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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 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 (I.R.S. employer
of 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)
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
8 1/2% CONVERTIBLE SUBORDINATED AMERICAN STOCK EXCHANGE
DEBENTURES, DUE MARCH 31, 2007
Securities registered pursuant to Section 12(g) of the Act:
NONE.
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of Common Stock held by non-affiliates of the
registrant on March 15, 2000, was $0.
As of March 1, 2001, 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-K 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 I(1)(a) AND (b) OF FORM 10-K FOR FILING FORM 10-K IN A
REDUCED DISCLOSURE FORMAT.
(2) THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
I(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
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CO-REGISTRANTS
This Form 10-K 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
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
345 Pine Street
Burlington, Vermont 05401
(802) 862-9671
As of December 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); 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
INDEX TO FORM 10-K
PAGE NO.
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PART I
Item 1. Business........................................................................... 4
Item 2. Properties......................................................................... 9
Item 3. Legal Proceedings.................................................................. 9
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.......... 10
Item 7. Management's Narrative Analysis of Results of Operations........................... 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk......................... 17
Item 8. Financial Statements and Supplementary Data........................................ 18
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure....................................................... 43
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................... 43
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PART I
ITEM 1. BUSINESS
GENERAL
Greyhound Lines, Inc. and subsidiaries (the "Company") is the only
nationwide provider of scheduled intercity bus transportation services in the
United States. The Company serves the value-oriented customer by connecting
rural and urban markets throughout the United States, offering scheduled
passenger service to more than 2,600 destinations with a fleet of approximately
2,900 buses and approximately 1,800 sales locations. The Company also provides
package express service, charter bus service and, in many terminals, food
service. For the year ended December 31, 2000, the Company generated total
operating revenues of $1.0 billion.
The Company serves a diverse customer base, consisting primarily of low to
middle income passengers from a wide variety of ethnic backgrounds. Management
believes that the demographic groups that make up the core of the Company's
customer base are growing at rates faster than the U.S. population as a whole.
The Company believes that it is uniquely positioned to serve this broad and
growing market because (i) the Company's operating costs, which are lower on an
available-seat-mile basis than other modes of intercity transportation, enable
it to offer passengers everyday low prices, (ii) the Company offers the only
means of regularly scheduled intercity transportation in many of its markets,
and (iii) the Company provides additional capacity during peak travel periods to
accommodate passengers who lack the flexibility to shift their travel to
off-peak periods.
On March 16, 1999, the Company's stockholders approved the Agreement and
Plan of Merger with Laidlaw Inc. ("Laidlaw") pursuant to which the Company
became a wholly owned subsidiary of Laidlaw (the "Merger").
MARKETS
Passengers. While the Company's major passenger markets are large
metropolitan areas, its business is geographically fragmented with the 50
largest sales outlets accounting for approximately 50% of 2000 ticket sales, and
the 1,200 largest origin/destination city pairs producing only 45% of 2000
ticket sales. Demographic studies have shown that the Company's potential riders
are concentrated in the northeastern, southern and industrial mid-western United
States, as well as Texas and California. The typical passenger travels to visit
friends and relatives and generally has an annual income below $35,000. In many
cases, the Company's passengers report that they own automobiles considered
sufficiently reliable for a trip of a similar distance, but travel by bus
because they are traveling alone or because of the lower cost of bus travel. The
majority of the Company's customers usually make the decision to take a trip
only a short time before actually traveling and, for the most part, pay cash for
their tickets on the day of departure.
Package Express. The Company's package express service targets commercial
shippers and delivery companies that require rapid delivery of small parcels,
typically within 400 miles. The Company's product offerings include standard
delivery, the traditional low-value, terminal-to-terminal delivery product, as
well as priority and same day delivery, premium priced products typically
delivered door to door. The Company satisfies the door-to-terminal portion of
priority and same day deliveries principally through relationships with over 300
courier companies, which serve over 400 markets. Shipments include automotive
repair parts, wholesale foods, computer parts and forms, fresh flowers,
eyeglasses, medical and dental supplies, architectural and legal documents and
pharmaceutical products. With its extensive network and multiple schedules, the
Company is able to provide expedited service, especially to rural areas. Most
shipments arrive at their destination on the same day they are shipped or by
8:00 a.m. the following morning. The Company also provides local courier
services through its subsidiaries On Time Delivery in Minneapolis, MN and LSX
Delivery in Chicago, IL.
Food Service. The Company's Food Service division gives passengers the
ability to enjoy quality food and purchase gifts and logo merchandise while
reaching their destinations in over 60 locations. In addition to cafeteria-style
restaurants, convenience store type "grab and go" facilities and gift shops, the
Company also offers national brand concepts such as Star Hardee's and Kentucky
Fried Chicken.
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MARKETING AND ADVERTISING
The Company's marketing and advertising philosophy is geared toward
stimulating extra travel through price awareness, improving the awareness and
image of Greyhound among potential customers and inducing first-time and repeat
travel. The Company uses various means to advertise its passenger travel
business including radio, television and print media (primarily yellow pages).
Additionally, the Company offers convenient around-the-clock fare and schedule
quotations via a toll-free telephone number through its telephone information
centers and through the Company's internet web site. The Company's telephone
centers and web site handled 38.3 million requests in 2000, an increase of 10.4%
over 1999. The Company also markets its passenger and in-terminal services
through advertising in the terminal facilities and on its ticket jackets.
OPERATIONS
The Company utilizes approximately 175 company-operated bus terminals and
approximately 1,625 agency-operated terminals and/or sales agencies. Maintenance
garages are maintained at 24 strategic locations and are supplemented by
company-operated service islands and fueling points. The Company currently has
approximately 4,900 drivers based in approximately 90 different locations across
the country. In the Greyhound Lines unit, drivers report to driver supervisors
who are organized into 11 districts reporting to district managers of driver
operations. The scheduling and dispatch of the buses and driver corps is a
centralized function that coordinates with the districts in the planning and
execution of daily operations. The flexing of capacity to meet demand is
accomplished through the management of national dispatch operations for
equipment and drivers, rental of additional buses to cover peak demand periods,
planning and coordinating extra sections with the districts and analyzing and
implementing pooling and through service arrangements with other carriers.
Annual planning of the fleet size and driver requirements by location is also
centralized. Subsidiaries of Greyhound Lines independently coordinate and manage
their own driver and fleet resources.
Information technology is an integral component of the Company's
operations. The Company's information systems support, among other things, its
scheduling and pricing, dispatch, operations planning, bus maintenance,
telephone information center, customer service, point of sale, payroll and
finance functions. As of December 31, 2000, the Company's automated fare and
schedule quotation and ticketing system, called TRIPS, was in use at 357
locations.
COMPETITION
Passengers. The transportation industry is highly competitive. The
Company's primary sources of competition for passengers are automobile travel,
low cost air travel from both regional and national airlines, and in certain
markets, regional bus companies and trains. Typically, the Company's customers
decide to travel only a short time before their trip and purchase their tickets
on the day of travel. The Company's everyday low pricing strategy results in
"walk-up" fares substantially below comparable airline fares. In instances where
the Company's fares exceed an airline discount fare, the Company believes the
airline fares are temporary or are typically more restrictive and less readily
available than travel provided by the Company. However, the Company has also
instituted numerous advance purchase programs, in order to attract the price
sensitive customer. Price, destination choices and convenient schedules are the
ways in which the Company meets this competitive challenge.
The automobile is the most significant form of competition to the Company.
The out-of-pocket costs of operating an automobile are generally less expensive
than bus travel, particularly for multiple persons traveling in a single car.
The Company meets this competitive threat through price and convenient
scheduling.
Additionally, the Company experiences competition from regional bus
companies. Price, frequency of service, and convenient scheduling are the
current strategies of the Company to meet this competition. The Company's
competitors possess operating authority for, but do not currently operate over,
numerous routes potentially competitive to the Company. Based on market and
competitive conditions, the regional bus companies could operate such routes in
the future. Competition by U.S.-based bus and van operators for the market
represented by Spanish
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speaking customers in the U.S. is growing. As of January 1, 1997, barriers to
entry into the regular-route cross-border bus market between the U.S. and Mexico
were scheduled to be reduced under the North American Free Trade Agreement
("NAFTA"), although entry into either market would still be regulated by the
respective U.S. and Mexican regulatory authorities. The U.S. government
currently has a blanket moratorium on grants of cross-border authority to
Mexican-owned or controlled motor freight carriers and regular-route motor
carriers of passengers. On February 6, 2000 a NAFTA arbitration panel ruled that
the moratorium on motor freight carriers was a violation of NAFTA and
recommended that the U.S. bring its practices with respect to cross-border
trucking services and investment into compliance with NAFTA by addressing each
request for operating authority individually. Should the moratorium also be
lifted with regard to regular-route passenger services, the Company could
experience significant new competition on routes, to, from and across Mexican
border points. Nevertheless, certain U.S.-based operators are providing
cross-border service into Mexico at this time. NAFTA also permits U.S. carriers
to make non-controlling, minority investments in Mexican-owned carriers and
permits Mexican carriers to make non-controlling, minority investments in
U.S.-owned carriers. In addition to bringing new competition, the Company
believes that the changes under NAFTA will increase the volume of bus travel
along both sides of the border and provide the Company with a growth
opportunity. The Company believes that the most effective way to service
passengers in this market is through joint ventures or other business
combinations with Mexico-based bus carriers and U.S.-based bus operators that
primarily serve these Spanish-speaking markets. The Company has established a
separate operating subsidiary that, through several joint ventures, provides
through-bus service at all major gateways between the United States and Mexico.
Package Express. The Company faces intense competition in its package
express service from local courier services, the U.S. Postal Service and
overnight express and ground carriers. The Company continues to develop programs
to meet this competition and rebuild its package express business. These
programs focus on system upgrades to improve service, billing and tracking for
its customers, localized marketing strategies, and local, regional or national
alliances with, or acquisitions of, pick up and delivery carriers. Due to the
incremental nature of the package express business, the Company is able to
provide same-day intercity package express service at distances of up to 400
miles at a substantially lower price than those charged by other delivery
services.
Food Service. The captive nature of the food service operations in the
Company's terminals limits competition; however, in some locations proximity of
terminals to fast food outlets and convenience stores can pose a competitive
factor.
SEASONALITY
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. Therefore, an
event that adversely affects ridership during any of these peak periods could
have a material adverse effect on the Company's financial condition and results
of operations for that year. 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 a fiscal quarter, may also affect the Company's quarterly
results of operations.
WORKFORCE
At March 1, 2001, the Company employed approximately 13,100 workers,
consisting of approximately 4,500 terminal employees, 4,900 drivers, 1,500
supervisory personnel, 800 mechanics, 600 telephone information agents, and 800
clerical workers. Of the total workforce, approximately 10,900 are full-time
employees and approximately 2,200 are part-time employees.
At March 1, 2001, approximately 44% of the Company's employees were
represented by collective bargaining agreements. The Amalgamated Transit Union
(the "ATU") represents approximately 5,100 of the Company's employees, including
drivers, telephone information agents in the Omaha location, terminal workers in
seven locations and about half of the Company's mechanics. The largest ATU
agreement, which covers the drivers and maintenance employees, expires on
January 31, 2004. The International Association of Machinists and Aerospace
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Workers (the "IAM") represents approximately 350 of the Company's employees,
including the remaining mechanics. The IAM agreements expire on October 1, 2004.
The Company also has bargaining agreements with the International Brotherhood of
Teamsters, which represent approximately 250 employees at five terminal
locations and the United Transportation Union, which represents employees at two
of the Company's subsidiaries.
TRADEMARKS
The Company owns the Greyhound name and trademarks and the "image of the
running dog" trademarks worldwide. The Company believes that this name and the
trademarks have substantial consumer awareness.
GOVERNMENT REGULATION
The Department of Transportation. As a motor carrier engaged in interstate,
as well as intrastate, transportation of passengers and express shipments, the
Company is, and must remain, registered with the United States Department of
Transportation (the "DOT"). Failure to maintain a satisfactory safety rating,
designate agents for service of process or to meet minimum financial
responsibility requirements, after notice and opportunity to remedy, may result
in the DOT's ordering the suspension or revocation of the registration of the
Company and its right to provide transportation. DOT regulations also govern the
qualifications, duties and hours of service of drivers, the standards for
vehicles, parts and accessories, the maintenance of records and the submission
of reports pertaining to the Company's drivers, buses and operations. The
Company is subject to periodic and random inspections and audits by the DOT or,
pursuant to cooperative arrangements with the DOT, by state police or officials,
to determine whether the Company's drivers, buses and records are in compliance
with the DOT's regulations. The Company, from time to time, has been cited by
the DOT for noncompliance with its regulations but, nevertheless, has retained a
satisfactory safety rating. The DOT establishes minimum financial responsibility
requirements for motor carriers; the Company has met these requirements and has
been authorized to partially self-insure its bodily injury and property damage
liability. See "Insurance Coverage." The DOT also administers regulations to
assure compliance with vehicle noise and emission standards prescribed by the
Environmental Protection Agency (the "EPA"). All of the buses in the Company's
fleet contain engines that comply with, or are exempt from compliance with, EPA
regulations, but, on occasion, the Company has been cited and fined for
non-compliance with noise or emission standards.
Surface Transportation Board. The Company is also regulated by the DOT's
Surface Transportation Board (the "STB"). The STB must grant advance approval
for the Company to pool operations or revenues with another passenger carrier.
The STB, moreover, must authorize any merger by the Company with, or its
acquisition or control of, another motor carrier of passengers. The Company must
maintain reasonable through routes with other motor carriers of passengers, and,
if found not to have done so, the STB can prescribe them. The Company is party
to certain agreements, which are subject to STB authorization and supervision,
for the adoption of mileage guides, rules, divisions or general rate
adjustments.
On August 17, 2000, in response to cautionary statements contained in the
Company's Form 10-Q for the period ending June 30, 2000, concerning the loss of
funding from Laidlaw, the STB issued a decision requesting comments concerning
the liquidity situation of the Company and its potential impact on operations.
The Company and Laidlaw responded to the STB inquiry and advised the STB that
the Company had completed the Revolving Credit Facility (as defined herein). See
"Liquidity and Capital Resources." On December 6, 2000, the STB issued a
decision acknowledging the Company's positive financial and operating results
and completion of the Revolving Credit Facility. The STB directed the Company to
provide copies of all future SEC filings and to advise the STB of any
developments that could affect the Company's ability to operate.
State Regulations. As an interstate motor carrier of passengers, the
Company may engage in intrastate operations over any of its authorized routes.
By federal law, states are pre-empted from regulating the Company's fares or its
schedules, including the withdrawal of service over any route. However, the
Company's buses remain subject to state vehicle registration requirements, bus
size and weight limitations, fuel sales and use taxes, vehicle emissions, speed
and traffic regulations and other local standards not inconsistent with federal
requirements.
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Other. The Company is subject to regulation under the Americans with
Disabilities Act (the "ADA") pursuant to regulations adopted by DOT in September
1998. Beginning in October 2000, all new buses acquired by the Company for its
fixed route operations must be equipped with wheelchair lifts. Additionally, by
October 2006, one-half of the Company's fleet involved in fixed route operations
will be required to be lift-equipped, and by October 2012, such fleet will need
to be entirely lift-equipped. The regulations do not require the retrofitting of
existing buses with lift equipment. Nor do the regulations require the purchase
of accessible used buses. Under an initiative implemented in the spring of 2000,
and continuing until the fleet is fully equipped, the Company has begun to
provide an accessible bus to any disabled passenger who provides at least 48
hours notice. This initiative was implemented over 18 months in advance of the
October 2001 deadline for larger fixed route operators being required to provide
an accessible bus to any disabled passenger who provides at least 48 hours
notice. Currently the added cost of a built-in lift device in a new bus is
approximately $30,000 plus the Company incurs additional maintenance and
employee training costs. Passenger revenues could also be impacted by the loss
of seating capacity when wheelchair passengers are on the bus, partially offset
by potentially increased ridership by disabled persons.
INSURANCE COVERAGE
Following the Merger, the Company began to purchase its insurance through
Laidlaw with coverage subject to a $50,000 deductible for property damage claims
and no deductible for all other claims. As a result, the Company requires no
insurance reserve associated with claims arising after March 16, 1999.
Additionally, on December 31, 1999, the Company transferred liability for all
known, and unknown claims, and all related insurance reserves, associated with
the period prior to March 16, 1999 to Laidlaw for which Laidlaw received
compensation in an amount equal to the book value of the reserves.
The predecessor agency to the STB granted the Company authority to
self-insure its automobile liability exposure for interstate passenger service
up to a maximum level of $5.0 million per occurrence, which has been continued
by the DOT. To maintain self-insurance authority, the Company is required to
maintain a satisfactory safety rating by the DOT, a tangible net worth of $10.0
million (as of December 31, 2000, the Company's tangible net worth was $163.6
million) and a $15.0 million trust fund (currently fully funded) to provide
security for payment of claims Although the Company purchases its insurance
through Laidlaw, the Company has none the less continued to maintain its
self-insurance authority.
The DOT, which oversees the Company's authority to self-insure a portion of
its automobile liability insurance, is monitoring Laidlaw and the Company's
financial situation and its capability to fund self-insured claims. Loss of
self-insurance authority or modification of its terms may adversely affect the
Company's results of operations, liquidity, or financial condition. In February
2001, the DOT advised the Company that they were satisfied with the Company's
financial condition and claims handling procedures and that the Company's
self-insurance authorization could continue in effect, without modification.
ENVIRONMENTAL MATTERS
The Company may be liable for certain environmental liabilities and
clean-up costs at the various facilities presently or formerly owned or leased
by the Company. Based upon surveys conducted solely by Company personnel or its
experts, 46 active and 11 inactive locations have been identified as sites
requiring potential clean-up and/or remediation as of December 31, 2000.
Additionally, the Company has, or has assumed, potential liability with respect
to two active and eight inactive locations which the Environmental Protection
Agency ("EPA") has designated as Superfund sites. The Company, as well as other
parties designated by the EPA as potentially responsible parties, face exposure
for costs related to the clean-up of those sites. Based on the EPA's enforcement
activities to date, the Company believes its liability at these sites will not
be material because its involvement was as a de minimis generator of wastes
disposed of at the sites. In light of its minimal involvement, the Company has
been negotiating to be released from liability in return for the payment of
nominal settlement amounts.
The Company has recorded a total environmental reserve of $8.3 million at
December 31, 2000 of which approximately $1.5 million is indemnifiable by the
predecessor owner of the Company's domestic bus operations,
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now known as Viad Corp. The environmental reserve relates to sites identified
for potential clean-up and/or remediation and represents the present value of
estimated cash flows discounted at 8.0%. The Company expects the majority of
this environmental liability to be paid over the next five to ten years. As of
the date of this report, the Company is not aware of any additional sites to be
identified, and management believes that adequate accruals have been made
related to all known environmental matters.
ITEM 2. PROPERTIES
LAND AND BUILDINGS
At December 31, 2000, the Company used 584 parcels of real property in its
operations, of which it owned 161 properties and leased 423 properties. Of those
properties, 407 are bus terminals, 33 are maintenance facilities, 33 are
terminal/maintenance facilities, and the remaining properties consist of driver
dormitories, parking/storage lots, office/storage/warehouse buildings and
telephone information centers. These properties are located throughout the
United States, with one in Canada. The Company believes the current makeup of
its properties is adequate for its operations, and although there can be no
assurance, based on its recent experience, the Company believes that it will be
able to find suitable replacement properties on acceptable terms for any
properties the Company chooses to replace, or which are condemned, or for which
leases are not renewed or are otherwise terminated.
FLEET COMPOSITION AND BUS ACQUISITIONS
During 2000, the Company took delivery of 289 new buses, and retired 250
buses, resulting in a fleet of 2,867 buses at December 31, 2000 of which the
Company owned 1,236 buses and leased an additional 1,631 buses. Motor Coach
Industries, Inc. ("MCI") or its affiliate, Dina Autobuses, S.A. de C.V.
("DASA"), hereafter referred to collectively as "MCI", produced all but 91 of
these buses. The Company is party to a long-term supply agreement with MCI. The
agreement extends through 2007, but may be canceled at the end of any year upon
six months notice. If the Company decides to acquire new buses, the Company and
its affiliates must purchase at least 80% of its new bus requirements from MCI
pursuant to the agreement.
ITEM 3. LEGAL PROCEEDINGS
LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits arising in the ordinary
course of business, primarily cases involving personal injury and property
damage claims and employment-related claims. Although these lawsuits involve a
variety of different facts and theories of recovery, the majority arise from
traffic accidents involving buses operated by the Company. The vast majority of
these claims are covered by insurance for amounts in excess of the deductible
portion of the policies. Management believes that there is no proceeding either
threatened or pending against the Company that, if resolved against the Company,
would materially exceed the amounts recorded as estimated liabilities by the
Company.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET INFORMATION
Prior to completing the Merger on March 16, 1999 (see Item 1, Business-in
this report), the Company's Common Stock, par value $.01 per share (the "Common
Stock"), was listed on the American Stock Exchange under the symbol "BUS." The
following table sets forth the high and low sale prices for the Company's Common
Stock during the periods indicated as reported by the American Stock Exchange:
HIGH LOW
---- ---
January 1, 1999 - March 16, 1999.............................. $ 6 1/2 $ 5 3/4
HOLDERS
The number of shares of Common Stock outstanding as of March 15, 2000, was
58,743,069. Laidlaw is the sole record holder of the Company's Common Stock.
DIVIDENDS
The Company had not paid any dividends on its Common Stock during the last
three years.
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ITEM 7. 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 85.0%, 4.2% and 4.2%,
respectively, of the Company's total operating revenues for 2000. The Company's
operations include a nationwide network of terminal and maintenance facilities,
a fleet of approximately 2,900 buses and approximately 1,800 sales outlets.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of total operating revenue for 2000, 1999 and 1998:
YEARS ENDED DECEMBER 31,
---------------------------
2000 1999 1998
------ ------ ------
Operating Revenues
Transportation Services
Passenger services ..................... 85.0% 84.6% 85.8%
Package express ........................ 4.2 4.5 4.3
Food services ............................. 4.2 4.2 3.6
Other operating revenues .................. 6.6 6.7 6.3
------ ------ ------
Total Operating Revenues ........... 100.0 100.0 100.0
------ ------ ------
Operating Expenses
Maintenance ............................... 9.3 9.8 9.8
Transportation ............................ 25.0 23.8 23.7
Agents' commissions and station costs ..... 18.3 19.0 18.6
Marketing, advertising and traffic ........ 3.1 3.4 3.2
Insurance and safety ...................... 5.2 5.5 5.9
General and administrative ................ 12.4 12.9 11.8
Depreciation and amortization ............. 4.5 4.8 4.3
Operating taxes and licenses .............. 6.0 6.5 6.7
Operating rents ........................... 8.4 8.4 7.8
Cost of goods sold - Food services ........ 2.9 2.8 2.4
Other operating expenses .................. 0.6 0.3 0.3
------ ------ ------
Total Operating Expenses ........... 95.7 97.2 94.5
------ ------ ------
Operating Income ............................ 4.3 2.8 5.5
Settlement of Stock Options ................. 0.0 2.3 0.0
Interest Expense ............................ 2.3 2.4 3.3
Income Tax Provision (Benefit) .............. 0.8 (0.5) (2.0)
Minority Interest ........................... 0.0 0.2 0.0
Extraordinary Item .......................... 0.0 0.2 0.0
------ ------ ------
Net Income (Loss) ........................... 1.2% (1.8)% 4.2%
====== ====== ======
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The following table sets forth certain operating data for the Company for
2000, 1999 and 1998. Certain statistics have been adjusted and restated from
those previously published to provide consistent comparisons.
YEARS ENDED DECEMBER 31,
-----------------------------------------
2000 1999 1998
----------- ----------- -----------
Regular Service Miles (000's) ................................... 348,789 339,752 316,045
Total Bus Miles (000's) ......................................... 356,831 347,392 323,393
Passenger Miles (000's) ......................................... 9,190,943 8,739,219 7,820,225
Passengers Carried (000's) ...................................... 25,386 24,698 22,552
Average Trip Length (passenger miles divided by passengers
carried) ...................................................... 362 354 347
Load (avg. number of passengers per regular service mile) ....... 26.4 25.7 24.7
Load Factor (% of available seats filled) ....................... 53.3% 52.9% 52.3%
Yield (regular route revenue divided by passenger miles) ........ $ 0.0938 $ 0.0896 $ 0.0931
Average Ticket Price ............................................ $ 33.95 $ 31.72 $ 32.27
Total Revenue Per Total Bus Mile ................................ $ 2.84 $ 2.66 $ 2.62
Operating Income Per Total Bus Mile ............................. $ 0.12 $ 0.07 $ 0.14
Cost per Total Bus Mile:
Maintenance ................................................... $ 0.265 $ 0.262 $ 0.258
Transportation ................................................ $ 0.712 $ 0.635 $ 0.622
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
The Company's results of operations include the operating results of On
Time Delivery, the addition of nine in-terminal restaurants that were previously
concessionaire-operated Burger King locations, and LSX Delivery (collectively
the "acquisitions"). The purchase of On Time Delivery occurred during the first
quarter of 1999 and the acquisitions involving the restaurants and 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 $88.3 million (or
9.5%) for the year ended December 31, 2000 compared to the same period in 1999.
Acquisitions accounted for $2.5 million of this growth, resulting in internal
growth of $85.8 million or 9.3%.
Passenger services revenues increased $78.5 million (or 10.0%) in 2000
compared to 1999. The increase in regular route revenues reflects the
consolidated impact of a 4.7% increase in yield, a 2.8% increase in the number
of passengers carried and a 2.3% increase in average trip length. These
improvements were principally due to the following:
1) Since the marginal cost of intercity travel by automobile is
principally fuel, the fuel price increases which occurred during 2000
produced dramatic increases in automobile travel costs, thus allowing
the Company to increase yield and still remain price competitive.
2) As a result of fuel price increases, many airlines have increased
ticket prices by instituting fuel price surcharges. These surcharges
have allowed the Company to increase yield. And, because bus travel is
more fuel efficient than air travel, the ticket price differential
between long-haul bus travel and air travel has increased, thus
improving long-haul bus travel economics which has resulted in an
increased average trip length.
3) During the first half of 2000, the Company modified its promotional
pricing program, so that longer trip length ticket prices were
generally increased compared to the old program and shorter,
intermediate, trip length ticket prices were generally decreased. The
overall effect of this change was to increase yield and decrease
average trip length. The decrease in average trip length due to
promotional ticket sales was more than offset by increases in walk-up
sales due to the factors discussed above.
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Package Express revenue increased $0.9 million (or 2.2%) in 2000
compared to 1999 (including $1.6 million related to the On Time Delivery and LSX
Delivery acquisitions). Excluding the acquisitions, the Company experienced a
$0.7 million decrease in revenue 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. The declines in the standard
product are a result of continued competition, as well as expanded and improved
product offerings (such as United Parcel Service's guaranteed service "brown
label" product), from larger package delivery companies. In response, the
Company continues to increase its focus on the same day delivery market niche
through the selling of priority service and Daily Direct, a guaranteed same day
or early next morning service.
Food services revenues increased $3.9 million (or 10.0%) for the year ended
December 31, 2000, compared to the same period in 1999. The restaurant
acquisitions contributed $0.9 million of this increase while the remaining $3.0
million was due primarily to the increase in passenger traffic discussed above.
Other operating revenues, consisting primarily of revenue from charter and
other in-terminal sales and services, increased $5.0 million (or 8.0%) for the
year ended December 31, 2000 compared to the same period in 1999. The increase
was primarily due to increases in tenant income received by the Company for
sharing its terminal space with other bus companies and increased long distance
commissions.
Operating Expenses. Total operating expenses increased $70.1 million (or
7.8%) for the year ended December 31, 2000, compared to the same period in 1999.
The increase is due primarily to increased bus miles (2.7%), increased fuel
cost, higher driver wages and hiring costs, increased terminal salaries,
increased ticket and express commissions due to higher sales, an increase in
buses operated under operating leases, and $2.4 million related to the
operations of the acquisitions.
Maintenance costs increased $3.7 million (or 4.0%) for the year ended
December 31, 2000, compared to the same period in 1999, primarily due to
increased bus miles. On a per-mile basis, maintenance cost increased by 1.1%.
Transportation expenses, which consist primarily of fuel costs and driver
salaries, increased $33.5 million (or 15.2%) for the year ended December 31,
2000, compared to the same period in 1999, due primarily to increased bus miles,
higher fuel costs, and increased driver wages and hiring costs. During 2000 the
average cost per gallon of fuel increased to $0.94 per gallon, compared to $0.61
per gallon in 1999, resulting in increased fuel cost of $19.2 million. Excluding
the effects of fuel price increases, transportation expenses increased on a
per-mile basis by 3.6% compared to the prior year.
Agents' commissions and station costs increased $10.2 million (or 5.8%) for
the year ended December 31, 2000, compared to the same period in 1999, primarily
due to commissions from increased ticket sales, terminal salaries associated
with staffing for the increase in passengers, and salary raises for terminal
employees. As a percentage of revenue, agents commissions and station costs
decreased to 18.3%, compared to 19.0% in the prior year, principally due to a
significant portion of the current year's revenue growth coming from ticket
price increases.
Marketing, advertising and traffic expenses increased $0.2 million (or
0.7%) for the year ended December 31, 2000, compared to the same period in 1999,
decreasing slightly as a percentage of total operating revenues.
Insurance and safety costs increased $1.7 million (or 3.3%) for the year
ended December 31, 2000, compared to the same period in 1999, due primarily to
increased bus miles. Insurance and safety costs decreased slightly as a
percentage of revenue and are virtually flat on a per mile basis.
General and administrative expenses increased $5.8 million (or 4.9%) for
the year ended December 31, 2000, compared to the same period in 1999,
decreasing slightly as a percentage of revenue. The increase in expenses is due
to higher health and welfare costs ($5.6 million) as a result of more
participants and a higher cost per participant, higher incentive plan costs
($4.1 million) due to the Company's improved financial performance over 1999 and
management fee charges from the Company's parent, Laidlaw ($2.3 million). These
increases were offset somewhat by computer remediation costs ($4.9 million) and
merger-related costs ($2.9 million) incurred in 1999 and not repeated in 2000.
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Depreciation and amortization expense increased $0.7 million (or 1.5%) for
the year ended December 31, 2000, compared to the same period in 1999, primarily
due to increased capital expenditures in the current and prior period, offset
somewhat by lower software amortization costs.
Operating taxes and license costs increased $1.4 million (or 2.3%) for the
year ended December 31, 2000, compared to the same period in 1999, primarily due
to increased payroll taxes resulting from increased salaries and head-counts
related to higher business volume (including increased miles operated) and
increased fuel taxes due to increased miles.
Operating rents increased $6.7 million (or 8.6%) for the year ended
December 31, 2000, compared to the same period in 1999, primarily due to an
increase in facilities rents and the number of buses leased under operating
leases.
Food services and related cost of goods sold increased $2.8 million (or
10.6%) for the year ended December 31, 2000, compared to the same period in
1999, primarily due to the increase in food services revenue.
Other operating expenses increased $3.4 million for the year ended December
31, 2000, compared to the same period in 1999, due to the write-down of an
investment and losses on disposals of property, plant and equipment.
As a result of the Merger, the Company incurred $21.3 million in charges
during 1999 related to the settlement of the Company's outstanding stock
options.
Interest expense increased $1.5 million (or 7.0%) for the year ended
December 31, 2000, compared to the same period in 1999. The increase in interest
expense is primarily attributable to interest on installment conversion payments
to certain preferred stockholders and an increase in the average debt
outstanding.
For the year ended December 31, 2000, the Company recorded tax expense at
an effective rate of 38.0%, compared to tax benefits recorded at a 26.0% rate
for the prior period. The lower rate of benefit recorded in the prior year is
principally the result of non-deductible goodwill amortization.
In 1999, the Company recorded an extraordinary loss of $1.9 million, net of
tax benefit of $1.0 million, related to the termination of the Company's
previous revolving credit facility. The amount represents the write-off of
previously incurred debt issuance costs that were being amortized over the life
of the revolving credit facility.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements are to provide working
capital, to finance capital expenditures, including bus acquisitions and to meet
debt service requirements, including the payment of interest on the 11 1/2%
Senior Notes. Previously, the Company's principal sources of liquidity were
expected to be cash flow from operations and funding provided by Laidlaw. In
August 2000, Laidlaw requested and authorized the Company to seek funding from
outside sources to satisfy the Company's seasonal cash requirements and capital
expenditure programs. In September 2000, Laidlaw obtained the requisite consents
from its lenders and bondholders allowing the Company to enter into a revolving
credit facility. On October 24, 2000, the Company entered into a two-year, $125
million revolving credit facility ("Revolving Credit Facility") with Foothill
Capital Corporation. The Company believes that its cash flow from operations,
together with borrowings under the Revolving Credit Facility, will fund its
working capital and near-term capital expenditure needs. With the closure of
this agreement Greyhound became independent of Laidlaw for financing purposes.
Net cash provided by operating activities was $32.5 million, $74.9 million
and $46.1 million for the years ended December 31, 2000, 1999 and 1998,
respectively. The decrease in cash provided by operating activities in 2000 is
principally due to the $18.9 million cash reduction of intercompany amounts due
to Laidlaw. Net cash used for investing activities was $41.2 million, $81.2
million and $47.4 million for 2000, 1999 and 1998, respectively, principally due
to capital expenditures, consisting primarily of acquisitions of buses and real
estate and facility
14
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improvements, totaling $63.7 million, $78.9 million and $33.7 million for 2000,
1999 and 1998, respectively. Net cash provided by financing activities was $10.6
million, $9.8 million and $4.0 million for 2000, 1999 and 1998, respectively.
The increase in cash provided by financing activities in 2000 is principally due
to borrowings under the Revolving Credit Facility offset by conversion payments
on Preferred Stock.
The Company requires significant cash flows to meet its debt service and
other continuing obligations. As of December 31, 2000, the Company had $273.0
million of long-term indebtedness outstanding (including current portions),
including $62.1 million of borrowing under the Revolving Credit Facility and
$150.0 million of 11 1/2% Senior Notes. As of December 31, 2000, the Company had
total availability of $62.9 million under the Revolving Credit Facility.
The Revolving Credit Facility provides for advances up to a maximum of $125
million based upon 85% of the appraised wholesale value of certain bus
collateral and 50% of the fair market value of certain real property collateral.
The Revolving Credit Facility has two interest rate options, prime and LIBOR. As
of December 31, 2000, the Company had borrowings under the Revolving Credit
Facility bearing interest at prime rate plus 0.50% (10.00%) and LIBOR plus 2.00%
(weighted average of 8.68%). The weighted-average interest rate for all
Revolving Credit Facility borrowings was 8.72% at December 31, 2000. After
December 31, 2000, the interest rates will be subject to quarterly adjustment
based upon the Company's ratio of debt to EBITDA for the four previous quarters.
Letter of credit fees will be based on the then applicable LIBOR margin.
The Revolving Credit Facility is secured by liens on substantially all of
the assets of the Company and the stock and assets of certain of its
subsidiaries. The Revolving Credit Facility is subject to certain affirmative
and negative operating and financial covenants, including maximum total debt to
EBITDA ratio; minimum EBITDA to interest ratio; minimum shareholder's equity;
limitation on non-bus capital expenditures; limitations on additional liens,
indebtedness, guarantees, asset disposals, advances, investments and loans; and
restrictions on the redemption or retirement of certain subordinated
indebtedness or equity interests, payment of dividends and transactions with
affiliates, including Laidlaw.
Concurrent with the closing of the Revolving Credit Facility, the Company
paid $43 million of intercompany amounts due to Laidlaw, with all remaining
intercompany amounts then due converting to an intercompany loan subordinate to
the Revolving Credit Facility. The intercompany loan matures 91 days after the
maturity of the Revolving Credit Facility. Interest on the loan accrues at the
Applicable Federal Rate and is payable at maturity. The balance of the
intercompany loan as of December 31, 2000 was $33.6 million.
LAIDLAW FINANCIAL SITUATION
In its audited financial statements for the year ended August 31, 2000 (the
"Laidlaw Annual Report"), Laidlaw reported that it had declared an interest
payment moratorium on all advances under its syndicated banking facility (the
"Laidlaw Facility") and on certain of its debentures totaling $2.044 billion
(the "Laidlaw Debentures"). As a consequence of the Laidlaw Facility covenant
violations and interest payment moratorium, the Laidlaw Facility and the Laidlaw
Debentures have become due on demand. In the Laidlaw Annual Report, Laidlaw
further reported that should repayment be demanded for the Laidlaw Facility
and/or the Laidlaw Debentures, Laidlaw may not be able to satisfy these
obligations, nor other obligations which become due in the normal course of
operations.
The Laidlaw Facility and Laidlaw Debentures are not collateralized by any
assets or stock of the Company, nor has the Company guaranteed such
indebtedness. As such, management believes that the creditors of these
obligations do not have any legal recourse to require a partial liquidation of
assets of the Company or to force the Company into bankruptcy. In addition, the
defaults under the Laidlaw Facility and Laidlaw Debentures do not cause a cross
default with any of the Company's debt which would place the Company's debt in
default with its financial institutions and, as of the date of this report, the
Company is in compliance with all covenants in its various debt agreements.
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Laidlaw is endeavoring to renegotiate and restructure the Laidlaw Facility
and Laidlaw Debentures. Although the outcome of the foregoing matters is
uncertain, management believes that the likely outcome will have no material
impact on the Company's financial position, cash flows or results of operations.
POTENTIAL PENSION PLAN FUNDING REQUIREMENTS
The Company maintains nine defined benefit pension plans, the most
significant of which (the ATU Plan) covers approximately 14,900 current and
former employees, fewer than 1,300 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and over 85% of its
participants are over the age of 50. For financial reporting and investment
planning purposes, the Company currently uses an actuarial mortality table that
closely matches the actual experience related to the existing participant
population. Based upon the application of this table and other actuarial and
investments assumptions, the Company believes that the ATU Plan is adequately
funded.
For funding purposes, legislation passed by the United States Congress in
1994, and amended in 1997, mandates the use of a prescribed actuarial mortality
table and discount rates that differ from those used by the Company for
financial reporting and investment planning purposes. Nevertheless, based upon
the application of the actuarial mortality table, discount rates and funding
calculations prescribed by current regulations, and further assuming the Company
can obtain investment returns consistent with long-term trends and assumptions,
the Company does not anticipate that it will be required to make significant
contributions to the ATU Plan during the next several years. However, there is
no assurance that the ATU Plan will be able to earn the assumed rate of return
or that contributions to the ATU Plan will not be significant. Additionally,
there can be no assurance that new regulations may result in changes in the
prescribed actuarial mortality table and discount rates, or that there will be
market driven changes in the discount rates, which would result in the Company
being required to make substantial contributions in the future.
NEW YORK PORT AUTHORITY
The Company operates out of its largest sales location, the Port Authority
Bus Terminal of New York (the "Port Authority"), on a month-to-month basis
pursuant to a license agreement which expired in 1994. The Company's fee is
based upon a fixed charge for dedicated space, a fixed charge for each departing
bus and a percentage of certain ticket sales. Because the majority of the other
bus operators utilizing the Port Authority are principally commuter or local
transit operators which are exempt from paying license fees on their sales, the
Company pays a disproportionate share of the total fees received from bus
operators that use the Port Authority relative to the Company's share of bus
departures, passengers, bus gates or square footage utilized. The Company has
been negotiating with the Port Authority for several years to structure a
market-based fee for the renewal of the license agreement and, beginning in June
1999, without Port Authority concurrence, began paying a lower fixed fee in lieu
of a percentage of sales. The lower fee payment was based on the Company's
research of the local real estate market in Midtown Manhattan and transportation
facilities nationwide, both of which demonstrate that this fee reflects fair
market value. Nevertheless, because the Company does not have a revised
agreement in place, the Company has continued to accrue for the license fee
based upon the 1994 agreement and, as of February 28, 2001, has an accrued rents
payable to the Port Authority of $15.9 million. At this time it is not known
whether or not the Company will be able to successfully negotiate a renewal of
the license agreement on terms more favorable than the currently expired
agreement or, if successful, whether or not the terms of the new agreement will
be applied retroactively.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about the Company's market risk includes
"forward-looking statements" that involve risk and uncertainties. Actual results
could differ materially from these projections. The Company is currently exposed
to market risk from changes in commodity prices for fuel, investment prices and
interest rates. The Company does not use derivative instruments to mitigate
market risk, nor does the Company use market risk sensitive instruments for
speculative or trading purposes. The Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", effective January 1, 2001. The adoption did not have a material
impact on the Company's consolidated financial position or results of
operations.
COMMODITY PRICES. The Company currently has exposure to commodity risk from its
fuel inventory and its advance purchase commitments for fuel. The Company has
fuel inventory at December 31, 2000, at a carrying value of $0.9 million. The
Company's fuel inventory is used in operations before a change in the market
price of fuel could have a material effect on the Company's results of
operation. Additionally, the Company has entered into an advance purchase
commitment for fuel whereby the Company has agreed to take delivery of a total
of 84,000 gallons during January and February 2001 for a fixed price of $56,469.
A 10% increase or decrease in the cost of fuel would not have a material effect
on this commitment or the Company's results of operations. For the year ended
December 31, 2000, the Company recorded $55.2 million in fuel expense (exclusive
of fuel taxes). While a 10% increase or decrease in the cost of fuel would have
a material effect on the Company's operating expenses, generally periods of
rising fuel costs have allowed the Company to increase average ticket prices and
periods of declining fuel costs have required the Company to lower ticket costs,
thus providing some hedge against fuel price fluctuations.
INVESTMENT PRICES. The company currently has exposure in the market price of
investments in its available for sale securities. At December 31, 2000, the
Company has approximately $6.1 million of investments classified as available
for sale and a 10% decrease in the market price would not have a material effect
on the Company's financial position. As required by GAAP, the Company has
reported these investments at fair value, with any unrecognized gains or losses
excluded from earnings and reported in a separate component of stockholders'
equity.
INTEREST RATE SENSITIVITY. The company currently has exposure to interest rates
from its long-term debt as it relates to the Company's Revolving Credit Facility
and the Laidlaw subordinated debt. The Revolving Credit Facility utilizes a
variable rate based on prime and LIBOR. As of December 31, 2000, The Revolving
Credit Facility utilized prime plus 0.50% and LIBOR plus 2.00% with an
outstanding balance of $62.1 million. The weighted-average interest rate for all
Revolving Credit Facility borrowings was 8.7% at December 31, 2000.
The Laidlaw subordinated debt matures 91 days after the maturity of the
Revolving Credit Facility. Interest on the debt accrues at the Applicable
Federal Rate (5.9% at December 31, 2000) and is payable at maturity. The
outstanding balance as of December 31, 2000 was $33.6 million.
A 10% increase or decrease in variable interest rates would not have a material
effect on the Company's results of operations or cash flows.
The table below presents principal cash flows and related weighted average
interest rates by contractual maturity dates for fixed rate debt as of December
31, 2000:
Long Term Debt:
2001 2002 2003 2004 2005 THEREAFTER TOTAL FAIR VALUE
---- ---- ---- ---- ---- ---------- ------- ----------
Fixed Rate Debt (in thousands) $4,919 $4,712 $7,313 $ 688 $ 696 $158,548 $176,876 $136,964
Average Interest Rate 9.04% 10.15% 10.02% 9.77% 10.14% 11.35% 11.19% --
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE NO.
--------
Management Report on Responsibility for Financial Reporting ....................................... 19
Reports of Independent Public Accountants.......................................................... 20
Consolidated Statements of Financial Position as of December 31, 2000 and 1999..................... 22
Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999, and 1998........ 23
Consolidated Statements of Stockholder's Equity for the Years Ended December 31, 2000, 1999,
and 1998...................................................................................... 24
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999, and 1998........ 25
Notes to Consolidated Financial Statements......................................................... 26
Schedule II - Valuation and Qualifying Accounts - For the Years Ended December 31, 2000, 1999,
and 1998...................................................................................... 42
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MANAGEMENT REPORT ON RESPONSIBILITY
FOR FINANCIAL REPORTING
The management of Greyhound Lines, Inc. and its subsidiaries (the
"Company") has the responsibility for preparing the accompanying consolidated
financial statements and for their integrity and objectivity. The statements
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis and are not misstated due to fraud or material
error. The financial statements include amounts that are based on management's
best estimates and judgments. Management also prepared the other information in
the annual report on Form 10-K and is responsible for its accuracy and
consistency with the financial statements.
The Company's consolidated financial statements have been audited by
PricewaterhouseCoopers LLP as of and for the years ended December 31, 2000 and
December 31, 1999, and by Arthur Andersen LLP for the year ended December 31,
1998 (the "Independent Public Accountants"). Management has made available to
the Independent Public Accountants all the Company's financial records and
related data, as well as the minutes of the stockholders' and directors'
meetings. Furthermore, management believes that all representations made to the
Independent Public Accountants during their audits were valid and appropriate.
Management of the Company has established and maintains a system of
internal control that provides reasonable assurance as to the integrity and
reliability of the financial statements, the protection of assets from
unauthorized use or disposition, and the prevention and detection of fraudulent
financial reporting. The system of internal control provides for appropriate
division of responsibility and is documented by written policies and procedures
that are communicated to employees with significant roles in the financial
reporting process and updated as necessary. Management continually monitors the
internal control system for compliance. The Company maintains an internal
auditing program that independently assesses the effectiveness of the internal
controls and recommends possible improvements thereto. In addition, as part of
their audits of the Company's consolidated financial statements, the Independent
Public Accountants considered the Company's system of internal control to the
extent they deemed necessary to determine the nature, timing and extent of audit
tests to be applied. Management has considered the internal auditors' and
Independent Public Accountants' recommendations concerning the Company's system
of internal control and has taken actions that the Company believes respond
appropriately to these recommendations. Management believes that the Company's
system of internal control is adequate to accomplish the objectives discussed
herein.
Management also recognizes its responsibility for fostering a strong
ethical climate so that the Company's affairs are conducted according to the
highest standards of personal and corporate conduct. This responsibility is
characterized and reflected in the Company's code of corporate conduct, which is
publicized throughout the Company. The code of conduct addresses, among other
things, the necessity of ensuring open communication within the Company;
potential conflicts of interests; compliance with all domestic and foreign laws,
including those relating to financial disclosure; and the confidentiality of
proprietary information. The Company maintains a systematic program to assess
compliance with these policies.
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Cheryl W. Farmer
Vice President and Controller
(Principal Accounting Officer)
Dallas, Texas
March 28, 2001
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REPORT OF INDEPENDENT ACCOUNTANTS
To Greyhound Lines, Inc:
In our opinion, the consolidated financial statements listed in the
accompanying index, present fairly, in all material respects, the financial
position of Greyhound Lines, Inc. and its subsidiaries at December 31, 2000 and
1999, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein for the years ended December 31,
2000 and 1999 when read in conjunction with the related consolidated financial
statements. These financial statements and the financial statement schedule are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Dallas, Texas
March 28, 2001
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Greyhound Lines, Inc.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of Greyhound Lines, Inc. (a Delaware
corporation) and subsidiaries for the year ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations, the changes in
stockholders' equity and cash flows of Greyhound Lines, Inc. and subsidiaries
for the year ended December 31, 1998, in conformity with accounting principles
generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index at Item
8 (Schedule II) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
financial data for the year December 31, 1998, included in this schedule, has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Dallas, Texas
February 15, 1999 (except with respect to the
merger of Greyhound Lines, Inc. and subsidiaries
with Laidlaw, Inc. as discussed in Note 1, as to
which the date is March 16, 1999)
21
22
GREYHOUND LINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DECEMBER 31,
----------------------
2000 1999
--------- ---------
Current Assets
Cash and cash equivalents ........................................................ $ 10,206 $ 8,295
Accounts receivable, less allowance for doubtful accounts of $398 and $402 ....... 57,923 46,830
Inventories, less allowance for shrinkage of $29 and $226 ........................ 7,788 7,494
Prepaid expenses ................................................................. 4,847 5,694
Assets held for sale ............................................................. 4,198 4,545
Current portion of deferred tax assets ........................................... 10,688 12,864
Other current assets ............................................................. 1,225 1,851
--------- ---------
Total Current Assets ....................................................... 96,875 87,573
Prepaid pension plans ............................................................... 32,483 29,983
Property, plant and equipment, net of accumulated depreciation of $ 193,724
and $173,273 .................................................................... 409,070 397,077
Investments in unconsolidated affiliates ............................................ 15,989 16,028
Deferred income taxes ............................................................... 27,452 27,970
Insurance and security deposits ..................................................... 24,692 22,220
Goodwill, net of accumulated amortization of $5,367 and $3,523 ...................... 43,540 45,384
Intangible assets, net of accumulated amortization of $37,571 and $31,825 ........... 28,011 25,821
--------- ---------
Total Assets ............................................................... $ 678,112 $ 652,056
========= =========
Current Liabilities
Accounts payable ................................................................ $ 24,714 $ 23,824
Due to Laidlaw .................................................................. -- 52,499
Accrued liabilities ............................................................. 66,807 62,337
Rents payable ................................................................... 27,211 17,496
Unredeemed tickets .............................................................. 11,750 11,956
Current portion of environmental reserves ....................................... 2,596 1,473
Current maturities of long-term debt ............................................ 5,079 5,671
--------- ---------
Total Current Liabilities .................................................. 138,157 175,256
Environmental reserves .............................................................. 5,698 5,840
Long-term debt, net ................................................................. 267,887 174,581
Minority interests .................................................................. 4,594 4,233
Other liabilities ................................................................... 23,951 22,286
--------- ---------
Total Liabilities .......................................................... 440,287 382,196
Redeemable preferred stock (2,400,000 shares authorized; 106,050 and
1,678,150 shares shares issued as of December 31, 2000 and 1999,
respectively) .............................................................. 2,651 41,954
Commitments and Contingencies (Notes 1, 14 and 15)
Stockholder's Equity
Common stock (100,000,000 shares authorized; par value $.01;
58,743,069 shares issued as of December 31, 2000 and 1999) ................. 587 587
Capital in excess of par value ................................................. 320,650 322,026
Retained deficit ............................................................... (80,945) (92,182)
Accumulated other comprehensive loss, net of tax benefit of $2,756
and $1,360 ........................................................... (5,118) (2,525)
--------- ---------
Total Stockholder's Equity ................................................. 235,174 227,906
--------- ---------
Total Liabilities and Stockholder's Equity ................................. $ 678,112 $ 652,056
========= =========
The accompanying notes are an integral part of these statements.
22
23
GREYHOUND LINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-----------------------------------------
2000 1999 1998
----------- ----------- -----------
Operating Revenues
Transportation services
Passenger services .................................. $ 861,790 $ 783,299 $ 727,786
Package express ..................................... 42,441 41,510 36,239
Food services ......................................... 43,042 39,124 31,127
Other operating revenues .............................. 67,044 62,057 53,293
----------- ----------- -----------
Total Operating Revenues ........................ 1,014,317 925,990 848,445
----------- ----------- -----------
Operating Expenses
Maintenance ........................................... 94,659 90,999 83,444
Transportation ........................................ 254,003 220,477 201,190
Agents' commissions and station costs ................. 185,772 175,550 158,248
Marketing, advertising and traffic .................... 31,535 31,325 27,349
Insurance and safety .................................. 52,867 51,178 49,748
General and administrative ............................ 125,234 119,396 99,836
Depreciation and amortization ......................... 45,067 44,396 36,332
Operating taxes and licenses .......................... 61,209 59,818 56,703
Operating rents ....................................... 84,912 78,222 65,756
Cost of goods sold - food services .................... 28,812 26,045 20,656
Other operating expenses .............................. 6,447 3,054 2,352
----------- ----------- -----------
Total Operating Expenses ........................ 970,517 900,460 801,614
----------- ----------- -----------
Operating Income ......................................... 43,800 25,530 46,831
Settlement of Stock Options .............................. -- 21,294 --
Interest Expense ......................................... 23,542 21,993 27,899
----------- ----------- -----------
Net Income (Loss) Before Income Taxes .................... 20,258 (17,757) 18,932
Income Tax Provision (Benefit) ........................... 7,702 (4,612) (16,856)
Minority Interests ....................................... (14) 1,278 556
----------- ----------- -----------
Net Income (Loss) Before Extraordinary Item .............. 12,570 (14,423) 35,232
Extraordinary Item (net of a tax benefit of $1,021) ...... -- 1,897 --
----------- ----------- -----------
Net Income (Loss) ........................................ $ 12,570 $ (16,320) $ 35,232
=========== =========== ===========
The accompanying notes are an integral part of these statements.
23
24
GREYHOUND LINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(in thousands)
PREFERRED STOCK COMMON STOCK TREASURY STOCK
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- --------- --------- ---------
BALANCE, JANUARY 1, 1998 ............................. 2,400 $ 60,000 59,438 $ 594 109 $ (1,038)
Issuance of stock in connection with employee
benefit plans including tax benefit of $844 ......... -- -- 817 9 -- --
Dividends on preferred stock ......................... -- -- -- -- -- --
Benefit of pre-bankruptcy deferred tax assets ........ -- -- -- -- -- --
Comprehensive Income (Loss):
Market value adjustment for securities held ......... -- -- -- -- -- --
Adjustment for unfunded accumulated
pension obligation, net of tax of $857 .............. -- -- -- -- -- --
Deferred tax benefit on prior years
unfunded accumulated pension obligation ............. -- -- -- -- -- --
Net Income .......................................... -- -- -- -- -- --
Total Comprehensive Income ....................
--------- --------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1998 ........................... 2,400 60,000 60,255 603 109 (1,038)
Reclassification of preferred stock due to Merger .... (2,400) (60,000) -- -- -- --
Issuance of stock in connection with
employee benefits plans ............................. -- -- 6 -- -- --
Dividends on preferred stock ......................... -- -- -- -- -- --
Purchase and cancellation of shares .................. -- -- (1,518) (16) (109) 1,038
Redemption of preferred stock ........................ -- -- -- -- -- --
Issuance of stock to Laidlaw ......................... -- -- -- -- -- --
Comprehensive Income (Loss):
Market value adjustment for securities held ......... -- -- -- -- -- --
Adjustment for unfunded accumulated
pension obligation, net of tax of $1,821 ............ -- -- -- -- -- --
Net Loss ............................................ -- -- -- -- -- --
Total Comprehensive (Loss) ....................
--------- --------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1999 ........................... -- -- 58,743 587 -- --
Dividends on preferred stock ......................... -- -- -- -- -- --
Redemption of preferred stock ........................ -- -- -- -- -- --
Purchase and cancellation of shares .................. -- -- -- -- -- --
Issuance of stock to Laidlaw ......................... -- -- -- -- -- --
Comprehensive Income (Loss):
Adjustment for unfunded accumulated
pension obligation, net of tax of $1,396 ............ -- -- -- -- -- --
Net Income .......................................... -- -- -- -- -- --
Total Comprehensive Income ....................
--------- --------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 2000 ........................... -- $ -- 58,743 $ 587 -- $ --
========= ========= ========= ========= ========= =========
ACCUMULATED TOTAL
CAPITAL IN OTHER COMPREHENSIVE
EXCESS OF RETAINED COMPREHENSIVE INCOME
PAR VALUE DEFICIT LOSS (LOSS)
--------- --------- --------- -------------
BALANCE, JANUARY 1, 1998 ............................. $ 229,365 $(101,809) $ (7,513)
Issuance of stock in connection with employee
benefit plans including tax benefit of $844 ......... 3,785 -- --
Dividends on preferred stock ......................... -- (5,184) --
Benefit of pre-bankruptcy deferred tax assets ........ 4,291 -- --
Comprehensive Income (Loss):
Market value adjustment for securities held ......... -- -- (682) $ (682)
Adjustment for unfunded accumulated
pension obligation, net of tax of $857 .............. -- -- (1,361) (1,361)
Deferred tax benefit on prior years
unfunded accumulated pension obligation ............. -- -- 2,324 2,324
Net Income .......................................... -- 35,232 -- 35,232
-------------
Total Comprehensive Income .................... $ 35,513
--------- --------- --------- =============
BALANCE, DECEMBER 31, 1998 ........................... 237,441 (71,761) (7,232)
Reclassification of preferred stock due to Merger .... -- -- --
Issuance of stock in connection with
employee benefits plans ............................. (108) -- --
Dividends on preferred stock ......................... -- (4,101) --
Purchase and cancellation of shares .................. (267,953) -- --
Redemption of preferred stock ........................ (6,012) -- --
Issuance of stock to Laidlaw ......................... 358,658 -- --
Comprehensive Income (Loss):
Market value adjustment for securities held ......... -- -- 682 $ 682
Adjustment for unfunded accumulated
pension obligation, net of tax of $1,821 ............ -- -- 4,025 4,025
Net Loss ............................................ -- (16,320) -- (16,320)
-------------
Total Comprehensive (Loss) .................... $ (11,613)
--------- --------- --------- =============
BALANCE, DECEMBER 31, 1999 ........................... 322,026 (92,182) (2,525)
Dividends on preferred stock ......................... -- (1,333) --
Redemption of preferred stock ........................ (13,096) -- --
Purchase and cancellation of shares .................. (256,884) -- --
Issuance of stock to Laidlaw ......................... 268,604 -- --
Comprehensive Income (Loss):
Adjustment for unfunded accumulated
pension obligation, net of tax of $1,396 ............ -- -- (2,593) $ (2,593)
Net Income .......................................... -- 12,570 -- 12,570
-------------
Total Comprehensive Income .................... $ 9,977
--------- --------- --------- =============
BALANCE, DECEMBER 31, 2000 ........................... $ 320,650 $ (80,945) $ (5,118)
========= ========= =========
The accompanying notes are an integral part of these statements.
24
25
GREYHOUND LINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
Cash Flows From Operating Activities
Net Income (Loss) ............................................... $ 12,570 $ (16,320) $ 35,232
Extraordinary item .............................................. -- 1,897 --
Non-cash expenses and gains included in net income (loss)
Depreciation and amortization ................................. 45,067 44,396 36,332
Other non-cash expenses and gains, net ........................ 3,385 (10,922) (19,134)
Net Change in Certain Operating Assets and Liabilities
Accounts receivable ........................................... (11,093) (4,855) (4,121)
Inventories ................................................... (294) (1,789) (1,032)
Prepaid expenses .............................................. 847 (482) 273
Other current assets .......................................... 626 8,052 1,608
Insurance and security deposits ............................... (2,472) 45,828 3,042
Intangible assets ............................................. (5,312) (4,583) (5,911)
Accounts payable .............................................. 899 (3,964) (5,469)
Due to Laidlaw ................................................ (18,904) 28,505 --
Accrued liabilities and rents payable ......................... 14,683 17,451 (545)
Environmental and insurance reserves .......................... 981 (28,350) 1,985
Unredeemed tickets ............................................ (206) (186) 1,817
Other liabilities ............................................. (8,304) 269 2,012
--------- --------- ---------
Net Cash Provided by Operating Activities .................. 32,473 74,947 46,089
--------- --------- ---------
Cash Flows From Investing Activities
Capital expenditures .......................................... (63,735) (78,915) (33,706)
Proceeds from assets sold ..................................... 23,059 6,052 3,935
Payments for business acquisitions, net of cash acquired ...... -- (7,491) (10,924)
Other investing activities .................................... (521) (796) (6,753)
--------- --------- ---------
Net Cash Used for Investing Activities ..................... (41,197) (81,150) (47,448)
--------- --------- ---------
Cash Flows From Financing Activities
Payments on debt and capital lease obligations ................ (5,812) (11,919) (5,730)
Redemption of Preferred Stock ................................. (52,399) (24,058) --
Proceeds from issuance of Common Stock to Laidlaw ............. 268,604 358,658 --
Purchase of Common Stock from Laidlaw ......................... (256,884) (266,931) --
Redemption of 8 1/2% Debentures ............................... (205) (3,740) --
Payment of Preferred Stock dividends .......................... (2,241) (4,355) (5,184)
Issuance of Common Stock in connection with employee
benefit plans .............................................. -- (108) 2,950
Net change in revolving credit facility ....................... 62,148 (37,785) 12,007
Other financing activities .................................... (2,576) -- --
--------- --------- ---------
Net Cash Provided by Financing Activities .................. 10,635 9,762 4,043
--------- --------- ---------
Net Increase in Cash and Cash Equivalents .......................... 1,911 3,559 2,684
Cash and Cash Equivalents, Beginning of Year ....................... 8,295 4,736 2,052
--------- --------- ---------
Cash and Cash Equivalents, End of Year ............................. $ 10,206 $ 8,295 $ 4,736
========= ========= =========
The accompanying notes are an integral part of these statements.
25
26
GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. BACKGROUND AND OPERATING ENVIRONMENT
Greyhound Lines, Inc. and subsidiaries (the "Company") is the only
nationwide provider of scheduled intercity bus service in the United States. The
Company provides various services including scheduled passenger service, package
express service and food service at certain terminals. The Company's operations
include a nationwide network of terminal and maintenance facilities, a fleet of
2,900 buses and approximately 1,800 sales outlets. The Company's operating
subsidiaries include Texas, New Mexico & Oklahoma Coaches, Inc. ("TNM&O"),
Vermont Transit Co., Inc. ("Vermont Transit"), Carolina Coach Company ("Carolina
Coach"), Valley Transit Co., Inc., Sistema Internacional de Transporte de
Autobuses, Inc., On Time Delivery Service, Inc., LSX Delivery, L.L.C., and
Peoria Rockford Bus Lines, L.L.C. The Company is subject to regulation by the
Department of Transportation (the "DOT") and certain states.
On March 16, 1999, the Company's stockholders approved the Agreement and
Plan of Merger with Laidlaw Inc. ("Laidlaw") pursuant to which the Company
became a wholly owned subsidiary of Laidlaw (the "Merger). The consolidated
financial statements of the Company do not reflect any purchase accounting
adjustments relating to the Merger.
As a result of the Merger, the Company incurred $21.3 million in charges
during 1999 related to the settlement of the Company's outstanding stock
options.
In its audited financial statements for the year ended August 31, 2000 (the
"Laidlaw Annual Report"), Laidlaw reported that it had declared an interest
payment moratorium on all advances under its syndicated banking facility (the
"Laidlaw Facility") and on certain of its debentures totaling $2.044 billion
(the "Laidlaw Debentures"). As a consequence of the Laidlaw Facility covenant
violations and interest payment moratorium, the Laidlaw Facility and the Laidlaw
Debentures have become due on demand. In the Laidlaw Annual Report, Laidlaw
further reported that should repayment be demanded for the Laidlaw Facility
and/or the Laidlaw Debentures, Laidlaw may not be able to satisfy these
obligations, nor other obligations which become due in the normal course of
operations.
In August 2000, Laidlaw requested and authorized the Company to seek
funding from outside sources to satisfy the Company's seasonal cash requirements
and capital expenditure programs. In September 2000, Laidlaw obtained the
requisite consents from its lenders and bondholders allowing the Company to
enter into a revolving credit facility. On October 24, 2000, the Company entered
into a two-year, $125 million revolving credit facility to fund its working
capital and near-term capital expenditure needs. With the closure of this
agreement Greyhound became independent of Laidlaw for financing purposes.
The Laidlaw Facility and Laidlaw Debentures are not collateralized by any
assets or stock of the Company, nor has the Company guaranteed such
indebtedness. As such, management believes that the creditors of these
obligations do not have any legal recourse to require a partial liquidation of
assets of the Company or to force the Company into bankruptcy. In addition, the
defaults under the Laidlaw Facility and Laidlaw Debentures do not cause a cross
default with any of the Company's debt which would place the Company's debt in
default with its financial institutions and, as of the date of this report, the
Company is in compliance with all covenants in its various debt agreements.
Laidlaw is endeavoring to renegotiate and restructure the Laidlaw Facility
and Laidlaw Debentures. Although the outcome of the foregoing matters is
uncertain, management believes that the likely outcome will have no material
impact on the Company's financial position, cash flows or results of operations.
26
27
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company. Investments in companies that are 20% to 50% owned ("affiliates")
are accounted for using the equity method. All significant intercompany
transactions and balances have been eliminated.
Certain Reclassifications
Certain reclassifications have been made to the prior period statements to
conform them to the current year presentation.
Cash and Cash Equivalents
Cash and cash equivalents include short-term investments that are part of
the Company's cash management portfolio. These investments are highly liquid and
have original maturities of three months or less.
Inventories
Inventories are stated at the lower of cost or market, with costs
determined using the weighted average method.
Property, Plant and Equipment
Property, plant and equipment, including capitalized leases, are recorded
at cost, including interest during construction, if any. Depreciation is
recorded over the estimated useful lives or lease terms and range from three to
twenty years for structures and improvements, four to eighteen years for revenue
equipment, and five to ten years for all other items. The Company principally
uses the straight-line method of depreciation for financial reporting purposes
and accelerated methods for tax reporting purposes. Maintenance costs are
expensed as incurred, and renewals and betterments are capitalized.
Investments and Security Deposits
At December 31, 2000, the Company held one equity security and several debt
securities which are classified as "available-for-sale" securities and reported
at fair value. Any temporary gains and losses associated with changes in market
value of the securities are excluded from operating results and are recognized,
net of taxes, as a separate component of stockholders' equity until realized.
Fair value of securities is determined based on market prices and gains and
losses are determined using the securities' cost.
During 1999, the Company's equity investment had ceased trading on a
national exchange and the Company accounted for this investment on the
historical cost basis at December 31, 1999. During 2000, this investment resumed
active trading at a significantly lower trading value than its historical cost.
As a result, the Company recognized in its operating results for 2000 a
permanent reduction of value of $1.8 million, before taxes, for this investment.
Goodwill
Goodwill represents the excess of cost over fair value of assets as
prescribed by the purchase method of accounting. The Company is amortizing
goodwill on a straight-line basis over a 10 to 30 year period. Periodically, the
Company evaluates goodwill and other intangibles based on undiscounted operating
cash flows whenever significant events or changes occur which might impair
recovery of recorded asset costs.
27
28
Debt Issuance Costs
Costs incurred related to the issuance of debt are deferred, and such costs
are amortized to interest expense over the life of the related debt.
Software Development Costs
Direct costs of materials and services consumed in developing or obtaining
internal use software and certain payroll costs for employees directly
associated with internal use software projects are capitalized. Amortization of
these costs begins when the software is available for its intended use and is
recognized on a straight-line basis over 5 years.
Insurance Coverage
The Company maintains comprehensive automobile liability, general
liability, workers' compensation and property insurance to insure its assets and
operations. Following the Merger, the Company began to purchase its insurance
through Laidlaw with coverage subject to a $50,000 deductible for property
damage claims and no deductible for all other claims. As a result, the Company
requires no insurance reserve associated with claims arising after March 16,
1999. Additionally, on December 31, 1999 the Company transferred liability for
all known and unknown claims, and all related insurance reserves, associated
with the period prior to March 16, 1999 to Laidlaw for which Laidlaw received
compensation in an amount equal to the book value of the reserves.
Environmental Reserves
The environmental reserve includes all sites identified for potential
clean-up and/or remediation and represents the present value of estimated cash
flows discounted at 8.0%.
Revenue Recognition
Transportation revenue is recognized when the service is provided. A
liability for tickets sold but not used is recorded as unredeemed tickets on the
Consolidated Statements of Financial Position.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Long-Lived Assets
The Company periodically evaluates whether the remaining useful life of
long-lived assets may require revision or whether the remaining unamortized
balance is recoverable. When factors indicate that an asset should be evaluated
for possible impairment, the Company uses an estimate of the asset's
undiscounted cash flows in assessing for a possible impairment.
3. STATEMENTS OF CASH FLOWS SUPPLEMENTARY DISCLOSURES
Cash paid for interest was $22.4 million, $22.3 million and $26.3 million
for the years ended December 31, 2000, 1999 and 1998, respectively. During the
year ended December 31, 2000, the Company made cash payments of $5.8 million to
Laidlaw for the Company's share of federal income taxes, based upon the
Company's separate taxable income, incurred by Laidlaw on its U.S. consolidated
tax return for the tax year ended August 31, 1999. There were no cash payments
for federal income taxes for the years ended December 31, 1999 and 1998.
28
29
In 2000, non-cash investing and financing activities included the issuance
of $33.3 million of subordinated debt to Laidlaw in satisfaction of accounts
payable due from the Company to Laidlaw and $3.2 million of buses acquired under
a capital lease. In 1999, non-cash investing and financing activities included a
sale of property in exchange for a $2 million note that was repaid in 2000. In
1998, non-cash activity included a garage that was acquired under a capital
lease for $1.0 million.
4. INVENTORIES
Inventories consisted of the following (in thousands):
DECEMBER 31,
----------------------
2000 1999
--------- ---------
Service parts .......................... $ 4,854 $ 4,770
Fuel ................................... 874 984
Food service operations ................ 2,089 1,966
--------- ---------
Total Inventories ................... 7,817 7,720
Less: Allowance for shrinkage ...... (29) (226)
--------- ---------
Inventories, net ................. $ 7,788 $ 7,494
========= =========
5. PREPAID EXPENSES
Prepaid expenses consisted of the following (in thousands):
DECEMBER 31,
---------------------
2000 1999
--------- ---------
Taxes and licenses ..................... $ 1,593 $ 3,521
Rents .................................. 1,203 1,238
Other .................................. 2,051 935
--------- ---------
Prepaid expenses ..................... $ 4,847 $ 5,694
========= =========
6. BENEFIT PLANS
Pension Plans
The Company has nine defined benefit pension plans. The first plan (the
"ATU Plan") covers substantially all of the ongoing hourly employees hired
before November 1, 1983. The ATU Plan provides normal retirement benefits to the
covered employees based upon a percentage of average final earnings, reduced pro
rata for service of less than 15 years. Participants in this plan will continue
to accrue benefits as long as no contributions are due from the Company. In the
event a contribution is required, the plan benefits will be frozen until such
time as the assets of the plan exceed 115% of the plan liabilities. The second
plan covered salaried employees through May 7, 1990, when the plan was
curtailed. The third plan is a multi-employer pension plan, instituted in 1992,
to cover certain union mechanics represented by the International Association of
Machinists and Aerospace Workers. The fourth plan covered substantially all
employees at Vermont Transit through June 30, 2000, when the plan was curtailed.
The remaining plans are held by T.N.M.&O. and Carolina Coach and cover
substantially all of their salaried and hourly personnel. It is the Company's
policy to fund the minimum required contribution under existing laws.
29
30
YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
(IN THOUSANDS)
COMPONENTS OF NET PERIODIC PENSION COST:
Service Cost .................................. $ 4,953 $ 5,309 $ 4,614
Interest Cost ................................. 51,966 50,605 51,011
Expected Return on Assets ..................... (58,725) (56,785) (57,507)
Amortization of Actuarial (Gain) Loss ......... 438 (34) 303
-------- -------- --------
Net Periodic Pension (Income) ................. $ (1,368) $ (905) $ (1,579)
======== ======== ========
YEARS ENDED DECEMBER 31,
------------------------
2000 1999
---------- ----------
(IN THOUSANDS)
CHANGE IN BENEFIT OBLIGATION:
Benefit Obligation at Beginning of Year ....................... $ 736,138 $ 749,372
Service Cost .................................................. 4,953 5,309
Interest Cost ................................................. 51,966 50,605
Plan Participants' Contributions .............................. 110 210
Actuarial (Gain) Loss ......................................... (14,915) 9,922
Benefits Paid ................................................. (79,779) (79,280)
--------- ---------
Benefit Obligation at End of Year ............................. $ 698,473 $ 736,138
--------- ---------
CHANGE IN PLAN ASSETS:
Fair Value of Plan Assets at Beginning of Year ................ $ 795,466 $ 810,160
Actual Return on Plan Assets .................................. 20,554 61,699
Employer Contributions ........................................ 3,747 2,677
Plan Participants' Contributions .............................. 110 210
Benefits Paid ................................................. (79,779) (79,280)
--------- ---------
Fair Value of Plan Assets at End of Year ...................... $ 740,098 $ 795,466
--------- ---------
Funded Status ................................................. $ 41,625 $ 59,328
Unrecognized Net Gain ......................................... (4,473) (27,291)
--------- ---------
Prepaid Benefit Cost (Net Amount Recognized) .................. $ 37,152 $ 32,037
========= =========
AMOUNTS RECOGNIZED IN THE STATEMENTS OF FINANCIAL POSITION:
Prepaid Benefit Cost .......................................... $ 32,483 $ 29,983
Accrued Benefit Liability ..................................... (3,205) (1,831)
Accumulated Other Comprehensive Loss .......................... 7,874 3,885
--------- ---------
Prepaid Benefit Cost (Net Amount Recognized) .................. $ 37,152 $ 32,037
========= =========
As of December 31, 2000, two of the Company's pension plans have
accumulated benefit obligations in excess of plan assets, for which the
projected benefit obligations, accumulated benefit obligations and fair value of
plan assets are $43,438, $43,438 and $41,316, respectively. As of December 31,
1999, two of the Company's pension plans have accumulated benefit obligations in
excess of plan assets, for which the projected benefit obligations, accumulated
benefit obligations and fair value of plan assets are $39,020, $39,020 and
$38,455, respectively. As of December 31, 2000, four of the Company's pension
plans have projected benefit obligations in excess of plan assets, for which the
projected benefit obligations, accumulated benefit obligations and fair value of
plan assets are $49,514, $48,856 and $47,328, respectively. As of December 31,
1999, three of the Company's pension plans have projected benefit obligations in
excess of plan assets, for which the projected benefit obligations, accumulated
benefit obligations and fair value of plan assets are $43,112, $42,403 and
$42,548, respectively.
30
31
Plan assets consist primarily of government-backed securities, corporate
equity securities, guaranteed insurance contracts, annuities and corporate debt
obligations.
In determining the benefit obligations and service costs for the Company's
defined benefit pension plans, the following assumptions were used:
YEARS ENDED DECEMBER 31,
-------------------------
2000 1999
------------ -----------
WEIGHTED-AVERAGE ASSUMPTIONS FOR END OF YEAR DISCLOSURE:
Discount Rate ............................................... 7.76% 7.27%
Rate of Salary Progression .................................. 4.10% 4.18%
Expected Long-Term Rate of Return on Plan Assets ............ 7.78% 7.83%
Statement of Financial Accounting Standards No. 87, "Employers Accounting
for Pensions," required the Company to record an increase in the additional
minimum liability of $2.6 million, net of a tax benefit of $1.4 million as of
December 31, 2000 and a decrease in the additional minimum liability of $4.0
million, net of a $1.8 million tax liability as of December 31, 1999. These
amounts are reflected as a component of comprehensive income.
Included in the above is a multi-employer pension plan, instituted in 1992,
to cover certain union mechanics, for which the Company made contributions of
$0.8 million and $0.6 million for the years ended December 31, 2000 and 1999,
respectively.
Cash or Deferred Retirement Plans
The Company sponsors 401(k) cash or deferred retirement plans that cover
substantially all of its ongoing salaried, hourly and represented employees.
Costs to the Company related to these plans were $3.3 million, $2.9 million, and
$1.9 million for the years ended December 31, 2000, 1999 and 1998, respectively.
Other Plans
A contributory trusteed health and welfare plan has been established for
all active hourly employees which are represented by collective bargaining
agreements and a contributory health and welfare plan has been established for
salaried employees and hourly employees who are not represented by collective
bargaining agreements. For the years ended December 31, 2000, 1999 and 1998, the
Company incurred costs of $27.5 million, $21.9 million, and $18.1 million,
respectively, related to these plans. No post-retirement health and welfare
plans exist.
The Company also has a Supplemental Executive Retirement Plan (the "SERP"),
which covers only key executives of the Company. During 1995, the SERP was
converted from a defined benefit plan to a defined contribution plan. For the
years ended December 31, 2000, 1999 and 1998, the Company incurred costs of $0.7
million, $0.8 million and $0.6 million, respectively.
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7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
DECEMBER 31,
----------------------
2000 1999
--------- ---------
Land and improvements ........................ $ 83,310 $ 85,173
Structures and improvements
Owned ...................................... 129,200 120,660
Capitalized leased assets .................. 1,397 1,395
Lease interests ............................ 4,376 4,376
Leasehold improvements ..................... 38,989 37,633
Revenue equipment
Owned ...................................... 242,707 221,990
Capitalized leased assets .................. 21,719 23,153
Leasehold improvements ..................... 5,918 5,278
Furniture and fixtures ....................... 60,275 57,850
Vehicles, machinery and equipment ............ 14,903 12,842
--------- ---------
Property, plant and equipment ................ 602,794 570,350
Accumulated depreciation ................. (193,724) (173,273)
--------- ---------
Property, plant and equipment, net ... $ 409,070 $ 397,077
========= =========
During 2000, the Company took delivery of 289 new buses, all but 50 of
which were manufactured by Motor Coach Industries, Inc. ("Motor Coach"). The
Company purchased 117 of these buses, 162 were financed as long-term operating
leases and 10 were financed as capital leases. In addition, the Company
purchased 46 buses from an expiring operating lease.
During 1999, the Company took delivery of 353 new buses, all of which were
manufactured by Motor Coach. The Company purchased 302 of these buses, and the
remaining were financed as long-term operating leases. In addition, the Company
purchased 147 buses from expiring leases (97 from capital and 50 from operating
leases).
Accumulated depreciation of capitalized leased revenue equipment amounted
to $4.8 million and $5.0 million at December 31, 2000, and 1999, respectively.
8. INSURANCE AND SECURITY DEPOSITS
Insurance and security deposits consisted of the following (in thousands):
DECEMBER 31,
---------------------
2000 1999
--------- ---------
Insurance deposits .......................... $ 17,294 $ 15,270
Security deposits ........................... 6,095 5,642
Other ....................................... 1,303 1,308
--------- ---------
Insurance and security deposits ..... $ 24,692 $ 22,220
========= =========
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9. INTANGIBLE ASSETS
Intangible assets consisted of the following (in thousands):
DECEMBER 31,
----------------------
2000 1999
--------- ---------
Trademarks ...................... $ 10,237 $ 10,198
Software ........................ 42,463 37,151
Debt issuance costs ............. 8,829 6,254
Deferred lease costs ............ 3,847 3,847
Other ........................... 206 196
--------- ---------
Intangible assets ............... 65,582 57,646
Accumulated amortization ...... (37,571) (31,825)
--------- ---------
Intangible assets, net ...... $ 28,011 $ 25,821
========= =========
Trademarks are amortized using the straight-line method over 15 years.
10. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):
DECEMBER 31,
---------------------
2000 1999
--------- ---------
Compensation, benefits and payroll-related taxes ... $ 25,274 $ 22,491
Unvouchered invoices ............................... 11,730 12,693
Interest ........................................... 4,255 3,971
Operating, property and income taxes ............... 7,647 6,455
Other expenses ..................................... 17,901 16,727
--------- ---------
Accrued liabilities ............................ $ 66,807 $ 62,337
========= =========
11. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
DECEMBER 31,
----------------------
2000 1999
--------- ---------
Secured Indebtedness
Revolving bank loan, prime plus 0.50% or LIBOR plus 2.0% (weighted
average 8.7% at December 31, 2000) due 2002 ......................... $ 62,148 $ --
Capital lease obligations (weighted average 9.9% at December 31, 2000
and 10.7% at December 31, 1999) due through 2033 .................... 18,629 18,752
Real estate mortgages (weighted average 8.3% at December 31, 2000
and 8.6% at December 31, 1999) due through 2005 .................... 284 633
Unsecured Indebtedness
11 1/2% Senior notes, due 2007 ........................................ 150,000 150,000
Laidlaw subordinated debt (5.9% at December 31, 2000) due 2003 ........ 33,604 --
8 1/2% Convertible debentures, due 2007 ............................... 5,674 6,064
Other long-term debt (weighted average 8.6% at December 31, 2000
and 8.3% at December 31, 1999) due through 2003 ....................... 2,627 4,803
--------- ---------
Long-term debt .......................................................... 272,966 180,252
Less current maturities ............................................... (5,079) (5,671)
--------- ---------
Long-term debt, net ............................................... $ 267,887 $ 174,581
========= =========
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Revolving Credit Facility
On October 24, 2000, the Company entered into a two-year, $125 million
revolving credit facility, with a $25 million letter of credit sub-facility,
("Revolving Credit Facility") with Foothill Capital Corporation. Letters of
credit or borrowings are available under the Revolving Credit Facility subject
to a maximum of $125 million based upon 85% of the appraised wholesale value of
certain bus collateral and 50% of the fair market value of certain real property
collateral. As of December 31, 2000, the Company had availability of $62.9
million under the Revolving Credit Facility. Borrowings under the Revolving
Credit Facility initially bear interest at a rate equal to Wells Fargo Bank's
prime rate plus 0.50% per annum or LIBOR plus 2.0% as selected by the Company.
After December 31, 2000, the interest rates are subject to quarterly adjustment
based upon the Company's ratio of debt to earnings before interest, taxes,
depreciation and amortization as defined in the agreement ("EBITDA") for the
four previous quarters. Initially, letter of credit fees were 2.00% per annum
based upon the maximum amount available to be drawn under each letter of credit.
After December 31, 2000, letter of credit fees are based on the then applicable
LIBOR margin. The Revolving Credit Facility is secured by liens on substantially
all of the assets of the Company and the stock and assets of certain of its
subsidiaries. The Revolving Credit Facility is subject to certain affirmative
and negative operating and financial covenants, including maximum total debt to
EBITDA ratio; minimum EBITDA to interest ratio; minimum shareholder's equity;
limitation on non-bus capital expenditures; limitations on additional liens,
indebtedness, guarantees, asset disposals, advances, investments and loans; and
restrictions on the redemption or retirement of certain subordinated
indebtedness or equity interest, payment of dividends and transactions with
affiliates, including Laidlaw. As of December 31, 2000, the Company was in
compliance with all such covenants.
11 1/2% Senior Notes
The Company's 11 1/2% Senior Notes due 2007 (the "11 1/2% Senior Notes")
bear interest at the rate of 11 1/2% per annum, payable each April 15 and
October 15. The 11 1/2% Senior Notes are redeemable at the option of the Company
in whole or in part, at any time on or after April 15, 2002, at redemption
prices of 105.750% in 2002, 103.834% in 2003, 101.917% in 2004 and 100% in 2005
and thereafter plus any accrued but unpaid interest. The 11 1/2% Senior Note
indenture contains certain covenants that, among other things, limit the ability
of the Company to incur additional indebtedness, pay dividends or make other
distributions, repurchase equity interests or subordinated indebtedness, create
certain liens, sell assets or enter into certain mergers or consolidations. As
of December 31, 2000, the Company was in compliance with all such covenants.
Laidlaw Subordinated Debt
Subsequent to the completion of the Revolving Credit Facility transaction,
the Company paid $43 million of intercompany amounts due to Laidlaw, with all
remaining intercompany amounts then due converting to an intercompany loan
subordinate to the Revolving Credit Facility. The intercompany loan matures 91
days after the maturity of the Revolving Credit Facility. Interest on the loan
accrues at the Applicable Federal Rate and is payable at maturity.
8 1/2% Convertible Debentures
Interest on the 8 1/2% Convertible Subordinated Debentures due 2007
("Convertible Debentures") is payable semiannually (each March 31 and September
30). Prior to the Merger, the Convertible Debentures were convertible into
shares of Common Stock at any time prior to maturity (unless earlier redeemed or
repurchased), at a conversion rate of approximately 80.81 shares of Common Stock
per $1,000 principal amount of Convertible Debentures. Following the Merger, the
Convertible Debentures may be converted into $525.27 in cash per $1,000
principal amount of Convertible Debentures.
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35
At December 31, 2000, maturities of long-term debt for the next five years
ending December 31 and all years thereafter, are as follows (in thousands):
2001............................................. $ 5,079
2002............................................. 67,037
2003............................................. 40,922
2004 ............................................ 688
2005 ............................................ 696
Thereafter....................................... 158,544
----------
$ 272,966
==========
For the year ended December 31, 1999, the Company recorded an extraordinary
loss of $1.9 million, net of tax benefit of $1.0 million, related to the
termination of the Company's previous revolving credit facility. The amount
represents the write-off of previously incurred debt issuance costs that were
being amortized over the life of the revolving credit facility.
12. INCOME TAXES
Tax Allocation Agreement
Effective with the Merger, the Company became a member of Laidlaw's U.S.
consolidated tax return group ("U.S. Group") and subject to a tax allocation
agreement. The Company is allocated its share of the tax liability of the U.S.
Group or receives a benefit for any losses used by the U.S. Group based on its
separate taxable income or loss.
Income Tax Provision
The income tax provision (benefit) consisted of the following (in
thousands):
YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
Current
Federal .................................. $ 2,087 $ 2,313 $ 6,843
State .................................... 1,525 868 862
-------- -------- --------
Total Current ...................... 3,612 3,181 7,705
-------- -------- --------
Deferred
Federal .................................. 5,137 (7,843) (22,376)
State .................................... (1,047) 50 (2,185)
-------- -------- --------
Total Deferred ..................... 4,090 (7,793) (24,561)
-------- -------- --------
Income tax provision (benefit) ..... $ 7,702 $ (4,612) $(16,856)
======== ======== ========
Additionally, the Company recorded a $1.0 million benefit for income taxes
as an offset to the extraordinary loss recorded in 1999.
Effective Tax Rate
The differences, expressed as a percentage of income before taxes and
extraordinary item, between the statutory and effective federal income tax rates
are as follows:
YEARS ENDED DECEMBER 31,
---------------------------
2000 1999 1998
------ ------ ------
Statutory tax rate ............................................ 35.0% (35.0)% 35.0%
State income taxes, net of federal benefit .................... 1.5 3.4 4.6
Recognition of previously unrecognized deferred tax assets .... -- -- (132.6)
Other ......................................................... 1.5 5.6 4.0
------ ------ ------
Effective tax rate ......................................... 38.0% (26.0)% (89.0)%
====== ====== ======
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Deferred Tax Assets
Significant components of deferred income taxes were as follows (in
thousands):
DECEMBER 31,
--------------------
2000 1999
-------- --------
Deferred Tax Assets
Federal and state NOL carryforwards ........................ $ 76,975 $ 54,427
Other accrued expenses and liabilities ..................... 12,653 20,295
Other deferred tax assets .................................. 1,197 701
-------- --------
Total deferred tax assets ................................ 90,825 75,423
-------- --------
Deferred Tax Liabilities
Tax over book depreciation and amortization ................ 18,649 20,881
Pension cost for tax purposes in excess of books ........... 8,840 8,791
Other deferred tax liabilities ............................. 146 967
-------- --------
Total deferred tax liabilities ........................... 27,635 30,639
-------- --------
Net deferred tax assets ...................................... 63,190 44,784
Valuation allowance .......................................... (25,050) (3,950)
-------- --------
Net deferred tax assets, net of valuation allowance ...... $ 38,140 $ 40,834
======== ========
During 2000, the Company recorded a $23.1 million increase in the valuation
allowance for net operating losses from prior years which may not be used before
they expire. Also in 2000, a $2.0 million reduction in the valuation allowance
was recorded due to the expiration of a net operating loss of a subsidiary,
which could only be used against its income.
Availability and Amount of NOL's
As a result of the ownership change from the Merger and in a previous period,
Section 382 of the Internal Revenue Code places an annual limitation on the
amount of federal net operating loss ("NOL") carryforwards which the Company and
the U.S. group may utilize. Consequently, the Company's NOL carryforwards are
subject to an annual limitation of $22.2 million and a fifteen to twenty year
carryforward period. The NOL carryforwards of $203.8 million expire as follows
(in thousands):
2005............................................. $ 55,511
2006............................................. 2,865
2007............................................. 10,019
2008............................................. 18,239
2009............................................. 30,128
2010............................................. 20,105
2011 ............................................ 18,815
2018 ............................................ 46,811
2020............................................. 1,272
----------
$ 203,765
==========
During 2000, the Company refined its calculation of the amount of a Section 382
limit from a previous ownership change which resulted in additional NOLs of $66
million related to previous periods. At December 31, 2000, the Company has
recorded a valuation allowance of $23.1 million for federal net operating losses
which may not be used before they expire.
Included in the deferred tax assets at December 31, 2000 is $5.6 million, less a
valuation allowance of $2.0 million, for the Company's various state NOLs which
have carryforward periods of 3 to 20 years and expiration dates of 2001 and
later.
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13. FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments", requires disclosure of the fair value of
financial instruments. The following methods and assumptions were used by the
Company in estimating the fair value disclosures for its financial instruments.
For cash and cash equivalents, accounts receivable and revolving bank
loans, the carrying amounts reported in the Consolidated Statements of Financial
Position approximate fair value. The fair values of the short-term deposits and
long-term insurance deposits and security deposits are based upon quoted market
prices at December 31, 2000 and 1999, where available. For the portion of
short-term deposits and long-term insurance deposits where no quoted market
price is available, the carrying amounts are believed to approximate fair value.
For the Laidlaw indebtedness and other long-term debt, the fair values are
estimated using discounted cash flow analysis, based upon the Company's
incremental borrowing rates for similar types of borrowing arrangements. The
fair values of the Senior Notes and the Convertible Debentures were based upon
quoted market prices at December 31, 2000 and 1999.
The carrying amounts and fair values of the Company's financial instruments
are as follows (in thousands):
DECEMBER 31, 2000 DECEMBER 31, 1999
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
Other Current Assets
Other Deposits ................................. $ 345 $ 345 $ 289 $ 289
Insurance and Security Deposits
Insurance Deposits ............................. 17,294 17,294 15,270 15,270
Security Deposits .............................. 6,095 6,095 5,642 5,642
Long-Term Debt
Laidlaw subordinated debt ...................... (33,604) (29,646) -- --
11 1/2% Senior Notes ........................... (150,000) (112,500) (150,000) (168,000)
8 1/2% Convertible Subordinated Debentures ..... (5,674) (2,865) (6,064) (6,200)
Other Long-term Debt ........................... (21,540) (21,945) (24,188) (23,666)
14. LEASE COMMITMENTS
The Company leases certain operating vehicles and terminals from various
parties pursuant to capital and operating lease agreements expiring at various
dates through 2065. The leases on most of the operating vehicles contain certain
purchase provisions or residual value guarantees and have terms of typically
seven years. Of those leases that contain residual value guarantees, the
aggregate residual value at lease expiration is $122.4 million, of which the
Company has guaranteed $76.4 million. To date, the Company has never incurred
any liability as a result of residual value guarantees.
For the years ended December 31, 2000, 1999 and 1998, rental expenses for
all operating leases (net of sublease rental income of approximately $3.5
million, $2.8 million and $2.2 million, respectively) amounted to $71.0 million,
$76.5 million and $60.0 million, respectively. Rental expenses for bus operating
leases, excluding casual rents and other short term leases during peak periods,
amounted to $42.0 million, $39.4 million and $34.4 million in 2000, 1999 and
1998, respectively.
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At December 31, 2000, scheduled future minimum payments (excluding any
payment related to the residual value guarantee which may be due upon
termination of the lease) for the next five years ending December 31, under the
capital leases and non-cancelable operating leases are as follows (in
thousands):
CAPITAL OPERATING
LEASES LEASES
--------- ----------
2001........................................................... $ 5,169 $ 68,689
2002........................................................... 5,486 58,354
2003........................................................... 7,409 62,250
2004........................................................... 927 55,856
2005........................................................... 927 43,355
Thereafter..................................................... 3,393 45,388
--------- ----------
Total minimum lease payments........................... 23,311 $ 333,892
==========
Amounts representing interest.............................. 4,682
---------
Present value of minimum lease payments................ $ 18,629
=========
15. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL MATTERS
The Company may be liable for certain environmental liabilities and
clean-up costs in the various facilities presently or formerly owned or leased
by the Company. Based upon surveys conducted solely by Company personnel or its
experts, 46 active and 11 inactive locations have been identified as sites
requiring potential clean-up and/or remediation as of December 31, 2000.
Additionally, the Company has, or has assumed, potential liability with respect
to two active and eight inactive locations which the Environmental Protection
Agency ("EPA") has designated as Superfund sites. The Company, as well as other
parties designated by the EPA as potentially responsible parties, face exposure
for costs related to the clean-up of those sites. Based on the EPA's enforcement
activities to date, the Company believes its liability at these sites will not
be material because its involvement was as a de minimis generator of wastes
disposed of at the sites. In light of its minimal involvement, the Company has
been negotiating to be released from liability in return for the payment of
nominal settlement amounts.
The Company has recorded a total environmental reserve of $8.3 million at
December 31, 2000 of which approximately $1.5 million is indemnifiable by the
predecessor owner of the Company's domestic bus operations, now known as Viad
Corp. The environmental reserve relates to sites identified for potential
clean-up and/or remediation and represents the present value of estimated cash
flows discounted at 8.0%. The Company expects the majority of this environmental
liability to be paid over the next five to ten years. As of the date of this
report, the Company is not aware of any additional sites to be identified, and
management believes that adequate accruals have been made related to all known
environmental matters.
NEW YORK PORT AUTHORITY
The Company operates out of its largest sales location, the Port Authority
Bus Terminal of New York (the "Port Authority"), on a month-to-month basis
pursuant to a license agreement which expired in 1994. The Company's fee is
based upon a fixed charge for dedicated space, a fixed charge for each departing
bus and a percentage of certain ticket sales. Because the majority of the other
bus operators utilizing the Port Authority are principally commuter or local
transit operators which are exempt from paying license fees on their sales, the
Company pays a disproportionate share of the total fees received from bus
operators that use the Port Authority relative to the Company's share of bus
departures, passengers, bus gates or square footage utilized. The Company has
been negotiating with the Port Authority for several years to structure a
market-based fee for the renewal of the license agreement and, beginning in June
1999, without Port Authority concurrence, began paying a lower fixed fee in lieu
of a percentage of sales. The lower fee payment was based on the Company's
research of the local real estate market in Midtown Manhattan and transportation
facilities nationwide, both of which demonstrate that this fee
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39
reflects fair market value. Nevertheless, because the Company does not have a
revised agreement in place, the Company has continued to accrue for the license
fee based upon the 1994 agreement and, as of February 28, 2001, has an accrued
rents payable to the Port Authority of $15.9 million. At this time it is unknown
whether or not the Company will be able to successfully negotiate a renewal of
the license agreement on terms more favorable than the currently expired
agreement or, if successful, whether or not the terms of the new agreement will
be applied retroactively.
POTENTIAL PENSION PLAN FUNDING REQUIREMENTS
The Company maintains nine defined benefit pension plans, the most
significant of which (the ATU Plan) covers approximately 14,900 current and
former employees, fewer than 1,300 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and over 85% of its
participants are over the age of 50. For financial reporting and investment
planning purposes, the Company currently uses an actuarial mortality table that
closely matches the actual experience related to the existing participant
population. Based upon the application of this table and other actuarial and
investments assumptions, the Company believes that the ATU Plan is adequately
funded.
For funding purposes, legislation passed by the United States Congress in
1994, and amended in 1997, mandates the use of a prescribed actuarial mortality
table and discount rates that differ from those used by the Company for
financial reporting and investment planning purposes. Nevertheless, based upon
the application of the actuarial mortality table, discount rates and funding
calculations prescribed by current regulations, and further assuming the Company
can obtain investment returns consistent with long-term trends and assumptions,
the Company does not anticipate that it will be required to make significant
contributions to the ATU Plan during the next several years. However, there is
no assurance that the ATU Plan will be able to earn the assumed rate of return
or that contributions to the ATU Plan will not be significant. Additionally,
there can be no assurance that new regulations may result in changes in the
prescribed actuarial mortality table and discount rates, or that there will be
market driven changes in the discount rates, which would result in the Company
being required to make substantial contributions in the future.
REDEEMABLE PREFERRED STOCK
During 1997, the Company issued 2,400,000 shares of 8 1/2% convertible
exchangeable preferred stock ("the Preferred Stock"). The Preferred Stock
carries a liquidation preference of $25.00 per share plus accumulated and unpaid
dividends. Dividends accrue at a rate per annum equal to 8 1/2% of the
liquidation preference per share of Preferred Stock and are payable quarterly in
arrears on February 1, May 1, August 1 and November 1. Each share of Preferred
Stock is convertible into $33.33 in cash which, based upon the number of shares
outstanding at December 31, 2000, results in a total conversion value of $3.5
million. The Company is recording the conversion of Preferred Stock as a
reduction in the carrying value with the excess deducted from paid in capital.
In late March 2001, the Company issued a redemption notice to the holders of all
outstanding shares of Preferred Stock. Any shares which have not been validly
tendered for conversion by April 27, 2001 will be redeemed by the Company at a
price per share of $26.74625 which includes accumulated and unpaid dividends
through the redemption date.
LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits arising in the ordinary
course of business, primarily cases involving personal injury and property
damage claims and employment-related claims. Although these lawsuits involve a
variety of different facts and theories of recovery, the majority arise from
traffic accidents involving buses operated by the Company. The vast majority of
these claims are covered by insurance for amounts in excess of the deductible
portion of the policies. Management believes that there is no proceeding either
threatened or pending against the Company that, if resolved against the Company,
would materially exceed the amounts recorded as estimated liabilities by the
Company.
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16. RELATED PARTY TRANSACTIONS
Following the Merger, the Company began to purchase its insurance through
Laidlaw. The Company has a $50,000 deductible for property damage claims and no
deductible for all other claims. As a result, there is no insurance reserve
associated with claims arising after March 16, 1999. For the years ended
December 31, 2000 and 1999, the Company has recorded $44.2 million and $31.7
million in insurance expense under this program respectively, which the Company
believes is comparative to the cost under its previous insurance program.
Additionally, on December 31, 1999, the Company transferred liability for all
known and unknown claims, and all related insurance reserves, associated with
the period prior to March 16, 1999 to Laidlaw for aggregate consideration of
$24.0 million, which equaled the book value of the reserves.
During the year ended December 31, 2000, the Company made cash payments of
$5.8 million to Laidlaw for the Company's share of federal income taxes, based
upon the Company's separate taxable income, incurred by Laidlaw on its U.S.
consolidated tax return for the tax year ended August 31, 1999.
During 2000, the Company issued $33.3 million of subordinated debt to
Laidlaw in satisfaction of accounts payable due from the Company to Laidlaw. At
December 31, 2000, $33.6 million was outstanding on this note.
Laidlaw provides certain management services to the Company including risk
management, income tax and treasury services. During the year ended December 31,
2000, Laidlaw charged the Company $2.3 million for these services.
Laidlaw has provided credit support in the form of corporate guarantees and
letters of credit for certain of the Company's operating leases. As of December
31, 2000, Laidlaw has guaranteed $136.1 million of future minimum lease payments
on buses under lease by the Company, and has provided $22.0 million in letters
of credit.
The Company's SERP has been funded, through a rabbi trust, with a $3.0
million letter of credit issued by Laidlaw.
Certain of the Company's employees participate in a stock option program
offered by Laidlaw.
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17. QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected unaudited quarterly financial data for the years ended December
31, 2000 and 1999 are as follows (in thousands):
FIRST SECOND THIRD FOURTH
YEAR ENDED DECEMBER 31, 2000 QUARTER QUARTER QUARTER QUARTER
---------------------------- -------- --------- --------- ---------
Operating revenues...................................... $215,085 $258,839 $291,275 $249,118
Operating expenses...................................... 224,520 242,113 262,016 241,868
--------- --------- --------- ---------
Operating income (loss)................................. (9,435) 16,726 29,259 7,250
Interest expense........................................ 5,152 5,870 5,590 6,930
Income tax provision (benefit).......................... (4,748) 3,255 10,243 (1,048)
Minority interest....................................... (52) (111) 7 142
---------- ---------- --------- ---------
Net income (loss)....................................... $ (9,787) $ 7,712 $ 13,419 $ 1,226
========= ========= ========= =========
FIRST SECOND THIRD FOURTH
YEAR ENDED DECEMBER 31, 1999 QUARTER QUARTER QUARTER QUARTER
---------------------------- -------- --------- --------- ---------
Operating revenues...................................... $ 195,307 $ 228,945 $ 268,799 $ 232,939
Operating expenses...................................... 207,719 220,247 242,785 229,709
--------- --------- --------- ---------
Operating income (loss)................................. (12,412) 8,698 26,014 3,230
Settlement of stock options............................. 19,929 1,365 - -
Interest expense........................................ 6,280 5,377 5,304 5,032
Income tax provision (benefit).......................... (17,353) 881 10,789 1,071
Minority interest....................................... 56 267 460 495
--------- --------- --------- ---------
Net income (loss) before extraordinary item............. (21,324) 808 9,461 (3,368)
Extraordinary item...................................... 1,607 - - 290
--------- --------- --------- ---------
Net income (loss)....................................... $ (22,931) $ 808 $ 9,461 $ (3,658)
========= ========= ========= ==========
Adjustments to the Company's annual effective income tax rate in the fourth
quarter of 1999 increased the net loss before extraordinary items by
approximately $1.5 million and resulted in the adjustment to the extraordinary
item. The total after-tax effect of these adjustments reduced net income in the
fourth quarter by approximately $1.8 million.
41
42
SCHEDULE II
GREYHOUND LINES, INC. AND SUBSIDIARIES (a)
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
-------------- -------- -------- -------- ------------ --------
December 31, 1998:
Allowance for Doubtful Accounts ......... $ 268 $ 342 $ (40) $ (372)(b) $ 198
Inventory Reserves ...................... 175 30 -- -- 205
Accumulated Amortization of
Intangible Assets .................... 22,188 6,908 -- (594)(c) 28,503
Environmental and Insurance
Reserves ............................. 57,965 35,237 (1,021) (31,822)(d) 60,359
-------- -------- -------- -------- --------
Total Reserves and Allowances ...... $ 80,596 $ 42,517 $ (1,061) $(32,788) $ 89,265
======== ======== ======== ======== ========
December 31, 1999:
Allowance for Doubtful Accounts ......... $ 198 $ 510 $ 224 $ (530)(b) $ 402
Inventory Reserves ...................... 205 21 -- -- 226
Accumulated Amortization of
Intangible Assets .................... 28,503 4,996 -- (1,674)(c) 31,825
Environmental and Insurance
Reserves ................................ 60,359 10,026 -- (63,072)(d) 7,313
-------- -------- -------- -------- --------
Total Reserves and Allowances ...... $ 89,265 $ 15,553 $ 224 $(65,276) $ 39,766
======== ======== ======== ======== ========
December 31, 2000:
Allowance for Doubtful Accounts ......... $ 402 $ 535 $ 202 $ (741)(b) $ 398
Inventory Reserves ...................... 226 -- -- (197)(e) 29
Accumulated Amortization of
Intangible Assets .................... 31,825 5,769 -- (23)(c) 37,571
Environmental Reserves .................. 7,313 105 1,763 (887)(d) 8,294
-------- -------- -------- -------- --------
Total Reserves and Allowances ...... $ 39,766 $ 6,409 $ 1,965 $ (1,848) $ 46,292
======== ======== ======== ======== ========
- ---------
(a) This schedule should be read in conjunction with the Company's audited
consolidated financial statements and related notes thereto.
(b) Write-off of uncollectible receivables, net of recovery of receivables
previously written-off.
(c) Write-off or amortization of other assets and deferred costs.
(d) Payments of settled claims and, in 1999, $24.0 million represents the
payment to Laidlaw for liabilities assumed by Laidlaw.
(e) Write-off of inventory shrinkage.
42
43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) CERTAIN DOCUMENTS FILED AS PART OF THE FORM 10-K
1. AND 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS SCHEDULES
The following financial statements and financial statement schedule are set
forth in Item 8 of this report. Financial statement schedules not included in
this report have been omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto. Financial
statements for fifty percent or less owned companies accounted for by the equity
method have been omitted because, considered in the aggregate, they have not
been considered to constitute a significant subsidiary.
PAGE NO.
--------
Management Report on Responsibility for Financial Reporting................................. 19
Reports of Independent Public Accountants................................................... 20
Consolidated Statements of Financial Position at December 31, 2000 and 1999................. 22
Consolidated Statements of Operations for the years ended December 31, 2000, 1999
and 1998.................................................................................. 23
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2000,
1999 and 1998............................................................................. 24
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999
and 1998.................................................................................. 25
Notes to Consolidated Financial Statements.................................................. 26
Schedule II - Valuation and Qualifying Accounts............................................. 42
3. EXHIBITS
3.1 -- Restated Certificate of Incorporation of Greyhound Lines, Inc.(11)
3.2 -- Bylaws of Greyhound Lines, Inc. (11)
4.1 -- Indenture governing the 8 1/2% Convertible Subordinated
Debentures due March 31, 2007, including the form of 8 1/2%
Convertible Subordinated Debentures due March 31, 2007. (1)
4.2 -- First Supplemental Indenture to the 8 1/2% Convertible
Subordinated Debentures Indenture between the Registrant and
Shawmut Bank Connecticut, N.A., as Trustee.(2)
4.3 -- Second Supplemental Indenture to the 8 1/2% Convertible
Subordinated Debentures Indenture between the Registrant and
State Street Bank and Trust Company, as trustee. (11)
4.4 -- Indenture, dated April 16, 1997, by and among the Company,
the Guarantors and PNC Bank, N.A., as Trustee.(5)
4.5 -- First Supplemental Indenture dated as of July 9, 1997 between
the Registrant and PNC Bank, N.A. as Trustee.(8)
4.6 -- Second Supplemental Indenture dated as of August 25, 1997
between the Registrant and PNC Bank, N.A. as Trustee. (9)
4.7 -- Third Supplemental Indenture dated as of February 1, 1999,
between the Registrant and Chase Manhattan Trust Company as
Trustee.(12)
4.8 -- Fourth Supplemental Indenture dated as of May 14, 1999,
between the Registrant and Chase Manhattan Trust Company as
Trustee.(12)
43
44
4.9 -- Form of 11 1/2% Series A Senior Notes due 2007.(5)
4.10 -- Form of 11 1/2% Series B Senior Notes due 2007.(7)
4.11 -- Form of Guarantee of 11 1/2% Series A and B Senior Notes.(7)
4.12 -- Indenture dated April 16, 1997, by and between the Company and
U.S. Trust of Texas, N.A., as Trustee.(6)
10.1 -- Greyhound Lines, Inc. Supplemental Executive Retirement Plan.(3)
10.2 -- First Amendment to Supplemental Executive Retirement Plan.(4)
10.3 -- Second Amendment to Supplemental Executive Retirement Plan.(11)
10.4 -- Supplemental Executive Retirement Plan Trust Agreement (11)
10.5 -- Second Amended Employment Agreement dated March 16, 1999,
between Registrant and Craig R. Lentzsch.(11)
10.6 -- Second Amended Employment Agreement dated March 16, 1999,
between Registrant and John Werner Haugsland.(11)
10.7 -- First Amendment to the Second Amended Executive Employment
Agreement dated December 1999 between Registrant and John
Warner Haugsland.(13)
10.8 -- Affiliated Companies Demand Loan Agreement dated March 16,
1999, between the Registrant and Laidlaw Transportation Inc. (13)
10.9 -- Tax Allocation Agreement dated June 1, 1982, between the
Registrant and Laidlaw Transportation Inc.(13)
10.10 -- Loss Portfolio Transfer Agreement dated December 31, 1999,
between the Registrant and Laidlaw Transportation Inc.(13)
10.11 -- Memorandum of Agreement, dated September 30, 1998, between
the Registrant and the Amalgamated Transit Union National
Local 1700. (10)
10.12 -- 1998 Stock Option Plan for ATU Represented Drivers and
Mechanics, dated July 22, 1998. (10)
10.13 -- Greyhound Lines, Inc. Change in Control Severance Pay
Program.(10)
10.14 -- Form of Change in Control Agreement between the Company and
certain officers of the Company.(10)
10.15 -- Loan and Security Agreement among Greyhound Lines, Inc., as
Borrower, the Financial Institutions named as Lenders, and
Foothill Capital Corporation as Agent dated October 24, 2000.(14)
10.16 -- Intercompany Agreement dated as of October 24, 2000, between
Registrant and Laidlaw Transportation, Inc.(15)
10.17 -- Termination Agreement dated as of October 24, 2000, between
Registrant and Laidlaw Transportation, Inc.(15)
21 -- Subsidiaries of the Registrant.(15)
- ---------
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1 (File No. 33-47908) regarding the Registrant's Common Stock and 10%
Senior Notes Due 2001 held by the Contested Claims Pool Trust.
(2) Incorporated herein by reference from the Registrant's Issuer Tender Offer
Statement on Schedule 13E-4 (File No. 5-41800).
(3) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995.
(4) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996.
(5) Incorporated by reference from the Company's Registration Statement on Form
S-4 regarding the Company's 11 1/2% Series B Senior Notes due 2007.
(6) Incorporated by reference from the Company's Registration Statement on Form
S-3 regarding the Company's 8 1/2% Convertible Exchangeable preferred
Stock, Common Stock and 8 1/2% Convertible Subordinated Debentures due
2009.
44
45
(7) Incorporated by reference from Amendment 1 to Form S-4 filed on June 27,
1997.
(8) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997.
(9) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997.
(10) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.
(11) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998.
(12) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1999.
(13) Incorporated by reference from the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1999.
(14) Incorporated by reference from the Registrant's Current Report on Form 8-K
filed on October 27, 2000.
(15) Filed herewith.
(b) REPORTS ON FORM 8-K
On October 27, 2000, the Company filed a current report on Form 8-K with
the Securities and Exchange Commission to report that Greyhound Lines, Inc. had
entered into a two year $125 million revolving credit facility with Foothill
Capital Corporation.
45
46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in the City of Dallas
and the State of Texas, on March 30, 2001.
GREYHOUND LINES, INC.
By: /s/ CRAIG R. LENTZSCH
--------------------------------------
Craig R. Lentzsch
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ JOHN R. GRAINGER Director March 30, 2001
- ------------------------------------------
John R. Grainger
/s/ CRAIG R. LENTZSCH President and Chief March 30, 2001
- ------------------------------------------ Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial Officer)
/s/ CHERYL W. FARMER Vice President and Controller March 30, 2001
- ------------------------------------------ (Principal Accounting Officer)
Cheryl W. Farmer
CO-REGISTRANTS
ATLANTIC GREYHOUND LINES OF VIRGINIA, INC.
By:
/s/ CRAIG R. LENTZSCH Director, Chairman of the Board, March 30, 2001
- ------------------------------------------ President and Chief Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ J. FLOYD HOLLAND Director March 30, 2001
- ------------------------------------------
J. Floyd Holland
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial and Accounting
Officer)
46
47
GLI HOLDING COMPANY
By:
/s/ CRAIG R. LENTZSCH Director, President and March 30, 2001
- ------------------------------------------ Chief Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ JACK W. HAUGSLAND Director March 30, 2001
- ------------------------------------------
Jack W. Haugsland
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial and Accounting
Officer)
GREYHOUND de MEXICO, S.A. de C.V.
By:
/s/ CRAIG R. LENTZSCH Director and President March 30, 2001
- ------------------------------------------ (Principal Executive Officer)
Craig R. Lentzsch
/s/ JACK W. HAUGSLAND Director March 30, 2001
- ------------------------------------------
Jack W. Haugsland
/s/ JEFFREY W. SANDERS Director March 30, 2001
- ------------------------------------------
Jeffrey W. Sanders
/s/ CHERYL W. FARMER Examiner March 30, 2001
- ------------------------------------------ (Principal Financial and Accounting
Cheryl W. Farmer Officer)
SISTEMA INTERNACIONAL de TRANSPORTE de AUTOBUSES, INC.
By:
/s/ CRAIG R. LENTZSCH Director, President, and March 30, 2001
- ------------------------------------------ Chief Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ JACK W. HAUGSLAND Director March 30, 2001
- ------------------------------------------
Jack W. Haugsland
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial and Accounting
Officer)
47
48
TEXAS, NEW MEXICO & OKLAHOMA COACHES, INC.
By:
/s/ CRAIG R. LENTZSCH Director and Chief March 30, 2001
- ------------------------------------------ Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ JACK W. HAUGSLAND Director March 30, 2001
- ------------------------------------------
Jack W. Haugsland
/s/ J. FLOYD HOLLAND Director March 30, 2001
- ------------------------------------------
J. Floyd Holland
/s/ ROBERT D. GREENHILL Director March 30, 2001
- ------------------------------------------
Robert D. Greenhill
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial and Accounting
Officer)
T.N.M. & O. TOURS, INC.
By:
/s/ CRAIG R. LENTZSCH Director and Chief March 30, 2001
- ------------------------------------------ Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ JACK W. HAUGSLAND Director March 30, 2001
- ------------------------------------------
Jack W. Haugsland
/s/ J. FLOYD HOLLAND Director March 30, 2001
- ------------------------------------------
J. Floyd Holland
/s/ ROBERT D. GREENHILL Director March 30, 2001
- ------------------------------------------
Robert D. Greenhill
/s/ RICHARD M. PORTWOOD Director March 30, 2001
- ------------------------------------------
Richard M. Portwood
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial and Accounting
Officer)
48
49
VERMONT TRANSIT CO., INC.
By:
/s/ CRAIG R. LENTZSCH Director, President and March 30, 2001
- ------------------------------------------ Chief Executive Officer
Craig R. Lentzsch (Principal Executive Officer)
/s/ JACK W. HAUGSLAND Director March 30, 2001
- ------------------------------------------
Jack W. Haugsland
/s/ J. FLOYD HOLLAND Director March 30, 2001
- ------------------------------------------
J. Floyd Holland
/s/ JEFFREY W. SANDERS Senior Vice President and March 30, 2001
- ------------------------------------------ Chief Financial Officer
Jeffrey W. Sanders (Principal Financial and Accounting
Officer)
49
50
INDEX TO EXHIBITS
EXHIBIT NO DESCRIPTION
- ---------- -----------
10.16 Intercompany Agreement dated as of October 24, 2000, between Registrant
and Laidlaw Transportation, Inc.
10.17 Termination Agreement dated as of October 24, 2000, between Registrant
and Laidlaw Transportation, Inc.
21 Subsidiaries of the Registrant