<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: March 31, 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 May 5, 1995
was 15,821,743.
================================================================================
<PAGE>
WORLDCORP, INC.
MARCH 1995 QUARTERLY REPORT ON FORM 10Q
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, March 31,
1995 and December 31, 1994....................... 3
Condensed Consolidated Statements of Operations,
Three Months Ended March 31, 1995 and 1994....... 5
Condensed Consolidated Statement of Changes in Common
Stockholders' Deficit, Three Months Ended March
31, 1995......................................... 7
Condensed Consolidated Statements of Cash Flows,
Three Months Ended March 31, 1995 and 1994....... 8
Notes to Condensed Consolidated Financial
Statements....................................... 9
Exhibit 11, Calculations of Income (Loss) Per
Common Share..................................... 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................. 19
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents, including $1,424
restricted cash at March 31, 1995 and
$107 at December 31, 1994 $ 7,922 $ 8,160
Restricted short-term investments 662 668
Trade accounts receivable, less allowance for
doubtful accounts of $83 at March 31, 1995
and $81 at December 31, 1994 3,050 5,748
Other receivables 3,251 3,134
Prepaid expenses and other current assets 7,790 8,222
Assets held for sale 2,500 2,500
-------- -------
Total current assets 25,175 28,432
-------- -------
ASSETS HELD FOR SALE 11,290 11,645
EQUIPMENT AND PROPERTY
Flight and other equipment 31,333 27,698
Equipment under capital leases 12,108 12,006
-------- -------
43,441 39,704
Less accumulated depreciation and amortization 13,526 12,657
-------- -------
Net equipment and property 29,915 27,047
-------- -------
LONG-TERM OPERATING DEPOSITS 14,733 13,562
OTHER ASSETS AND DEFERRED CHARGES 8,940 9,689
INTANGIBLE ASSETS 10,458 7,161
-------- -------
TOTAL ASSETS $100,511 $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)
March 31, December 31,
1995 1994
----------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 17,210 $ 15,662
Current maturities of long-term obligations 10,375 9,664
Deferred aircraft rent 925 907
Accounts payable 9,720 12,311
Unearned revenue 16,649 5,615
Accrued maintenance in excess of reserves paid 5,284 6,395
Accrued salaries and wages 7,991 7,652
Accrued interest 2,571 2,297
Accrued taxes 1,830 1,855
--------- ---------
Total current liabilities 72,555 62,358
--------- ---------
LONG-TERM OBLIGATIONS, NET
Subordinated convertible debt 65,000 65,000
Subordinated notes, net 24,947 24,942
Deferred aircraft rent, net of current portion 1,437 1,522
Equipment financing and other long-term
obligations 16,347 17,904
--------- ---------
Total long-term obligations, net 107,731 109,368
--------- ---------
OTHER LIABILITIES
Deferred gain from sale-leaseback transactions,
net of accumulated amortization of $32,610 at
March 31, 1995 and $32,344 at December 31, 1994 8,107 8,373
Accrued postretirement benefits 2,437 2,384
Accrued maintenance in excess of reserves paid 4,672 2,866
Other 422 380
--------- ---------
Total other liabilities 15,638 14,003
--------- ---------
TOTAL LIABILITIES 195,924 185,729
--------- ---------
MINORITY INTEREST -- --
COMMON STOCKHOLDERS' DEFICIT
Common stock, $1 par value, (60,000,000 shares
authorized, 15,861,870 shares issued and
15,799,285 shares outstanding at March 31, 1995,
and 15,491,699 shares issued and 15,429,114
shares outstanding at December 31, 1994) 15,862 15,492
Additional paid-in capital 40,127 37,563
Deferred compensation (1,279) (1,102)
Accumulated deficit (148,260) (139,806)
ESOP guaranteed bank loan (1,523) --
Treasury stock, at cost (340) (340)
--------- ---------
TOTAL COMMON STOCKHOLDERS' DEFICIT (95,413) (88,193)
--------- ---------
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND COMMON STOCKHOLDERS'
DEFICIT $ 100,511 $ 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 March 31,
(in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
-------- ---------
<S> <C> <C>
OPERATING REVENUES
Contract flight operations $39,384 $31,561
Flight operations subcontracted to other carriers 693 --
Other 487 159
Transaction processing-US Order 745 317
------- -------
Total operating revenues 41,309 32,037
------- -------
OPERATING EXPENSES
Flight 12,905 13,113
Maintenance 8,013 964
Aircraft costs 13,522 11,747
Fuel 3,086 5,336
Flight operations subcontracted to other carriers 667 28
Depreciation and amortization 1,530 1,334
Selling and administrative 5,400 5,545
Transaction processing-US Order 1,834 2,379
------- -------
Total operating expenses 46,957 40,446
------- -------
OPERATING LOSS (5,648) (8,409)
------- -------
OTHER INCOME (EXPENSE)
Interest expense (3,171) (3,209)
Interest income 163 171
Gain on sale of interest in World Airways -- 26,921
Other, net 202 (7)
------- -------
Total other income (expense) (2,806) 23,876
------- -------
EARNINGS (LOSS) BEFORE INCOME TAXES AND
MINORITY INTEREST (8,454) 15,467
INCOME TAX EXPENSE -- (340)
MINORITY INTEREST -- 469
------- -------
NET EARNINGS (LOSS) $(8,454) $15,596
======= =======
</TABLE>
(Continued)
5
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For The Three Months Ended March 31,
(Continued)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE
Primary: $(0.55) $0.93
====== ======
Fully diluted: * $0.74
====== ======
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary 15,477,596 17,100,862
========== ==========
Fully diluted * 22,977,896
========== ==========
</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 CHANGES
IN COMMON STOCKHOLDERS' DEFICIT
For the Three Months Ended March 31, 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 67,889 options 68 290 -- -- -- -- 358
Employee Stock Ownership Plan
guaranteed bank loan -- -- -- -- (1,523) -- (1,523)
Grant of stock options -- 485 (485) -- -- -- --
Amortization of deferred
compensation -- -- 308 -- -- -- 308
Issuance of stock 302 1,789 -- -- -- -- 2,091
Net loss -- -- -- (8,454) -- -- (8,454)
------- ------- -------- ---------- -------- ----- --------
BALANCE AT
MARCH 31, 1995 $15,862 $40,127 $(1,279) $(148,260) $(1,523) $(340) $(95,413)
======= ======= ======== ========== ======== ===== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
7
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31
(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 (loss) (8,454) 15,596
Adjustments to reconcile net earnings (loss) to cash
provided (used) by operating activities:
Depreciation and amortization 1,530 1,334
Deferred gain recognition (266) (1,152)
Gain on sale of World Airways stock -- (26,921)
Minority interest in loss of subsidiaries -- (469)
(Gain) loss on sale of equipment and property (20) 51
Other 602 379
Changes in certain assets and liabilities net of
effects of non-cash transactions:
Decrease in accounts receivable 2,581 2,835
Increase in deposits, prepaid expenses and other
assets (532) (1,918)
(Decrease) increase in accounts payable, accrued
expenses and other liabilities 9,745 (2,080)
------- --------
Net cash provided (used) by operating activities 5,186 (12,345)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property (3,743) (2,670)
Proceeds from disposal of equipment and property 415 625
Purchase of investments (382) (195)
Proceeds from sales of short-term investments, net 106 150
------- --------
Net cash used by investing activities (3,604) (2,090)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in line of credit borrowing arrangement, net (2,260) (921)
Issuance of debt 4,800 262
Repayment of debt (4,795) (2,225)
Proceeds from stock transactions 435 450
Proceeds from sale of subsidiary's stock -- 24,651
------- --------
Net cash provided (used) by financing activities (1,820) 22,217
------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (238) 7,782
------- --------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 7,922 $ 24,698
======= ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
8
<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 March 31, 1995, the related condensed consolidated
statements of operations for the three month periods ended March 31, 1995 and
1994, the condensed consolidated statement of changes in common stockholders'
deficit for the three months ended March 31, 1995, and the condensed
consolidated statements of cash flows for the three months ended March 31,
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 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. 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. Of the shares to be registered, 2,800,000 are being issued and sold by
US Order, and 700,000 shares are being sold by WorldCorp. No assurances can
be given, however, with respect to the eventual outcome of this offering.
9
<PAGE>
EXHIBIT 11
WORLDCORP, INC. AND SUBSIDIARIES
CALCULATIONS OF EARNINGS (LOSS) PER COMMON SHARE
For the Three Months Ended March 31,
(in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- ---------------------------
Fully
Primary Diluted
----------- -----------
<S> <C> <C> <C>
Earnings (loss) from
continuing operations $ (8,454) $ 15,596 $ 15,596
Plus: assumed interest expense
reduction from conversion
of convertible debt -- -- 1,137
Plus: assumed interest
expense reduction
due to retirement of
subordinated notes
with excess proceeds
from exercise of
options and warrants -- 382 382
----------- ----------- -----------
Net earnings (loss) applicable
to common stock $ (8,454) $ 15,978 $ 17,115
=========== =========== ===========
Weighted average common
shares outstanding 15,477,596 15,170,020 15,170,020
Weighted average options
and warrants treated as
common stock equivalents -- 1,930,842 1,930,842
Weighted average other
dilutive securities -- -- 5,877,034
----------- ----------- -----------
Primary and fully diluted
number of shares 15,477,596 17,100,862 22,977,896
=========== =========== ===========
Net earnings (loss) per
share of common stock $ (0.55) $0.93 $0.74
=========== =========== ===========
</TABLE>
10
<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.
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. As of
March 31, 1995, WorldCorp owned 88% of the voting stock of US Order. In April
1995, US Order filed a registration statement to register 3,500,000 shares of US
Order's common stock. If the sale is successfully completed, WorldCorp would
own 66% of US Order (see "Financing Developments").
General
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.
Air Transportation
- ------------------
World Airways is a contract air carrier that generally charges customers
based 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 moves
at its point of origin to the time it comes to rest at its destination.
Fluctuations in flight revenues are not necessarily indicative of true growth
because of shifts in the mix between full service contracts and basic contracts.
Under the terms of full service contracts, World Airways is responsible for all
costs associated with operating these contracts and receives a higher rate per
hour. Under the terms of basic contracts, World Airways provides only certain
services associated with the contract including aircraft, crews, insurance, and
maintenance ("basic contracts"). World Airways typically charges a lower rate
per hour for basic contracts since the customer is responsible for other
operating costs. For this reason, it is important to measure pure growth
through block hours flown rather than actual revenues earned. Typically, U.S.
military contracts are full service contracts where the rate paid is set
annually and consists of all flying costs, including fuel and ground handling of
the aircraft and cargo.
The Company's current fuel purchasing policy consists of the purchase of fuel
within seven days in advance of all flights based on current prices set by
individual suppliers. In addition, the Company receives certain volume
discounts. The Company purchases no fuel under long-term contracts nor does the
Company enter into futures or fuel swap contracts. The Company manages fuel
price risk by making the Company's customers responsible (in all of the
Company's contracts) for potential fuel price fluctuations in excess of five
percent.
Customers
- ---------
World Airways' business relies heavily on its U.S. Air Mobility Command
("AMC"), Malaysian Airline System Berhad ("MAS"), and P.T. Garuda Indonesia
("Garuda") contracts, which provided 22%, 19%, and 24%, respectively, of
consolidated revenues in 1994, and 14%, 23%, and 20%, respectively, of total
block hours in 1994. The AMC and MAS contracts provided 12% and 44%,
respectively, of consolidated revenues and 7% and 47%, respectively, of total
block hours during the first quarter of 1995. Operations under the Garuda
contract commence in the second quarter. The loss of any of these contracts or a
substantial reduction in business from any of these contracts, if not replaced,
would have a material adverse effect on the Company's revenues and financial
condition.
11
<PAGE>
AMC has awarded contracts to World Airways since 1956. The minimum contract
amount for 1995 of $33.4 million is a 73% increase over 1994, and will be
augmented by further expansion business. Expansion business totaled 92% of the
minimum contract amount for 1994 and 164% for the first quarter of 1995. World
Airways cannot determine how any future cuts in military spending may affect
future operations with AMC.
World Airways has provided service to MAS since 1981, providing aircraft for
integration into MAS' scheduled passenger and cargo operations as well as
transporting passengers for the annual Hadj pilgrimage. MHS, which owns 19.9%
of World Airways as of March 31, 1995, acquired a 32% ownership interest in MAS
from the Malaysian government during 1994. As a result of the strengthening of
the MHS/MAS relationship, World Airways recently entered into a series of long-
term contracts with MAS. World Airways has agreed to provide five aircraft to
MAS under long-term contracts with expirations ranging from March 1997 to
September 2000 (see "Financing Developments"). The current MAS Hadj contract,
which was entered into in 1992, expires in 1996. In 1994, World Airways provided
two aircraft for Hadj operations. World Airways expects to provide three
aircraft for the 1995 MAS Hadj operations.
World Airways has provided service to Garuda since 1988 under an annual
contract. World Airways provided six aircraft for the 1994 Garuda Hadj
operations and expects to provide five aircraft for the 1995 operations. In
addition, World Airways has provided aircraft for Garuda's cargo operations in
previous years.
Transaction Processing
- ----------------------
US Order 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. Home banking includes services offered by financial institutions that
allow consumers to pay bills, check account balances and receive other bank
information from their home. Telephone company intelligent network services are
new services offered by telephone companies that utilize a simple in-home
display screen incorporated into or attached to a telephoning device to deliver
textual messages to residential customers, such as Caller ID. To date, US Order
has generated limited revenues from the sale of its products and services. US
Order has entered into strategic alliances with Visa Interactive, Inc. ("Visa
Interactive") a wholly owned subsidiary of Visa International Services
Association, Inc. ("VISA"), in the financial services industry and Colonial Data
Technologies Corp. ("Colonial Data") in the telecommunications industry.
On August 1, 1994, US Order sold its electronic banking and bill pay
operations to VISA International Services Association, Inc. ("VISA") for
approximately $15.0 million in cash and a 72-month royalty obligation commencing
January 1, 1995 and ending December 31, 2000. The royalty amount is based on the
number of customers who use the electronic banking and billing payment
technology sold to VISA. No assurances can be given as to the amount of the
royalty payments that will be received from VISA. US Order does not expect to
receive any royalty payments in 1995.
As a result of the purchase of US Order's banking operations by VISA, US
Order has agreed to certain restrictions on its operations with respect to the
banking and financial services industry. Similarly, VISA has agreed to certain
restrictions on its activities as they might relate to the ongoing businesses of
US Order. Additionally, the VISA agreement designates US Order as a "preferred
provider" to supply certain products and services including smart telephones,
consumer applications, and customer service throughout the royalty period.
Under the agreement, VISA must make its member banks aware of the preferred
provider status of US Order and its products and services, although it is under
no obligation to guarantee any minimum purchases of any such US Order products
or services by VISA or any of its members. Until August 1, 1995, VISA also
agreed not to designate any third party as a provider of US Order's services.
In January 1995, US Order signed a two-way exclusive strategic alliance with a
leading manufacturer of Caller ID units, Colonial Data Technologies, to jointly
develop and distribute US Order's next generation of smart telephones to the
telecommunications industry.
12
<PAGE>
Results of Operations
Three Months Ended March 31, 1995 Compared to the Three Months Ended March 31,
- ------------------------------------------------------------------------------
1994
- ----
Operating Revenue
- -----------------
In the first quarter of 1995, operating revenues increased $9.3 million (29%)
to $41.3 million. Block hours increased 64% to 6,913 in the first quarter of
1995 from 4,207 in the first quarter of 1994. World Airways experienced a 24%
decrease in revenue per block hour to $5,681 in the first quarter of 1995 from
$7,502 in the first quarter of 1994. This decrease is primarily due to a
decrease in full service contracts. Full service contracts represented 23% of
total block hours in 1995 compared to 69% in 1994.
Aircraft capacity, the number of days that the Company's aircraft are
available for service (including days in maintenance), increased to 8.4
available aircraft per day in the first quarter of 1995 from 8.1 in the first
quarter of 1994. This increase was augmented by a 59% increase in daily
aircraft utilization to 9.2 hours in the first quarter of 1995 from 5.8 hours in
the first quarter of 1994. Aircraft utilization is measured by the total block
hours that the Company's aircraft were in use divided by the number of days that
the aircraft were available for service (including days in maintenance).
Operating Expenses
- ------------------
Maintenance costs increased $7.0 million in the first quarter of 1995. This
increase resulted primarily from a 1994 reversal of $4.5 million of excess
accrued maintenance reserves associated with the expiration of three DC10-30
aircraft leases which was not repeated in 1995. Excluding the effect of this
reversal, maintenance expense increased $2.5 million, primarily due to the 64%
increase in block hours flown in 1995.
Despite the increase in block hours flown, flight and fuel expenses decreased
in 1995, generally due to the shift to more basic contracts. However, this
decrease was partially offset by an increase in rent costs associated with the
addition of higher cost MD-11 aircraft.
Transaction Processing - US Order
- ---------------------------------
In the first quarter of 1995, the Company recorded $1.4 million of net losses
relating to US Order, compared to $2.4 million of losses in 1994. This decrease
is primarily due to a reduction in administrative expenses as a result of the
VISA transaction in August 1994. To date, US Order has generated limited
revenue from the sale of its products and services.
Non-Operating Items
- -------------------
Interest income and expense remained relatively constant during the first
quarters of 1995 and 1994. In 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.
Liquidity and Capital Resources
The Company's air transportation subsidiary operates in a very challenging
business environment. In recent years, the combination of a generally weak
economy and the depressed state of the airline industry has adversely affected
the Company's operating performance. Although there has been recent growth in
demand within the industry, such that World Airways experienced a 64% increase
in block hours flown in the first quarter of 1995 over 1994 and a 18% increase
in annual block hours flown in 1994 over 1993, yields generally remain low.
The Company is highly leveraged, primarily due to losses sustained by World
Airways' scheduled operations between 1979 and 1986, debt restructurings in 1984
and 1987, and losses the Company incurred in the past several years. In
addition, the Company incurred substantial debt and operating lease committments
during 1993 in connection with acquiring MD-11 aircraft and related spare parts.
The Company has historically financed its working capital and capital
expenditure requirements out of cash flow from operating activities, secured
borrowings, and other financings from banks and other lenders.
13
<PAGE>
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. The market for US Order's products
and services is relatively new and is characterized by rapid technological
change, evolving industry standards, changes in end-user requirements and
frequent new product introductions and enhancements. To date, US Order has
generated limited revenues through the sale of its products and services,
although in 1994, a substantial gain was generated on the sale of certain
operations to VISA, and future revenue and cash flow are likely to be generated
by the 72-month revenue stream from VISA. US Order, however, does not expect to
receive any royalty payments in 1995.
Cash Flows from Operating Activities
- ------------------------------------
During 1995, operating activities provided $5.2 million compared to using
$12.3 million in 1994. This increase in cash is primarily due to $11.0 million
of security deposits received in conjunction with the 1995 Hadj program and
other MAS contracts. In addition, operating loss decreased in 1995 compared to
1994.
Cash Flows from Investing Activities
- ------------------------------------
Investing activities used $3.6 million in 1995 compared to $2.1 million in
1994. This increase is primarily due to the purchase of rotable spare parts
required for the integration of two MD-11 aircraft in the first quarter of 1995.
In 1994, the company purchased spare parts relating to the integration of one
MD-11 aircraft.
Cash Flows from Financing Activities
- ------------------------------------
Financing activities used $1.8 million in 1995 compared with providing $22.2
million in 1994. In 1994, the company sold 24.9% of World Airways to MHS
resulting in proceeds of $24.7 million.
Capital Plans
- -------------
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.
As of March 31, 1995, World Airways has 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 toward four of the option aircraft. During 1995,
the options' exercise dates were extended to May 31, 1995, with scheduled
aircraft delivery dates beginning no earlier than 1996. If the options are
exercised, World Airways intends to obtain financing for the purchases. World
Airways standardized its fleet around the MD-11 aircraft. World Airways,
however, has recently entered into two short-term DC10 aircraft leases with
lease terms expiring June 1995 and August 1995, and one DC10 aircraft lease
expiring in September 1997. World Airways may choose to lease additional DC10
aircraft to meet short-term peak demand requirements.
World Airways made $3.6 million of capital expenditures and cash deposits for
MD-11 integration in the first quarter of 1995. World Airways estimates that
its required capital expenditures for MD-11 integration will be approximately
$6.9 million for the remainder of 1995. In addition, World Airways will require
approximately $8.0 million to purchase a spare engine in the fourth quarter of
1995. While World Airways is currently seeking financing for the purchase of
the engine and additional spare parts relating to the MD-11 aircraft recently
acquired, no assurances can be given that the Company will obtain the necessary
financing.
World Airways has obtained regulatory approval from the government of Israel
to operate a scheduled service commencing in July 1995. World Airways
anticipates working capital requirements of approximately $2.0 million in
connection with the start of scheduled service.
US Order's working capital and capital expenditure requirements for the
remainder of 1995 is expected to be approximately $2.7 million. On August 1,
1994, US Order sold its electronic banking and bill payment operations to VISA
for $15.0 million plus certain future payments. As of March 31, 1995,
approximately $1.3 million of these proceeds are available to fund future
working capital requirements of US Order. In April 1995, US Order filed a
registration statement to register 3,500,000 shares of US Order's common stock
of which 2,800,000 shares are being offered by US Order. The Company is offering
700,000 US Order shares for sale. If successfully completed, US Order plans to
use the proceeds from this offering to fund its future working capital
requirements and the Company plans to use its proceeds to reduce debt and
increase working capital. However, no assurances can be given with respect to
the
14
<PAGE>
eventual outcome of this offering. In addition, US Order is attempting to sell
certain of its assets, including its $2.5 million advertising credit from
Knight-Ridder.
In 1995, WorldCorp has parent company repayment obligations totaling $16.5
million, consisting primarily of an $8.5 million (excluding interest thereon)
note payable to MHS due in December 1995 and approximately $8.1 million of
annual debt service on subordinated notes and debentures. WorldCorp intends to
satisfy these obligations by one or more of the following: intercompany loans,
further sales of equity securities of its subsidiaries, and/or external
financing.
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
would pay $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, increasing WorldCorp's ownership of voting
stock to 52%. 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 $1.1 million in the form of notes due to
the Founders. These notes are due in 1995. As of March 31, 1995, WorldCorp
owned 88% of the voting stock of US Order.
As of March 31, 1995, WorldCorp has invested $14.2 million of equity (net of
$3.3 million received from the retirement of a portion of US Order preferred
stock - see "Financing Developments") and $3.5 million of unsecured debt in US
Order. WorldCorp does not plan to provide additional financing to US Order in
1995.
As of March 31, 1995, the Company holds approximately $13.8 million (at book
value) of aircraft spare parts and transaction processing terminals currently
available for sale.
Financing Developments
- ----------------------
The Company has closed certain transactions which, in aggregate, have
provided additional cash to WorldCorp, World Airways, and US Order.
First, on October 30, 1993, WorldCorp, World Airways, and MHS entered into a
Stock Purchase Agreement (the "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 for $27.4 million in cash. On
February 28, 1994, WorldCorp, World Airways, and MHS concluded this transaction.
World Airways received upon closing (the "Closing") $12.4 million to fund its
working capital requirements. The remaining $15.0 million (less a $2.7 million
deposit received in November 1993) was paid to WorldCorp to add to its cash
reserves. At the time of the signing of the Stock Purchase Agreement, World
Airways was a wholly-owned subsidiary of WorldCorp. As a result of this
transaction, WorldCorp recognized a gain of approximately $26.9 million in the
first quarter of 1994. Effective December 31, 1994, WorldCorp agreed to pay MHS
$8.5 million in exchange for the repurchase of 5% of World Airways' common stock
from MHS and the execution of a series of long-term contracts between World
Airways and MAS. The $8.5 million note to MHS is due in December 1995.
Second, in 1993, World Airways closed an agreement with a financial
institution for a $20.0 million credit facility collateralized by certain
receivables and spare parts. This agreement contains certain covenants related
to World Airways' financial condition and operating results. Approximately $10.8
million of the proceeds from this transaction were used to retire existing
obligations. The balance was added to cash reserves. As of March 31, 1995, $0.5
million of the $8.0 million portion of the credit facility collateralized by
receivables was utilized, with no borrowing capacity currently available. In
1995, World Airways amended this agreement to adjust certain covenants beginning
in the first quarter of 1995 and extended the credit facility's term to 1998.
In addition, the amended agreement provides for up to an additional $2.0 million
in borrowing capacity, subject to spare part valuations, beginning in October
1995.
Third, on August 1, 1994, US Order sold its electronic banking and bill
payment operations to VISA for $15.0 million, assumption of certain liabilities,
and a 72 month royalty obligation commencing January 1, 1995 and ending December
31, 2000 (the "Royalty Period"). Of the proceeds received by US Order, $9.4
million was used to retire a portion of its preferred stock (of which WorldCorp
received $3.3 million) and vested employee options. As of March 31, 1995,
approximately $1.3 million of these proceeds is available to fund future working
capital requirements of US Order. The royalty amount is based on the number of
VISA customers using the electronic banking and bill payment technology sold by
US Order to VISA. The first $75,000 of royalties earned during each quarter on
a cumulative basis
15
<PAGE>
for a total of twelve quarters, will be applied by VISA to offset certain
liabilities assumed by VISA pursuant to the acquisition. To date, VISA has
commitments from more than 40 U.S.-based financial institutions (including six
of the nation's top 20 banks) to offer the VISA bill pay system. No assurances
can be given as to the amount of the royalty payments that will be received from
VISA. US Order does not expect to receive any royalty payments in 1995.
Fourth, World Airways has concluded a series of contracts with MAS and other
commercial customers which have resulted in substantial increases in its backlog
of business to approximately $475 million today from approximately $80 million a
year ago. Under the terms of its new long-term contracts with MAS, World
Airways will operate three freighter aircraft for at least 400 hours per
aircraft per month (or a total of at least 1,200 hours per month). One
freighter is currently in service and will operate through September 1999; two
additional freighters will begin service in June 1995 and operate through
September 2000. These contracts provide for hourly rates that reflect generally
improved market conditions. Also under the new contracts, MAS has extended
through March 1997 the operation of two MD-11 passenger aircraft that had been
previously contracted by MAS to operate from October 1994 through March 1995.
Each aircraft will operate a minimum of 320 hours per month (or a total minimum
of 640 hours per month) at rates that reflect generally improved market
conditions.
In the first quarter of 1995, World Airways received approximately $6.0
million in working capital and short-term financing. This financing bears
interest at approximately 11%. Approximately $5.2 million of this financing is
due in the second quarter 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. Of the
shares to be registered, 2,800,000 are being issued and sold by US Order, and
700,000 shares are being sold by WorldCorp. If the sale is successfully
completed, WorldCorp would use proceeds from the sale to reduce debt and
increase working capital and would own 66% of US Order after a completed
offering.
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
in 1995.
Business Trends
The Company's air transportation business is highly seasonal. Typically,
World Airways experiences reduced demand during the first quarter for passenger
and cargo services relative to other times of the year. World Airways generally
experiences stronger results in the second and third quarters due to demand for
commercial passenger services including the annual Hadj pilgrimage. Fourth
quarter results depend upon the overall world economic climate and global trade
patterns. In recent years, soft demand and weakening yields have adversely
affected worldwide cargo and passenger markets.
As a result of its marketing alliance with MAS and increased marketing
efforts, World Airways entered into several important contracts in 1994. World
Airways recently concluded a series of contracts with MAS that will result in
World Airways' operation of two passenger aircraft until 1997, one freighter
aircraft until 1999, and two freighter aircraft until 2000 (see "Financing
Developments"). These contracts and related rate improvements, along with
recent agreements with other commercial customers, have absorbed a substantial
portion of the Company's aircraft capacity in 1995 and 1996 and resulted in
substantial increases in the Company's backlog of business to approximately $475
million today from approximately $80 million a year ago. Approximately 90% of
the $475 million backlog represents contracts in place with MAS, which is 32%
owned by MHS, a 19.9% shareholder of World Airways. As a result of these
contracts, World Airways expects that the percentage of the Company's total
revenue generated from MAS in 1995 will increase significantly over historical
levels. In addition, World Airways has obtained regulatory approval from the
Government of Israel to operate a scheduled service between New York and Tel
Aviv commencing in July 1995.
In order to make World Airways more cost-competitive with certain passenger
and cargo carriers, and to improve cash flow, World Airways' management has
taken a series of steps to reduce operating costs. These steps generally
involve eliminating business activities that are not essential to World Airways'
operations, including eliminating those costs which customers are not prepared
to compensate for in the form of higher prices. World Airways' management
believes that these actions, which began in the second half of 1994, should
result in improved operating income and cash flow. Management also believes
that the shift in the Company's business to more patterned flying, made possible
by the
16
<PAGE>
long-term contracts it has obtained, should also enable the Company to achieve
certain operating cost efficiencies.
US Order's research indicated that consumers prefer to receive banking
services through their local bank. The VISA transaction in August 1994 postures
the company to deliver its products and services to 13,000 VISA member banks in
the United States. The Company believes that the VISA transaction improves the
prospects of US Order's future performance by expanding the business
opportunities available to US Order through customization services, smart
telephones, non-financial applications, customer service, and facilities
management.
Other Matters
On August 11, 1992, WorldCorp, World Airways, and certain other commercial
paper customers of Washington Bancorporation ("WBC") were served with a
complaint by WBC as debtor-in-possession by and through the Committee of
Unsecured Creditors of WBC (the "Committee"). The complaint arises from
investment proceeds totaling $6.8 million received by WorldCorp and World
Airways from WBC in May 1990 in connection with the maturity of WBC commercial
paper. The Committee seeks to recover this amount on the grounds that these
payments constituted voidable preferences and/or fraudulent conveyances under
the Federal Bankruptcy Code and under applicable state law. On June 9, 1993,
the Company filed a motion to dismiss this litigation and intends to vigorously
contest the claim. No assurances can be given of the eventual outcome of this
litigation.
World Airways' cockpit and flight attendant crewmembers are covered by
collective bargaining agreements which expired in July 1992. On August 15,
1994, World Airways and the International Brotherhood of Teamsters ("Teamsters")
executed a four-year agreement on behalf of World Airways' cockpit members,
which was ratified on September 9, 1994. The agreement contains modifications to
the crewmember work rules which will permit World Airways to take greater
advantage of the operational capabilities of the MD-11 aircraft fleet in
exchange for crewmember pay increases.
On July 16, 1987, World Airways and the Teamsters executed a five-year
agreement on behalf of the World Airways' flight attendants, which was ratified
on August 5, 1987. The contract expired in July 1992 and since that time the
flight attendants have been employed under the terms of their prior contract
pursuant to the provisions of the Railway Labor Act. The Company is currently
in active negotiations with the Teamsters concerning renewal of the contract for
the flight attendants. In December 1994, World Airways and the Teamsters
jointly requested the assistance of a federal mediator to facilitate
negotiations between World Airways and its flight attendants. The outcome of
the negotiations cannot be determined at this time.
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 excess of the lesser of $4.5
million or 50% of net income for the previous nine months. In addition, World
Airways must have a cash balance of at least $7.5 million immediately after
giving effect to such dividend.
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.
The availability of net operating loss, investment tax credit, and
alternative minimum tax credit carryforwards to reduce the Company's future
Federal income tax liability is subject to limitations under the Internal
Revenue Code of 1986, as amended (the "Code"). Generally, these limitations
restrict the availability of net operating loss and investment tax credit
carryforwards upon certain changes in stock ownership by five percent
shareholders which, in aggregate, exceed 50 percentage points in value in the
three-year testing period ("Ownership Change"). In August 1991, 5.7 million
shares of common stock were sold by a group of existing shareholders. This
transaction constituted an Ownership
17
<PAGE>
Change, which reduced the annual utilization of net operating loss, alternative
minimum tax credit, and investment tax credit carryforwards ("Carryforwards")
available to the Company in 1991 and future years. As of December 31, 1994, the
Company had net operating loss carryforwards for federal income tax purposes of
$72.6 million [subject to a $6.3 million annual limitation based on the value of
the outstanding Common Stock immediately prior to the Ownership Change and the
statutorily provided long-term tax exempt rate (the "Limitation")] and $89.9
million (generated after the Ownership Change) which are available to offset
future federal taxable income. These carryforwards expire between 1997 and
2009. As a result of the transactions between the Company and MHS during 1994,
approximately $113.5 million of the consolidated net operating loss
carryforwards for federal income tax purposes (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.
18
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(b) Reports on Form 8-K
None.
* * * * * * * * * * * * * *
19
<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: May 15, 1995
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------
(a) Exhibits
--------
<PAGE>
Exhibit
No. Exhibit
------- -------
3.1 Certificate of Incorporation of Incorporated
WorldCorp, Inc. dated March 16, by reference
1987. [Filed as Exhibit 3.1 to
WorldCorp, Inc.'s Registration
Statement on Form S-4 (Commission
File No. 33012735) filed on March 19,
1987 and incorporated herein by
reference.]
3.2 Amended and Restated Bylaws of Incorporated
WorldCorp, Inc. dated November 13, by reference
1987. (Filed as Exhibit 3.1 to
WorldCorp, Inc.'s Annual Report on
Form 10-K for the fiscal year ended
December 31, 1987 and
incorporated herein by reference.)
4.1 Indenture dated as of August 1, Incorporated
1987 between WorldCorp, Inc. and by reference
Norwest Bank of Minneapolis, N.A.
(Filed as Exhibit 4.1 to Amendment
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 Incorporated
as of March 1, 1988 between by reference
WorldCorp, Inc. and Norwest Bank of
Minneapolis, N.A. (Filed as
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.)
10.1 Warrant Agreement between Incorporated
WorldCorp, Inc. and Drexel Burnham by reference
Lambert, Incorporated ("Drexel")
dated as of June 30, 1988. (Filed
as Exhibit 10.1 to WorldCorp,
Inc.'s Form 10-Q for the quarter
ended March 31, 1989 and incorporated
herein by reference.)
10.4 Aircraft Lease Agreement dated as Incorporated
of March 30, 1987 between World by reference
Airways, Inc. and The Connecticut
National Bank, not in its
individual 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.)
<PAGE>
Exhibit
No. Exhibit
------- -------
10.5 Merger Agreement and Plan of Incorporated
Reorganization dated as of April 28, by reference
1987 by and among World Airways,
Inc., World Merger Corporation
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 Incorporated
June 23, 1987 among WorldCorp, by reference
Inc., World Airways, Inc. and T.
Coleman Andrews, III. [Filed as
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 Incorporated
June 23, 1987 among WorldCorp, by reference
Inc., World Airways, Inc. and D.
Fraser Bullock. [Filed as Exhibit
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 Incorporated
dated as of June 23, 1987 by reference
between WorldCorp, Inc. and The
Connecticut National Bank, a
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 Incorporated
as of June 23, 1987 among by reference
WorldCorp, Inc., World Airways, Inc.
and each Indemnified Party.
[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, Incorporated
Inc. and Flight Attendants by reference
represented by International
Brotherhood of Teamsters. [Filed
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, Incorporated
Inc. and Mechanics represented by by reference
the International Brotherhood of
Teamsters. (Filed as Exhibit 10.41
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, Incorporated
Inc. and Stock Clerks and Store by reference
Room Employees represented by the
International Brotherhood of
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.)
<PAGE>
Exhibit
No. Exhibit
------- -------
10.14 Office Lease - The Hallmark Building Incorporated
dated as of May 16, 1987 between by reference
WorldCorp, Inc. and GT Renaissance
Centre Limited 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 Incorporated
between WorldCorp, Inc. and GT by reference
Renaissance Centre Limited Partnership.
(Filed as Exhibit 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 Incorporated
dated as of September 20, 1989 by reference
between World Airways, Inc. and GT
Renaissance Centre Limited 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 Incorporated
July 22, 1989 between WorldCorp, Inc. by reference
and Charles W. Pollard. (Filed as
Exhibit 10.45 to WorldCorp, 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 Incorporated
Stock Ownership Plan. (Filed as Exhibit by reference
10.49 to WorldCorp, Inc.'s Annual
Report on Form 10-K for the fiscal year
ended December 31, 1989 and incorporated
herein by reference.)
10.21 Amendment No. 1 to WorldCorp, Inc. Incorporated
Employee Savings and Stock by reference
Ownership Plan. (Filed as Exhibit 10.50
to WorldCorp, Inc.'s 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 Incorporated
dated as of January 15, 1991 between by reference
World Airways, Inc. and First Security
Bank of Utah, N.A., not in its 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 Incorporated
January 15, 1991 between World Airways, by reference
Inc. and First Security Bank of Utah, N.A.,
not in its 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 Incorporated
February 26, 1992 between WorldCorp, Inc. by reference
and US Order Incorporated. (Filed as
Exhibit 10.38 to WorldCorp, Inc.'s Annual
Report on Form 10-K for the fiscal year
ended December 31, 1991 and incorporated
herein by reference.)
<PAGE>
Exhibit
No. Exhibit
------- -------
10.30 Aircraft Lease Agreement I dated as Incorporated
of February 12, 1992 between by reference
McDonnell Douglas Finance
Corporation and World Airways, Inc.
(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.)
10.31 Aircraft Lease Agreement II dated Incorporated
as of February 12, 1992 between by reference
McDonnell Douglas Finance
Corporation and World Airways, Inc.
(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 Incorporated
dated as of April 26, 1991 between by reference
Terandon Leasing Corporation and
World Airways, Inc. (Filed as
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 Incorporated
dated as of April 26, 1991 between by reference
Terandon Leasing Corporation and
World Airways, Inc. (Filed as
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 Incorporated
February 12, 1992 between McDonnell by reference
Douglas Finance Corporation and
World Airways, Inc. (Filed as
Exhibit 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 Incorporated
February 12, 1992 between McDonnell by reference
Douglas Finance Corporation and
World Airways, Inc. (Filed as
Exhibit 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 Incorporated
Agreement dated as of September 14, by reference
1990 between US Order, Inc. and
WorldCorp, Inc. (Filed as Exhibit
10.45 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 Incorporated
as of September 14, 1990 between by reference
WorldCorp, Inc., William F. Gorog,
Jonathan M. Gorog, Peter M. Gorog,
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 Incorporated
Aircraft Serial Number 48518 dated by reference
as of September 30, 1992 between
World Airways, Inc. and International
Lease Finance Corporation.
10.39 Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48519 dated by reference
as of September 30, 1992 between
World Airways, Inc. and International
Lease Finance Corporation.
<PAGE>
Exhibit
No. Exhibit
------- -------
10.40 Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48520 dated as by reference
of September 30, 1992 between World
Airways, Inc. and International
Lease Finance Corporation.
10.41 Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48633 dated as by reference
of September 30, 1992 between World
Airways, Inc. and International
Lease Finance Corporation.
10.42 Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48631 dated as by reference
of September 30, 1992 between World
Airways, Inc. and International
Lease Finance Corporation.
10.43 Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48632 dated as by reference
of September 30, 1992 between World
Airways, Inc. and International
Lease Finance Corporation.
10.45 MD-11 Aircraft Charter Agreement Incorporated
dated as of March 18, 1993 by reference
between World Airways, Inc. and PT.
Garuda Indonesia.
10.45 DC10-30 Aircraft Charter Agreement Incorporated
dated as of March 18, 1993 by reference
between World Airways, Inc. and PT.
Garuda Indonesia.
10.46 Accounts Receivable Management and Incorporated
Security Agreement dated as by reference
of December 7, 1993 between World
Airways, Inc. and BNY
Financial Corporation.
10.47 Aircraft Parts Security Agreement Incorporated
dated as of December 7, 1993 by reference
between World Airways, Inc. and BNY
Financial Corporation.
10.48 Warrant Certificate dated as of Incorporated
December 7, 1993 between WorldCorp, by reference
Inc. and BNY Financial Corporation.
10.50 Subscription and Preferred Stock Incorporated
Purchase Agreement dated as of by reference
December 20, 1993 between US Order,
Inc. and Knight-Ridder, Inc.
10.51 Subscription and Preferred Stock Incorporated
Purchase Agreement dated as of by reference
December 21, 1993 between US Order,
Inc. and WorldCorp, Inc.
10.52 Subscription and Preferred Stock Incorporated
Purchase Agreement dated as of by reference
December 20, 1993 between US Order,
Inc. and Jerome Kohlberg, Jr.
10.53 Subscription and Preferred Stock Incorporated
Purchase Agreement dated as of by reference
December 21, 1993 between US Order,
Inc. and Hoechst Celanese
Corporation Employee Benefit Master
Trust
10.54 Series C Preferred Stock Purchase Incorporated
Agreement dated as of December by reference
21, 1993 between US Order, Inc. and
VeriFone, Inc.
10.55 Registration Rights Agreement dated Incorporated
as of December 21, 1993 by reference
between US Order, Inc. and VeriFone,
Inc.
<PAGE>
Exhibit
No. Exhibit
------- -------
10.57 Investment Agreement dated as Incorporated
of December 21, 1993 by and by reference
among US Order, Inc., WorldCorp,
Inc., and VeriFone, Inc.
10.58 Settlement Agreement dated as Incorporated
of February 8, 1994 between by reference
World Airways, Inc, WorldCorp,
Inc., Concord Asset Management,
Inc., Concord Leasing, Inc., and
The CIT Group.
10.59 Lease Agreement dated as of Incorporated
June 1, 1993 between World by reference
Airways, Inc. and Mattei
Corporation.
10.60 Lease Agreement dated as of Incorporated
March 30, 1993 between World by reference
Airways, Inc. and Tinicum
Properties Associates Limited
Partnership, as amended by First
Amendment to Lease dated
July 9, 1993.
10.61 Lease Agreement dated as of Incorporated
January 25, 1993 between by reference
World Flight Crew Services, Inc.
and Sakioka Farms.
10.62 Consignment Agreement dated Incorporated
as of September 30, 1993 by reference
between World Airways Inc. and
The Memphis Group.
10.63 Assignment and Assumption and Incorporated
Consent and Release for by reference
Aircraft Serial Number 47818 dated
as of July 20, 1993 among World
Airways, Inc., WorldCorp, Inc.,
McDonnell Douglas Corporation, and
McDonnell Douglas Finance
Corporation.
10.64 Assignment and Assumption and Incorporated
Consent and Release for by reference
Aircraft Serial Number 46999 dated
as of July 9, 1993 among World
Airways, Inc., WorldCorp, Inc.,
McDonnell Douglas Corporation, and
McDonnell Douglas Finance
Corporation.
10.65 Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48458 by reference
dated as of January 15, 1993
between World Airways, Inc. and
Wilmington Trust Company/GATX
Capital Corporation.
10.66 Aircraft Lease Supplement for Incorporated
Aircraft Serial Number 48458 by reference
dated as of April 23, 1993
between World Airways, Inc. and
Wilmington Trust Company/GATX
Capital Corporation.
10.67 Aircraft Spare Parts Lease Incorporated
Agreement dated as of April by reference
15, 1993 between World Airways,
Inc. and GATX Capital Corporation.
10.68 Amendment No. 1 To Aircraft Incorporated
Lease Agreement for Aircraft by reference
Serial Number 48518 dated as of
November 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.69 Amendment No. 2 to Aircraft Incorporated
Lease Agreement for Aircraft by reference
Serial Number 48518 dated as of
March 8, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.70 Assignment of Rights for Incorporated
Aircraft Serial Number 48518 by reference
dated as of March 8, 1993
between World Airways, Inc.
and International Lease
Finance Corporation.
<PAGE>
Exhibit
No. Exhibit
------- -------
10.71 Assignment of Rights for Aircraft Incorporated
Engines Serial Numbers P723942, by reference
P723945, and P723943 dated as of
March 1, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.72 Agency Agreement for Aircraft Serial Incorporated
Number 48518 dated as of by reference
January 15, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.73 Amendment No. 2 to Aircraft Lease Incorporated
Agreement for Aircraft Serial by reference
Number 48437 dated as of March 31,
1993 between World Airways,
Inc. and International Lease Finance
Corporation.
10.74 Amendment No. 3 to Aircraft Lease Incorporated
Agreement for Aircraft Serial by reference
Number 48437 dated as of April 15,
1993 between World Airways,
Inc. and International Lease Finance
Corporation.
10.75 Agency Agreement for Aircraft Serial Incorporated
Number 48437 dated as of by reference
January 15, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.76 Assignment of Rights for Aircraft Incorporated
Serial Number 48437 dated as of by reference
April 15, 1993 between World
Airways, Inc. and International Lease
Finance Corporation.
10.77 Assignment of Rights for Aircraft Incorporated
Engines Serial Numbers P723913, by reference
P723912, and P723914 dated as of
April 15, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.78 Amendment No. 2 to Aircraft Lease Incorporated
Agreement for Aircraft Serial by reference
Number 48520 dated as of April 22,
1993 between World Airways,
Inc. and International Lease Finance
Corporation.
10.79 Agency Agreement for Aircraft Serial Incorporated
Number 48520 dated as of by reference
January 15, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.80 Assignment of Rights for Aircraft Incorporated
Serial Number 48520 dated as of by reference
April 22, 1993 between World
Airways, Inc. and International Lease
Finance Corporation.
10.81 Assignment of Rights for Aircraft Incorporated
Engines Serial Numbers P723957, by reference
P723958, and P723956 dated as of
March 1, 1993 between World
Airways, Inc. and International
Lease Finance Corporation.
10.82 Aircraft Charter Agreement dated as Incorporated
of July 24, 1993 between World by reference
Airways, Inc. and Malaysian Airline
System Berhad.
10.83 Amendment No. 1 to Aircraft Lease Incorporated
Agreement for Aircraft Serial by reference
Numbers 46835, 46837, and 46820
dated as of May 14, 1993 between
World Airways, Inc. and The
Connecticut National Bank (assigned
to Federal Express Corporation).
<PAGE>
Exhibit
No. Exhibit
------- -------
10.84 Amendment No. 2 to Aircraft Lease Incorporated
Agreement for Aircraft Serial by reference
Numbers 46835, 46837, and 47820
dated as of May 14, 1993 between
World Airways, Inc. and The
Connecticut National Bank
(assigned to Federal Express
Corporation).
10.85 Return Agreement for Aircraft Incorporated
Serial Numbers 47818 and 46999 by reference
dated as of July 9, 1993 among
World Airways, Inc., WorldCorp,
Inc., International Lease Finance
Corporation, McDonnell Douglas
Corporation, and McDonnell
Douglas Finance Corporation.
10.86/1/ Acquisition Agreement Among VISA Incorporated
International Service Association, by reference
US Order, Inc, and WorldCorp,
Inc, dated as of July 15, 1994.
10.87 Stock Purchase Agreement by and Incorporated
among World Airways, Inc., by reference
WorldCorp, Inc., and Malaysian
Helicopter Services Berhad dated
as of October 30, 1993.
10.88 Stock Registration Rights Incorporated
Agreement between World Airways, by reference
Inc. and Malaysian Helicopter
Services Berhad dated as of
October 30, 1993.
10.89 Shareholders Agreement between Incorporated
Malaysian Helicopter Services by reference
Berhad and WorldCorp, Inc., and
World Airways, Inc. dated as of
February 3, 1994.
10.90 Amendment No. 1 to Shareholders Incorporated
Agreement dated as of February 28, by reference
1994, among WorldCorp, World
Airways, and MHS.
10.91 Right of First Refusal Agreement Incorporated
dated as of February 28, 1994, by reference
between US Order, Inc. ("US
Order") and Technology Resources,
Inc. Berhad ("TRI")
10.92 Amendment No. 1 dated as of Incorporated
August 29, 1991 to the US Order, by reference
Inc. Stock Restriction Agreement
dated as of September 14, 1990
among 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.
10.93 Amendment No. 2 dated as of March Incorporated
31, 1993 to the US Order, Inc. by reference
Stock Restriction Agreement dated
as of September 14, 1990 among
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.
10.94 Stock Option Agreement dated as Incorporated
of August 1, 1994 ("Grant Date") by reference
between WorldCorp, Inc. and
William F. Gorog.
10.95 Employment Agreement dated as of Incorporated
August 1, 1994 between US by reference
Order, Inc. and John C. Backus,
Jr.
<PAGE>
Exhibit
No. Exhibit
------- -------
10.96 Employment Agreement dated as of Incorporated
August 19, 1994 between by reference
WorldCorp, Inc. and T. Coleman
Andrews, III.
10.97 Stock Option Agreement dated as of Incorporated
August 19, 1994 ("Grant Date") by reference
by and between WorldCorp, Inc. and
T. Coleman Andrews, III.
10.98 Agreement between World Airways, Incorporated
Inc. and the International by reference
Brotherhood of Teamsters
representing the Cockpit
Crewmembers employed by
World Airways, Inc. dated
August 15, 1994-June 30,
1998.
10.99 Letter Employment Agreement of Incorporated
William F. Gorog dated by reference
August 25, 1994.
10.100 Amendment No. 3 dated as of Incorporated
September 1, 1994 to the US Order, by reference
Inc. Stock Restriction Agreement
dated as of September 14, 1990
among 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.
10.101 Aircraft Services Agreement dated Incorporated
September 26, 1994 by and between by reference
World Airways, Inc. ("World") and
Malaysian Airline System Berhad
("MAS").
10.102 Freighter Services Agreement dated Incorporated
October 1, 1994 by and between by reference
World Airways, Inc. and Malaysian
Airline System Berhad.
10.103 World Airways, Inc. 1995 AMC Incorporated
Contract F11626-94-D0027 dated by reference
October 1, 1994 between World
Airways, Inc. and Air Mobility
Command.
10.104 Amendment No. 4 dated as of Incorporated
December 1, 1994 to the US Order, by reference
Inc. Stock Restriction Agreement
dated as of September 14, 1990
among 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.
10.105 Stock Purchase Agreement (the Incorporated
"Agreement") dated as of December by reference
31, 1994 by and between MHS
Berhad, a Malaysian corporation
(the "Shareholder") and WorldCorp,
Inc., a Delaware corporation (the
"Purchaser").
10.106 Promissory Note dated December 31, Incorporated
1994 for $8,500,000 between by reference
WorldCorp, Inc., a Delaware
corporation ("Borrower") and
Malaysian Helicopter Services
Berhad, a Malaysian corporation
("Lender").
10.107 Amendment No. 1 to Passenger Incorporated
Aircraft Services and Freighter by reference
Services Agreement dated December
31, 1994 by and between World
Airways, Inc. and Malaysian Airline
System Berhad.
<PAGE>
Exhibit
No. Exhibit
------- -------
10.108 Amendment No. 5 dated January 2, Incorporated
1995 to the US Order, Inc. Stock by reference
Restriction Agreement dated as of
September 14, 1990 among
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.
10.109 Customer Agreement between Incorporated
WorldCorp ESSOP and Scott & by reference
Stringfellow, Inc. dated January
11, 1995 for a margin loan.
10.110 Side Letter dated January 11, 1995 Incorporated
from Scott & Stringfellow, Inc. to by reference
William F. Gorog, Trustee of
WorldCorp Employee Savings and
Stock Ownership Plan for a margin
loan to the WorldCorp ESSOP.
10.111 Guarantee Agreement dated January Incorporated
11, 1995 by WorldCorp, Inc. by reference
("Guarantor") for the benefit of
Scott & Stringfellow, Inc. (the
"Lender").
10.112 Registration Rights Agreement Incorporated
dated as of January 11, 1995 by and by reference
between WorldCorp, Inc. and Scott
& Stringfellow, Inc.
10.113 Side Letter dated January 11, 1995 Incorporated
from WorldCorp, Inc. to Scott & by reference
Stringfellow, Inc. regarding
commitment to make contributions
to the WorldCorp Employee Savings
and Stock Ownership Plan (the
"ESSOP"), for the duration of the
Scott & Stringfellow loan to
the ESSOP.
10.114 Strategic Alliance Agreement dated Incorporated
January 16, 1995 by and between by reference
Colonial Data Technologies Corp.
and US Order.
10.115 Amendment No. 2 to Passenger Incorporated
Aircraft Services and Freighter by reference
Aircraft Service Agreement dated
February 9, 1995 by and between
World Airways, Inc. and Malaysian
Airline System Berhad.
11.1 Statement on Calculation of Incorporated
Earnings Per Common Share. by reference
/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.
<PAGE>
(b) Reports on Form 8-K.
--------------------
None.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WORLDCORP
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1995 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> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 8,584
<SECURITIES> 0
<RECEIVABLES> 3,133
<ALLOWANCES> 83
<INVENTORY> 0
<CURRENT-ASSETS> 25,175
<PP&E> 43,441
<DEPRECIATION> 13,526
<TOTAL-ASSETS> 100,511
<CURRENT-LIABILITIES> 72,555
<BONDS> 107,731
<COMMON> 15,862
0
0
<OTHER-SE> (111,275)
<TOTAL-LIABILITY-AND-EQUITY> 100,511
<SALES> 0
<TOTAL-REVENUES> 41,309
<CGS> 0
<TOTAL-COSTS> 38,193
<OTHER-EXPENSES> 8,750
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 3,171
<INCOME-PRETAX> (8,454)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,454)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,454)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> 0<F1>
<FN>
<F1>FULLY DILUTED EARNINGS PER SHARE ARE ANTI-DILUTED.
</FN>
</TABLE>
