 65.5 |   | 71.0 |   |
| Selling, general  and administrative expenses                 |       | 11.9                             |       | 10.4                           |       | 11.2 |   | 11.5 |   |
| Amortization of  intangible assets                            |       | 3.7                              |       | 3.7                            |       | 3.9 |   | 3.6 |   |
| Total operating expenses                                      |       | 82.0                             |       | 85.5                           |       | 80.6 |   | 86.1 |   |
| Operating income                                              |       | 18.0                             |       | 14.5                           |       | 19.4 |   | 13.9 |   |
| Total other  expense, net                                     |       | (6.0                             | )          | (6.3                           | )          | (6.3 | ) | (16.5 | ) |
| Income (loss)  before provision for income taxes              |       | 12.0                             |       | 8.1                            |       | 13.1 |   | (2.6 | ) |
| Income tax  expense                                           |       | 0.3                              |       | 0.6                            |       | 0.3 |   | 0.5 |   |
| Net income (loss)                                             |       | 11.7                             | %          | 7.5                            | %          | 12.8 | % | (3.1 | )% |

 

Thefollowing table shows total transactions using the Worldspan GDS for theperiods presented. The historical transaction data set forth below reflects thedesignations which were in effect for each period presented. We evaluate theclassification of our travel agencies periodically and reclassify asappropriate.

**Worldspan Transaction Summary(in millions)**
| ** **          | ** ** | **Three months ended** | ** ** | **%**                       | ** ** | **Six months ended** | ** ** | **%**                       | ** ** |
|---------------------|------------|----------------------------------|------------|-----------------------------|------------|--------------------------------|------------|-----------------------------|------------|
| ** **          | ** ** | **June 30, 2006**      | ** ** | **June 30, 2005** | ** ** | **Change**                     | ** ** | **June 30, 2006** | ** ** | **June 30, 2005** | ** ** | **Change** | ** ** |
| Traditional         |       | 23.9                             |       | 25.1                        |       | (4.8                           | )%         | 51.0                        |       | 52.7 |   | (3.2 | )% |
| Online              |       | 26.5                             |       | 27.6                        |       | (4.0                           | )          | 55.3                        |       | 57.1 |   | (3.2 | ) |
| Total  transactions |       | 50.4                             |       | 52.7                        |       | (4.4                           | )%         | 106.3                       |       | 109.8 |   | (3.2 | )% |

 

**WorldspanRevenue Summary(in millions) **

 
| ** **                       | ** ** | **Three months ended** | ** ** | **%**                       | ** ** | **Six months ended** | ** ** | **%**                       | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------------------------|------------|--------------------------------|------------|-----------------------------|------------|
| ** **                       | ** ** | **June 30, 2006**      | ** ** | **June 30, 2005** | ** ** | **Change**                     | ** ** | **June 30, 2006** | ** ** | **June 30, 2005** | ** ** | **Change** | ** ** |
|                             |       |                             |       |                        |       |                           |       |                        |       |   |   |   |   |
| Electronic  travel distribution  |       | $                                | 233.2      |                        | $          | 227.5                          |       | 2.5                         | %          | $ | 475.9 |   | $ | 469.4 |   | 1.4 | % |
| Information  technology services |       | 18.5                             |       | 18.1                        |       | 2.2                            |       | 37.9                        |       | 36.8 |   | 3.0 |   |
| Total revenue                    |       | $                                | 251.7      |                        | $          | 245.6                          |       | 2.4                         | %          | $ | 513.8 |   | $ | 506.2 |   | 1.5 | % |

 

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**WorldspanRevenue per Transaction Summary**

 
| ** **               | ** ** | **Three months ended** | ** ** | **%**                       | ** ** | **Six months ended** | ** ** | **%**                       | ** ** |
|--------------------------|------------|----------------------------------|------------|-----------------------------|------------|--------------------------------|------------|-----------------------------|------------|
| ** **               | ** ** | **June 30, 2006**      | ** ** | **June 30, 2005** | ** ** | **Change**                     | ** ** | **June 30, 2006** | ** ** | **June 30, 2005** | ** ** | **Change** | ** ** |
| Revenue per  transaction |       | $                                | 4.63       |                        | $          | 4.32                           |       | 7.2                         | %          | $ | 4.48 |   | $ | 4.28 |   | 4.7 | % |
|                     |       |                             |       |                        |       |                           |       |                        |       |   |   |   |   |
|                          |            |                                  |            |                             |            |                                |            |                             |            |  |  |  |  |  |  |  |  |

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

***Comparison of the Three Months Ended June30, 2006 and June 30, 2005***

*Revenues*

Totalrevenues increased $6.1 million or 2.4% to $251.7 million from$245.6 million for the three months ended June 30, 2006 and 2005,respectively. The increase included $10.5 million related to a contractualpayment that was received from a certain former online travel agency in finalsettlement of a dispute.  Excluding thisreceipt, revenue for the three months ended June 30, 2006 would have been$241.2 million or a $4.4 million or 1.8% decline.  This decrease was due to a decline intransactions, partially offset by a higher average fee per transaction and anincrease in subscription-based technology services revenues.

Electronictravel distribution revenues increased $5.7 million or 2.5% to $233.2 millionfrom $227.5 million for the three months ended June 30, 2006 and2005, respectively. The increase included the $10.5 million contractual paymentmentioned above. Absent this receipt, electronic travel distribution revenuesof $222.8 million would have been $4.7 million or 2.1% lower than the sameperiod in 2005. This decrease was due to a 4.4% decline in total transactions,partially offset by a 7.2% increase in the average fee per transaction. The7.2% increase in average fee per transaction includes the impact of thenon-transaction based $10.5 million contractual payment discussed above.  Without this contractual payment the increasein average fee per transaction would have been 2.4%.

Informationtechnology services revenues increased $0.3 million or 1.8% to $18.5 millionfrom $18.2 million for the threemonths ended June 30, 2006 and 2005, respectively. The increase was primarilyattributable to increased revenue associated with the use of Worldspan RapidReprice SM and Electronic Ticketing, partially offset bylower FASA revenue.

*Cost of Revenues Excluding Developed Technology Amortization*

Costof revenues excluding developed technology amortization decreased $6.6 millionor 3.9% to $161.9 million from $168.5 million for the three months endedJune 30, 2006 and 2005, respectively. Cost of revenues excluding developedtechnology amortization as a percentage of total revenues decreased to 64.3%from 68.6% for the three months ended June 30, 2006 and 2005, respectively.The $6.6 million decrease was primarily driven by lower employee costs,technology costs and travel agency inducement expenses, partially offset byhigher outside services costs.

Costof electronic travel distribution revenues excluding developed technologyamortization decreased $5.3 million or 3.6% to $141.7 million from$147.0 million for the three months ended June 30, 2006 and 2005,respectively. Cost of electronic travel distribution revenues excludingdeveloped technology amortization as a percentage of total electronic traveldistribution revenue decreased to 60.7% from 64.6% for the three months endedJune 30, 2006 and 2005, respectively. The $5.3 million decrease wasprimarily attributable to a $2.8 million or 16.1% decrease in technology costs,a $2.2 million or 2.3% decrease in inducements paid to travel agencies, and a$1.8 million or 10.3% decrease in employee related costs, partially offset by a$1.7 million or 20.5% increase in outside service costs. Technology costsdecreased due to the continued migration of traditional travel agencies tothird-party owned equipment and networks and the migration of supplierconnections to less expensive IP-based connections. Inducements decreased dueto fewer overall transactions, partially offset by higher overall inducementrates. Employee related costs declined due to lower headcount as a result ofimproved organizational effectiveness and efficiency and workforce reductionsthat were implemented throughout 2005. This was partially offset by an increasein outside service costs which was primarily caused by a higher volume oftransactions in distributor markets globally.

Costof information technology services revenues excluding developed technologyamortization decreased $1.3 million or 6.0% to $20.2 million from$21.5 million for the three months ended June 30, 2006 and 2005,respectively. Cost of information technology services revenues excludingdeveloped technology amortization was 109.2% of information technology servicesrevenue for the three months ended June 30, 2006 as compared to 118.4% forthe three months ended June 30, 

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2005. This decrease wasprimarily caused by the reduced costs attributable to the hosting operationsand development resources for Delta and Northwest.

*Developed Technology Amortization*

Developedtechnology amortization decreased $1.5 million or 21.8% to $5.4 million from$6.9 million for the three months ended June 30, 2006 and 2005,respectively. Developed technology amortization was 2.1% of total revenue forthe three months ended June 30, 2006 as compared to 2.8% for the three monthsended June 30, 2005. The $1.5 million decrease was primarily the result ofthe write-down in the second quarter of 2005 of certain purchased software tobe enhanced and ultimately used in multi-hosting services for smaller carriers.The carrying value of the software was written down as a result of management’sdecision to pursue other third party solutions as a means to provide theseservices to smaller carriers as well as management’s current evaluation of thecurrent and potential revenue stream of the software, among other factors.

*Selling, General and Administrative Expenses*

Selling,general and administrative expenses increased $4.5 million or 17.7% to $30.0million from $25.5 million for the three months ended June 30, 2006and 2005, respectively. The increase was primarily attributable to an increasein bad debt expense and professional fees. During the three months ended June30, 2005, bad debt expense benefited from a $2.6 million decrease as a resultof a settlement and partial recovery of an outstanding customer balance.Professional fees increased $2.4 million primarily due to higher legal feesresulting from airline contract renegotiations, settlement negotiations andother matters.  As a percentage of totalrevenue, selling, general and administrative expenses increased to 11.9% in thethree months ended June 30, 2006 from 10.4% in the prior year. Excludingthe reduction in bad debt expense, selling, general and administrative expensesincreased $1.9 million or 6.8% and were 11.4% of total revenue for the threemonths ended June 30, 2005.

*OperatingIncome*

Operatingincome increased $9.8 million or 27.4% to $45.4 million from $35.6 millionfor the three months ended June 30, 2006 and 2005, respectively. As apercentage of total revenue, operating income increased to 18.0% from 14.5% forthe three months ended June 30, 2006 and 2005, respectively. The increaseis due primarily to the above mentioned receipt of the $10.5 million contractualpayment during the second quarter of 2006.

*Net Interest Expense*

Netinterest expense decreased $0.6 million or 4.0% to $15.0 million from$15.6 million for the three months ended June 30, 2006 and 2005,respectively. The decrease in net interest expense was primarily related to thedecrease in debt outstanding, partially offset by an increase in the averageinterest rate of 1.9% during the three months ended June 30, 2006 compared tothe three months ended June 30, 2005.

*Income Tax Expense*

Incometax expense attributable to foreign jurisdictions decreased $0.8 million to$0.7 million from $1.5 million for the three months ended June 30,2006 and 2005, respectively. The decrease in income tax expense primarilyrelates to a decrease in estimated annual taxable income of our foreignsubsidiaries during the three months ended June 30, 2006.

*Net Income*

Netincome increased $11.0 million or 59.7% to $29.5 million from$18.5 million for the three months ended June 30, 2006 and 2005,respectively. The increase was primarily due to a $9.8 million improvement inoperating income, resulting mainly from the above mentioned receipt of the$10.5 million contractual payment during the second quarter of 2006.

***Comparison of Six Months Ended June 30,2006 and June 30, 2005***

*Revenues*

Totalrevenues increased $7.6 million or 1.5% to $513.8 million from $506.2 millionfor the six months ended June 30, 2006 and 2005, respectively. The increaseincluded the $10.5 million received during the second quarter of 2006 relatedto a contractual payment that was received from a certain former online travelagency in final settlement of a dispute. Excluding this receipt, revenue for the six months ended June 30, 2006would have been $503.3 million or a $2.9 million decline.   This decrease was due to a decline intransactions, partially offset by a higher average fee per transaction and anincrease in subscription-based technology services revenues.

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Electronictravel distribution revenues increased $6.5 million or 1.4% to $475.9 million from$469.4 million for the six months ended June 30, 2006 and 2005, respectively.The increase included the $10.5 million contractual payment mentioned above.Absent this receipt, electronic travel distribution revenues of $465.5 millionwere $4.0 million or 0.8% lower than the same period in 2005. This decrease wasdue to a 3.2% decline in total transactions, partially offset by a 4.7%increase in the average fee per transaction. The 4.7% increase in average feeper transaction includes the impact of the non-transaction based $10.5 millioncontractual payment discussed above. Without this contractual payment the increase in average fee pertransaction would have been 2.4%.

Informationtechnology services revenues increased $1.1 million or 2.9% to $37.9 millionfrom $36.8 million for the six months ended June 30, 2006 and 2005,respectively. The increase was primarily attributable to increased revenueassociated with the use of Worldspan Rapid Reprice and Electronic Ticketing,partially offset by lower FASA revenue.

*Costof Revenues Excluding Developed Technology Amortization*

Costof revenues excluding developed technology amortization decreased $20.9 millionor 6.0% to $325.7 million from $346.6 million for the six months ended June 30,2006 and 2005, respectively. Cost of revenues excluding developed technologyamortization as a percentage of total revenues decreased to 63.4% for the sixmonths ended June 30, 2006 compared to 68.5% for the six months ended June 30,2005. The $20.9 million decrease was primarily driven by lower inducements paidto travel agencies related to $11.3 million of minimum booking fees that were received from certain former onlinetravel agencies towards the settlement of previously disputed amounts and loweremployee related costs and technology costs, partially offset by increasedoutside service costs.

Costof electronic travel distribution revenues excluding developed technologyamortization decreased $19.0 million or 6.3% to $284.4 million from $303.4million for the six months ended June 30, 2006 and 2005, respectively. Cost ofelectronic distribution revenues excluding developed technology amortization asa percentage of total electronic travel distribution revenue was 59.8% for thesix months ended June 30, 2005 compared to 64.6% for the six months ended June30, 2005. The decrease was primarily attributable to a $12.6 million or 6.4%decrease in inducement costs paid to travel agencies, a $6.2 million or 17.4%decrease in technology costs, a $4.1 million or 11.2% decrease in employeerelated costs, a $2.1 million or 14.6% decrease in depreciation expense,partially offset by $4.5 million or 30.9% 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 $1.3 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. Employee related costsdeclined from prior year due to lower headcount as a result of improved organizationaleffectiveness and efficiency and workforce reductions that were implementedthroughout 2005. Depreciation expense declined due to a decrease in agencyequipment owned by the Partnership. Outside service costs increased primarilydue to a higher volume of transactions in distributor markets globally.

Costof information technology services revenues excluding developed technologyamortization decreased $1.9 million or 4.4% to $41.3 million from $43.2 millionfor the six months ended June 30, 2006 and 2005, respectively. Cost ofinformation technology services revenues excluding developed technologyamortization was 109.0% of information technology services revenue for the sixmonths ended June 30, 2006 as compared to 117.4% for the six months endedJune 30, 2005. This decrease was primarily caused by the reduced costsattributable to the hosting operations and development resources for Delta andNorthwest.

*DevelopedTechnology Amortization*

Developedtechnology amortization decreased $1.8 million or 14.1% to $10.8 million from$12.6 million for the six months ended June 30, 2006 and 2005, respectively.Developed technology amortization was 2.1% of total revenues for the six monthsended June 30, 2006 as compared to 2.5% for the six months ended June 30, 2005.The $1.8 million decrease was primarily the result of the write-down in thesecond quarter of 2005 of certain purchased software to be enhanced andultimately used in multi-hosting services for smaller carriers. The carryingvalue of the software was written down as a result of management’s decision topursue other third party solutions as a means to provide these services tosmaller carriers as well as management’s current evaluation of the current andpotential revenue stream of the software, among other factors.

*Selling,General and Administrative Expenses*

Selling,general and administrative expenses decreased $0.5 million or 0.8% to $57.7million from $58.2 million for the six months ended June 30, 2006 and 2005,respectively. Prior year expenses benefited from a $2.6 million decrease in baddebt as a result of a settlement and partial recovery of an outstandingcustomer balance.  Absent this prior yearbenefit, expenses for the current year period decreased $3.1 million or 5.0%from selling, general and administrative expenses for the prior year period.The decrease is primarily due to a 5.5% decline in employee costs and a 26.7%decline in rent and utilities. Employee costs declined due to a lower headcountfrom the prior year as a result of restructuring activities which occurredthroughout 2005.  Rent and utilitiesdeclined due to a reduction in the amount of office space leased.   As a percentage of total revenue, selling,general and administrative expenses declined to 11.2% from 11.5% in the prioryear. Excluding the 

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reduction in bad debtexpense in the prior year period, selling, general and administrative expenseswere 12.0% of total revenue for the six months ended June 30, 2005.

*Amortizationof Intangible Assets*

Amortizationof intangible assets increased $1.7 million or 9.1% to $19.9 million from $18.3million for the six months ended June 30, 2006 and 2005, respectively. As apercentage of total revenue, amortization of intangible assets increased to3.9% from 3.6% for the six months ended June 30, 2006 and 2005, respectively.The $1.6 million increase is due to the acceleration of amortization in March2006 of intangible assets related to two online agencies with whom we no longerhave an agreement.

*OperatingIncome*

Operatingincome increased $29.1 million or 41.2% to $99.7 million from $70.6 million forthe six months ended June 30, 2006 and 2005, respectively. As a percentage oftotal revenue, operating income increased to 19.4% from 13.9% for the sixmonths ended June 30, 2006 and 2005, respectively. The increase is dueprimarily to a decrease in operating expenses of $21.5 million or 4.9% and anincrease of $7.6 million or 1.5% in total revenue.

*NetInterest Expense*

Netinterest expense increased $3.3 million or 11.9% to $31.2 million from $27.9million for the six months ended June 30, 2006 and 2005, respectively. Theincrease in net interest expense was primarily related to the increase ininterest rate on the Floating Rate Notes (as defined below under the heading “—Liquidityand Capital Resources—Floating Rate Notes and Senior Credit Facility”).

*TotalOther Expense, Net*

Totalother expense, net decreased $51.4 million to $32.3 million from $83.7 millionfor the six months ended June 30, 2006 and 2005, respectively. The decrease wasprimarily due to a $55.6 million loss on extinguishment of debt in connectionwith the Refinancing Transactions (as defined below under the heading “—Liquidityand Capital Resources—Use of Proceeds”) in February 2005.

*IncomeTax Expense*

Incometax expense decreased $1.1 million to $1.4 million from $2.5 million for thesix months ended June 30, 2006 and 2005, respectively. The decrease in incometax expense primarily relates to a decrease in estimated annual taxable incomeof our foreign subsidiaries during the six months ended June 30, 2006.

*NetIncome (Loss)*

Netincome increased $81.6 million to $66.0 million from a loss of $15.6 millionfor the six months ended June 30, 2006 and 2005, respectively. The increase wasprimarily due to a $55.6 million loss on the extinguishment of debt associatedwith the Refinancing Transactions and to the receipt of $11.3 million and $10.5million, respectively, during the quarters ended March 31, 2006 and June 30,2006 in contractual payments from certain former online travel agencies insettlement of previous disputes.

**Liquidity and Capital Resources**

Ourprincipal source of liquidity will be cash flow generated from operations,borrowings under capital lease obligations and borrowings under our 2005 SeniorCredit Facility (as defined below). Our principal uses of cash will be to fundour planned operating expenditures which include operating expenses, capitalexpenditures, investments in our current as well as future products andofferings, interest payments on our debt and any mandatory or discretionaryprincipal payments of our debt. Based on our current level of operations, webelieve that our cash flow from operations, available cash of $81.6 million andavailable borrowings under our 2005 Senior Credit Facility will be adequate tomeet our future liquidity needs for the next 12 months, although noassurance can be given. Our future operating performance and ability to extendor refinance our indebtedness will be dependent on future economic conditionsand financial, business and other factors that are beyond our control. Riskfactors that could possibly affect the ability of our internally generatedfunds include, among other things:

·       reduced sales due to declines in transactionvolumes or movement of transactions to another GDS,

·       acts of global terrorism, and

·       bankruptcy filings of any of the airlines thatcomprise a significant portion of our revenues.

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EffectiveSeptember 14, 2005, Delta and Northwest, two of our significant suppliers,entered bankruptcy protection. Revenues generated by Delta and Northwest were$53.9 million and $64.1 million for the three months ended June 30, 2006 and2005, respectively, and $116.3 million and $140.0 million for the six monthsended June 30, 2006 and 2005, respectively. These amounts represented approximately 22% and 26% of total revenuesfor the three months ended June 30, 2006 and 2005, respectively, and 22% and28% for the six months ended June 30, 2006 and 2005, respectively.Individually, Delta and Northwest accounted for 13% and 9%, respectively, oftotal revenue for the three months ended June 30, 2006, and 13% and 9%,respectively, for the six months ended June 30, 2006.

Pre-bankruptcypetition accounts receivable at June 30, 2006 under our two primary agreementswith Northwest was $16.0 million, collectively. Pre-bankruptcy petitionaccounts receivable under the Partnership’s two primary agreements with Deltahas been collected as of June 30, 2006. Post-bankruptcy petition accountsreceivable at June 30, 2006 under our two primary agreements with Delta andNorthwest are $26.6 million. We believe that our pre-bankruptcy petitionaccounts receivable from Northwest will likely be realized over an extendedperiod of time. We believe we will continue to provide the services to theairlines and, absent further significant deterioration in the financialcondition of the airlines, post-bankruptcy petition accounts receivable areexpected to be collected in accordance with the terms of our current commercialagreements.

Whileunder bankruptcy protection, Delta and Northwest could petition the court toreject certain or all of the existing agreements with us except for theParticipating Carrier Agreement with Northwest, which was assumed by Northwestand received Bankruptcy court approval in June 2006.  We are not aware of an action by either Deltaor Northwest to reject any agreements with us and, accordingly, continue tooperate with the two airlines under our existing commercial agreements. See theheading “Airline Content Agreements” for a discussion of the new five-yearcontent agreement, which is an addendum to the Participating Carrier Agreementassumed by Northwest. Additional facts could become known or actions taken byeither airline in bankruptcy that could impact our assessment of thecollectibility and thus result in a charge to earnings in future periods.Furthermore, we are not yet in a position to ultimately determine whetherpayments previously made to us will be challenged or unwound in the bankruptcyproceedings.

Additionally,it is not possible for us to determine the long term impacts of the Delta andNorthwest bankruptcies at this time. Actions taken in the future by theairlines in the bankruptcy proceedings could have a material, adverse impact onour financial condition and cash flows. If Delta was to reject ourParticipating Carrier Agreement (“PCA”), which represent $24.4 million or 78%of total revenue generated by Delta for the three months ended June 30,2006, and $54.2 million or 79% of total revenue generated by Delta for the sixmonths ended June 30, 2006, it would have a material, adverse impact on ourfinancial condition and cash flows.

Shouldthese airlines fail to successfully emerge from bankruptcy, there can be noassurance that our cash flow from operations and borrowings available under oursenior credit facility would be adequate to meet our future liquidity needswithout additional capital. Such capital may or may not be available to us. Fora more complete discussion of risk factors that might affect the availabilityof our internally generated funds, see “Item 1A. Risk Factors” in this reportand in our annual report on Form 10-K for the year ended December 31, 2005.

AtJune 30, 2006, we had cash and cash equivalents of $81.6 million andworking capital of $11.5 million as compared to $45.0 million in cashand cash equivalents and working capital of $1.9 million at June 30, 2005.The $36.6 million increase in cash was primarily the result of increasedoperating income and decreased costs associated with the RefinancingTransactions that occurred in February 2005 and the timing of the receiptof payments for airline receivables from a clearing house before June 30, 2006.During 2005 these payments were not received until the middle of the subsequentmonth. The $9.6 million increase in working capital is primarily the result ofhigher cash, lower current maturities of capital lease obligations, partiallyoffset by lower accounts receivable.

Historically,we have funded our operations through internally generated cash. We generatedcash from operating activities of $122.8 million for the six months endedJune 30, 2006 as compared to $73.0 million for the six months endedJune 30, 2005. The $49.8 million increase in cash flows from operatingactivities during the first six months of 2006 as compared to the first sixmonths of 2005 is a result of increased operating income and decreased costsassociated with the Refinancing Transactions that occurred in February 2005.

Weused cash for investing activities of approximately $2.8 million for thesix months ended June 30, 2006 as compared to $6.5 million for thesix months ended June 30, 2005. The $3.7 million decrease in cash used forinvesting activities during the first six months of 2006 as compared to thefirst six months of 2005 primarily resulted from decreased capitalexpenditures.

Weused cash for financing activities of approximately $96.4 million for thesix months ended June 30, 2006 as compared to $122.0 million for thesix months ended June 30, 2005. The $25.6 million decrease in cash usedfor financing activities during the first six months of 2006 as compared to thefirst six months of 2005 primarily resulted from the Refinancing Transactionsthat occurred in February 2005. To finance the redemption of the WTIPreferred Stock and the payment of the Consent Fee (as defined below under theheading “—Use of Proceeds”), we distributed $375.7 million and $8.6 million,respectively, to WTI. In addition, WTI redeemed the Delta subordinated note inJanuary 2005 and we distributed $36.1 million to WTI to finance thistransaction.

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*FloatingRate Notes and Senior Credit Facility*

OnFebruary 11, 2005, we, WS Financing Corp. (“WS Financing”), ourwholly-owned domestic subsidiaries, as guarantors (the “Guarantor Subsidiaries”)and The Bank of New York Trust Company, N.A., as trustee, entered into anIndenture (the “Indenture”). Pursuant to the Indenture, the GuarantorSubsidiaries issued $300.0 million of Senior Second Lien Secured Floating RateNotes due 2011 (the “Floating Rate Notes”), secured on a second priority basisby substantially all of our assets and those of WS Financing and the GuarantorSubsidiaries. In addition, we, as borrower, WTI, and WS Holdings entered into anew credit agreement (the “Credit Agreement”) with a syndicate of financialinstitutions as lenders. In connection with the closing under the CreditAgreement, a new senior credit facility (the “2005 Senior Credit Facility”),consisting of a five-year revolving credit facility in the amount of $40.0million and a new term loan facility due 2010 (the “Term Loan under 2005 SeniorCredit Facility”) in the amount of $450.0 million, was made available to us.Obligations under the 2005 Senior Credit Facility and the guarantees aresecured by a perfected first priority security interest in all of our tangibleand intangible assets and all of the tangible and intangible assets of WTI andeach of the Guarantor Subsidiaries, subject to customary exceptions, and apledge of (i) all of the membership interests of WS Holdings LLC owned by WTI,(ii) all of the partnership interests owned by WTI and WS Holdings LLC, and(iii) all of the capital stock of our Guarantor Subsidiaries and significantportions of our holdings in foreign subsidiaries.

At ouroption, the interest rate applied to borrowings under the 2005 Senior CreditFacility is based on the LIBOR rate (as defined in the Credit Agreement) plusthe initial applicable margin of 2.75%. The alternative rate is a base rate(generally defined as the sum of (i) the higher of (x) the primerate and (y) the federal funds effective rate, plus one half percent(0.50%) per annum and (ii) an initial applicable margin of 1.75%). Theinterest rate applicable to borrowings under the Floating Rate Notes is basedon the three-month LIBOR rate plus 6.25%. At June 30, 2006, thethree-month LIBOR rate was 5.5%. 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.

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 Credit Amendment amends the CreditAgreement to provide that the Partnership or WTI, as applicable, may, providedthat no revolving credit loans are outstanding, repurchase up to a totalcombined $50.0 million aggregate principal amount of the Partnership’s and WSFinancing’s outstanding Floating Rate Notes and/or WTI’s Holdco Notes (asdefined below), 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 August 8, 2006 the Partnership has not repurchased any FloatingRate Notes or Holdco Notes.

On March 4,2005, we entered into an interest rate swap with a notional amount that startedat $508.4 million on November 15, 2005 and is amortized on a quarterlybasis to $102.3 million at November 15, 2008. The reset dates on the swapare February 15, May 15, August 15 and November 15 of eachyear until maturity on November 15, 2008. The notional amount as of June30, 2006 is $455.7 million. This agreement, which has been designated as a cashflow hedge, is being used to convert the variable component of the interest rates on certain indebtedness to a fixedrate of 4.3%, effective November 15, 2005. Because the critical terms ofthe swap match those of the debt it is hedging, the swap is considered aperfect hedge against changes in the fair value of the debt and the hedge hasresulted in no ineffectiveness being recognized in operations. Changes in thefair value of the swap are recognized as a component of accumulated othercomprehensive income in each reporting period. As of June 30, 2006, the fairvalue of this swap was an asset of $7.0 million, which is included in otherlong-term assets in the condensed consolidated balance sheet.

OnJuly 21, 2006 we made a $10 million discretionary payment on our Term Loan. Forthe remaining months of 2006, assuming mandatory scheduled payments only andusing the interest rate swap fixed rate of 4.3%, we expect the cash principaland interest payments related to the $450.0 million borrowed under theterm loan facility portion of the 2005 Senior Credit Facility to be $2.0 millionand approximately $10.0 million, respectively. The actual amounts to bepaid for cash principal and interest during the remaining months of 2006 maydiffer significantly from these amounts depending on the LIBOR rate in effectat the time and any additional discretionary payments that we may elect to makeduring the year.

The2005 Senior Credit Facility requires us to meet financial tests, includingwithout limitation, a minimum interest coverage ratio and a maximum totalleverage ratio. Also, the Indenture requires the Guarantor Subsidiaries tomaintain a minimum fixed charge coverage ratio. In addition, the 2005 SeniorCredit Facility contains customary covenants which, among other things, limitthe incurrence of additional indebtedness, prepayments of other indebtedness,liens and encumbrances and other matters customarily restricted in a seniorcredit facility. The Indenture also includes certain restrictions ondistributions from certain of our subsidiaries. As of June 30, 2006, we believewe were in compliance with the applicable covenants.

*Useof Proceeds*

Thenet proceeds from the sale of the Floating Rate Notes and the closing of theTerm Loan under 2005 Senior Credit Facility, along with available cash, wereused to (collectively referred to as the “Refinancing Transactions”):

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·                  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,

·                  purchase pursuant to a cash tenderoffer of $279.5 million of our outstanding 9 5/8% Senior Notes due 2011,

·                  distribute funds to WTI to redeem WTI’soutstanding Preferred Stock at a redemption price equal to the face amount ofWTI’s Preferred Stock plus accrued and unpaid dividends to the redemption datefor a total redemption price of approximately $375.7 million,

·                  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 and expenses related to theRefinancing Transactions.

As aresult of the Refinancing Transactions described above, we recorded a loss onextinguishment of debt of $55.6 million during the three months endedMarch 31, 2005.

Alsoin connection with the Refinancing Transactions, on February 16, 2005, weentered into an amendment to our Advisory Agreement with WTI to terminate alladvisory and other fees payable under that agreement as of January 1, 2005in return for a prepayment of $7.7 million payable on or beforeDecember 15, 2005**.** We paid atotal of $7.7 million in the third and fourth quarters of 2005.

*HoldcoNotes*

Inconnection with the Refinancing Transactions, on February 16, 2005, WTIissued $43.6 million in new 11% Subordinated Notes due 2013 (the “Holdco Notes”)to certain related parties of CVC and paid $0.4 million in accrued and unpaidinterest in exchange for the surrender and cancellation of all of theobligations owing by WTI related to the then outstanding subordinated notes due2012. We periodically distribute funds to WTI to pay the interest on the Holdconotes. During the six months ended June 30, 2006 and 2005 we distributed $2.4million and $1.6 million, respectively, to WTI for this purpose. For 2006 weexpect to distribute $4.8 million to WTI for this purpose.

*Operating and Capital Lease Obligations*

ThePartnership has operating lease agreements which are principally for software,equipment and office facilities. We also lease equipment and software undercapital lease obligations. As of June 30, 2006, our obligations undercapital leases totaled $71.0 million.

OnJune 30, 2006, we signed amendments to the existing Asset Management Offeringagreement (“AMO”), Enterprise Software Option agreement (“ESO”) and theWebsphere Software Special Option agreement (“WSSO”), collectively referred toas the “IBM Agreements”.  The IBMAgreements 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.

Consistentwith prior treatment, we have accounted for the amended IBM Agreementscollectively as a multiple element arrangement of hardware, software, andservices. Under the terms of these agreements, we have a remaining aggregateminimum commitment of $225.0 million at June 30, 2006, plus additionalcontingent payments dependent upon the rate of growth of electronic travel distributiontransaction volumes. Of the aggregate minimum commitment, approximately $171.9million represents future minimum lease payments for leases classified asoperating at June 30, 2006 and approximately $53.1 million represents futureminimum lease payments for leases classified as capital at June 30, 2006.

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The future minimum amounts payable under the IBMAgreements are as follows at June 30, 2006:

(dollars in thousands)
| ** **                                                                       | ** ** | **Total IBM  Agreements** | ** ** | **IBM Agreements  Operating Leases at  June 30, 2006** | ** ** | **0IBM Agreements  Capital Leases at  June 30, 2006** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| 2006                                                                             |       | $                              | 22,500     |                                                                            | $          | 17,189                                                                         |       | $ | 5,311 |   |
| 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                                                                            |       | $                              | 225,000    |                                                                            | $          | 171,890                                                                        |       | $ | 53,110 |   |
| Less imputed  interest (1)                                                       |       |                           |       |                                                                            |       | (8,347                                                                         | )          |
| Present value of  net minimum lease payments related to IBM Agreements           |       |                           |       |                                                                            |       | $                                                                              | 44,763     |   |
| Present value of  net minimum lease payments related to other capital leases (2) |       |                           |       |                                                                            |       | 26,244                                                                         |       |
| Total                                                                            |       |                           |       |                                                                            |       | $                                                                              | 71,007     |   |
| Less current  maturities                                                         |       |                           |       |                                                                            |       | (13,510                                                                        | )          |
| Long-term  maturities                                                            |       |                           |       |                                                                            |       | $                                                                              | 57,497     |   |
|                                                                             |       |                           |       |                                                                            |       |                                                                           |       |

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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*

Pursuantto the terms of the 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 in anamount up to an aggregate total of $75.0 million to each of Delta andNorthwest as of June 30, 2006, and are reflected as reductions to our FASArevenues in the corresponding periods. The FASA credits are provided to Deltaand Northwest in monthly installments, with an annual amount of$16.7 million scheduled to be provided to each of these founding airlinesduring the first six years of the respective FASA term, an annual amount of$9.2 million scheduled to be provided to each of these founding airlinesduring the seventh and eighth years of the respective FASA term and an annualamount of $6.7 million scheduled to be provided to each of these foundingairlines during the ninth year of the respective FASA term. In the event thatthe monthly FASA credits deliverable by us to Delta or Northwest are more thanthe FASA service fee payments due from the applicable airline, then we will beobligated to pay such excess to such airline in cash.

Deltaor Northwest may terminate its FASA due to a failure by us to satisfy themainframe processing time, system availability or critical production dataperformance standards under that agreement (which represent performancestandards which we have historically met under our predecessor servicesagreements with Delta and Northwest). Furthermore, such a termination by Deltaor Northwest of its FASA constitutes an event of default under our 2005 SeniorCredit Facility. In the event that the event of default is waived by theapplicable lenders under our senior credit facilities (as defined in thesubordination agreement executed by the founding airlines) or our senior creditfacilities are no longer outstanding, then any remaining FASA creditsdeliverable by us to the terminating airline will not be provided according tothe initial nine year schedule specified above and will instead be payablein cash to such airline as and when, and only to the extent that, we arepermitted to make such payments as “Restricted Payments” under the restrictedpayment covenant test contained in the indenture governing our 9 5/8% SeniorNotes and the Floating Rate Notes. If a FASA is otherwise terminated inaccordance with its terms prior to the expiration of its term, such as atermination by either Delta or Northwest without cause, or is rejected by Deltaor Northwest in bankruptcy, then the obligation to provide the remaining FASAcredits or to make the remaining FASA credit payments then deliverable orpayable to the airline under the applicable FASA will terminate. See discussionof the Delta and Northwest bankruptcies under “Item 2. Management’sDiscussion and Analysis of Financial Condition and Results ofOperations—Overview.” Our obligations to provide FASA credits or to make theFASA credit payments will not terminate if either or both of Delta andNorthwest reduce or cease operations in a way that reduces or eliminates theamount of airline services 

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either founding airlineobtains under the FASAs, although an airline’s failure to comply with itssoftware development minimum and exclusivity obligations would constitute abreach of its agreement. If we terminate a FASA other than as expressly permittedby the agreement, then we will be obligated to provide the scheduled FASAcredits to the applicable airline by way of a monthly cash payment rather thanapplying the FASA credits against FASA service fee payments due from theairline. 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. 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 FASA creditpayments in cash. In that event, Delta and Northwest will, however, retaintheir 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. Our agreements with Delta and Northwest provide that wehave the right to recoup service fees owed to us by Delta and Northwest againstour FASA credit obligations, although Delta and Northwest or other parties ininterest in their bankruptcy proceedings may elect to challenge that right. Wewill continue to exercise our recoupment rights for service fees owed to us forthe period preceding the Delta and Northwest bankruptcies, although we cannotassure you that the exercise of these rights will not be successfullychallenged by the airlines in bankruptcy court.

*Taxes*

Becausewe are a limited partnership, our partners will owe taxes on all of the incomethat we generate in the United States. We expect that WTI will cause us to makedistributions to it from time to time sufficient to cover all income taxes owedby WTI. Under the terms of our 2005 Senior Credit Facility and the indenturesgoverning our 9 5/8% Senior Notes and the Floating Rate Notes, we arespecifically permitted to make these tax distributions. During the next twelvemonths, we expect to distribute $24.0 million to WTI, although actual resultsof operations could cause this amount to differ materially. There were no taxdistributions to WTI during the six months ended June 30, 2006.

**Capital Expenditures**

    Capital expenditures for property andequipment, including purchased assets, assets acquired under capital leases andcapitalized software, totaled $27.6 million (of which $3.0 million werecash capital expenditures) for the six months ended June 30, 2006. This is anincrease of $21.0 million from capital expenditures of $6.6 million forthe six months ended June 30, 2005. The increase is primarily due to therenegotiation of the IBM Agreements as discussed above. We have estimatedapproximately $42.3 million for capital expenditures in 2006, whichrelates to the renegotiation of the IBM AMO agreement as well as normal growthin capacity requirements and routine replacement and upgrades of equipment.

**Off-Balance Sheet Arrangements**

AtJune 30, 2006 and 2005, we did not have any relationships withunconsolidated entities or financial partnerships, such as entities oftenreferred to as structured finance or special purpose entities, which would havebeen established for the purpose of facilitating off-balance sheet arrangementsor other contractually narrow or limited purposes. We are, therefore, notmaterially exposed to any financing, liquidity, market or credit risk thatcould arise if we had engaged in such relationships.

**Effect of Inflation**

Inflationgenerally affects us by increasing our costs of labor, equipment and newmaterials. We do not believe that inflation has had any material effect on ourresults of operations during the three months ended June 30, 2006.

**Airline Content Agreements**

InMarch 2006, we signed a five-year content agreement with American. During thesecond quarter of 2006, we signed five-year content agreements withContinental, United and Northwest. In July 2006, we signed a five-year contentagreement with U.S. Airways. The Northwest agreement received Bankruptcy Courtapproval in June 2006. The terms of these agreements will become effective inthe third quarter of 2006. In conjunction with the agreements, Worldspan hasdeveloped two new optional products to introduce into the marketplace. Throughthese new agreements, travel agencies will have the opportunity to access theairlines’ comprehensive published fares and inventory. Our new contentagreements will result in reduced transaction fees from participating airlineswhich could have a material adverse effect on revenue, however, we cannotpredict at this time the ultimate impact of these agreements on earnings as theimpact will depend on the adoption rate by travel agencies of our two newoptional products.

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**Subsequent Events**

On July 21, 2006 we made a $10.0 milliondiscretionary payment on the Term Loan.

**Worldspan Cautionary 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 the travel and transportationindustries; airlines limiting their participation in travel marketing anddistribution services; airlines altering their content or changing the pricingof such content; or other changes within, or affecting, the travel industry. Wemay not succeed in addressing these and other risks.

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** **

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

Marketrisk represents the risk of changes in value of a financial instrument,derivative or non-derivative, caused by fluctuations in interest rates, foreignexchange rates and equity prices. Changes in these factors could causefluctuations in the results of our operations and cash flows. In the ordinarycourse of business, we are exposed to foreign currency and interest rate risks.These risks primarily relate to the sale of products and services to foreigncustomers and changes in interest rates on our long-term debt.

**ForeignExchange Rate Market Risk**

Weconsider the U.S. dollar to be the functional currency for all of our entities.Substantially all of our net sales and the majority of our expenses during thethree months ended March 31, 2006 and 2005 were denominated in U.S. dollars.Therefore, foreign currency fluctuations did not materially impact ourfinancial results in those periods. We have foreign currency exposure arisingfrom the remeasurement of our foreign subsidiaries’ financial statements intoU.S. dollars. The primary currencies to which we are exposed to fluctuationsinclude the euro and the British pound sterling. The fair value of our netforeign investments would not be materially affected by a 10% adverse change inforeign currency exchange rates from June 30, 2006 levels.

**InterestRate Market Risk**

Our2005 Senior Credit Facility is variable rate debt. Interest rate changestherefore generally do not affect the market value of such debt but do impactthe amount of our interest payments and, therefore, our future earnings andcash flows, assuming other factors are held constant. As of June 30, 2006, wehad variable rate debt of approximately $586.0 million, of which $455.7million was hedged through an interest rate swap. Holding other variablesconstant, including levels of indebtedness, a one hundred basis point increasein interest rates on our variable debt would have an estimated impact on 2006pre-tax earnings and cash flows of approximately $1.3 million.

OnMarch 4, 2005, we entered into an interest rate swap with a notionalamount that will start at $508.4 million on November 15, 2005 andamortize on a quarterly basis to $102.2 million at November 15, 2008.The reset dates on the swap are February 15, May 15, August 15and November 15 each year until maturity on November 15, 2008. Thenotional amount as of June 30, 2006 is $455.7 million. This agreement, whichhas been designated as a cash flow hedge, is being used to convert the variablecomponent of interest rates on certain indebtedness to a fixed rate of 4.3%. Asof June 30, 2006, the fair value of the interest rate swap was $7.0 million.

**ITEM 4.**                    CONTROLS ANDPROCEDURES

As ofthe end of the period covered by this report, we conducted an evaluation, underthe supervision and with the participation of our principal executive officerand principal financial officer, of the effectiveness of the design andoperation of our disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) under the Exchange Act). Based onthis evaluation, our principal executive officer and principal financialofficer concluded that our disclosure controls and procedures are effective.There were no changes in our internal control over financial reporting thatoccurred during the quarter ended June 30, 2006 which have materiallyaffected, or are reasonably likely to materially affect, our internal controlover financial reporting.

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**PART II. OTHERINFORMATION**

**ITEM 1.**                    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 theFederal Computer Fraud and Abuse Act (“FCFAA”) and in breach of our agreementwith Orbitz.  Our Federal Suit containedseveral additional state-law claims.  OnApril 19, 2006, the court considering our Federal Suit dismissed our claimunder the FCFAA and relinquished jurisdiction over our state-law claims againstOrbitz without prejudice to us refiling our state-law claims in statecourt.  We filed an appeal with theUnited States Court of Appeals for the Seventh Circuit on May 18, 2006.

On April 24, 2006, we refiled our state-law claims inthe Circuit Court of Cook County, Illinois, County Department, LawDivision.  Our complaint alleges thatOrbitz’s improper accessing and use of our seat map data violates ouragreements with Orbitz, and that Orbitz’s use of Galileo and ITA, competingcomputer reservation systems, constitutes breaches of our agreement withOrbitz.  We are seeking injunctive reliefto prevent the unauthorized accessing and use of our seat map data as well asto prevent Orbitz’s use of the services or data of Galileo and ITA. We alsoseek monetary damages from Orbitz in excess of $50.0 million and reimbursementfor our attorneys’ fees and costs.

After filing ourFederal Suit, we learned that Orbitz filed suit against us on September 16,2005, in the Circuit Court of Cook County, Illinois, County Department, LawDivision, purporting to assert two causes of action against us for violation ofthe Illinois Consumer Fraud Act and 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 our contractwith 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. Orbitzfiled an amended complaint against us on July 5, 2006.  The amended complaint adds six counts,including claims of breach of contract, fraud and rescission, in addition to adeclaratory judgment request.** **The complaint seeksequitable and monetary relief, attorney’s fees and costs, monetary damages inexcess of $0.05 million and prejudgment interest. 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 lawusit against us in theSuperior Court, King County, Washington. Among other actions and requests for relief, the complaint requests adeclaratory judgment from the court regarding Expedia’s use of data andinformation provided by us as set forth in the contract between theparties.  We believe that the allegationsin the Expedia complaint are without merit and we intend to defend against thisaction vigourously.

**ITEM 1A.**           RISK FACTORS

There are no material changes to the risk factorsincluded in our annual report on Form 10-K filed with the SEC on March 3, 2006and in our quarterly report on Form 10-Q filed with the SEC on May 15, 2006.

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

We arewholly-owned by Worldspan Technologies Inc., or WTI, a privately ownedcorporation. There is no public trading market for our equity securities or forthose of WTI. As of August 8, 2006, there were 44 holders of WTI Class A CommonStock and 1 holder of WTI Class B Common Stock.

On April 14, 2006,WTI entered into a stock subscription agreement in connection with the exerciseby one of our directors, who is also a former member of management, of hisoption to purchase 20,000 shares of WTI Class A Common Stock for an aggregatepurchase price of $0.02.  This sale wasexempt from registration under the Securities Act in reliance on Rule 506 promulgatedthereunder.

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** **

**ITEM 6.**                    EXHIBITS

***Exhibits:***
| 10.88  |   | Content Agreement, dated as of April 3, 2006, by and between  Worldspan, L.P. and Continental Airlines, Inc.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.89  |   | Content Agreement, dated as of April 12, 2006, by and between  Worldspan, L.P. and United Air Lines, Inc.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| 10.90  |   | Content Agreement, dated as of May 11, 2006, by and between  Worldspan, L.P. and Northwest Airlines, Inc.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| 10.91  |   | June 15, 2006 Amendment to Employment Agreement, by and between  Worldspan Technologies Inc., Worldspan, L.P. and Rakesh Gangwal***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
| 10.92  |   | Second Amendment to the Worldspan Technologies Inc. Stock Incentive  Plan, dated as of June 15, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
| 10.93  |   | Second Amendment, dated as of June 21, 2006, to the Credit Agreement,  dated as of February 11, 2005, among the Company, WTI, WS Holdings LLC, J.P.  Morgan Securities Inc. and UBS Securities LLC, as joint advisors, J.P. Morgan  Securities Inc., UBS Securities LLC and Lehman Brothers Inc., as joint  book-runners, J.P. Morgan Securities Inc., UBS Securities LLC, Lehman  Brothers Inc., Deutsche Bank Securities Inc. and Goldman Sachs Credit  Partners L.P., as joint lead arrangers, UBS Securities LLC, as syndication  agent, Lehman Commercial Paper Inc., Deutsche Bank Securities Inc. and  Goldman Sachs Credit Partners L.P., as documentation agents, the  Administrative Agent, and the several banks and other financial institutions  or entities from time to time party thereto |   |
| 10.94  |   | Change of Control Bonus Amendment, dated June 26, 2006, by and among  Worldspan Technologies Inc., Worldspan, L.P. and Ninan Chacko                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
| 10.95  |   | Change of Control Bonus Amendment, dated June 26, 2006, by and among  Worldspan Technologies Inc., Worldspan, L.P. and Susan J. Powers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 10.96  |   | Change of Control Bonus Amendment, dated June 26, 2006, by and among  Worldspan Technologies Inc., Worldspan, L.P. and Jeffrey C. Smith                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
| 10.97  |   | Employment Agreement, dated as of August 29, 2003, by and among  Worldspan, L.P., Worldspan Technologies Inc. and David A. Lauderdale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10.98  |   | Change of Control Bonus Amendment, dated June 26, 2006, by and among  Worldspan Technologies Inc., Worldspan, L.P. and David A. Lauderdale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 10.99  |   | Change of Control Bonus Amendment, dated June 26, 2006, by and among  Worldspan Technologies Inc., Worldspan, L.P. and Kevin W. Mooney                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 10.100 |   | Amendment 3 to Worldspan Asset Management Offering Agreement, among Worldspan, L.P., International  Business Machines Corporation and IBM Credit LLC, dated as of June 30, 2006***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| 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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*** Certain portions ofthis document have been omitted pursuant to a confidential treatment request.

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** **

**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|                |   | WORLDSPAN, L.P. |
|----------------|--------|-----------------|
|           |   |            |   |   |
|           |   |            |   |   |
| August 9, 2006 |   |            |   | /s/ Rakesh Gangwal |
| DATE           |   | By:             |   | Rakesh Gangwal |
|           |   |            |   | Chairman, President and Chief Executive Officer |
|           |   |            |   | (principal executive officer) |
|           |   |            |   |   |
|           |   |            |   |   |
| August 9, 2006 |   |            |   | /s/ Kevin W. Mooney |
| DATE           |   | By:             |   | Kevin W. Mooney |
|           |   |            |   | Chief Financial Officer |
|           |   |            |   | (principal financial and accounting officer) |
|           |   |            |   |   |
|           |   |            |   |   |

 

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