-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, nAVQIF7c8gHUTEDkER58GHDkW+rr+OZVUVDZ70RPOLypxQ98WMisEF5spLgk0vff 5ogvJ8ADPMMenMHTR5b/VQ== 0000950109-95-001928.txt : 19950516 0000950109-95-001928.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950109-95-001928 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLDCORP INC CENTRAL INDEX KEY: 0000811664 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 943040585 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09591 FILM NUMBER: 95539420 BUSINESS ADDRESS: STREET 1: 13873 PARK CTR RD STE 490 CITY: HERNDON STATE: VA ZIP: 22071 BUSINESS PHONE: 7038349200 MAIL ADDRESS: STREET 1: 13873 PARK CENTER ROAD CITY: HERNDON STATE: VA ZIP: 22071 10-Q 1 FORM 10-Q ================================================================================ 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. ================================================================================ 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 ITEM 1. FINANCIAL STATEMENTS - ----------------------------- WORLDCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS (in thousands)
(Unaudited) March 31, December 31, 1995 1994 ----------- ------------ 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 ======== =======
(Continued) 3 WORLDCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT (in thousands except share data) (Continued)
(Unaudited) March 31, December 31, 1995 1994 ----------- ------------- 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 ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements 4 WORLDCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For The Three Months Ended March 31, (in thousands except share data) (Unaudited)
1995 1994 -------- --------- 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 ======= =======
(Continued) 5 WORLDCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For The Three Months Ended March 31, (Continued) (Unaudited)
1995 1994 ------- ------ 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 ========== ==========
* Fully diluted earnings per share are anti-dilutive. See accompanying Notes to Condensed Consolidated Financial Statements. 6 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)
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 ------- ---------- ------------- ------------ ------------- --------- -------------- 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) ======= ======= ======== ========== ======== ===== ========
See accompanying Notes to Condensed Consolidated Financial Statements 7 WORLDCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31 (in thousands) (Unaudited)
1995 1994 --------- ---------- 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 ======= ========
See accompanying Notes to Condensed Consolidated Financial Statements 8 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 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)
1995 1994 ----------- --------------------------- Fully Primary Diluted ----------- ----------- 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 =========== =========== ===========
10 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 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 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 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 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 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 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 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 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- (b) Reports on Form 8-K None. * * * * * * * * * * * * * * 19 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 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ---------------------------------------- (a) Exhibits -------- 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.) 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.) 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.) 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. 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. 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. 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). 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. 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. 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. (b) Reports on Form 8-K. -------------------- None. EX-27 2 ARTICLE 5 FDS
5 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. 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 8,584 0 3,133 83 0 25,175 43,441 13,526 100,511 72,555 107,731 15,862 0 0 (111,275) 100,511 0 41,309 0 38,193 8,750 14 3,171 (8,454) 0 (8,454) 0 0 0 (8,454) (0.55) 0 FULLY DILUTED EARNINGS PER SHARE ARE ANTI-DILUTED.
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