<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------------------
For the Quarter ended: SEPTEMBER 30, 1995 Commission File Number 1-5351
WORLDCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3040585
(State of incorporation) (I.R.S. Employer Identification Number)
13873 Park Center Road, Suite 490, Herndon, VA 22071
(Address of Principal Executive Offices)
(703) 834-9200
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __________
----------
The number of shares of the registrant's Common Stock outstanding on November 7,
1995 was 16,271,264.
================================================================================
<PAGE>
WORLDCORP, INC.
SEPTEMBER 1995, QUARTERLY REPORT ON FORM 10Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, September 30,
1995 and December 31, 1994.................................................... 3
Condensed Consolidated Statements of Operations,
Three Months Ended September 30, 1995 and 1994................................ 5
Condensed Consolidated Statements of Operations,
Nine Months Ended September 30, 1995 and 1994................................. 7
Condensed Consolidated Statement of Changes in Common
Stockholders' Deficit, Nine months ended September 30, 1995................... 9
Condensed Consolidated Statements of Cash Flows,
Nine months ended September 30, 1995 and 1994.................................10
Notes to Condensed Consolidated Financial Statements..........................11
Exhibit 11, Calculations of Earnings Per Common Share.........................13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................................15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..............................................29
</TABLE>
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents, including $1,081
restricted cash at September 30, 1995 and
$107 at December 31, 1994 $ 62,580 $ 8,160
Restricted short-term investments 623 668
Trade accounts receivable, less allowance for doubtful
accounts of $316 at September 30, 1995 and $81 at
December 31, 1994 12,251 5,748
Other receivables 4,190 3,134
Prepaid expenses and other current assets 5,252 8,222
Assets held for sale 1,250 2,500
------- ------
Total current assets 86,146 28,432
------- ------
ASSETS HELD FOR SALE 3,959 11,645
EQUIPMENT AND PROPERTY
Flight and other equipment 54,349 27,698
Equipment under capital leases 11,734 12,006
------- ------
66,083 39,704
Less accumulated depreciation and amortization 16,216 12,657
------- ------
Net equipment and property 49,867 27,047
------- ------
LONG-TERM OPERATING DEPOSITS 15,718 13,562
OTHER ASSETS AND DEFERRED CHARGES 11,008 9,689
INTANGIBLE ASSETS 8,014 7,161
------- ------
TOTAL ASSETS $ 174,712 $ 97,536
======= ======
</TABLE>
(Continued)
3
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
(IN THOUSANDS EXCEPT SHARE DATA)
(CONTINUED)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 12,057 $ 15,662
Current maturities of long-term obligations 10,804 9,664
Deferred aircraft rent 712 907
Accounts payable 15,938 12,311
Unearned revenue 6,619 5,615
Air traffic liability 2,419 --
Accrued maintenance in excess of reserves paid 7,169 6,395
Accrued salaries and wages 9,551 7,652
Accrued interest 2,842 2,297
Accrued taxes 2,500 1,855
-------- ---------
Total current liabilities 70,611 62,358
-------- ---------
LONG-TERM OBLIGATIONS, NET
Subordinated convertible debt 65,000 65,000
Subordinated notes, net 24,956 24,942
Deferred aircraft rent, net of current portion 1,197 1,522
Equipment financing and other long-term obligations 22,729 17,904
-------- ---------
Total long-term obligations, net 113,882 109,368
-------- ---------
OTHER LIABILITIES
Deferred gain from sale-leaseback transactions, net of
accumulated amortization of $33,141 at September 30,
1995 and $32,344 at December 31, 1994 7,576 8,373
Accrued postretirement benefits 2,543 2,384
Accrued maintenance in excess of reserves paid 4,373 2,866
Other 1,567 380
-------- ---------
Total other liabilities 16,059 14,003
-------- ---------
TOTAL LIABILITIES 200,552 185,729
-------- ---------
MINORITY INTEREST 12,903 --
COMMON STOCKHOLDERS' DEFICIT
Common stock, $1 par value, (60,000,000 shares authorized,
16,236,298 shares issued and 16,173,713 shares outstanding
at September 30, 1995, and 15,491,699 shares issued and
15,429,114 shares outstanding at December 31, 1994) 16,236 15,492
Additional paid-in capital 41,956 37,563
Deferred compensation (924) (1,102)
Accumulated deficit (94,330) (139,806)
ESOP guaranteed bank loan (1,341) --
Treasury stock, at cost (340) (340)
-------- ---------
TOTAL COMMON STOCKHOLDERS' DEFICIT (38,743) (88,193)
-------- ---------
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND COMMON STOCKHOLDERS'
DEFICIT $ 174,712 $ 97,536
======== =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
OPERATING REVENUES
Air Transportation - World Airways $ 79,244 $ 51,543
Transaction Processing - US Order 1,208 342
------- --------
Total operating revenues 80,452 51,885
------- --------
OPERATING EXPENSES
Air Transportation - World Airways:
Flight 24,448 21,233
Maintenance 11,338 7,446
Aircraft costs 19,836 13,237
Fuel 8,072 7,309
Flight operations subcontracted to other carriers 1,323 1,869
Promotions, sales and commissions 2,643 641
Depreciation and amortization 1,525 1,047
Selling and administrative 6,010 4,910
------- --------
Total operating expenses - air transportation 75,195 57,692
------- --------
Transaction Processing - US Order:
Cost of revenue 803 357
Research and development 272 675
General and administrative 1,418 4,155
Advertising and promotion -- 89
------- --------
Total operating expenses - transaction processing 2,493 5,276
------- --------
Holding Company - WorldCorp:
General and administrative 1,010 1,309
------- --------
Total operating expenses 78,698 64,277
------- --------
OPERATING INCOME (EXPENSE) 1,754 (12,392)
------- --------
OTHER INCOME (EXPENSE)
Interest expense (3,034) (2,963)
Interest income 1,004 300
Gain on sale of subsidiary's stock (206) --
Gain on sale of US Order banking operations -- 14,547
Other, net 87 (673)
------- --------
Total other income (expense) (2,149) 11,211
------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST (395) (1,180)
INCOME TAX BENEFIT (EXPENSE) (101) 51
MINORITY INTEREST (323) (1,411)
------- --------
NET EARNINGS (LOSS) $ (819) $ (2,540)
======= ========
</TABLE>
5
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Primary: $ (0.05) $ (0.16)
===== =====
Fully diluted: * $ *
===== =====
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary: 17,404,924 15,537,230
========== ==========
Fully diluted: * *
========== ==========
</TABLE>
* Fully diluted earnings per share are anti-dilutive.
See accompanying Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
OPERATING REVENUES
Air Transportation - World Airways $ 195,561 $ 139,129
Transaction Processing - US Order 2,900 1,023
------ ------
Total operating revenues 198,461 140,152
------- -------
OPERATING EXPENSES
Air Transportation - World Airways:
Flight 53,317 46,841
Maintenance 31,925 18,482
Aircraft costs 52,680 41,644
Fuel 14,005 14,742
Flight operations subcontracted to other carriers 8,676 2,126
Promotions, sales and commissions 2,712 1,059
Depreciation and amortization 4,162 3,055
Selling and administrative 15,707 15,905
------- -------
Total operating expenses - air transportation 183,184 143,854
------- -------
Transaction Processing - US Order:
Cost of revenue 2,018 808
Research and development 777 1,236
General and administrative 3,804 7,472
Advertising and promotion 7 835
------- -------
Total operating expenses - transaction processing 6,606 10,351
------- -------
Holding Company - WorldCorp:
General and administrative 3,703 2,483
------- -------
Total operating expenses 193,493 156,688
------- -------
OPERATING INCOME (LOSS) 4,968 (16,536)
------- -------
OTHER INCOME (EXPENSE)
Interest expense (9,430) (9,218)
Interest income 1,559 777
Gain on sale of equity by subsidiary 29,004 10,524
Gain on sale of subsidiaries' stock 19,660 16,398
Gain on sale of US Order banking operations -- 14,547
Other, net 884 (720)
------- -------
Total other income 41,677 32,308
------- -------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTEREST 46,645 15,772
INCOME TAX EXPENSE (532) (97)
MINORITY INTEREST (637) (2,040)
------- -------
NET EARNINGS $ 45,476 $ 13,635
======= =======
</TABLE>
7
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Primary: $ 2.67 $ 0.89
===== =====
Fully diluted: 2.11 $ 0.79
===== =====
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary: 17,046,247 15,296,419
========== ==========
Fully diluted: 23,153,973 21,446,357
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
8
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN COMMON STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Employee
Stock Owner- Total
Additional ship Plan Treasury Common
Common Paid-in Deferred Accumulated Guaranteed Stock, Stockholders'
Stock Capital Compensation Deficit Bank Loan at cost Deficit
------ ---------- ------------ ------------ ------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1994 $ 15,492 $ 37,563 $ (1,102) $(139,806) $ 0 $ (340) $(88,193)
Exercise of 442,317 options
and warrants 442 1,989 -- -- -- -- 2,431
Employee Stock Ownership Plan
guaranteed bank loan -- -- -- -- (1,341) -- (1,341)
Grant of stock options -- 615 (615) -- -- -- --
Amortization of deferred
compensation -- -- 793 -- -- -- 793
Issuance of stock 302 1,789 -- -- -- -- 2,091
Net earnings -- -- -- 45,476 -- -- 45,476
------ ------ ------ ------ ------ ----- ------
BALANCE AT
SEPTEMBER 30, 1995 $ 16,236 $ 41,956 $ (924) $ (94,330) $ (1,341) $ (340) $(38,743)
====== ====== ====== ====== ====== ===== =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
9
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD $ 8,160 $ 16,916
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings 45,476 13,635
Adjustments to reconcile net earnings to cash
provided (used) by operating activities:
Depreciation and amortization 5,633 4,032
Deferred gain recognition (797) (1,683)
Gain on sale of equity by subsidiaries (29,004) (10,524)
Gain on sale of subsidiaries' stock (19,660) (16,398)
Gain on sale of US Order banking operations -- (14,547)
Minority interest in subsidiaries 637 2,040
(Gain) loss on sale of equipment and property (303) 765
Loss on sale of investments -- 101
Other 1,439 1,718
Changes in certain assets and liabilities net of
effects of non-cash transactions:
(Increase) decrease in accounts receivable and other receivables (7,559) 3,147
(Increase) decrease in deposits, prepaid expenses and other assets 1,298 (6,770)
Increase in accounts payable, accrued
expenses and other liabilities 13,479 (4,047)
-------- --------
Net cash provided (used) by operating activities 10,639 (28,531)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property (18,563) (4,370)
Proceeds from disposal of equipment and property 1,346 1,406
Proceeds from sale of US Order banking operations -- 14,746
Purchase of investments (382) (6,133)
Proceeds from sales of short-term investments, net 145 6,029
-------- --------
Net cash provided (used) by investing activities (17,454) 12,678
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in line of credit borrowing arrangement, net 312 --
Issuance of debt 19,685 68,763
Repayment of debt (20,609) (83,336)
Repayment of ESOP guaranteed bank loan -- (1,734)
Proceeds from stock transactions 2,431 913
Proceeds from sale of equity by subsidiaries 41,781 12,351
Proceeds from sale of subsidiaries' stock 18,520 12,300
Payment of dividends by subsidiary (885) (2,901)
-------- --------
Net cash provided by financing activities 61,235 6,356
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 54,420 (9,497)
-------- --------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 62,580 $ 7,419
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
10
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The condensed consolidated balance sheet of WorldCorp, Inc. ("WorldCorp"
or the "Company") as of September 30, 1995, the related condensed
consolidated statements of operations for the three and nine month periods
ended September 30, 1995 and 1994, the condensed consolidated statement of
changes in common stockholders' deficit for the nine months ended September
30, 1995, and the condensed consolidated statement of cash flows for the nine
months ended September 30, 1995 and 1994 are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted only of
normal recurring items. All significant intercompany balances have been
eliminated. Interim results are not necessarily indicative of results for a
full year. Certain 1994 amounts have been reclassified to conform with the
1995 presentation.
The condensed financial statements and notes are presented as required by
Form 10-Q, and do not contain certain information included in the Company's
annual financial statements and notes. These financial statements should be
read in conjunction with the financial statements and the notes included in
the Company's annual report filed on Form 10-K for the year ended December
31, 1994.
2. Certain 1994 amounts have been reclassified to conform with the 1995
presentation. In addition, in 1995 the Company changed its presentation of
activity under contracts in which certain of the services to be provided are
subcontracted by the Company to the customer. In prior years, equal amounts
of revenue and expenses related to these subcontracted services were
reflected in the financial statements for these subcontracted services.
Prior period financial statements have been reclassified to conform to
September 30, 1995 presentation. The revenue and expenses which have been
reclassified amounted to $22.3 million for the nine months ended September
30, 1994.
3. In April 1995, US Order filed a registration statement on Form S-1 with
the Securities and Exchange Commission to register 3,500,000 shares
(exclusive of the underwriters' over-allotment option) of US Order's common
stock. The offering was completed in June 1995. Of the shares registered,
2,800,000 were issued and sold by US Order, and 700,000 shares were sold by
WorldCorp. As a result of this offering, US Order and WorldCorp received
$41.8 million and $18.5 million in net proceeds, respectively. In connection
with these transactions, the Company recognized gains of $19.7 million on the
sale of its shares of US Order stock and $27.0 million from the sale of
shares by US Order.
4. On April 6, 1995, US Order entered into a stock exchange agreement with
Colonial Data Technologies Corp. ("Colonial Data"), a strategic alliance
partner. Pursuant to the terms of the agreement, on June 8, 1995, US Order
exchanged 230,000 shares of its restricted common stock, valued at the
initial public offering price of $14.75 per share or $3.4 million, for
170,743 shares of Colonial Data's unregistered common stock (valued based on
the average closing price of Colonial Data's stock for the twenty trading
days preceding the date of the exchange) which equaled the value of the US
Order stock exchanged. At September 30, 1995, WorldCorp owned 59% of the
voting stock of US Order. The Company recognized a gain of $2.0 million in
connection with the issuance of stock by US Order.
As part of the agreement, US Order also agreed to exchange $3.0 million
of its restricted common stock on April 15, 1996 for $3.0 million of Colonial
Data's unregistered common stock, subject to certain limitations. Each
company's stock will be valued at the average closing price of their
respective common stock as reported on the Nasdaq National Market and
American Stock Exchange, respectively, for each of the twenty trading days
prior to April 10, 1996. Both companies will have certain "piggyback"
registration rights and rights of first refusal with respect to each others'
stock.
11
<PAGE>
5. On August 8, 1995, World Airways, Inc. filed a Form S-1 registration
statement with the Securities and Exchange Commission to register 2,900,000
shares of World Airways' common stock. The offering was completed in October
1995. Of the 2,900,000 shares registered, 2,000,000 were issued and sold by
World Airways, and 900,000 shares were sold by WorldCorp. As a result of this
offering, World Airways and WorldCorp received $22.8 million and $10.2
million in net proceeds, respectively. In connection with these transactions,
the Company recognized gains of $4.1 million on the sale of its shares of
World Airways' stock and $11.9 million from the sale of shares by World
Airways.
6. In September 1995, US Order entered into an agreement to acquire a 40%
equity interest in Home Financial Network, Inc. ("HomeNet"), a newly formed,
development stage personal computer software company that will develop and
deliver electronic financial products and services. The transaction closed on
October 19, 1995. At closing, US Order exchanged 296,746 shares of its common
stock (valued at approximately $5.0 million) in exchange for 40% of HomeNet.
The shareholders agreement among US Order, HomeNet, and HomeNet's founding
shareholders contains certain provisions whereby, under certain conditions,
beginning three years from the closing, US Order could elect to acquire, or
be required to acquire, the founding shareholders' HomeNet equity in exchange
for common stock or cash. As of September 30, 1995, US Order had a short-term
note receivable of $250,000 for a loan made to HomeNet. The note is a demand
note, which US Order expects to collect with related accrued interest by the
end of 1995.
7. In November 1995, World Airways signed a letter of intent with the
manufacturer to lease two MD-11ER aircraft to be delivered in the first
quarter of 1996. Under the agreement, World Airways will lease each aircraft
for a term of 24 years with an option to return the aircraft after a seven
year period with certain fixed termination fees. As part of the agreement,
$1.2 million in deposits previously paid to the manufacturer in 1992 will be
applied towards these two aircraft. In addition, World Airways will receive
spare parts financing from the lessor of $9.0 million of which $3.0 million
will be advanced with the delivery of each aircraft, and the remaining $3.0
million will be available in December 1996. Finally, World Airways agreed to
assume an existing lease of two additional MD-11 freighter aircraft for 20
years, beginning in 1999, in the event that the other lessee terminates its
lease with the manufacturer at that time. There can be no assurances,
however, that a final agreement on this transaction will be completed.
12
<PAGE>
EXHIBIT 11
1 OF 2
WORLDCORP, INC. AND SUBSIDIARIES
CALCULATIONS OF EARNINGS PER COMMON SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Net loss from continuing operations $ (819) $ (2,540)
---------- ----------
NET LOSS APPLICABLE TO COMMON STOCK $ (819) $ (2,540)
========== ==========
Weighted average common shares
outstanding 16,107,267 15,280,942
Weighted average options and warrants
treated as common stock equivalents 1,297,657 256,288
---------- ----------
PRIMARY AND FULLY DILUTED NUMBER OF SHARES 17,404,924 15,537,230
========== ==========
NET LOSS PER SHARE OF COMMON STOCK $ (0.05) $ (0.16)
========== ==========
</TABLE>
13
<PAGE>
EXHIBIT 11
2 OF 2
WORLDCORP, INC. AND SUBSIDIARIES
CALCULATIONS OF EARNINGS PER COMMON SHARE
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------------------------- --------------------------
Fully Fully
Primary Diluted Primary Diluted
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net earnings from continuing operations $ 45,476 $ 45,476 $ 13,635 $ 13,635
Plus: assumed interest expense reduction
from conversion of convertible debt -- 3,413 -- 3,413
----------- ---------- ----------- -----------
NET EARNINGS APPLICABLE TO
COMMON STOCK $ 45,476 $ 48,889 $ 13,635 $ 17,048
=========== ========== =========== ===========
Weighted average common shares
outstanding 15,864,340 15,864,340 15,234,857 15,234,857
Weighted average options and warrants
treated as common stock equivalents 1,181,907 1,412,599 61,562 334,466
Weighted average other dilutive securities -- 5,877,034 -- 5,877,034
----------- ---------- ----------- -----------
PRIMARY AND FULLY DILUTED NUMBER OF SHARES 17,046,247 23,153,973 15,296,419 21,446,357
=========== ========== =========== ===========
NET EARNINGS PER SHARE OF
COMMON STOCK $ 2.67 $ 2.11 $ 0.89 $ 0.79
=========== ========== =========== ===========
</TABLE>
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations presented below relates to the operations of WorldCorp, Inc.
("WorldCorp" or "the Company") as reflected in its consolidated financial
statements. These statements primarily include the accounts of the contract
flight operations of World Airways, Inc. ("World Airways"). On February 28,
1994, pursuant to an October 1993 agreement, the Company sold 24.9% of its
ownership in World Airways to MHS Berhad ("MHS"), a Malaysian aviation company.
Effective December 31, 1994, WorldCorp repurchased 5% of World Airways' common
stock from MHS. At September 30, 1995, WorldCorp owned 80.1% of World Airways'
common stock. In October 1995, World Airways completed an initial public
offering whereby 2,000,000 shares were issued and sold by World Airways and
900,000 shares were sold by WorldCorp. Subsequent to the offering, WorldCorp
owns 59% of World Airways common stock.
WorldCorp also has an ownership interest in US Order, Inc. ("US Order"), a
company which designs, develops, and markets transaction processing software,
interactive applications, customer support services, and enabling hardware for
two industries: home banking and telephone company intelligent network services.
In December 1993, US Order completed a $12.0 million private equity placement.
On August 1, 1994, US Order sold its electronic banking and bill payment
operations to VISA International Services Association, Inc. ("Visa"). In
February 1995, WorldCorp exercised an option to purchase additional shares of
the voting stock of US Order for consideration equal to $3.9 million. In June
1995, US Order completed an initial public offering whereby 3,062,500 shares
were issued and sold by US Order, and 1,365,000 shares were sold by WorldCorp.
As of September 30, 1995, WorldCorp owned 59% of the voting stock of US Order.
OVERVIEW
WorldCorp owns majority positions in companies that operate in two distinct
business areas: air transportation (through World Airways) and transaction
processing (through US Order). MHS Berhad of Malaysia is an equity investor in
World Airways. Knight Ridder and Colonial Data Technologies, Inc. are equity
investors in US Order.
AIR TRANSPORTATION
General. World Airways earns revenue primarily from four distinct markets
-------
within the air transportation industry: passenger and cargo services to major
international air carriers; passenger and cargo services, on a scheduled and ad
hoc basis, to the U.S. Government; passenger services in seasonal charter
markets; and cargo services to small package shippers and freight forwarders.In
addition, in July 1995, World Airways commenced year-round scheduled passenger
service between New York and Tel Aviv. World Airways' principal customers are
Malaysian Airlines, Garuda Indonesia and Asiana Airlines, Inc. ("Asiana
Airlines") within the international air carrier market; the U.S. Air Force
within the U.S. Government market; Look Voyages of France and Dimensao Turismo
of Brazil within the charter passenger market; and United Parcel Service ("UPS")
within the freight shipping market.
World Airways generally charges customers on a block hour basis rather than
a per seat or per pound basis. A block hour is defined as the elapsed time
computed from the moment the aircraft first moves under its own power at the
point of origin to the time it comes to rest at its destination. World Airways
provides most services under two types of contracts: basic contracts and full
service contracts. Under the terms of basic contracts, World Airways provides
the aircraft, cockpit crew, maintenance and insurance and the customer provides
all other operating services and bears all other operating expenses, including
fuel and fuel servicing, marketing costs associated with obtaining passengers
and/or cargo, airport passenger and cargo handling fees, landing fees, cabin
crews, catering, ground handling, aircraft push-back and de-icing services.
Under the terms of full service contracts, World Airways provides fuel,
catering, ground handling, cabin crew and all related support services as well.
Accordingly, World Airways charges a lower rate per block hour for basic
contracts than full service contracts, although it does not necessarily earn a
lower profit. Because of shifts in the mix between full service contracts and
basic contracts, fluctuations in revenues are not necessarily indicative of
growth and profitability. It is important, therefore, to measure growth in World
Airways' business by block hours flown and to measure profitability by operating
income per block hour.
15
<PAGE>
Consistent with other companies in the air transportation industry, World
Airways has relatively high fixed costs. Therefore, achieving high average daily
utilization of its aircraft is one of the most critical factors to World
Airways' financial results. While World Airways believes that the lease rates on
its MD-11 aircraft are favorable relative to lease rates of other MD-11
operators, World Airways' MD-11 aircraft have higher lease costs (although lower
operating costs) than its DC10-30 aircraft. In addition, a portion of World
Airways' labor costs are fixed due to monthly minimum guarantees to cockpit
crewmembers and flight attendants.
As a means of improving average daily utilization, World Airways has
recently sought multi-year contracts with high utilization guarantees. In late
1994, World Airways entered into a series of multi-year contracts, with
expiration dates running from 1997 through 2000, to provide basic services to
Malaysian Airlines. One contract provides for World Airways' operation of three
MD-11 freighter aircraft for a five-year period for a combined guaranteed
minimum of 1,200 hours per month (except when an aircraft is in scheduled
maintenance). The lease for one of the aircraft commenced in June 1994, and the
leases for the other two aircraft commenced in June and July 1995. A second
contract provides for each of two of World Airways' MD-11 passenger aircraft to
operate a guaranteed minimum of 320 hours per month from October 1994 through
March 1997. For the 1994 fiscal year and the nine months ended September 30,
1995, 9% and 26%, respectively, of World Airways' revenues and 14% and 32%,
respectively, of World Airways' block hours flown resulted from these new multi-
year contracts with Malaysian Airlines. As a result of these new multi-year
contracts, World Airways expects that Malaysian Airlines will provide a larger
percentage of total revenues and block hours in the future.
World Airways has received fixed awards from the U.S. Air Force since
1956,and the current annual contract commenced on October 1, 1995 and expires on
September 30, 1996. These contracts provide for a fixed level of scheduled
business from the U.S. Air Force with opportunities for additional short-term
expansion business. World Airways' fixed award for the current contract is $55.4
million compared to the $33.9 million fixed award for the prior contract. Due to
the utilization of a significant number of World Airways' MD-11 aircraft under
multi-year contracts with Malaysian Airlines and other contractual commitments,
it is unlikely that World Airways will be able to accept all of the available
expansion business.
World Airways also receives significant revenues from airline services
provided to Malaysian Airlines and Garuda Indonesia in connection with the
annual Hadj pilgrimage. The current five-year Hadj contract with Malaysian
Airlines expires after the 1996 Hadj. World Airways provides Hadj services to
Garuda Indonesia under contracts which are awarded on an annual basis.
As a result of these and other contracts, World Airways had an overall
contract backlog at September 30, 1995 of $458 million, compared to $109 million
at September 30, 1994. World Airways' backlog for each contract is determined by
multiplying the minimum number of block hours guaranteed under the applicable
contract by the specified hourly rate under such contract. Substantially all of
the backlog (including all of the backlog beginning in 1997) relates to the
multi-year contracts with Malaysian Airlines. The loss of any of World Airways'
key contracts or a substantial reduction in business from these key customers,
if not replaced, would have a material adverse effect on World Airways'
financial condition and results of operations.
Historically, World Airways' business has been significantly affected by
seasonal factors. During the first quarter, World Airways typically experiences
lower levels of utilization and yields as demand for passenger and cargo
services is lower relative to other times of the year. World Airways experiences
higher levels of utilization and yields in the second quarter, principally due
to peak demand for commercial passenger services associated with the annual Hadj
pilgrimage. During 1995, World Airways' flight operations associated with the
Hadj pilgrimage occurred from April 1 to April 30 and from May 13 to June 8.
Because the Hadj occurs approximately 10 to 12 days earlier each year, revenues
resulting from future Hadj contracts will begin to shift from the second quarter
to the first quarter over the next several years. In recent years, soft demand
and weakening yields in worldwide passenger markets adversely affected World
Airways' results in the third quarter. Fourth quarter utilization depends
primarily upon the demand for air cargo services in connection with the shipment
of merchandise in advance of the U.S. holiday season. World Airways believes
that its recent multi-year contracts with Malaysian Airlines and a recent
increase in peak European summer tourist travel occurring in the third quarter
should lessen the effect of these seasonal factors as experienced by World
Airways in 1995.
The price of fuel has not had a significant impact on World Airways'
operations in recent years. World Airways' exposure to fuel risk is limited
because (i) under the terms of World Airways' basic contracts, the customer is
responsible
16
<PAGE>
for providing fuel, (ii) under the terms of its full service contracts with the
U.S. Government, World Airways is reimbursed for the cost of fuel it provides,
and (iii) under World Airways' charter contracts, World Airways is reimbursed
for fuel price increases in excess of 5% of the price agreed upon in the
contract, subject to a 10% cap. World Airways is, however, exposed to fuel price
increases with respect to its scheduled passenger services. It does not purchase
fuel under long-term contracts and does not enter into futures or fuel swap
contracts.
Business Trends. World Airways operates in a challenging business
---------------
environment. During 1993 and 1994, the combination of a generally weak worldwide
economy and excess capacity in the air transportation industry resulted in soft
demand and weakening yields, which adversely affected World Airways' operating
performance. In addition, World Airways incurred significant training costs and
capital expenditures during this period in connection with shifting the mix of
its aircraft fleet from DC10-30s to predominately MD-11s.
World Airways believes, however, that its multi-year contracts with
Malaysian Airlines, in combination with its continued relationships with other
key customers, provide World Airways with a more predictable base of revenue
than existed in the past when World Airways was more dependent on ad hoc, short-
term business.
TRANSACTION PROCESSING
US Order was organized in 1990 to provide interactive applications
(including home banking and home shopping) primarily to individual customers on
a smart telephone.
On August 1, 1994, US Order sold its electronic banking and bill pay
operations to Visa for approximately $15.0 million, the assumption of certain
liabilities and the right to receive certain royalties during a 72-month period
commencing January 1, 1995. In addition, Visa designated US Order as a
"preferred provider" through the 72-month royalty period, and, as such, will
make its member banks aware that US Order can provide certain of its interactive
applications, customer support services, and smart telephones to Visa member
banks, with Visa acting in certain cases as a direct marketer and reseller.
Prior to December 31, 1994, US Order's primary source of revenue was from the
monthly service fees which US Order charges its customers for the use of its
smart telephones and interactive applications. As a result of the Visa
transaction, US Order is in the process of converting these customers over to
Visa member banks and over time expects to be offering its services strictly on
a wholesale basis to Visa and other strategic partners. As each customer is
converted to a Visa member bank, US Order will no longer collect monthly fee
revenue from these customers. In January 1995, US Order entered into a strategic
alliance with a leading manufacturer of Caller ID units, Colonial Data, to
jointly develop and distribute US Order's next generation of smart telephones to
various telecommunications industry. US Order's next generation smart telephone,
the Falcon, is currently undergoing various certification testing by independent
labs to meet Federal Communication Commission standards, and BellCore, a
research and testing company jointly owned by the seven regional Bell operating
companies. US Order expects the Falcon smart telephone to complete certification
testing by the end of 1995. US Order expects its next generation smart telephone
to be available for sale in the first quarter of 1996.
On October 19, 1995, US Order completed a transaction to acquire a 40%
equity interest in Home Financial Network, Inc. ("HomeNet"), a newly formed,
development stage personal computer company that will develop and deliver
electronic financial products and services for consumers. At closing, US Order
exchanged approximately $5.0 million of its common stock in exchange for 40% of
HomeNet. US Order believes that its investment in HomeNet will help round out
its home banking strategy by adding a PC-based application to the current smart
telephone and touch-tone applications that US Order offers. US Order expects
HomeNet to incur operating losses at least through 1996 of which US Order will
record its proportionate share. US Order expects that its share of these losses
will adversely affect its operating results at least through 1996.
To date, US Order has generated limited revenue. As a result of its new
strategic relationships in the home banking and telecommunications industries,
US Order no longer offers its services directly to the end user but, instead,
markets its products and services on a wholesale basis. This shift in strategy
has reduced US Order's overall cost structure, in particular its expenditures
for advertising and promotion, while improving its distribution channels. Due to
this change in US Order's strategy, US Order expects that its sources of
revenues in 1995 and the future, and the costs it incurs to generate such
revenues, will differ from its results prior to 1995.
17
<PAGE>
As a result of the strategic change in US Order's business focus, US Order
will generate revenue by selling its products, such as smart telephones and
voice response systems, as well as by generating monthly fees for providing
ongoing services, including interactive applications and customer support
services. In addition, commencing January 1, 1995, through December 31, 2000, US
Order has the right to receive on a quarterly basis from Visa $0.66 per month
per active retail bill pay customer that uses the Visa Bill-Pay System, subject
to certain limitations, including a reduction in the royalty payment for each
quarter through December 31, 1997 by an offset amount (the "Visa Offset"). The
Visa Offset, initially set at $73,315 per quarter, accumulates quarterly up to
an aggregate of $0.9 million. US Order has not received any revenue from these
Visa royalty payments through the nine month period ended September 30, 1995,
and does not expect to receive any revenue from these payments, after
application of the Visa Offset, through the first half of 1996.
RESULTS OF OPERATIONS
AIR TRANSPORTATION
- ------------------
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1994
Operating Revenues. Total block hours increased 4,175 hours, or 63%, to
------------------
10,797 hours for the third quarter of 1995 from 6,622 hours in the comparable
1994 period, with an average of 11.4 available aircraft per day for the third
quarter of 1995 compared to 7.1 in the comparable 1994 period. Average daily
utilization (block hours flown per day per aircraft) increased to 10.3 hours for
the three months ended September 30, 1995 from 10.1 hours for the three months
ended September 30, 1994. During 1994 and in the first nine months of 1995, the
Company began to obtain a higher percentage of its revenues under basic
contracts as opposed to full service contracts. For the three months ended
September 30, 1995, basic contracts accounted for 57% of total block hours, up
from 32% for the three months ended September 30, 1994.
Total operating revenues increased $27.7 million, or 54%, for the three
months ended September 30, 1995 to $79.2 million from $51.5 million in 1994.
This increase was primarily attributable to the $24.1 million in revenues
generated from the new multi-year contracts with Malaysian Airlines. Average
daily utilization on these contract for the three months ended September 30,
1995 was 10.9 hours. In addition, the Company realized an increase in revenues
associated with services to certain international carriers, contract flying for
the Air Force, and as a result of the commencement of scheduled service
operations to Tel Aviv in July 1995. Partially offsetting these increases was a
decrease in revenues associated with the 1995 summer charter programs to Europe.
Operating Expenses. Total operating expenses increased $17.5 million, or
------------------
30%, for the three months ended September 30, 1995 to $75.2 million from $57.7
million in 1994.
Flight operations expenses include all expenses related directly to the
operation of the aircraft other than aircraft cost, fuel, and maintenance. Also
included are expenses related to flight dispatch, flight operations
administration. Handling fees are negotiated with third party contractors on an
airport specific basis. Landing fees are subject to unilateral increases by
various governments. Navigation fees are incurred primarily in international
flights. Flight operations expenses increased $3.2 million, or 15%, for the
three months ended September 30, 1995 to $24.4 million from $21.2 million in
1994. This increase was primarily due to an increase in block hours flown,
higher cockpit crews levels associated with the planned integration of two MD-
11s into the Company's fleet in 1995, an increase in interrupted trip expenses,
and an increase in accruals under the Company's profit sharing plans for its
crewmembers during the 1995 period. These factors were partially offset by the
shift from full service to basic contracts.
Maintenance expenses increased $3.9 million, or 53%, for the three months
ended September 30, 1995 to $11.3 million from $7.4 million in 1994. This
increase resulted primarily from the increase in block hours flown in 1995 and
higher costs associated with the incremental DC10-30 aircraft, partially offset
by lower costs associated with reduced maintenance requirements of new MD-11
aircraft and the guarantees and warranties received from the engine and aircraft
manufacturers of the MD-11 aircraft and related engines.
Aircraft costs increased $6.6 million, or 50%, for the three months ended
September 30, 1995 to $19.8 million from $13.2 million in 1994. This increase
was primarily due to the lease of two additional MD-11 convertible aircraft in
the first quarter of 1995 and the short-term lease of incremental DC10-30
aircraft in the fourth quarter of 1994 and the
18
<PAGE>
second quarter of 1995, partially offset by the return of three lower-cost DC10-
30 aircraft to the lessor in the third quarter of 1994.
Fuel expenses increased $0.8 million, or 11%, for the three months ended
September 30, 1995 to $8.1 million from $7.3 million in 1994. This increase was
primarily due to a 12% increase in gallons uplifted as a result of the increase
in block hours flown in 1995, partially offset by a decrease in price per
gallon.
Promotions, sales and commissions expenses increased $2.0 million for the
three months ended September 30, 1995 to $2.6 million from $0.6 million in 1994.
This increase resulted primarily from commissions paid in connection with
scheduled service operations to Tel Aviv which commenced in July 1995.
Depreciation and amortization increased $0.5 million, or 50%, for the three
months ended September 30, 1995 to $1.5 million from $1.0 million in 1994. This
increase resulted primarily from an increase in spare parts required to support
the additional MD-11 aircraft and incremental DC10-30 aircraft described above
as well as the amortization of certain MD-11 aircraft integration costs and
other deferred costs..
General and administrative expenses increased $1.1 million, or 22%, for the
three months ended September 30, 1995 to $6.0 million from $4.9 million in 1994.
This increase was primarily due to start-up expenses and an increase in Company
personnel necessary to commence scheduled service operations in July 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1994
Operating Revenues. Total block hours increased 7,741 hours, or 38%, to
------------------
28,023 hours for the first nine months of 1995 from 20,282 hours in the
comparable 1994 period, with an average of 10.3 available aircraft per day for
the first nine months of 1995 compared to 8.7 in the comparable 1994 period.
Average daily utilization (block hours flown per day per aircraft) increased 18%
to 10.0 hours for the nine months ended September 30, 1995 from 8.5 hours for
the nine months ended September 30, 1994. For the nine months ended September
30, 1995, basic contracts accounted for 73% of total block hours, up from 59%
for the same period in 1994.
Revenues from contract flight operations increased $50.0 million, or 37%,
for the nine months ended September 30, 1995 to $186.2 million from $136.2
million in 1994. This increase was primarily attributable to a $46.8 million
increase in revenues generated from the new multi-year contracts with Malaysian
Airlines. Average daily utilization on these contract for the nine months ended
September 30, 1995 was 10.8 hours. In addition, the Company realized an increase
in revenues associated with services to certain international carriers and as a
result of the commencement of scheduled service operations to Tel Aviv in July
1995. Partially offsetting these increases was a decrease in revenues associated
with the 1995 summer charter programs to Europe.
Revenues from flight operations subcontracted to other carriers increased
$6.3 million for the nine months ended September 30, 1995 to $8.5 million from
$2.2 million in 1994. This increase resulted primarily from the Company's need
subcontract certain flights to other carriers due to peak airlift requirements
for the 1995 Hadj pilgrimage.
Operating Expenses. Total operating expenses increased $39.3 million, or
------------------
27%, for the nine months ended September 30, 1995 to $183.2 million from $143.9
million in 1994.
Flight operations expenses increased $6.5 million, or 14%, for the nine
months ended September 30, 1995 to $53.3 million from $46.8 million in 1994.
This increase was primarily due to an increase in block hours flown, higher
cockpit crews levels associated with the integration of two MD-11s into the
Company's fleet in 1995, and an increase in accruals under the Company's profit
sharing plans for its crewmembers during the 1995 period. These factors were
partially offset by the shift from full service to basic contracts.
Maintenance expenses increased $13.4 million, or 72%, for the nine months
ended September 30, 1995 to $31.9 million from $18.5 million in 1994. This
increase resulted primarily from a non-recurring 1994 reversal of $4.2 million
of excess maintenance reserves associated with the expiration of three DC10-30
aircraft leases and the increase in block hours flown in 1995, partially offset
by lower costs associated with reduced maintenance requirements of new MD-11
aircraft and the guarantees and warranties received from the engine and aircraft
manufacturers of the MD-11 aircraft and related engines.
19
<PAGE>
Aircraft costs increased $11.1 million, or 27%, for the nine months ended
September 30, 1995 to $52.7 million from $41.6 million in 1994. This increase
was primarily due to the lease of two additional MD-11 convertible aircraft in
the first quarter of 1995 and the short-term lease of incremental DC10-30
aircraft in the fourth quarter of 1994 and the second quarter of 1995, partially
offset by the return of three lower-cost DC10-30 aircraft to the lessor in the
third quarter of 1994.
Fuel expenses decreased $0.7 million, or 5%, for the nine months ended
September 30, 1995 to $14.0 million from $14.7 million in 1994. This decrease
was primarily due to a shift from full service to basic contracts in 1995 under
which the Company is not responsible for fuel.
Promotions, sales and commissions expenses increased $1.6 million for the
nine months ended September 30, 1995 to $2.7 million from $1.1 million in 1994.
This increase resulted primarily from commissions paid in connection with
scheduled service operations to Tel Aviv which commenced in July 1995.
Depreciation and amortization increased $1.1 million, or 35%, for the nine
months ended September 30, 1995 to $4.2 million from $3.1 million in 1994. This
increase resulted primarily from an increase in spare parts required to support
the additional MD-11 aircraft and incremental DC10-30 aircraft described above
as well as the amortization of certain MD-11 aircraft integration costs and
other deferred costs.
General and administrative expenses decreased $0.2 million to $15.7 million
for the nine months ended September 30, 1995 versus $15.9 million in 1994. This
decrease resulted primarily from a reduction in certain administrative expenses,
partially offset by various start-up expenses and an increase in personnel
necessary to commence scheduled service operations in July 1995.
TRANSACTION PROCESSING
- ----------------------
Results of operations for 1994 reflect US Order's prior retail strategy.
Results of operations for the periods ended September 30, 1995 reflect US
Order's current wholesale strategy.
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1994
Revenue. US Order's third quarter revenues increased by $0.9 million from
-------
$0.3 million in 1994 to $1.2 million in 1995. This increase is primarily
related to the sale of new products, such as its smart telephones, which US
Order began selling through its "preferred provided" relationship with Visa in
1995. All of US Order's third quarter product sales were generated from the
sale of its smart telephones and voice response systems. Service revenues for
the third quarter of 1995 were generated primarily from three sources: (1)
customer support services, (2) monthly service fees, and (3) miscellaneous
development fees for smart telephone applications. US Order's customer support
services of approximately $0.2 million for the quarter were remarketed by Visa
Interactive to Visa member banks under US Order's reseller agreement with Visa
Interactive. The monthly service fees accounting for approximately $0.2 million
of US Order's service fees were from its customers who used its smart telephones
and interactive applications during the third quarter of 1995, compared to
approximately $0.3 million during the same period in 1994. The decrease of $0.1
million was primarily due to the fact that US Order is in the process of
converting these customers to Visa member banks and over time expects to be
offering these services strictly on a wholesale basis.
Cost of Revenue. US Order's cost of revenue increased by $0.4 million
---------------
during the third quarter of 1995 compared to the same period in 1994 due to the
sale of its products such as its voice response systems and smart telephones.
US Order's cost of revenue historically has consisted of bill pay processing
costs and depreciation of US Order's smart telephones being utilized by
customers for a monthly fee under US Order's prior retail strategy. Beginning
in 1995, US Order began selling its smart telephones and voice response systems
pursuant to a market penetration strategy designed to build an installed base of
subscribers who are potential sources of monthly fees.
Operating Expenses. Research and development costs were $0.3 million for
------------------
the three months ended September 30, 1995 compared to $0.7 million during the
same period in 1994. The decrease of $0.4 million was primarily due to a one
time payment to employees in August 1994 of $3.25 million for the cancellation
of their vested options of which a portion was attributed to research and
development employees. The payment was made in conjunction with the August 1,
1994 purchase of US Order's bill pay operations, where Visa required that all US
Order employees who became
20
<PAGE>
employees of Visa Interactive cancel their outstanding vested options to
eliminate any potential conflict of interest. Of the $3.25 million,
approximately $2.1 million was paid to US Order employees who became Visa
Interactive employees as of August 1, 1994 and $1.1 million was paid to
employees who remained with US Order. US Order has been actively engaged in
research and development since its inception and expects that these activities
will be essential to the operations of US Order in the future. Research and
development related expenses for the third quarter of 1995 were largely
attributable to developing, designing, and testing US Order's fourth generation
smart telephone, the Falcon, which US Order anticipates will be available
for sale in the first quarter of 1996.
While there were $0.1 million of advertising and promotion expenses in the
third quarter of 1994, there were no such expenses in the third quarter of 1995.
Advertising expenses were significant prior to 1995 due to US Order's efforts to
market its smart telephones and interactive applications directly to the end
user. US Order ceased advertising to end users after the sale of US Order's
electronic bill pay system to Visa in August 1994, as it began to offer its
services and products on a wholesale basis. US Order does not expect
advertising expenses to be significant in 1995.
General and administrative expenses were $1.4 million in the third quarter
of 1995 versus $4.2 million during the comparable period in 1994. The decrease
of $2.8 million was primarily due to a one time payment to employees in August
1994 of $3.25 million. This decrease was partially offset by reduced costs
associated with approximately 60% of US Order's personnel becoming Visa
Interactive employees effective August 1, 1994.
In the future, US Order expects that aggregate general and administrative
expense will increase as US Order grows. The amount of any increase will depend
on the products and services offered by US Order and its alliances with
strategic partners.
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1994
Revenue. US Order's third quarter revenues increased by $1.9 million from
-------
$1.0 million in 1994 to $2.9 million in 1995. This increase is primarily
related to the sale of US Order's new products, such as its smart telephone,
which US Order began selling through its "preferred provided" relationship with
Visa in 1995. All of US Order's third quarter product sales were generated from
the sale of its smart telephones and voice response systems. Service revenues
for the first nine months of 1995 were generated primarily from three sources:
(1) customer support services, (2) monthly service fees, and (3) miscellaneous
development fees for smart telephone applications. US Order's customer support
services of approximately $0.4 million for the period were remarketed by Visa
Interactive to Visa member banks under US Order's reseller agreement with Visa
Interactive. The monthly service fees which accounted for approximately $0.7
million of US Order's service revenues were from its customers who used its
smart telephones and interactive applications during the first nine months of
1995, compared to $0.9 million during the same period in 1994. The decrease of
$0.2 million was primarily due to the fact that US Order is in the process of
converting these customers to Visa member banks and over time expects to be
offering these services strictly on a wholesale basis.
Cost of Revenue. US Order's cost of revenue increased by $1.2 million for
---------------
the first nine months of 1995 compared to the same period in 1994, due to the
sale of its products such as its voice response systems and smart telephones.
US Order's cost of revenue historically has consisted of bill pay processing
costs and depreciation of US Order's smart telephones being utilized by
customers for a monthly fee under US Order's prior retail strategy. Beginning
in 1995, US Order began selling its smart telephones and voice response systems
pursuant to a market penetration strategy designed to build an installed base of
subscribers who are potential sources of monthly fees.
Operating Expenses. Research and development costs were $0.8 million for
------------------
the nine months ended September 30, 1995 compared to $1.2 million during the
same period in 1994. The decrease of $0.4 million was primarily due to a one
time payment to employees in August 1994 of $3.25 million for the cancellation
of their vested options of which a portion was attributed to research and
development employees. The payment was made in conjunction with the August 1,
1994 purchase of US Order's bill pay operations where Visa required that all US
Order employees who became employees of Visa Interactive cancel their vested
options to eliminate any potential conflict of interest. Of the $3.25 million,
approximately $2.1 million was paid to US Order employees who became Visa
Interactive employees as of August 1, 1994 and $1.1 million was paid to
employees who remained with US Order. US Order has been actively engaged in
research and development since its inception and expects that these activities
will be essential to the operations of US Order in the future. Research and
development related expenses for the first nine months of 1995 were largely
attributable to developing, designing, and testing the US Order's fourth
generation smart telephone, the Falcon, which
21
<PAGE>
US Order anticipates will be available for sale in the first quarter of 1996.
While advertising and promotion expenses were $0.8 million for the first
nine months of 1994, there were relatively no expenses of this type for the same
period in 1995. Advertising expenses were significant prior to 1995 due to US
Order's efforts to market its smart telephones and interactive applications
directly to the end user. US Order ceased advertising to end users after the
sale of US Order's electronic bill pay system to Visa in August 1994, as it
began to offer its services and products on a wholesale basis. US Order does not
expect advertising expenses to be significant in 1995.
General and administrative expenses were $3.8 million in the first nine
months of 1995 versus $7.5 million during the comparable period in 1994. The
decrease of $3.7 million was primarily due to a one time payment to employees in
August 1994 of $3.25 million. This decrease was partially offset by reduced
costs associated with approximately 60% of US Order's personnel becoming Visa
Interactive employees effective August 1, 1994.
In the future, US Order expects that aggregate general and administrative
expense will increase as US Order grows. The amount of any increase will depend
on the products and services offered by US Order and its alliances with
strategic partners.
HOLDING COMPANY
- ---------------
General and administrative expenses decreased $0.3 million for the three
months ended September 30, 1995 to $1.0 million from $1.3 million during the
comparable 1994 period. This decrease resulted primarily from a decrease in
professional fees, partially offset by goodwill amortization.
For the nine month period ended September 30, 1995, general and
administrative expenses increased $1.2 million to $3.7 million from $2.5 million
in the comparable 1994 period. This increase was primarily due to goodwill
amortization and compensation expense associated with executive stock options in
1995.
OTHER INCOME (EXPENSE)
- ----------------------
Interest income increase $0.7 million and $0.8 million for the three and
nine months ended September 30, 1995, respectively, from the same periods in
1994. These increases were primarily due to an increase in cash and investments
balances.
In February 1994, WorldCorp recognized a gain of $26.9 million from the
sale of 24.9% of World Airways common stock, pursuant to an October 1993
agreement.
In August 1994, US Order sold its electronic banking and bill payment
operations to Visa. As a result of this transaction, the Company recognized a
gain of $14.5 million.
In April 1995, US Order filed a registration statement on Form S-1 with the
Securities and Exchange Commission to register 3,500,000 shares (exclusive of
the underwriters' over-allotment option) of US Order's common stock. The
offering was completed in June 1995. Of the shares registered, 2,800,000 were
issued and sold by US Order, and 700,000 shares were sold by WorldCorp. In June
1995, US Order exchanged 230,000 shares of its restricted common stock for
170,743 shares of Colonial Data's unregistered common stock. As a result of
these transactions, the Company recognized a gain of $48.7 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company is highly leveraged, primarily due to debt restructurings in
1987 and 1992, substantial debt and operating lease commitments during 1993 in
connection with acquiring MD-11 aircraft and related spare parts, and losses the
Company incurred in the past several years.
The Company has historically financed its working capital and capital
expenditure requirements out of cash flow from operating activities, public and
private sales of stock of its subsididaries, secured borrowings, and other
financings from banks and other lenders.
22
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US Order has generated operating losses since its inception. US Order's
interactive products and services are subject to the risks inherent in the
marketing and development of new products. To date, US Order has generated
limited revenue through the sale if its products and services and there can be
no assurance as to what level of future sales or royalties, if any, US Order
will receive from Visa or its member banks.
Cash Flows from Operating Activities. During the first nine months of
------------------------------------
1995, operating activities provided $10.6 million of cash compared to using
$28.5 million of cash in the first nine months of 1994. This increase in cash
for 1995 was primarily due to the following activities in the first six months
of 1995: an increase in operating income over 1994; increases in accounts
payable and accrued expenses; and decreases in deposits and prepaid expenses
incurred during the period. These factors were partially offset by an increase
in accounts receivable during the first nine months of 1995 over the comparable
1994 period.
Cash Flows from Investing Activities. Investing activities used $17.5
------------------------------------
million of cash in the nine months ended September 30, 1995 compared to
providing $12.7 million during the first nine months of 1994. This decrease in
cash resulted primarily from the purchase of rotable spare parts required for
the integration of two MD-11 aircraft in 1995 and the purchase of spare parts to
be maintained in Malaysia as a result of the new contracts with Malaysian
Airlines. In addition, US Order sold its banking operations to Visa for $14.7
million (net of related expenses) in 1994.
Cash Flows from Financing Activities. In the first nine months of 1995,
------------------------------------
financing activities provided $61.2 million of cash compared to $6.4 million of
cash provided during the first nine months of 1994. This increase in cash
provided resulted primarily from the sale of US Order's stock for $60.3 million
in cash in June 1995. In February 1994, the Company sold 24.9% of Common Stock
to MHS for $24.7 million in cash. Also in 1994, the Company made net repayments
of $16.3 million of its borrowings.
Capital Commitments. In October 1992 and January 1993, World Airways
-------------------
signed a series of agreements to lease seven new MD-11 aircraft for initial
lease terms of two to five years, renewable for up to 10 years (and in the case
of one aircraft, for 13 years) by World Airways with increasing rent costs. As
of September 30, 1995, World Airways had taken delivery of all seven aircraft,
consisting of four passenger MD-11 aircraft, one freighter MD-11, and two
convertible MD-11s. As part of the lease agreements, World Airways was assigned
purchase options for four additional MD-11 aircraft. In 1992, World Airways made
non-refundable deposits of $1.2 million toward the option aircraft.
In November 1995, World Airways signed a letter of intent with the
manufacturer to lease two MD-11ER aircraft to be delivered in the first quarter
of 1996. Under the agreement, World Airways will lease each aircraft for a term
of 24 years with an option to return the aircraft after a seven year period with
certain fixed termination fees. As part of the agreement, the above-mentioned
deposits will be applied towards these two aircraft. In addition, World Airways
agreed to assume an existing lease of two additional MD-11 freighter aircraft
for 20 years, beginning in 1999, in the event that the other lessee terminates
its lease with the manufacturer at that time. There can be no assurances,
however, that a final agreement on this transaction will be completed.
World Airways maintains three long-term DC10-30 aircraft leases with terms
expiring in 1997, 1998, and 2003. World Airways may choose to lease additional
DC10-30 aircraft primarily to meet peak demand requirements.
As of September 30, 1995, annual minimum payments required under World
Airways' aircraft and lease obligations total $16.5 million for the remainder of
1995 and $83.8 million for 1996, including the two MD-11ER aircraft mentioned
above.
World Airways spent $10.4 million to purchase spare parts and to make cash
security deposits for MD-11 integration in the first nine months of 1995. On
September 29, 1995, World Airways entered into an agreement with a lessor to
purchase a spare engine, previously under lease, for $5.5 million. World Airways
estimates that its required capital expenditures for MD-11 integration will be
approximately $4.3 million for the remainder of 1995. In August 1995, World
Airways amended its aircraft spare parts facility under the Credit Agreement to
provide for a variable rate borrowing of $10.5 million. Approximately $2.5
million of this facility was used to pay off the previously outstanding balance
of the spare parts loan facility and approximately $1.6 million will be used to
purchase additional spare parts for MD-11s required in the fourth quarter of
1995. The balance of this loan facility was used to increase cash balances which
were reduced during the first nine months of 1995 to purchase MD-11 spare parts.
In addition, World Airways intends to purchase an additional spare engine to be
delivered in the first quarter of 1996. The engine will cost approximately
23
<PAGE>
$8.0 million. World Airways has a commitment from the engine manufacturer to
finance 80% of the purchase price over a seven-year term with an interest rate
to be fixed at the time of delivery. In addition, World Airways made a $1.2
million downpayment towards this purchase in September 1995.
As discussed above, World Airways has signed a letter of intent for the
lease of two MD-11ER aircraft beginning in the first quarter of 1996 to provide
additional capacity for growth opportunities. Upon successful completion of this
agreement, World Airways estimates that it will require approximately $6.4
million for additional spare parts and $8.0 million for an additional spare
engine in 1996. As part of the agreement for the MD-11 aircraft, World Airways
will receive spare parts financing from the lessor of $9.0 million of which $3.0
million will be advanced with the delivery of each aircraft, and the remaining
$3.0 million will be available in December 1996. World Airways is currently in
negotiations for the financing of the additional spare engine. No assurances can
be given, however, that World Airways will take delivery of the above-mentioned
aircraft, obtain the consents required to incur such capital expenditures or
obtain financing necessary to make the associated spare parts and engine
purchases.
World Airways anticipates that its total capital expenditures in 1995 and
in 1996 will be approximately $22.7 million and $29.5 million, respectively. On
September 28, 1995, the Credit Agreement was amended to increase the limit on
capital expenditures by World Airways to no more than $25.0 million in 1995.
While the Credit Agreement limits capital expenditures by World Airways to no
more than $15.0 million in 1996, World Airways currently is negotiating with BNY
Financial Corporation to amend the Credit Agreement to increase the annual limit
on capital expenditures. There can be no assurance that the Credit Agreement
will be so amended or that a waiver will be obtained, in which event World
Airways would expect to limit its annual capital expenditures to $15.0 million.
World Airways is seeking authority to provide scheduled passenger and cargo
service between New York and points in West Africa and South Africa. If World
Airways receives such approval, it will incur start-up costs in an as yet
undetermined amount. World Airways believes it will be able to fund such start-
up costs from its operating cash flow and the proceeds of the Offering.
As of November 1, 1995, US Order had committed to purchase from Standard
Telecommunications Ltd. 30,000 Falcon phones for approximately $3.3 million. US
Order had no other material commitments for capital expenditures nor does it
anticipate a significant change in the current level of its capital
expenditures.
In October 1995, US Order entered into a facilities operating lease for
30,000 additional square feet of office space which will be used in addition of
US Order's current office space. The lease covers a fifty three month period
commencing July 1, 1996 with aggregate minimum lease payments equal to
approximately $2.8 million.
US Order's primary needs for cash in the future are for investment in
product development, working capital, the financing of operating losses and
capital expenditures. In order to meet US Order's needs for cash for the next 12
months, US Order will utilize proceeds from its June 1995 initial public
offering and, to the extent available, gross margins generated form the sale of
its products and services. Additionally, US Order will utilize proceeds from
funds generated from asset sales, including approximately $0.7 million of its
first and second generation smart telephones (which US Order sells to third
parties for use as point of sale terminals) and its $2.5 million advertising
credit which was received as partial consideration for certain shares of Series
C convertible preferred stock in 1993, subject to certain restrictions regarding
its use.
As of September 30, 1995, WorldCorp had parent company repayment
obligations for the remainder of 1995 and 1996 totaling $10.8 million and $8.0
million, respectively, consisting primarily of an $8.5 million (excluding
interest thereon) note payable to MHS due in December 1995 and approximately
$2.3 million and $8.0 million of annual debt service on subordinated notes and
debentures for the fourth quarter of 1995 and full year 1996, respectively.
WorldCorp intends to satisfy these obligations with its current cash reserves.
On August 25, 1994, the Company's Board of Directors approved the exercise
of WorldCorp's option to purchase 4.8 million shares of US Order common stock
held by its founders (the "Founders"). Under the terms of this agreement,
WorldCorp paid $3.9 million in consideration as follows: $2.1 million in shares
of WorldCorp common stock and $1.8 million in cash. Prior to December 31, 1994,
WorldCorp paid $0.4 million in cash to the Founders in exchange for 498,794
shares of US Order common stock. Effective February 16, 1995, WorldCorp
purchased the remaining 4.3 million shares of US Order common stock with 302,282
shares of WorldCorp common stock, $0.3 million in cash, and
24
<PAGE>
$1.1 million in the form of notes due to the Founders. These notes were paid in
the third quarter of 1995. As of September 30, 1995, WorldCorp owned 59% of the
voting stock of US Order.
As of September 30, 1995, the Company holds approximately $5.2 million (at
book value) of aircraft spare parts and transaction processing terminals
currently available for sale.
Financing Developments. On October 30, 1993, WorldCorp, World Airways, and
----------------------
MHS entered into the MHS Stock Purchase Agreement pursuant to which MHS, subject
to satisfactory completion of its due diligence investigations, agreed to
purchase 24.9% of World Airways' common stock. On February 28, 1994, the
transaction was completed. World Airways received upon closing $12.4 million to
fund its working capital requirements. The remaining proceeds from the sale
($15.0 million less a $2.6 million deposit received in November 1993) were paid
directly to WorldCorp.
In 1993, World Airways entered into the Credit Agreement, which included a
$12.0 million spare parts loan and an $8.0 million revolving line of credit
collateralized by certain receivables, inventory, equipment, and general
intangibles. World Airways is prohibited from granting a security interest in
such collateral to anyone other than BNY Financial Corporation. Approximately
$10.8 million of the proceeds from this borrowing were used to retire existing
obligations. This agreement contains certain covenants related to World Airways'
financial condition and operating results. At December 31, 1994, World Airways
was not in compliance with certain of these covenants, including minimum net
income requirements, but obtained a waiver of these covenants from the financial
institution. In March, August and September of 1995, World Airways amended this
agreement to adjust certain covenants beginning in the first quarter of 1995, in
August 1995 and in September 1995, respectively, and extended the credit
facility's term to 1998. Under the terms of the amended Credit Agreement, World
Airways is not permitted to (i) incur indebtedness in excess of $25.0 million
(excluding capital leases), (ii) declare or pay dividends if after giving effect
to such dividends World Airways's cash or cash equivalents would be less than
$7.5 million or (iii) make capital expenditures in 1995 of more than $25.0
million or in any subsequent year of more than $15.0 million. World Airways must
also maintain a certain quarterly net worth and net income (loss) requirements,
and at September 30, 1995, World Airways was in compliance with the terms of the
credit agreement as in effect as of such date. No assurances can be given that
World Airways will continue to meet these revised covenants or, if necessary,
obtain the required waivers. As of September 30, 1995, $3.1 million of the $8.0
million portion of the credit facility collateralized by receivables was
utilized, with no borrowing capacity currently available, and $10.1 million of
the $12.0 million spare parts loan was outstanding. As discussed above, World
Airways has amended the aircraft spare parts facility under the Credit Agreement
to provide for a variable rate borrowing of $10.5 million. World Airways used a
portion of the proceeds from this loan to pay off the previously outstanding
balance.
As discussed above, on September 29, 1995 World Airways entered into an
agreement with a lessor to purchase a spare engine, previously under lease, for
$5.5 million. World Airways paid $0.5 million upon closing and signed a note for
the $5.0 million balance. The note bears interest at a rate of 7.25% and is
payable over a 40-month period at $69,000 a month, with the balance of $3.3
million due on January 29, 1999.
In the first quarter of 1995, World Airways obtained approximately $6.0
million in short-term borrowings from equipment lessors for working capital
purposes. These borrowings bear interest at an average interest rate of
approximately 11%. Approximately $5.5 million of this financing was repaid in
the second and third quarters of 1995. The remaining balance will be repaid in
monthly installments through December 1995.
In April 1995, US Order filed a registration statement on Form S-1 with the
Securities and Exchange Commission to register 3,500,000 shares (exclusive of
the underwriters' over-allotment option) of US Order's common stock. The
offering was completed in June 1995. Of the shares registered, 2,800,000 were
issued and sold by US Order, and 700,000 shares were sold by WorldCorp. As a
result of this offering, US Order and WorldCorp received $41.8 million and $18.7
million in net proceeds, respectively. US Order used part of its proceeds to
satisfy debt obligations (including those to WorldCorp). The remaining balance
will be used to fund US Order's future capital requirements. World Corp will use
its proceeds to fund its debt service requirements and increase its cash
position. At September 30, 1995, WorldCorp owned 59% of the voting stock of US
Order.
In August 1995, World Airways filed a registration statement on Form S-1
with the Securities and Exchange Commission to register 2,900,000 shares of
World Airways' common stock. The offering was completed in October 1995. Of the
2,900,000 shares registered, 2,000,000 shares were issued and sold by World
Airways and 900,000 shares were sold by WorldCorp. As a result of this offering,
World Airways and WorldCorp received approximately $22.8
25
<PAGE>
million and $10.2 million in net proceeds, respectively. World Airways will use
its proceeds to increase cash reserves and fund future capital requirements.
World Corp will use its proceeds to fund its debt service requirements and
increase its cash position. At September 30, 1995, WorldCorp owned 59% of the
voting stock of World Airways.
The Company believes that the combination of the financings consummated to
date and the operating and additional financing plans described above will be
sufficient to allow the Company to meet its operating and capital requirements
for the next twelve months.
OTHER MATTERS
Legal and Administrative Proceedings. World Airways and WorldCorp (the
------------------------------------
"World Defendants") are defendants in litigation brought by the Committee of
Unsecured Creditors of Washington Bancorporation (the "Committee") in August
1992, captioned Washington Bancorporation v. Boster, et. al., Adv. Proc. 92-0133
(Bankr. D.D.C.) (the "Boster Litigation").
The complaint asserts that the World Defendants received preferential
transfers or fraudulent conveyances from Washington Bancorporation when the
World Defendants received payment at maturity on May 4, 1990 of Washington
Bancorporation commercial paper purchased on May 3, 1990. Washington
Bancorporation filed for relief under the Federal Bankruptcy Code on August 1,
1990. The Committee seeks recovery of approximately $4.8 million from World
Airways and approximately $2.0 million from WorldCorp, which are alleged to be
the amounts paid to each of World Airways and WorldCorp by Washington
Bancorporation. On the motion of the World Defendants, among others, the Boster
Litigation was removed from the Bankruptcy Court to the District Court for the
District of Columbia on May 10, 1993. The World Defendants filed a motion to
dismiss the Boster Litigation as it pertains to them on June 9, 1993, and intend
to vigorously contest liability. On September 20, 1995, the District Court for
the District of Columbia granted the motion to dismiss filed by the World
Defendants with respect to three of the four counts alleged in the litigation,
but declined to grant a motion to dismiss the remaining claim regarding
fraudulent transfers. The District Court's ruling is subject to appeal in
certain cases. The World Defendants filed a summary motion with respect to the
remaining claim on October 19, 1995, which remains pending. In any event, the
Company believes it has substantial defenses to this action, although no
assurance can be given of the eventual outcome of this litigation. Depending
upon the timing of the resolution of this claim, if the Committee were
successful in recovering the full amount claimed, the resolution could have a
material adverse effect on the Company's financial condition and results of
operations.
In addition, the Company is party to routine litigation and administrative
proceedings incidental to its business, none of which is believed by the Company
to be likely to have a material adverse effect on the financial condition,
liquidity, or results of operations of the Company.
Employee Relations. World Airways' cockpit crew members, who are
------------------
represented by the Teamsters, are subject to a four-year collective bargaining
agreement expiring in June 1998. This agreement permitted World Airways to
modify crew member work rules in exchange for pay increases.
World Airways' flight attendants are represented by the Teamsters. The
collective bargaining agreement between World Airways and the Teamsters on
behalf of the Company's flight attendants expired in 1992. The parties
exchanged their opening contract proposals in 1992 and have had numerous
contract negotiation session. In December 1994, World Airways and the Teamsters
jointly requested the assistance of a federal mediator to facilitate
negotiations. After several mediated sessions, the National Mediation Board
(the "NMB") mediator recommended that the NMB release the parties to pursue
"direct" (i.e., non-mediated) negotiations with the flight attendants. World
Airways and the Teamsters agreed and direct negotiations continue. The outcome
of the negotiations with the flight attendants cannot be determined at this
time. An inability to reach an agreement upon terms favorable to World Airways
could have a material adverse effect on World Airways. World Airways' flight
attendants also recently challenged the use of foreign flight attendant crews on
the World Airways' Malaysian Airlines and Garuda Indonesia flights, a practice
which has historically been World Airways' operating procedure. World Airways
is contractually obligated to permit its Southeast Asian customers to deploy
their own flight attendants. While World Airways intends to contest this matter
vigorously, an unfavorable ruling for World Airways could have a material
adverse effect on the Company.
World Airways' aircraft dispatchers are represented by the Transport
Workers Union (the "TWU"). This contract became subject to renegotiation on June
30, 1993. In May 1995, the parties reached agreement with respect to a new
26
<PAGE>
four-year contract which remains subject to employee ratification. Fewer than 12
employees are covered by this collective bargaining agreement.
World Airways is unable to predict whether any of its employees not
currently represented by a labor union, such as World Airways' maintenance
personnel, will elect to be represented by a labor union or collective
bargaining unit. The election by such employees of representation in such an
organization could result in employee compensation and working condition demands
that could have a material adverse effect on the financial results of World
Airways.
Dividend Policy. WorldCorp has never paid any cash dividends and does not
---------------
plan to do so in the foreseeable future. Both the 13 7/8% Subordinated Notes
Indenture and the indenture pursuant to which the Debentures were issued (the
"Indentures") restrict the Company's ability to pay dividends or make other
distributions on its common stock. In addition, the Indentures originally
restricted the ability of World Airways and US Order to pay dividends other than
to the Company. In 1994, however, the Company received approval from the holders
of the Indentures to allow World Airways to pay dividends to parties other than
the Company.
The $20 million credit facility also contains restrictions on World
Airways' ability to pay dividends. Under this agreement, World Airways cannot
declare, pay, or make any dividend or distribution in any six-month period which
aggregate in excess of the lesser of $4.5 million or 50% of net income for the
previous six months. In addition, World Airways must have a cash balance of at
least $7.5 million immediately after giving effect to such dividend or
distribution. Additionally, WorldCorp, which upon completion of the World
Airways stock option, owned approximately 59% of World Airways' common stock, is
subject to the provisions of two indentures expiring in 1997 and 2004,
respectively, under which it is obligated to cause World Airways not to pay
dividends upon the occurrence of any events of default by WorldCorp under such
indentures.
All of the funds from operations are generated by the Company's
subsidiaries. The ability of the Company and its subsidiaries to pay principal
and interest on their respective short and long-term obligations is
substantially dependent upon the payment to the Company of dividends, interest
or other charges by its subsidiaries and upon funds generated by the operations
of the subsidiaries.
Income Taxes. In August 1991, 5.7 million shares of WorldCorp common stock
------------
were sold by a group of existing shareholders. This transaction constituted an
"ownership change" of WorldCorp (and thus the Company) as defined under Section
382 of the Code (the "1991 Ownership Change"). The 1991 Ownership Change
subjected WorldCorp to an annual limitation in 1991 and future years in the use
of net operating loss carryforwards ("NOLs") that were available to WorldCorp
(and thus allocable to the Company) on the date on which the 1991 Ownership
Change occurred. As of December 31, 1994, the Company had NOLs for federal
income tax purposes of $153.3 million which, if not utilized to offset taxable
income in future periods, will expire from 1997 to 2009. Of this amount, $72.6
million is subject to a $6.3 million annual limitation (the "Limitation")
resulting from the 1991 Ownership Change. The remaining $80.7 million was
generated after the 1991 Ownership Change and, therefore, is not currently
subject to annual limitation. As a result of the transactions between the
Company and MHS during 1994, approximately $111.0 million of the consolidated
NOL (subject to the limitation) will be allocated to World Airways and,
therefore, will only be available to offset future federal taxable income of
World Airways.
While the Company believes that the World Airways Stock Offering has not
caused an ownership change, the application of the Code in this area is subject
to interpretation by the IRS. If future transactions in the capital stock of
WorldCorp or World Airways, combined with the effect of the World Airways Stock
Offering, result in an ownership change, the use of World Airways' NOLs in
future years would be further limited. The amount of the annual limitation that
would apply to World Airways' NOLs after an ownership change would equal the
product of the value of the outstanding stock of World Airways immediately prior
to such ownership change multiplied by the long-term tax-exempt rate at such
time, which is determined monthly and was 5.88% in July 1995. In the event that
more than $5.0 million of the outstanding convertible debentures of Worldcorp
are converted into WorldCorp common stock, the Company believes an ownership
change will occur.
There can be no assurance that the operations of the Company will generate
taxable income in future years so as to allow the Company to realize a tax
benefit from its NOLs. The NOLs are subject to examination by the IRS and,
thus, are subject to adjustment or disallowance resulting from any such IRS
examination. In addition to the change in ownership that might occur upon the
conversion of the WorldCorp debentures, additional ownerships changes of the
27
<PAGE>
Company may occur in the future and may result in the imposition of a lower
annual limitation on the Company's NOLs existing at the time of any such
ownership change.
New Accounting Standard. In June 1995, the Financial Accounting Standards
-----------------------
Board issued a Statement of Financial Accounting Standards No.121, Accounting
for the Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed
of ("SFAS No. 121"). SFAS No. 121 requires companies to review long-lived
assets and certain identifiable intangibles to be held, used or disposed of, for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company believes the
adoption of this statement will not have a significant effect on its financial
statements. The Company is required to adopt this statement in 1996.
Inflation. The Company believes that inflation has not had a material
----------
effect on the Company's revenues during the past three years.
28
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
--------
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<S> <C> <C>
3.1 Certificate of Incorporation of WorldCorp, Inc. dated March 16, 1987. Incorporated
[Filed as Exhibit 3.1 to WorldCorp, Inc.'s Registration Statement on by reference
Form S-4 (Commission File No. 33012735) filed on March 19, 1987 and
incorporated herein by reference.]
3.2 Amended and Restated Bylaws of WorldCorp, Inc. dated November 13, Incorporated
1987. (Filed as Exhibit 3.1 to WorldCorp, Inc.'s Annual Report on by reference
Form 10-K for the fiscal year ended December 31, 1987 and
incorporated herein by reference.)
4.1 Indenture dated as of August 1, 1987 between WorldCorp, Inc. and Incorporated
Norwest Bank of Minneapolis, N.A.(Filed as Exhibit 4.1 to Amendment by reference
by reference No. 2 to WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed August 13, 1987 and incorporated
herein by reference.]
4.2 First Supplemental Indenture dated as of March 1, 1988 between Incorporated
WorldCorp, Inc. and Norwest Bank of Minneapolis, N.A. (Filed as by reference
Exhibit 4.2 to WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1988 and incorporated herein by
reference.)
4.3 Second Supplemental Indenture dated as of February 22, 1994 between Incorporated
WorldCorp, Inc. and Norwest Bank Minnesota, National Association. by reference
(Filed as Exhibit 4.3 to WorldCorp, Inc's Form S-3 Registration Statement
(Commission file No. 33-60247) filed on June 15, 1995 and incorporated
herein by reference.)
4.4 Third Supplemental Indenture dated as of March 15, 1995 between Incorporated
WorldCorp, Inc. and Norwest Bank Minnesota, National Association. by reference
(Filed as Exhibit 4.4 to WorldCorp, Inc's Form S-3 Registration Statement
(Commission file No. 33-60247) filed on June 15, 1995 and incorporated
herein by reference.)
4.6 First Supplemental Indenture dated as of February 22, 1994 between Incorporated
WorldCorp, Inc. and The First National Bank of Boston, as Trustee. by reference
(Filed as Exhibit 4.6 to WorldCorp, Inc's Form S-3 Registration Statement
(Commission file No. 33-60247) filed on June 15, 1995 and incorporated
herein by reference.)
4.8 Stock Option Agreement dated as of April 1, 1995 between WorldCorp, Incorporated
Inc. and Patrick F. Graham. (Filed as Exhibit 4.8 to WorldCorp Inc's by reference
Form S-3 Registration Statement (Commission file No. 33-60247)
filed on June 15, 1995 and incorporated herein by reference.)
10.1 Warrant Agreement between WorldCorp, Inc. and Drexel Burnham Incorporated
Lambert, Incorporated ("Drexel") dated as of June 30, 1988. (Filed by reference
as Exhibit 10.1 to WorldCorp, Inc.'s Form 10-Q for the quarter ended
March 31, 1989 and incorporated herein by reference.)
</TABLE>
29
<PAGE>
<TABLE>
<S> <C> <C>
10.4 Aircraft Lease Agreement dated as of March 30, 1987 between World Incorporated
Airways, Inc. and The Connecticut National Bank, not in its individual by reference
capacity, but solely as Owner Trustee. (Filed as Exhibit 10.34
to World Airways, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1986 and incorporated herein by reference.)
10.5 Merger Agreement and Plan of Reorganization dated as of April 28, Incorporated
1987 by and among World Airways, Inc., World Merger Corporation by reference
and WorldCorp, Inc. [Filed as Exhibit 10.50 to WorldCorp, Inc.'s
Form S-2 Registration Statement (Commission File No. 33-1358276)
filed on July 31, 1987 and incorporated herein by reference.]
10.6 Assumption Agreement dated as of June 23, 1987 among WorldCorp, Incorporated
Inc., World Airways, Inc. and T. Coleman Andrews, III. [Filed as by reference
Exhibit 10.51 to WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed on July 31, 1987 and
incorporated herein by reference.]
10.7 Assumption Agreement dated as of June 23, 1987 among WorldCorp, Incorporated
Inc., World Airways, Inc. and D. Fraser Bullock. [Filed as Exhibit by reference
10.52 to WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed on July 31, 1987 and
incorporated herein by reference.]
10.8 Guaranty and Amendment Agreement dated as of June 23, 1987 Incorporated
between WorldCorp, Inc. and The Connecticut National Bank, a by reference
national banking association, as Owner Trustee, with Burnham
Leasing Corporation, as Owner Participant. [Filed as Exhibit
10.55 to WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed July 31, 1987 and
incorporated herein by reference.]
10.9 Form of Assumption Agreement dated as of June 23, 1987 among Incorporated
WorldCorp, Inc., World Airways, Inc. and each Indemnified Party. by reference
[Filed as Exhibit 10.60 to WorldCorp, Inc.'s Form S-2 Registration
Statement (Commission File No. 33-1358276) filed on July 31, 1987
and incorporated herein by reference.]
10.11 Agreement between World Airways, Inc. and Flight Attendants Incorporated
represented by International Brotherhood of Teamsters. [Filed by reference
reference as Exhibit 10.67 to WorldCorp, Inc.'s Form S-3 Registration
Statement (Commission File No. 2-91998) filed on December 10, 1987
and incorporated herein by reference.]
10.12 Agreement between World Airways, Inc. and Mechanics represented by Incorporated
the International Brotherhood of Teamsters. (Filed as Exhibit 10.41 by reference
to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 and incorporated herein by reference.)
10.13 Agreement between World Airways, Inc. and Stock Clerks and Store Incorporated
Room Employees represented by the International Brotherhood of by reference
Teamsters. (Filed as Exhibit 10.42 to WorldCorp, Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1988
and incorporated herein by reference.)
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10.14 Office Lease - The Hallmark Building dated as of May 16, 1987 Incorporated
between WorldCorp, Inc. and GT Renaissance Centre Limited by reference
Partnership. (Filed as Exhibit 10.36 to WorldCorp, Inc.'s Annual Report
on Form 10-K for the fiscal year ended December 31, 1989 and
incorporated herein by reference.)
10.15 Lease Amendment dated as of June 27, 1989 between WorldCorp, Inc. Incorporated
and GT Renaissance Centre Limited Partnership. (Filed as Exhibit by reference
10.37 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein by reference.)
10.16 Office Lease - The Hallmark Building dated as of September 20, 1989 Incorporated
between World Airways, Inc. and GT Renaissance Centre Limited by reference
Partnership. (Filed as Exhibit 10.38 to WorldCorp, Inc's Annual
Report on form 10-K for the fiscal year ended December 31, 1989
and incorporated herein by reference.)
10.17 Warrant Agreement dated as of July 22, 1989 between WorldCorp, Incorporated
Inc. and Charles W. Pollard. (Filed as Exhibit 10.45 to WorldCorp, by reference
Inc.'s Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 and incorporated herein by reference.)
10.20 WorldCorp, Inc. Employee Savings and Stock Ownership Plan. (Filed Incorporated
as Exhibit 10.49 to WorldCorp, Inc.'s Annual Report on 10-K by reference
for the fiscal year ended December 31, 1989 and incorporated
herein by reference.)
10.21 Amendment No. 1 to WorldCorp Inc. Employee Savings and Stock Incorporated
Ownership Plan. (Filed as Exhibit 10.50 to WorldCorp, Inc.'s by reference
Annual Report on Form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by reference.)
10.27 Aircraft Warranty Bill of Sale dated as of January 15, 1991 between Incorporated
World Airways, Inc. and First Security Bank of Utah, N.A., not in its by reference
individual capacity, but solely as Owner Trustee. (Filed as Exhibit
10.46 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1990 and incorporated herein by reference.)
10.28 Aircraft Lease Agreement dated as of January 15, 1991 between World Incorporated
Airways, Inc. and First Security Bank of Utah, N.A., not in its by reference
individual capacity, but solely as Owner Trustee. (Filed as Exhibit
10.47 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1990 and incorporated herein by reference.)
10.29 Loan and Security Agreement dated as of February 26, 1992 between Incorporated
WorldCorp, Inc. and US Order Incorporated. (Filed as Exhibit 10.38 by reference
to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1991 and incorporated herein by reference.)
10.30 Aircraft Lease Agreement I dated as of February 12, 1992 between Incorporated
McDonnell Douglas Finance Corporation and World Airways, Inc. by reference
(Filed as Exhibit 10.39 to WorldCorp, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1991 and incorporated
herein by reference.)
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10.31 Aircraft Lease Agreement II dated as of February 12, 1992 between Incorporated
McDonnell Douglas Finance Corporation and World Airways, Inc. by reference
(Filed as Exhibit 10.40 to WorldCorp, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1991 and incorporated
herein by reference.)
10.32 Aircraft Engine Purchase Agreement dated as of April 26, 1991 between Incorporated
Terandon Leasing Corporation and World Airways, Inc. (Filed as by reference
Exhibit 10.41 to WorldCorp, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1991 and incorporated herein by
reference.)
10.33 Aircraft Engine Lease Agreement dated as of April 26, 1991 between Incorporated
Terandon Leasing Corporation and World Airways, Inc. (Filed as by reference
Exhibit 10.42 to WorldCorp, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1991 and incorporated herein by
reference.)
10.34 Guaranty Agreement I dated as of February 12, 1992 between McDonnell Incorporated
Douglas Finance Corporation and World Airways, Inc. (Filed as Exhibit by reference
10.43 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1991 and incorporated herein by reference.)
10.35 Guaranty Agreement II dated as of February 12, 1992 between McDonnell Incorporated
Douglas Finance Corporation and World Airways, Inc. (Filed as Exhibit by reference
10.44 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1991 and incorporated herein by reference.)
10.36 Series A Preferred Stock Purchase Agreement dated as of September 14, Incorporated
1990 between US Order, Inc. and WorldCorp, Inc. (Filed as Exhibit 10.45 by reference
to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1991 and incorporated herein by reference.)
10.37 Stock Restriction Agreement dated as of September 14, 1990 between Incorporated
WorldCorp, Inc., William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, by reference
Henry R. Nichols, William N. Melton and John Porter. (Filed as Exhibit
10.46 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1991 and incorporated herein by reference.)
10.38 Aircraft Lease Agreement for Aircraft Serial Number 48518 dated as Incorporated
of September 30, 1992 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.38 to WorldCorp, Inc.'s
Annual Report on Form 10-K for the financial year ended Dec 31, 1992
and incorporated herein by reference.)
10.39 Aircraft Lease Agreement for Aircraft Serial Number 48519 dated as Incorporated
of September 30, 1992 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.39 to WorldCorp, Inc.'s
Annual Report on Form 10-K for the financial year ended Dec 31, 1992 and
incorporated herein by reference.)
10.40 Aircraft Lease Agreement for Aircraft Serial Number 48520 dated as Incorporated
of September 30, 1992 between World Airways, Inc. and International by reference
Lease Finance Corporation.(Filed as Exhibit 10.40 to WorldCorp, Inc.'s
Annual Report on Form 10-K for the financial year ended Dec 31, 1992 and
incorporated herein by reference.)
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10.41 Aircraft Lease Agreement for Aircraft Serial Number 48633 dated as Incorporated
of September 30, 1992 between World Airways, Inc. and International by reference
Lease Finance Corporation.(Filed as Exhibit 10.41 to WorldCorp, Inc.'s
Annual Report on Form 10-K for financial year ended Dec 31, 1992 and
incorporated herein by reference.)
10.42 Aircraft Lease Agreement for Aircraft Serial Number 48631 dated as Incorporated
of September 30, 1992 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.42 to WorldCorp, Inc.'s
Annual Report on Form 10-K for financial year ended Dec 31, 1992 and
incorporated herein by reference.)
10.43 Aircraft Lease Agreement for Aircraft Serial Number 48632 dated as Incorporated
of September 30, 1992 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.44 to WorldCorp, Inc.'s
Annual Report on Form 10-K for financial year ended Dec 31, 1992 and
incorporated herein by reference.)
10.45 MD-11 Aircraft Charter Agreement dated as of March 18, 1993 Incorporated
between World Airways, Inc. and PT. Garuda Indonesia. (Filed as Exhibit by reference
10.45 to WorldCorp, Inc's Annual Report on Form 10-K for financial year ended
Dec 31, 1992 and incorporated herein by reference.)
10.45 DC10-30 Aircraft Charter Agreement dated as of March 18, 1993 Incorporated
between World Airways, Inc. and PT. Garuda Indonesia. (Filed as Exhibit 10.45 by reference
to WorldCorp, Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.46 Accounts Receivable Management and Security Agreement dated as Incorporated
of December 7, 1993 between World Airways, Inc. and BNY by reference
Financial Corporation. (Filed as Exhibit 10.46 to WorldCorp, Inc's Annual Report
on Form 10-K for the fiscal year ended Dec 31, 1993 and incorporated herein
by reference.)
10.47 Aircraft Parts Security Agreement dated as of December 7, 1993 Incorporated
between World Airways, Inc. and BNY Financial Corporation. (Filed as Exhibit by reference
10.47 to WorldCorp, Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.48 Warrant Certificate dated as of December 7, 1993 between WorldCorp, Incorporated
Inc. and BNY Financial Corporation. (Filed as Exhibit 10.48 to WorldCorp, Inc's by reference
Annual Report on Form 10-K for the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.50 Subscription and Preferred Stock Purchase Agreement dated as of Incorporated
December 20, 1993 between US Order, Inc. and Knight-Ridder, Inc. (Filed as by reference
Exhibit 10.50 to WorldCorp, Inc's Annual Report on Form 10-K for the
fiscal year ended Dec 31, 1993 and incorporated herein by reference.)
10.51 Subscription and Preferred Stock Purchase Agreement dated as of Incorporated
December 21, 1993 between US Order, Inc. and WorldCorp, Inc. by reference
(Filed as Exhibit 10.51 to WorldCorp Inc's Annual Report on Form 10-K
for the fiscal year ended Dec 31, 1993 and incorporated herein by
reference.)
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10.52 Subscription and Preferred Stock Purchase Agreement dated as of Incorporated
December 20, 1993 between US Order, Inc. and Jerome Kohlberg, Jr. by reference
(Filed as Exhibit 10.52 to WorldCorp Inc's Annual Report on Form 10-K for the
fiscal year ended Dec 31, 1993 and incorporated herein by reference.)
10.53 Subscription and Preferred Stock Purchase Agreement dated as of Incorporated
December 21, 1993 between US Order, Inc. and Hoechst Celanese by reference
Corporation Employee Benefit Master Trust. (Filed as Exhibit 10.53 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended Dec 31,
1993 and incorporated herein by reference.)
10.54 Series C Preferred Stock Purchase Agreement dated as of December Incorporated
21, 1993 between US Order, Inc. and VeriFone, Inc. (Filed as Exhibit 10.54 by reference
to WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.55 Registration Rights Agreement dated as of December 21, 1993 Incorporated
between US Order, Inc. and VeriFone, Inc. (Filed as Exhibit 10.55 to WorldCorp by reference
Inc's Annual Report on Form 10-K for the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.57 Investment Agreement dated as of December 21, 1993 by and among Incorporated
US Order, Inc., WorldCorp, Inc., and VeriFone, Inc. (Filed as Exhibit 10.57 to by reference
WorldCorp, Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.58 Settlement Agreement dated as of February 3, 1994 between World Incorporated
Airways, Inc, WorldCorp, Inc., Concord Asset Management, Inc., by reference
Concord Leasing, Inc., and The CIT Group. (Filed as Exhibit 10.58 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1994 and incorporated herein by reference.)
10.59 Lease Agreement dated as of June 1, 1993 between World Airways, Incorporated
Inc. and Mattei Corporation. (Filed as Exhibit 10.59 to WorldCorp Inc's by reference
Annual Report on Form 10-K for the fiscal year ended Dec 31, 1994 and
incorporated herein by reference.)
10.60 Lease Agreement dated as of March 30, 1993 between World Airways, Incorporated
Inc. and Tinicum Properties Associates Limited Partnership, as by reference
amended by First Amendment to Lease dated July 9, 1993. (Filed as
Exhibit 10.60 to WorldCorp Inc's Annual Report on Form 10-K for the
fiscal year ended Dec 31, 1993 and incorporated herein by reference.)
10.61 Lease Agreement dated as of January 25, 1993 between World Flight Incorporated
Crew Services, Inc. and Sakioka Farms. (Filed as Exhibit 10.61 to by reference
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.62 Consignment Agreement dated as of September 30, 1993 between World Incorporated
Airways Inc. and The Memphis Group. (Filed as Exhibit 10.62 to by reference
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
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10.63 Assignment and Assumption and Consent and Release for Aircraft Incorporated
Serial Number 47818 dated as of July 20, 1993 among World by reference
Airways, Inc., WorldCorp, Inc., McDonnell Douglas Corporation, and
McDonnell Douglas Finance Corporation. (Filed as Exhibit 10.63 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.64 Assignment and Assumption and Consent and Release for Aircraft Incorporated
Serial Number 46999 dated as of July 9, 1993 among World by reference
Airways, Inc., WorldCorp, Inc., McDonnell Douglas Corporation, and
McDonnell Douglas Finance Corporation. (Filed as Exhibit 10.64 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.65 Aircraft Lease Agreement for Aircraft Serial Number 48458 dated as Incorporated
of January 15, 1993 between World Airways, Inc. and Wilmington by reference
Trust Company/GATX Capital Corporation.(Filed as Exhibit 10.65 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.66 Aircraft Lease Supplement for Aircraft Serial Number 48458 dated as Incorporated
of April 23, 1993 between World Airways, Inc. and Wilmington Trust by reference
Company/GATX Capital Corporation. (Filed as Exhibit 10.66 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.67 Aircraft Spare Parts Lease Agreement dated as of April 15, 1993 Incorporated
between World Airways, Inc. and GATX Capital Corporation. (Filed by reference
as Exhibit 10.67 to WorldCorp Inc's Annual Report on Form 10-K for the
fiscal year ended Dec 31,1993 and incorporated herein by reference.)
10.68 Amendment No. 1 To Aircraft Lease Agreement for Aircraft Serial Incorporated
Number 48518 dated as of November 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation. (Filed as
Exhibit 10.68 to WorldCorp Inc's Annual Report on Form 10-K for
the fiscal year ended Dec 31, 1993 and incorporated herein
by reference.)
10.69 Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial Incorporated
Number 48518 dated as of March 8, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation. (Filed as Exhibit 10.69
to WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.70 Assignment of Rights for Aircraft Serial Number 48518 dated as of Incorporated
March 8, 1993 between World Airways, Inc. and International Lease by reference
Financial Corporation. (Filed as Exhibit 10.70 to WorldCorp Inc's
Annual Report on Form 10-K for the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.71 Assignment of Rights for Aircraft Engines Serial Numbers P723942, Incorporated
P723945, and P723943 dated as of March 1, 1993 between World by reference
Airways, Inc. and International Lease Finance Corporation. (Filed as
Exhibit 10.71 to WorldCorp Inc's Annual Report on Form 10-K for the
fiscal year ended Dec 31, 1993 and incorporated herein by reference.)
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10.72 Agency Agreement for Aircraft Serial Number 48518 dated as of Incorporated
January 15, 1993 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.72 to WorldCorp Inc's
Annual Report on Form 10-K for the fiscal year ended Dec 31, 1993
and incorporated herein by reference.)
10.73 Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial Incorporated
Number 48437 dated as of March 31, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation.(Filed as Exhibit 10.73
to WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.74 Amendment No. 3 to Aircraft Lease Agreement for Aircraft Serial Incorporated
Number 48437 dated as of April 15, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation. (Filed as Exhibit 10.74
to WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1993 and incorporated herein by reference.)
10.75 Agency Agreement for Aircraft Serial Number 48437 dated as of Incorporated
January 15, 1993 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.75 to WorldCorp Inc's
Annual Report on Form 10-K for the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.76 Assignment of Rights for Aircraft Serial Number 48437 dated as of Incorporated
April 15, 1993 between World Airways, Inc. and International Lease by reference
Finance Corporation. (Filed as Exhibit 10.76 to WorldCorp Inc's
Annual Report on Form 10-K for the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.77 Assignment of Rights for Aircraft Engines Serial Numbers P723913, Incorporated
P723912, and P723914 dated as of April 15, 1993 between World by reference
Airways, Inc. and International Lease Finance Corporation. (Filed as
Exhibit 10.77 to WorldCorp's Annual Report on Form 10-K to the
fiscal year ended Dec 31, 1993 and incorporated herein by reference.)
10.78 Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial Incorporated
Number 48520 dated as of April 22, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation. (Filed as Exhibit 10.78
to WorldCorp's Annual Report on Form 10-K to the fiscal year ended Dec
31, 1993 and incorporated herein by reference.)
10.79 Agency Agreement for Aircraft Serial Number 48520 dated as of Incorporated
January 15, 1993 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.79 to WorldCorp's
Annual Report on Form 10-K to the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.80 Assignment of Rights for Aircraft Serial Number 48520 dated as of Incorporated
April 22, 1993 between World Airways, Inc. and International by reference
Lease Finance Corporation. (Filed as Exhibit 10.80 to
WorldCorp's Annual Report on Form 10-K to the fiscal year ended Dec 31,
1993 and incorporated herein by reference.)
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10.81 Assignment of Rights for Aircraft Engines Serial Numbers P723957, Incorporated
P723958, and P723956 dated as of March 1, 1993 between World by reference
Airways, Inc. and International Lease Finance Corporation. (Filed
as Exhibit 10.81 to WorldCorp Inc's Annual Report on Form 10-K to
the fiscal year ended Dec 31, 1993 and incorporated herein by reference.)
10.82 Aircraft Charter Agreement dated as of July 24, 1993 between World Incorporated
Airways, Inc. and Malaysian Airline System Berhad. (Filed as Exhibit by reference
10.82 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year
ended Dec 31, 1993 and incorporated herein by reference.)
10.83 Amendment No. 1 to Aircraft Lease Agreement for Aircraft Serial Incorporated
Numbers 46835, 46837, and 46820 dated as of May 14, 1993 between by reference
World Airways, Inc. and The Connecticut National Bank (assigned to
Federal Express Corporation). (Filed as Exhibit 10.83 to WorldCorp Inc's
Annual Report on Form 10-K to the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.84 Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial Incorporated
Numbers 46835, 46837, and 47820 dated as of May 14, 1993 between by reference
World Airways, Inc. and The Connecticut National Bank (assigned to
Federal Express Corporation). (Filed as Exhibit 10.84 to WorldCorp Inc's
Annual Report on Form 10-K to the fiscal year ended Dec 31, 1993 and
incorporated herein by reference.)
10.85 Return Agreement for Aircraft Serial Numbers 47818 and 46999 dated Incorporated
as of July 9, 1993 among World Airways, Inc., WorldCorp, Inc., by reference
International Lease Finance Corporation, McDonnell Douglas
Corporation, and McDonnell Douglas Finance Corporation. (Filed as Exhibit
10.85 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year
ended Dec 31, 1993 and incorporated herein by reference.)
10.86/1/ Acquisition Agreement Among VISA International Service Association, Incorporated
US Order, Inc, and WorldCorp, Inc, dated as of July 15, 1994. by reference
(Filed as Exhibit 10.86 to WorldCorp Inc's Quarterly Report on Form 10-Q
to the fiscal year ended September 30, 1994 and incorporated herein by
reference.)
10.87 Stock Purchase Agreement by and among World Airways, Inc., Incorporated
WorldCorp, Inc., and Malaysian Helicopter Services Berhad dated as by reference
of October 30, 1993. (Filed as Exhibit 10.87 to WorldCorp Inc's
Annual Report on Form 10-K to the fiscal year ended Dec 31, 1994 and
incorporated herein by reference.)
10.88 Stock Registration Rights Agreement between World Airways, Inc. Incorporated
and Malaysian Helicopter Services Berhad dated as of October 30, by reference
(Filed as Exhibit 10.88 to WorldCorp Inc's Annual Report on
Form 10-K to the fiscal year ended Dec 31, 1994 and incorporated herein
by reference.)
10.89 Shareholders Agreement between Malaysian Helicopter Services Incorporated
Berhad and WorldCorp, Inc., and World Airways, Inc. dated as of by reference
February 3, 1994. (Filed as Exhibit 10.89 to WorldCorp Inc's Annual
Report on Form 10-K to the fiscal year ended Dec 31, 1994 and
incorporated herein by reference.)
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10.90 Amendment No. 1 to Shareholders Agreement dated as of February 28, Incorporated
1994, among WorldCorp, World Airways, and MHS. (Filed as Exhibit by reference
10.89 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal
year ended Dec 31, 1994 and incorporated herein by reference.)
10.91 Right of First Refusal Agreement dated as of February 28, 1994, Incorporated
between US Order, Inc. ("US Order") and Technology Resources, Inc. by reference
Berhad ("TRI") (Filed as Exhibit 10.90 to WorldCorp Inc's Annual Report
on Form 10-K to the fiscal year ended Dec 31, 1994 and incorporated herein
by reference.)
10.92 Amendment No. 1 dated as of August 29, 1991 to the US Order, Inc. Incorporated
Stock Restriction Agreement dated as of September 14, 1990 among by reference
WorldCorp, Inc., a Delaware corporation ("WorldCorp"), William
F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols,
William N. Melton and John Porter (collectively, the "Founders" and
each a "Founder"), and the Employees. (Filed as Exhibit 10.92 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1994 and incorporated herein by reference.)
10.93 Amendment No. 2 dated as of March 31, 1993 to the US Order, Inc. Incorporated
Stock Restriction Agreement dated as of September 14, 1990 among by reference
WorldCorp, Inc., a Delaware corporation ("WorldCorp"), William F.
Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols,
William N. Melton and John Porter (collectively, the "Founders" and
each a "Founder"), and the Employees. (Filed as Exhibit 10.93 to
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year ended
Dec 31, 1994 and incorporated herein by reference.)
10.94 Stock Option Agreement dated as of August 1, 1994 ("Grant Date") Incorporated
between WorldCorp, Inc. and William F. Gorog. (Filed as Exhibit by reference
10.93 to WorldCorp Inc's Annual Report on Form 10-K for the
fiscal year ended Dec 31, 1994 and incorporated herein by reference.)
10.95 Employment Agreement dated as of August 1, 1994 between US Incorporated
Order, Inc. and John C. Backus, Jr. (Filed as Exhibit 10.95 to by reference
WorldCorp Inc's Annual Report on Form 10-K for the fiscal year
ended Dec 31, 1994 and incorporated herein by reference.)
10.96 Employment Agreement dated as of August 19, 1994 between Incorporated
WorldCorp, Inc. and T. Coleman Andrews, III. (Filed as Exhibit by reference
10.96 to WorldCorp Inc's Annual Report on Form 10-K for the fiscal year
ended Dec 31, 1994 and incorporated herein by reference.)
10.97 Stock Option Agreement dated as of August 19, 1994 ("Grant Date") Incorporated
by and between WorldCorp, Inc. and T. Coleman Andrews, III. by reference
(Filed as Exhibit 10.97 to WorldCorp Inc's Annual Report on Form 10-K
for the fiscal year ended Dec 31, 1994 and incorporated herein by reference.)
10.98 Agreement between World Airways, Inc. and the International Incorporated
Brotherhood of Teamsters representing the Cockpit Crewmembers by reference
employed by World Airways, Inc. dated August 15, 1994-June 30, 1998.
(Filed as Exhibit 10.98 to WorldCorp Inc's Annual Report on Form 10-K
to the fiscal year ended Dec 31, 1994 and incorporated here by
reference.)
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10.99 Letter Employment Agreement of William F. Gorog dated August 25, 1994. Incorporated
(Filed as Exhibit 10.99 to WorldCorp Inc's Annual Report on Form 10-K by reference
to the fiscal year ended Dec 31, 1994 and incorporated herein by reference.)
10.100 Amendment No. 3 dated as of September 1, 1994 to the US Order, Inc. Stock Incorporated
Restriction Agreement dated as of September 14, 1990 among WorldCorp, Inc., by reference
a Delaware corporation ("WorldCorp"), William F. Gorog, Jonathan M. Gorog,
Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter
(collectively, the "Founders" and each a "Founder"), and the Employees.
(Filed as Exhibit 10.100 to WorldCorp Inc's Annual Report on Form 10-K to
the fiscal year ended Dec 31, 1994 and incorporated herein by reference.)
10.101 Aircraft Services Agreement dated September 26, 1994 by and between World Incorporated
Airways, Inc. ("World") and Malaysian Airline System Berhad ("MAS"). (Filed by reference
as Exhibit 10.101 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal
year ended Dec 31, 1994 and incorporated herein by reference.)
10.102 Freighter Services Agreement dated October 1, 1994 by and between World Incorporated
Airways, Inc. and Malaysian Airline System Berhad. (Filed as Exhibit 10.102 by reference
to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended
Dec 31, 1994 and incorporated herein by reference.)
10.103 World Airways, Inc. 1995 AMC Contract F11626-94-D0027 dated October 1, 1994 Incorporated
between World Airways, Inc. and Air Mobility Command. (Filed as Exhibit by reference
10.103 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended
Dec 31, 1994 and incorporated herein by reference.)
10.104 Amendment No. 4 dated as of December 1, 1994 to the US Order, Inc. Stock Incorporated
Restriction Agreement dated as of September 14, 1990 among WorldCorp, Inc., by reference
a Delaware corporation ("WorldCorp"), William F. Gorog, Jonathan M. Gorog,
Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter
(collectively, the "Founders" and each a "Founder"), and the Employees.(Filed
as Exhibit 10.104 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal
year ended Dec 31, 1994 and incorporated herein by reference.)
10.105 Stock Purchase Agreement (the "Agreement") dated as of December 31, 1994 by Incorporated
and between MHS Berhad, a Malaysian corporation (the "Shareholder") and by reference
WorldCorp, Inc., a Delaware corporation (the "Purchaser"). (Filed as Exhibit
10.105 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended
Dec 31, 1994 and incorporated herein by reference.)
10.106 Promissory Note dated December 31, 1994 for $8,500,000 between WorldCorp, Incorporated
Inc., a Delaware corporation ("Borrower") and Malaysian Helicopter Services by reference
Berhad, a Malaysian corporation ("Lender"). (Filed as Exhibit 10.106 to
WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended Dec 31,
1994 and incorporated here by reference.)
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10.107 Amendment No. 1 to Passenger Aircraft Services and Freighter Services Incorporated
Agreement dated December 31, 1994 by and between World Airways, Inc. and by reference
Malaysian Airline System Berhad. (Filed as Exhibit 10.107 to WorldCorp Inc's
Annual Report on Form 10-K to the fiscal year ended Dec 31, 1994 and
incorporated herein by reference.)
10.108 Amendment No. 5 dated January 2, 1995 to the US Order, Inc. Stock Restriction Incorporated
Agreement dated as of September 14, 1990 among WorldCorp, Inc., a Delaware by reference
corporation ("WorldCorp"), William F. Gorog, Jonathan M. Gorog, Peter M.
Gorog, Henry R. Nichols, William N. Melton and John Porter (collectively,
the "Founders" and each a "Founder"), and the Employees. (Filed as Exhibit
10.108 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended
Dec 31, 199 and incorporated herein by reference.)
10.109 Customer Agreement between WorldCorp ESSOP and Scott & Stringfellow, Inc. Incorporated
dated January 11, 1995 for a margin loan. (Filed as Exhibit 10.109 to by reference
WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended Dec 31,
1994 and incorporated herein by reference.)
10.110 Side Letter dated January 11, 1995 from Scott & Stringfellow, Inc. to William Incorporated
F. Gorog, Trustee of WorldCorp Employee Savings and Stock Ownership Plan for a by reference
margin loan to the WorldCorp ESSOP. (Filed as Exhibit 10.110 to WorldCorp
Inc's Annual Report on Form 10-K to the fiscal year ended Dec 31, 1994 and
incorporated herein by reference.)
10.111 Guarantee Agreement dated January 11, 1995 by WorldCorp, Inc. ("Guarantor") for Incorporated
the benefit of Scott & Stringfellow, Inc. (the "Lender"). (Filed as Exhibit by reference
10.111 to WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended
December 31, 1994 and incorporated herein by reference.)
10.112 Registration Rights Agreement dated as of January 11, 1995 by and between Incorporated
WorldCorp, Inc. and Scott & Stringfellow, Inc. (Filed as Exhibit 10.112 to by reference
WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended December
31, 199 and incorporated herein by reference.)
10.113 Side Letter dated January 11, 1995 from WorldCorp, Inc. to Scott & Incorporated
Stringfellow, Inc. regarding commitment to make contributions to the WorldCorp by reference
Employee Savings and Stock Ownership Plan (the "ESSOP"), for the duration of
the Scott & Stringfellow loan to the ESSOP. (Filed as Exhibit 10.113 to
WorldCorp Inc's Annual Report on Form 10-K to the fiscal year ended December
31, 1994 and incorporated herein by reference.)
10.114 Strategic Alliance Agreement dated January 16, 1995 by and between Colonial Incorporated
Data Technologies Corp. and US Order. (Filed as Exhibit 10.114 to WorldCorp by reference
Inc's Annual Report on Form 10-K to the fiscal year ended December 31, 1994
and incorporated herein by reference.)
10.115 Amendment No. 2 to Passenger Aircraft Services and Freighter Aircraft Service Incorporated
Agreement dated February 9, 1995 by and between World Airways, Inc. and by reference
Malaysian Airline System Berhad. (Filed as Exhibit 10.115 to WorldCorp Inc's
Annual Report on Form 10-K to the fiscal year ended December 31, 1994 and
incorporated herein by reference.)
</TABLE>
40
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<S> <C> <C>
10.116 Employment Agreement between the Company and Charles W. Pollard, dated as of Incorporated
January 1, 1995. [Filed as Exhibit 10.3 to World Airways, Inc.'s Registration by reference
Statement on Form S-1(Commission File No. 33-95488) filed on August 8, 1995
and incorporated herein by reference.]
10.117 Amendment No. 1 to the Employment Agreement between the Company and Charles Incorporated
W. Pollard, dated as of May 31, 1995. [Filed as Exhibit 10.4 to World Airways, by reference
Inc.'s Registration Statement on Form S-1 (Commission File No. 33-95488) filed
on August 8, 1995 and incorporated herein by reference.]
10.118 Stock Option Agreement between the Company and Charles W. Pollard, dated as of Incorporated
January 1, 1995 [Filed as exhibit 10.5 to World Airways, Inc.'s Registration by reference
Statement on Form S-1 (Commission File No. 33-95488) filed on August 8, 1995
and incorporated herein by reference.]
10.119 Amendment No. 1 to the Stock Option Agreement between the Company and Charles W. Incorporated
Pollard, dated as of May 31, 1995. [Filed as exhibit 10.6 to World Airways, by reference
Inc.'s Registration Statement on Form S-1 (Commission File No. 33-95488) filed
on August 8, 1995 and incorporated herein by reference.]
10.120 Amendment No. 2 to Aircraft Lease Agreement Lease for Aircraft Serial Number Incorporated
48631 dated as of April 28, 1995 between the Company and International Lease by reference
Finance Corporation. [Filed as exhibit 10.18 to World Airways, Inc.'s
Registration Statement on Form S-1 (Commission File No. 33-95488) filed on
August 8, 1995 and incorporated herein by reference.]
10.121 Amendment No. 2 to Aircraft Lease Agreement for Aircraft Serial Number 48632 Incorporated
dated as of April 28, 1995 between the Company and International Lease Finance by reference
Corporation. [Filed as exhibit 10.20 to World Airways, Inc.'s Registration
Statement on Form S-1 (Commission File No. 33-95488) filed on August 8, 1995
and incorporated herein by reference.]
10.122 Amendment No. 3 to the Freighter Services Agreement by and between the Company Incorporated
and Malaysian Airline System Berhad dated May, 1995. [Filed as exhibit 10.32 by reference
to World Airways, Inc.'s Registration Statement on Form S-1 (Commission File
No. 33-95488) filed on August 8, 1995 and incorporated herein by reference.]
10.123 Aircraft lease Agreement between Malaysian Airline System Berhad, as lessor, Incorporated
and the Company, as lessee, relating to Aircraft N9-MAW, Serial No. 46959 by reference
dated June 23, 1995. [Filed as exhibit 10.35 to World Airways, Inc.'s
Registration Statement on Form S-1 (Commission File No. 33-95488) filed on
August 8, 1995 and incorporated herein by reference.]
10.124 Maintenance Agreement between Malaysian Airline System Berhad and the Incorporated
Company dated March 1, 1995. [Filed as exhibit 10.4 to World Airways, Inc.'s by reference
Registration Statement on Form S-1 (Commission File No. 33-95488) filed on
August 8, 1995 and incorporated herein by reference.]
10.125 1996 U.S. Air Force Contract dated October 1, 1995 between World Airways and Incorporated
Air Mobility Command. [Filed as Exhibit 10.43 to Amendment No. 4 to the By Reference
World Airways, Inc. Registration Statement on Form S-1 (Commission File No
33-95488) filed on October 4, 1995 and incorporated herein by reference.]
</TABLE>
41
<PAGE>
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10.126 Amendment No. 3 to the Accounts Receivable Management and Security Agreement Incorporated
between World Airways and BNY Financial Corporation dated as of September By Reference
28, 1995. [Filed as Exhibit 10.44 to Amendment No. 4 to the World Airways,
Inc. Registration Statement on Form S-1 (Commission File No 33-95488) filed
on October 4, 1995 and incorporated herein by reference.]
10.127 Amendment No. 4 to the Accounts Receivable Management and Security Agreement Incorporated
between World Airways and BNY Financial Corporation dated as of September By Reference
28, 1995. [Filed as Exhibit 10.45 to Amendment No. 4 to the World Airways,
Inc. Registration Statement on Form S-1 (Commission File No 33-95488) filed
on October 4, 1995 and incorporated herein by reference.]
11.1 Statement on Calculation of Earnings Per Common Share. Filed Herewith
27 Financial Data Schedule for quarter ended September 30, 1995. Filed Herewith
</TABLE>
/1/ Confidential treatment of portions of the Agreement has been granted
by the Commission. The copy filed as an exhibit omits the information
subject to confidentiality request. Confidential portions so omitted
have been filed separately with the Commission.
(b) Reports on Form 8-K
Form 8-K, dated June 8, 1995, was filed with the Securities and Exchange
Commission on June 9, 1995.
Form 8-K/A, dated June 8, 1995, was filed with the Securities and Exchange
Commission on August 2, 1995.
Form 8-K, dated September 13, 1995, was filed with the Securities and
Exchange Commission on September 13, 1995.
* * * * * * * * * * * * * *
42
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLDCORP, INC.
By: /s/ T. Coleman Andrews, III
---------------------------
(T. Coleman Andrews, III)
Chief Executive Officer, President,
and Principal Accounting Officer
Date: August 14, 1995
43
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 63,203
<SECURITIES> 0
<RECEIVABLES> 12,567
<ALLOWANCES> 316
<INVENTORY> 0
<CURRENT-ASSETS> 86,146
<PP&E> 66,083
<DEPRECIATION> 16,216
<TOTAL-ASSETS> 174,712
<CURRENT-LIABILITIES> 70,611
<BONDS> 113,882
<COMMON> 16,236
0
0
<OTHER-SE> 54,979
<TOTAL-LIABILITY-AND-EQUITY> 174,712
<SALES> 0
<TOTAL-REVENUES> 80,452
<CGS> 0
<TOTAL-COSTS> 78,698
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 200
<INTEREST-EXPENSE> 3,034
<INCOME-PRETAX> (395)
<INCOME-TAX> (101)
<INCOME-CONTINUING> (819)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (819)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> 0
</TABLE>
