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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------- -------
Commission file number 1-10841
GREYHOUND LINES, INC.
and its Subsidiaries identified in Footnote (1) below
(Exact name of registrant as specified in its charter)
DELAWARE 86-0572343
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(Address of principal executive offices) (Zip code)
(972) 789-7000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
As of May 9, 2000, the registrant had 58,743,069 shares of Common Stock,
$0.01 par value, outstanding all of which are held by the registrant's parent
company.
(1) This Form 10-Q is also being filed by the co-registrants specified under
the caption "Co-Registrants", each of which is a wholly-owned subsidiary of
Greyhound Lines, Inc. and each of which has met the conditions set forth in
General Instructions H(1)(a) and (b) of Form 10-Q for filing Form 10-Q in a
reduced disclosure format.
(2) The registrant meets the conditions set forth in General Instructions
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the
reduced disclosure format.
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CO-REGISTRANTS
This Form 10-Q is also being filed by the following entities. Except as set
forth below, each entity has the same principal executive offices, zip code and
telephone number as that set forth for Greyhound Lines, Inc. on the cover of
this report:
I.R.S. EMPLOYER JURISDICTION
COMMISSION IDENTIFICATION OF
NAME FILE NO. NO. INCORP.
- ---- ---------- --------------- -------------
Atlantic Greyhound Lines of Virginia, Inc. 333-27267-01 58-0869571 Virginia
GLI Holding Company 333-27267-04 75-2146309 Delaware
Greyhound de Mexico, S.A. de C.V. 333-27267-05 None Republic of
Mexico
Los Buenos Leasing Co., Inc. 333-27267-07 85-0434715 New Mexico
Sistema Internacional de Transporte de Autobuses, Inc. 333-27267-08 75-2548617 Delaware
Texas, New Mexico & Oklahoma Coaches, Inc. 333-27267-10 75-0605295 Delaware
1313 13th Street
Lubbock, Texas 79408
(806) 763-5389
T.N.M. & O. Tours, Inc. 333-27267-11 75-1188694 Texas
(Same as Texas, New Mexico & Oklahoma Coaches, Inc.)
Vermont Transit Co., Inc. 333-27267-12 03-0164980 Vermont
106 Main Street
Burlington, Vermont 05401
(802) 862-9671
As of March 31, 2000, Atlantic Greyhound Lines of Virginia, Inc. had 150 shares
of common stock outstanding (at a par value of $50.00 per share); GLI Holding
Company had 1,000 shares of common stock outstanding (at a par value of $0.01
per share); Greyhound de Mexico, S.A. de C.V. had 10,000 shares of common stock
outstanding (at a par value of $0.10 Mexican currency per share); Los Buenos
Leasing Co., Inc. had 1,000 shares of common stock outstanding (at a par value
of $1.00 per share); Sistema Internacional de Transporte de Autobuses, Inc. had
1,000 shares of common stock outstanding (at a par value of $0.01 per share);
Texas, New Mexico & Oklahoma Coaches, Inc. had 1,000 shares of common stock
outstanding (at a par value of $0.01 per share); T.N.M. & O. Tours, Inc. had
1,000 shares of common stock outstanding (at a par value of $1.00 per share);
and Vermont Transit Co., Inc. had 505 shares of common stock outstanding (no par
value). Each of the above named co-registrants (1) have 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 such
co-registrant was required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Interim Consolidated Statements of Financial Position as of
March 31, 2000 (Unaudited) and December 31, 1999........................... 5
Interim Consolidated Statements of Operations for the
Three Months Ended March 31, 2000 and 1999 (Unaudited)..................... 6
Condensed Interim Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 (Unaudited)..................... 7
Notes to Interim Consolidated Financial Statements (Unaudited)................ 8
Item 2. Management's Narrative Analysis of Results of Operations....................... 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................................. 13
Item 6. Exhibits and Reports on Form 8-K............................................... 13
SIGNATURES................................................................................ 14
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4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
CURRENT ASSETS (UNAUDITED)
Cash and cash equivalents ....................................................... $ 8,706 $ 8,295
Accounts receivable, less allowance for doubtful accounts of $375 and $402 ...... 47,539 46,830
Inventories, less allowance for shrinkage of $226 and $226 ...................... 7,880 7,494
Prepaid expenses ................................................................ 5,610 5,694
Assets held for sale ............................................................ 5,019 4,545
Current portion of deferred tax assets .......................................... 18,246 12,864
Other current assets ............................................................ 3,061 1,851
--------- ---------
Total Current Assets ....................................................... 96,061 87,573
Prepaid pension plans ............................................................... 30,483 29,983
Property, plant and equipment, net of accumulated depreciation of $174,792
and $173,273 ....................................................................... 386,375 397,077
Investments in unconsolidated affiliates ............................................ 16,527 16,028
Deferred income taxes ............................................................... 14,511 14,711
Insurance and security deposits ..................................................... 22,418 22,220
Goodwill, net of accumulated amortization of $3,925 and $3,523 ...................... 44,982 45,384
Intangible assets, net of accumulated amortization of $33,181 and $31,825 ........... 25,995 25,821
--------- ---------
Total Assets ............................................................... $ 637,352 $ 638,797
========= =========
Current Liabilities
Accounts payable ................................................................ $ 22,201 $ 23,824
Due to Laidlaw .................................................................. 48,070 42,560
Accrued liabilities ............................................................. 86,907 76,367
Unredeemed tickets .............................................................. 10,508 11,956
Current portion of environmental reserves ....................................... 1,598 1,473
Current maturities of long-term debt ............................................ 6,559 5,671
--------- ---------
Total Current Liabilities .................................................. 175,843 161,851
Environmental reserves .............................................................. 5,676 5,840
Long-term debt, net ................................................................. 171,375 174,581
Minority interests .................................................................. 4,211 4,233
Other liabilities ................................................................... 23,191 22,432
--------- ---------
Total Liabilities .......................................................... 380,296 368,937
--------- ---------
Redeemable preferred stock (2,400,000 shares authorized; 1,344,850 and 1,678,150
shares issued as of March 31, 2000 and December 31, 1999) ........................ 33,621 41,954
Stockholders' Equity
Common stock (100,000,000 shares authorized; par value $.01; 58,743,069 shares
issued as of March 31, 2000 and December 31, 1999) ........................... 587 587
Capital in excess of par value .................................................. 328,133 322,026
Retained deficit ................................................................ (102,760) (92,182)
Accumulated other comprehensive loss, net of tax benefit of $1,360 .............. (2,525) (2,525)
--------- ---------
Total Stockholders' Equity ................................................. 223,435 227,906
--------- ---------
Total Liabilities and Stockholders' Equity ................................. $ 637,352 $ 638,797
========= =========
The accompanying notes are an integral part of these statements.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
2000 1999
--------- ---------
(UNAUDITED)
OPERATING REVENUES
Transportation service
Passenger services ....................... $ 179,432 $ 163,688
Package express .......................... 10,352 9,123
Food services ................................ 9,506 7,800
Other operating revenues ..................... 15,795 14,696
--------- ---------
Total Operating Revenues ................. 215,085 195,307
--------- ---------
OPERATING EXPENSES
Maintenance .................................. 22,267 21,448
Transportation ............................... 58,281 49,637
Agents' commissions and station costs ........ 43,147 40,550
Marketing, advertising and traffic ........... 7,478 6,991
Insurance and safety ......................... 11,570 11,730
General and administrative ................... 28,954 28,275
Depreciation and amortization ................ 10,517 9,757
Operating taxes and licenses ................. 14,911 14,368
Operating rents .............................. 20,542 18,688
Cost of goods sold - food services ........... 6,273 5,355
Other operating expenses ..................... 580 920
--------- ---------
Total Operating Expenses ................. 224,520 207,719
--------- ---------
Operating Loss ..................................... (9,435) (12,412)
Settlement of Stock Options ........................ -- 19,929
Interest Expense ................................... 5,152 6,280
--------- ---------
Loss Before Income Taxes ........................... (14,587) (38,621)
Income Tax Benefit ................................. (4,748) (17,353)
Minority Interests ................................. (52) 56
--------- ---------
Net Loss Before Extraordinary Item ................. (9,787) (21,324)
Extraordinary Item, net of tax benefit of $1,310 ... -- 1,607
--------- ---------
Net Loss ........................................... $ (9,787) $ (22,931)
========= =========
The accompanying notes are an integral part of these statements.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
2000 1999
--------- ---------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .................................................... $ (9,787) $ (22,931)
Non-cash expenses and gains included in net loss ............ 4,834 (6,628)
Net change in certain operating assets and liabilities ...... 4,624 7,855
--------- ---------
Net Cash Used for Operating Activities .................. (329) (21,704)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ........................................ (5,591) (51,952)
Proceeds from assets sold ................................... 12,265 266
Payments for business acquisitions, net of cash acquired .... -- (6,745)
Other investing activities .................................. (499) (748)
--------- ---------
Net Cash Provided by (Used for) Investing Activities .... 6,175 (59,179)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on debt and capital lease obligations .............. (2,318) (2,682)
Redemption of preferred stock ............................... (11,110) (1,226)
Proceeds from issuance of common stock to Laidlaw ........... 95,491 143,678
Purchase of common stock from Laidlaw ....................... (86,607) --
Payment of quarterly preferred dividends .................... (891) (1,296)
Net change in revolving credit facility ..................... -- (37,785)
--------- ---------
Net Cash Provided by (Used for) Financing Activities .... (5,435) 100,689
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ......................... 411 19,806
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................... 8,295 4,736
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .......................... $ 8,706 $ 24,542
========= =========
The accompanying notes are an integral part of these statements.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited Interim Consolidated Financial
Statements of Greyhound Lines, Inc. and Subsidiaries (the "Company") include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company's financial position as of March 31, 2000, the
results of its operations for the three months ended March 31, 2000 and 1999 and
cash flows for the three months ended March 31, 2000 and 1999. Due to the
seasonality of the Company's operations, the results of its operations for the
interim period ended March 31, 2000 may not be indicative of total results for
the full year. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
promulgated by the Securities and Exchange Commission. The unaudited Interim
Consolidated Financial Statements should be read in conjunction with the audited
Consolidated Financial Statements of Greyhound Lines, Inc. and Subsidiaries and
accompanying notes for the year ended December 31, 1999. Certain
reclassifications have been made to the prior period statements to conform them
to the current year presentation. For the three months ended March 31, 2000 and
1999, the Company's comprehensive loss was equal to net loss.
2. COMMITMENTS AND CONTINGENCIES
The Company's principal sources of liquidity are cash flow from operations and
funds provided by the Company's parent, Laidlaw Inc. ("Laidlaw"). In its
Quarterly Report on Form 10-Q for the period ended February 29, 2000 (the
"Laidlaw Form 10-Q"), Laidlaw reported that it had received a waiver of
financial covenant compliance on its syndicated banking facility to May 31,
2000. During the waiver period, the bank syndicate has agreed to advance Laidlaw
$30 million and Laidlaw has agreed not to request further advances under the
line. In the Laidlaw Form 10-Q, Laidlaw further reported that if Laidlaw is
unsuccessful in negotiating amendments to its credit facility prior to May 31,
2000 Laidlaw will not be in compliance with its financial covenants and should
repayment be demanded for the credit facility, Laidlaw may not be able to
satisfy the obligation, nor other obligations which become due in the normal
course of operations and may not be able to continue to operate as a going
concern. Although Laidlaw has continued to provide funding to the Company for
essential ordinary course operating costs and capital expenditures, there can be
no assurances that Laidlaw will be able to do so in the future. In the event
Laidlaw is unable to provide necessary funding to the Company in the future, and
the Company's cash flows from operations are not sufficient to meet its needs,
then the Company would be required to seek funding from other sources. There can
be no assurances that alternate sources of financing will be available, and if
available, that the cost of such financing will not materially exceed the cost
currently experienced by the Company.
At March 31, 2000, the Company had 1,344,850 shares of Redeemable Preferred
Stock outstanding, which shares are convertible into $44.8 million in cash in
the aggregate. As of May 9, 2000, holders of 881,800 shares, representing a
conversion value of $29.4 million, had presented their shares for conversion.
Laidlaw advised the Company that due to the limitation of funding available to
Laidlaw from its bank syndicate, it is not practical to make payment for
Redeemable Preferred Stock presented for conversion. Accordingly, Laidlaw has
instructed the Company's transfer agent to reject shares that have been
presented for conversion and to return them to the holders. On May 1, 2000, the
Company paid the quarterly dividend to holders of the Redeemable Preferred
Stock, including to those holders that had tendered their shares for conversion.
On May 9, 2000, a lawsuit was filed by two purported holders of Redeemable
Preferred Stock alleging: (i) that the Company, in violation of federal
securities laws, materially misrepresented facts, and omitted reference to
material facts, with respect to the conversion rights of holders of the
Redeemable Preferred Stock and (ii) that the Company was in breach of the rights
of holders of Redeemable Preferred Stock as contained in the Company's Restated
Certificate of Incorporation. The suit seeks recovery from the Company of the
conversion payments relating to the Redeemable Preferred Stock purportedly held
by the plaintiffs, totaling $17.4 million, costs, attorneys' fees and interest.
Laidlaw was also named as a defendant in the suit. Plaintiffs allege that
Laidlaw tortiously interfered with the Company's obligations to the plaintiffs
and seek injunctive relief, actual and punitive damages, costs, attorneys' fees
and interest. The suit, Reliant Trading and Deutsche Bank AG, London Branch v.
Greyhound Lines, Inc. and Laidlaw Inc., is pending in the United States District
Court for the Eastern District of Wisconsin, Civil Action 00-C-0656. The court
has set a hearing for June 8 and 9, 2000 to consider the plaintiffs' motion for
preliminary relief sought against Laidlaw. The Company intends to vigorously
defend this suit.
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ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
GENERAL
Greyhound is the only nationwide provider of scheduled intercity bus
transportation services in the United States. The Company's primary business
consists of scheduled passenger service, package express service and food
services at certain terminals, which accounted for 83.4%, 4.8% and 4.4%,
respectively, of the Company's total operating revenues for the three months
ended March 31, 2000. The Company's consolidated operations include a nationwide
network of terminal and maintenance facilities, a fleet of approximately 2,900
buses and approximately 1,800 sales outlets.
The Company's business is seasonal in nature and generally follows the pattern
of the travel industry as a whole, with peaks during the summer months and the
Thanksgiving and Christmas holiday periods. As a result, the Company's cash
flows are also seasonal with a disproportionate amount of the Company's annual
cash flows being generated during the peak travel periods. The day of the week
on which certain holidays occur, the length of certain holiday periods, and the
date on which certain holidays occur within the fiscal quarter, may also affect
the Company's quarterly results of operations.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of total operating revenue for the quarters ended March 31, 2000 and
1999:
THREE MONTHS ENDED
MARCH 31,
2000 1999
-------- --------
OPERATING REVENUES
Transportation Service
Passenger services .......................... 83.4% 83.8%
Package express ............................. 4.8 4.7
Food services ................................... 4.4 4.0
Other operating revenues ........................ 7.4 7.5
-------- --------
Total Operating Revenues .................... 100.0 100.0
-------- --------
OPERATING EXPENSES
Maintenance ..................................... 10.3 11.0
Transportation .................................. 27.1 25.4
Agents' commissions and station costs ........... 20.1 20.8
Marketing, advertising and traffic .............. 3.5 3.6
Insurance and safety ............................ 5.4 6.0
General and administrative ...................... 13.5 14.5
Depreciation and amortization ................... 4.9 5.0
Operating taxes and licenses .................... 6.9 7.3
Operating rents ................................. 9.5 9.6
Cost of goods sold - food services .............. 2.9 2.7
Other operating expenses ........................ 0.3 0.5
-------- --------
Total Operating Expenses .................... 104.4 106.4
-------- --------
Operating Loss ...................................... (4.4) (6.4)
Settlement of Stock Options ......................... 0.0 10.2
Interest Expense .................................... 2.4 3.2
-------- --------
Loss Before Income Taxes ............................ (6.8) (19.8)
Income Tax Benefit .................................. (2.2) (8.9)
Minority Interests .................................. 0.0 0.0
-------- --------
Net Loss Before Extraordinary Item .................. (4.6) (10.9)
Extraordinary Item .................................. 0.0 0.8
-------- --------
Net Loss ............................................ (4.6) (11.7)
======== ========
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The following table sets forth certain operating data for the Company for the
quarters ended March 31, 2000 and 1999. Certain statistics have been adjusted
and restated from that previously published to provide consistent comparisons.
THREE MONTHS ENDED
MARCH 31, PERCENTAGE
2000 1999 CHANGE
---------- ---------- ----------
Regular Service Miles (000's) .............................. 77,858 75,118 3.6%
Total Bus Miles (000's) .................................... 80,114 77,345 3.6%
Passenger Miles (000's) .................................... 1,958,134 1,822,903 7.4%
Passengers Carried (000's) ................................. 5,633 5,410 4.1%
Average Trip Length (passenger miles/passengers carried) ... 348 337 3.3%
Load (avg. number of passengers per regular service mile) .. 25.2 24.3 3.7%
Load Factor (% of available seats filled) .................. 50.9% 50.3% 1.2%
Yield (regular route revenue/passenger miles) .............. $ 0.0916 $ 0.0900 1.8%
Total Revenue Per Total Bus Mile ........................... $ 2.685 $ 2.525 6.3%
Operating Loss Per Total Bus Mile .......................... $ (0.118) $ (0.160) (26.3%)
Cost Per Total Bus Mile:
Maintenance .......................................... $ 0.278 $ 0.277 0.4%
Transportation ....................................... $ 0.727 $ 0.642 13.2%
THREE MONTHS ENDED MARCH 31, 2000 AND 1999 RESULTS OF OPERATIONS
The Company's results of operations include the operating results of On-Time
Delivery and LSX Delivery (collectively the "acquisitions"). The purchase of
On-Time Delivery occurred during the first quarter of 1999 and the acquisition
involving LSX Delivery occurred during the second quarter of 1999. The results
for the acquisitions are included as of their respective purchase dates.
Operating Revenues. Total operating revenues increased $19.8 million, up 10.1%,
for the three months ended March 31, 2000, compared to the same period in 1999.
Acquisitions accounted for $1.3 million of this growth while internal growth
amounted to $18.5 million, or 9.5% over the same quarter last year.
Passenger services revenues increased $15.7 million, or 9.6%, for the three
months ended March 31, 2000, compared to the same period in 1999. The increases
in regular route revenues reflect the impact of a 4.1% increase in the number of
passengers carried, a 3.3% increase in average trip length and a 1.8% increase
in yield.
Package express revenues increased $1.2 million, or 13.5%, for the three months
ended March 31, 2000, compared to the same period in 1999 (including $1.3
million related to the acquisitions). Excluding the acquisitions, the Company
experienced a slight decrease due to reduced standard product deliveries (the
traditional, low-value, terminal to terminal market segment) offset somewhat by
gains in same day and priority product deliveries.
Food services revenues increased $1.7 million, up 21.9%, for the three months
ended March 31, 2000, compared to the same period in 1999. Food services
revenues increased over the prior year due primarily to the increase in
passenger traffic and the addition of eight in-terminal restaurants that were
previously concessionaire-operated Burger King locations.
Other operating revenues, consisting primarily of revenue from charter and other
in-terminal sales and services, increased $1.1 million, up 7.5%, for the three
months ended March 31, 2000, compared to the same period in 1999. The increase
was attributable to higher tenant income, subsidy income and long distance
commissions offset by a $0.7 million reduction in interest income compared to
the prior year.
Operating Expenses. Total operating expenses increased $16.8 million, up 8.1%,
for the three months ended March 31, 2000, compared to the same period in 1999.
The increase is attributable to a 3.6% increase in bus miles operated, increased
fuel cost, higher driver wages, increased terminal salaries, increased ticket
and express commissions due to higher sales and $1.2 million related to the
operations of the acquisitions.
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Maintenance costs increased $0.8 million, up 3.8%, for the three months ended
March 31, 2000, compared to the same period in 1999, due principally to
increased bus miles.
Transportation expenses which consist primarily of fuel costs and driver
salaries, increased $8.6 million, up 17.4%, for the three months ended March 31,
2000, compared to the same period in 1999, due primarily to increased bus miles,
fuel costs, and higher driver wages. Transportation expenses increased on a
per-mile basis by 13.2% due largely to higher fuel prices in 1999 compared to
the prior year, and to the impact of the driver wage increases. For the first
quarter of 2000, the average cost per gallon of fuel increased to $0.885 per
gallon, compared to $0.483 per gallon during the same period in 1999, resulting
in increased fuel cost of $5.1 million during 2000.
Agents' commissions and station costs increased $2.6 million, up 6.4%, for the
three months ended March 31, 2000, compared to the same period in 1999. The
increase is primarily due to commissions from increased ticket sales, terminal
salaries associated with staffing for the increase in passengers, terminal
salary raises and the inclusion of the acquisitions.
Marketing, advertising and traffic expenses increased $0.5 million, up 7.0% for
the three months ended March 31, 2000, compared to the same period in 1999, due
to an increase in spending to support the increase in revenues.
Insurance and safety costs decreased $0.2 million, down 1.4% for the three
months ended March 31, 2000, compared to the same period in 1999. The reduction
is principally due to timing as the Company is charged for insurance coverage
under the Laidlaw program based on a percentage of sales. Due to the seasonal
nature of the Company's business, this method results in the fixed portion of
the insurance program costs being low during the first quarter of 2000 and thus,
produced a lower insurance expense in the first quarter of 2000 than had been
experienced under the Company's stand-alone program during the first quarter of
1999.
General and administrative expenses increased $0.7 million, up 2.4%, for the
three months ended March 31, 2000, compared to the same period in 1999 due to
the increase in revenues and higher health insurance costs offset by a reduction
in expenses associated with remediation of the Company's computer systems
related to the Year 2000 preparation.
Depreciation and amortization increased by $0.8 million, up 7.8%, for the three
months ended March 31, 2000, compared to the same period in 1999 primarily due
to increased capital expenditures in prior periods, and goodwill amortization
attributable to the acquisitions.
Operating taxes and licenses expense increased $0.5 million, up 3.8%, for the
three months ended March 31, 2000, compared to the same period in 1999 due to
increased payroll taxes resulting from increased salaries and head-counts
related to higher business volume (including increased miles operated),
increased fuel taxes due to increased miles and the inclusion of the
acquisitions.
Operating rents increased $1.9 million, up 9.9%, for the three months ended
March 31, 2000, compared to the same period in 1999 due to the increase in
revenues.
Food services cost of goods sold increased $0.9 million, up 17.1%, for the three
months ended March 31, 2000, compared to the same period in 1999, primarily due
to the 21.9% increase in food services revenues. The revenue increase is
primarily attributable to increased passenger traffic and the addition of eight
in-terminal Burger King restaurants previously operated by a concessionaire.
Other operating expenses decreased $0.3 million, down 37.0%, for the three
months ended March 31, 2000, compared to the same period in 1999 due to an
increase in income from unconsolidated affiliates.
Interest expense decreased $1.1 million, down 18.0%, for the three months ended
March 31, 2000, compared to the same period in 1999 due to a reduction in
average debt outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements are to provide working capital,
to finance capital expenditures, to meet debt service requirements, including
the payment of interest on the 11 1/2% Senior Notes and to pay dividends and
amounts due to the remaining holders of the Company's redeemable preferred
stock. The Company's principal sources of liquidity are cash flow from
operations and funds provided by the Company's parent, Laidlaw Inc. ("Laidlaw").
In its Quarterly Report on Form 10-Q for the period ended February 29, 2000 (the
"Laidlaw Form 10-Q"),
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Laidlaw reported that it had received a waiver of financial covenant compliance
on its syndicated banking facility to May 31, 2000. During the waiver period,
the bank syndicate has agreed to advance Laidlaw $30 million and Laidlaw has
agreed not to request further advances under the line. In the Laidlaw Form 10-Q,
Laidlaw further reported that if Laidlaw is unsuccessful in negotiating
amendments to its credit facility prior to May 31, 2000 Laidlaw will not be in
compliance with its financial covenants and should repayment be demanded for the
credit facility, Laidlaw may not be able to satisfy the obligation, nor other
obligations which become due in the normal course of operations and may not be
able to continue to operate as a going concern. Although Laidlaw has continued
to provide funding to the Company for essential ordinary course operating costs
and capital expenditures, there can be no assurances that Laidlaw will be able
to do so in the future. In the event Laidlaw is unable to provide necessary
funding to the Company in the future, and the Company's cash flows from
operations are not sufficient to meet its needs, then the Company would be
required to seek funding from other sources. There can be no assurances that
alternate sources of financing will be available, and if available, that the
cost of such financing will not materially exceed the cost currently experienced
by the Company.
Net cash used in operating activities for the three months ended March 31, 2000
was $0.3 million, a decrease of $21.4 million, or 98.5%, from the $21.7 million
used during the same period of 1999. The principal reason for the reduction is
the inclusion in the first quarter of 1999 of $19.9 million in payments for the
settlement of stock options. Net proceeds from investing activities for the
first quarter of 2000 were $6.2 million compared to the $59.2 million in net
cash used for investing during the first quarter of 1999. The decrease in net
cash used for investing is principally due to $39.4 million in sale-leaseback
proceeds received in the first quarter of 2000, compared to no sale-leaseback
proceeds during the same period of 1999, and reduced capital expenditures during
the first quarter of 2000. Net cash used for financing activities in the first
quarter of 2000 was $5.4 million versus $100.7 million cash provided by
financing activities during the same period in 1999. The $106.1 million
difference is due to the $143.7 million of proceeds from the issuance of common
stock to Laidlaw in 1999, which was offset by the $37.8 million retirement of
the revolving credit facility.
At March 31, 2000, the Company had 1,344,850 shares of Redeemable Preferred
Stock outstanding, which shares are convertible into $44.8 million in cash in
the aggregate. As of May 9, 2000, holders of 881,800 shares, representing a
conversion value of $29.4 million, had presented their shares for conversion.
Laidlaw advised the Company that due to the limitation of funding available to
Laidlaw from its bank syndicate, it is not practical to make payment for
Redeemable Preferred Stock presented for conversion. Accordingly, Laidlaw has
instructed the Company's transfer agent to reject shares that have been
presented for conversion and to return them to the holders. On May 1, 2000, the
Company paid the quarterly dividend to holders of the Redeemable Preferred
Stock, including to those holders that had tendered their shares for conversion.
12
13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 9, 2000, a lawsuit was filed by two purported holders of Redeemable
Preferred Stock alleging: (i) that the Company, in violation of federal
securities laws, materially misrepresented facts, and omitted reference to
material facts, with respect to the conversion rights of holders of the
Redeemable Preferred Stock and (ii) that the Company was in breach of the rights
of holders of Redeemable Preferred Stock as contained in the Company's Restated
Certificate of Incorporation. The suit seeks recovery from the Company of the
conversion payments relating to the Redeemable Preferred Stock purportedly held
by the plaintiffs, totaling $17.4 million, costs, attorneys' fees and interest.
Laidlaw was also named as a defendant in the suit. Plaintiffs allege that
Laidlaw tortiously interfered with the Company's obligations to the plaintiffs
and seek injunctive relief, actual and punitive damages, costs, attorneys' fees
and interest. The suit, Reliant Trading and Deutsche Bank AG, London Branch v.
Greyhound Lines, Inc. and Laidlaw Inc., is pending in the United States District
Court for the Eastern District of Wisconsin, Civil Action 00-C-0656. The court
has set a hearing for June 8 and 9, 2000 to consider the plaintiffs' motion for
preliminary relief sought against Laidlaw. The Company intends to vigorously
defend this suit.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 - Financial Data Schedule as of and for the three months ended
March 31, 2000.(1)
- ----------------------
(1) Filed only in EDGAR format with the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000.
(b) REPORTS ON FORM 8-K
During the three months ended March 31, 2000, the Company did not file any
current reports on Form 8-K with the Securities and Exchange Commission.
13
14
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.
Date: May 15, 2000
GREYHOUND LINES, INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
ATLANTIC GREYHOUND LINES OF
VIRGINIA, INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
GLI HOLDING COMPANY
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
GREYHOUND de MEXICO S.A. de C.V.
By: /s/ Cheryl W. Farmer
---------------------------------------------
Cheryl W. Farmer
Examiner
LOS BUENOS LEASING CO., INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
SISTEMA INTERNACIONAL de TRANSPORTE de
AUTOBUSES, INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
14
15
TEXAS, NEW MEXICO & OKLAHOMA
COACHES, INC.
By: /s/ Jeffrey W. Sanders
----------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
T.N.M. & O. TOURS, INC.
By: /s/ Jeffrey W. Sanders
----------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
VERMONT TRANSIT CO., INC.
By: /s/ Jeffrey W. Sanders
----------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial
Officer
15
16
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule as of and for the three months ended
March 31, 2000.(1)
- ------------------
(1) Filed only in EDGAR format with the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000.