SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18,
1997
WORLDCORP, INC.
(Exact name of registrant as specified in charter)
Delaware 1-5351 94-3040585
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
13873 Park Center Road, Suite 490, Herndon, Virginia 20171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703)
834-9200
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On September 18, 1997, WorldCorp, Inc., a Delaware
corporation ("WorldCorp"), consummated the sale of 3,227,000
shares (the "Shares") of common stock of World Airways, Inc.
("World Airways") to World Airways. The Shares were purchased by
World Airways for total consideration of $24.7 million or $7.65
per Share. $15 million of the net proceeds from the sale of the
Shares were used to retire a senior secured bank note, and the
balance of proceeds were added to WorldCorp's working capital.
Subsequent to this sale, WorldCorp owns 3,702,000 Shares of the
common stock of World Airways, or 46% of World Airways.
A copy of the press release announcing the completion of the
sale of the Shares is attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Businesses Acquired
Not Applicable
(b) Pro Forma Financial Information
On August 26, 1997, World Airways completed a private
offering, issuing $50.0 million of 8% convertible senior
subordinated debentures (the "Debentures") due in 2004 (the
"Offering"). The Debentures are unsecured obligations,
convertible into shares of World Airways common stock, at a
conversion price of $8.90 per share, and subordinated to all
present and future senior indebtedness of World Airways. Net
proceeds from the Offering approximated $48.5 million and would
be used by World Airways to: 1) repurchase approximately 4.0
million shares of its common stock, 2) repay approximately $4.0
million of certain indebtedness, and 3) increase its working
capital for general corporate purposes. The Company's portion of
Offering expenses approximated $1.0 million.
On September 18, 1997, World Airways repurchased 3,227,000
shares of its common stock from the Company, its largest
shareholder, for approximately $24.7 million (the "Repurchase").
Under the terms of the Offering, World Airways must repurchase at
least 4.0 million shares of its common stock within 150 days
after the sale of the Debentures. As a result, an additional
773,000 shares of common stock must be repurchased by January
1998 and may be repurchased from the Company or other
shareholders. No assurances, however, can be given with respect
to the eventual outcome of future share repurchases. Upon
receipt of its proceeds from the sale of common stock to World
Airways, the Company used approximately $15.0 million to repay an
outstanding obligation to a financial institution.
The following unaudited pro forma condensed financial
information gives effect to the Repurchase and the necessary
adjustments for WorldCorp using the equity method. Prior to the
Repurchase, WorldCorp owned approximately 62% of World Airways
and accounted for World Airways as a consolidated subsidiary. As
a result of the Repurchase, WorldCorp currently owns
approximately 46% of World Airways and will record its
proportionate share of World Airways' financial results
subsequent to September 18, 1997, using the equity method.
The unaudited pro forma condensed consolidated balance sheet
has been prepared as if the Offering, the $4.0 million repayment
of indebtedness by World Airways, the Repurchase and the $15.0
million repayment of indebtedness by the Company, were
consummated as of June 30, 1997. The unaudited pro forma
condensed consolidated statements of operations for the year
ended December 31, 1996 and the six months ended June 30, 1997,
give effect to the Offering, the $4.0 million repayment of
indebtedness by World Airways, the Repurchase and the $15.0
million repayment of indebtedness by the Company, as if each were
completed as of January 1, 1996. As a result, WorldCorp's pro
forma statement of operations includes World Airways' results for
each period under the equity method of accounting. Such
statements of operations do not include the pre-tax estimated
gain on sale of stock by WorldCorp of approximately $9.3 million
which will be recorded by the Company as a result of the
Repurchase in the third quarter. However, such statements do
reflect adjustments for the elimination of historical
transactions between WorldCorp and World Airways and related
income tax effects. This method of combining historical
financial statements for the preparation of the pro forma
condensed consolidated financial information is for presentation
only.
WORLDCORP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1997
(Dollars in thousands)
Pro
Forma
Equity
Method Pro
Adjust- forma Pro
Historical ments Adjust- Forma
WorldCorp (Note a) Subtotal ments WorldCorp
Current assets:
Cash and cash
equivalents $ 8,390 $ (8,270) $ 120 $ 23,687b $ 8,807
(15,000)c
Other current
assets 27,196 $(25,188) 2,008 - $ 2,008
Total current
assets 35,586 (33,458) 2,128 8,687 10,815
Equipment and
property, net 73,473 (73,147) 326 - 326
Long-term
operating
deposits 15,965 - 15,965 - 15,965
Investment in
affiliate -
InteliData 35,399 - 35,399 - 35,399
Investment in
affiliate -
World Airways - 11,923 11,923 (14,377)b (2,454)
Other assets 7,865 (21,064) (13,199) - (13,199)
Total assets $ 168,288 $(115,746) $52,542 $(5,690) $ 46,852
Current liabilities:
Notes payable and
current maturities
of long-term
obligations $ 26,739 $ (11,694) 15,045 (15,000)c 45
Accounts payable 21,733 (21,413) 320 - 320
Accrued main-
tenance in excess
of reserves paid 16,095 (16,095) - - -
Other current
liabilities 17,604 (16,108) 1,496 - 1,496
Total current
liabilities 82,171 (65,310) 16,861 (15,000) 1,861
Long-term obli-
gations, net 103,789 (29,070) 74,719 - 74,719
Other liabilities 14,394 (14,393) 1 - 1
Total
liabilities 200,354 (108,773) 91,581 (15,000) 76,581
Minority interest 7,434 (7,434) - - -
Common stock-
holders' deficit:
Common stock 16,630 - 16,630 - 16,630
Additional paid
in capital 43,861 - 43,861 - 43,861
Deferred compen-
sation (549) - (549) - (549)
Accumulated
deficit (90,870) - (90,870) 9,310d (81,560)
ESSOP guaranteed
bank loan (461) 461 - - -
Treasury stock,
at cost (8,111) - (8,111) - (8,111)
Total stock-
holders' deficit (39,500) 461 (39,039) 9,310 (29,729)
Total
liabilities
and common
stockholders'
deficit $168,288 $(115,746) $ 52,542 $ (5,690) $ 46,852
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1997
(Dollars in thousands, except per share amounts)
Pro
Forma
Equity
Method Pro
Adjust- forma Pro
Historical ments Adjust- Forma
WorldCorp (Note a) Subtotal ments WorldCorp
Operating revenues:
World Airways $ 160,676 $(160,676) $ - $ - $ -
US Order - - - - -
Total operating
revenues 160,676 (160,676) - - -
Operating expenses
World Airways:
Flight 33,114 (33,114) - - -
Maintenance 34,595 (34,595) - - -
Aircraft costs 49,379 (49,379) - - -
Fuel 5,703 (5,703) - - -
Flight operations
subcontracted to
others 2,249 (2,249) - - -
Promotions, sales
and commissions 4,663 (4,663) - - -
Depreciation and
amortization 4,331 (4,331) - - -
General and
administrative 13,808 (13,808) - - -
Total operating
expenses - World
Airways 147,842 (147,842) - - -
US Order:
Total operating
expenses -
US Order - - - -
WorldCorp:
General and
administrative 1,324 - 1,324 - 1,324
Total operating
expenses 149,166 (147,842) 1,324 - 1,324
Operating income
(loss) 11,510 (12,834) (1,324) - (1,324)
Other income
(expense)
Interest expense (5,625) 2,046 (3,579) 860c (2,719)
Interest income 429 (338) 91 - 91
Equity in loss of
InteliData (770) - (770) - (770)
Equity in income
of World Airways - 6,569 6,569 (2,469) 4,100
b,e
Loss on purchases
of equity by
subsidiaries (396) - (396) - (396)
Other, net (204) 110 (94) - (94)
Total other
income
(expense) (6,566) 8,387 1,821 (1,609) 212
Earning (loss)
from continuing
opertations before
income taxes and
minority interest 4,944 (4,447) 497 (1,609) (1,112)
Income tax expense (350) 350 - - -
Minority interest (4,097) 4,097 - - -
Earnings (loss)
from continuing
operations $497 $- $ 497 $(1,609) $(1,112)
Primary earnings
(loss) from
continuing
operations per
common equivalent
share $0.03 $0.03 $(0.10)b $(0.07)
Primary weighted
average common and
common equivalent
shares outstanding 15,012,368 15,012,368 15,012,368 15,012,368
Fully diluted
earnings (loss)
from continuing
operations per
common equivalent
share $* $* $* $*
Fully diluted
weighted average
common and common
equivalent
shares outstanding * * * *
* Amounts are not presented as they are anti-dilutive.
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
Twelve Months Ended December 31, 1996
(Dollars in thousands, except per share amounts)
Pro
Forma
Equity
Method Pro
Adjust- forma Pro
Historical ments Adjust- Forma
WorldCorp (Note a) Subtotal ments WorldCorp
Operating revenues:
World Airways $ 309,587 $(309,587) $ - $ - $ -
US Order 4,085 - 4,085 - 4,085
Total operating
revenues 313,672 (309,587) 4,085 - 4,085
Operating expenses
World Airways:
Flight 71,121 (71,121) - - -
Maintenance 60,462 (60,462) - - -
Aircraft costs 85,227 (85,227) - - -
Fuel 19,255 (19,255) - - -
Flight operations
subcontracted to
others 12,932 (12,932) - - -
Promotions, sales
and commissions 6,236 (6,236) - - -
Depreciation and
amortization 8,032 (8,032) - - -
General and
administrative 24,677 (24,677) - - -
Total operating
expenses - World
Airways 287,942 (287,942) - - -
US Order:
Total operating
expenses - US
Order 19,190 - 19,190 - 19,190
WorldCorp:
General and
administrative 3,803 - 3,803 - 3,803
Total operating
expenses 310,935 (287,942) 22,993 - 22,993
Operating income
(loss) 2,737 (21,645) (18,908) - (18,908)
Other income
(expense)
Interest expense (11,680) 3,529 (8,151) 298c (7,853)
Interest income 3,389 (1,230) 2,159 - 2,159
Equity in loss
of InteliData (23,273) - (23,273) - (23,273)
Equity in income
of World Airways - 10,977 10,977 (4,073)b,e 6,904
Gain (loss) on
issuances
(purchases) of
equity by
subsidiaries,
net 38,886 - 38,886 - 38,886
Other, net (1,550) 314 (1,236) - (1,236)
Total other
income 5,772 13,590 19,362 (3,775) 15,587
Earning (loss)
from continuing
opertations before
income taxes
and minority
interest 8,509 (8,055) 454 (3,775) (3,321)
Income tax expense (504) 679 175 - 175
Minority interest (568) 7,376 6,808 - 6,808
Earnings from
continuing
operations $ 7,437 $- $7,437 $ (3,775) $ 3,662
Primary earnings
from continuing
operations per
common equivalent
share $ 0.45 $0.45 $(0.23)b $0.22
Primary weighted
average common
and common
equivalent
shares
outstanding 16,676,889 16,676,889 16,676,889 16,676,889
Fully diluted
earnings (loss)
from continuing
operations per
common equivalent
share $* $* $* $*
Fully diluted
weighted average
common and common
equivalent
shares
outstanding * * * *
* Amounts are not presented as they are anti-dilutive.
_____________________________
Footnotes:
(a) The pro forma equity method adjustments were made to the
unaudited pro forma condensed consolidated financial information
to record WorldCorp's proportionate share of World Airways' net
assets and financial results under the equity method, as a result
of WorldCorp's ownership percentage in World Airways decreasing
from approximately 62% to approximately 46% due to the
Repurchase. Prior to the Repurchase, the Company accounted for
World Airways as a consolidated subsidiary.
(b) The pro forma adjustments were made to the unaudited pro
forma condensed consolidated financial information to give effect
to the cash received and the reduction in the Company's
investment in World Airways as a result of the Repurchase and the
Company's share of the Offering's expenses which approximated
$1.0 million.
(c) The pro forma adjustments were made to the unaudited pro
forma condensed consolidated financial information to give effect
to the Company's use of a portion of the proceeds received from
the Repurchase to repay an outstanding obligation to a
financial institution for approximately $15.0 million and the
resulting reduction in interest expense.
(d) Reflects the estimated gain on the sale of the World Airways
Shares by WorldCorp.
(e) Reflects the pro forma adjustments to World Airways
operating results as a result of the Offering (primarily
additional interest expense) and the adjustment to WorldCorp's
percentage interest in World Airways' earnings as a result of the
Repurchase.
-2-
<PAGE>
(c) Exhibits
99.1 Press Release dated September 18, 1997, announcing
the completion of the sale of the Shares.
-3-
<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 hereunto duly authorized.
WORLDCORP, INC.
Date: October 3, 1997 By: /s/ Andrew M. Paalborg
Andrew M. Paalborg
Vice President and
General Counsel
-4-
<PAGE>
INDEX TO EXHIBITS
99.1 Press Release dated September 18, 1997, announcing the
completion of the sale of the Shares.
-5-
Exhibit 99.1
WORLDCORP
CONTACT: Coleman Andrews
Chairman
(703) 834-9201 or
Doug Poretz
The Poretz Group
(703) 506-1778
FOR IMMEDIATE RELEASE
September 18, 1997
2:30 PM
WorldCorp Sells Shares in Subsidiary; Retires $15MM Bank Debt
HERNDON, VIRGINIA, September 18, 1997 -- WorldCorp (NYSE: WOA)
announced today that it has completed the sale of 3,227,000
shares of World Airways common stock. The shares were purchased
by World Airways for total consideration of $24.7MM or $7.65 per
share.
$15MM of proceeds from the share sale were used to retire a
senior secured bank note, and the balance of proceeds were added
to WorldCorp's working capital.
Subsequent to the sale, WorldCorp owns 3,702,000 shares of
World Airways stock, or 46% of the Company.
WorldCorp owns significant positions in companies that
operate in two distinct business areas.
InteliData develops and markets products and services for
the financial services and telecommunications industries.
InteliData's financial services products include bank branded
customers services, voice response systems and data translation
systems. Its telecommunications products include the Intelifone
smart telephone and a complete package of interactive
applications. Over 50 banks and telephone companies currently
use InteliData's products and services. WorldCorp owns
approximately 29% of InteliData.
World Airways provides ACMI leases to commercial and
military customers using MD-11 and DC-10 passenger and cargo
aircraft. WorldCorp owns approximately 46% of World Airways.
"Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995: This release contains forward
looking statements that are subject to risks and uncertainties,
including, but not limited to, the impact of competitive
products, product demand and market acceptance risks, reliance on
key strategic alliances, fluctuations in operating results and
other risks detailed from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission (which
reports are available from the Company upon request). These
risks could cause the Company's actual results for 1997 and
beyond to differ materially from those expressed in any forward
looking statements made by, or on behalf of, the Company in this
release.
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