1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-10841
GREYHOUND LINES, INC.
and its Subsidiaries identified in Footnote (1) below
(Exact name of registrant as specified in its charter)
DELAWARE 86-0572343
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(Address of principal executive offices) (Zip code)
(972) 789-7000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
----- -----
As of August 10, 2001, the registrant had 587 shares of Common Stock,
$0.01 par value, outstanding all of which are held by the registrant's
parent company.
(1) This Form 10-Q is also being filed by the co-registrants specified under
the caption "Co-Registrants", each of which is a wholly-owned subsidiary
of Greyhound Lines, Inc. and each of which has met the conditions set
forth in General Instructions H(1)(a) and (b) of Form 10-Q for filing Form
10-Q in a reduced disclosure format.
(2) The registrant meets the conditions set forth in General Instructions
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the
reduced disclosure format.
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CO-REGISTRANTS
This Form 10-Q is also being filed by the following entities. Except as set
forth below, each entity has the same principal executive offices, zip code and
telephone number as that set forth for Greyhound Lines, Inc. on the cover of
this report:
I.R.S. EMPLOYER JURISDICTION
COMMISSION IDENTIFICATION OF
NAME FILE NO. NO. INCORP.
- ---- ------------ --------------- ------------
Atlantic Greyhound Lines of Virginia, Inc. 333-27267-01 58-0869571 Virginia
GLI Holding Company 333-27267-04 75-2146309 Delaware
Greyhound de Mexico, S.A. de C.V. 333-27267-05 None Republic of
Mexico
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 June 30, 2001, 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
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Interim Consolidated Statements of Financial Position as of
June 30, 2001 (Unaudited) and December 31, 2000........................................... 5
Interim Consolidated Statements of Operations for the Three and
Six months Ended June 30, 2001 and 2000 (Unaudited)....................................... 6
Condensed Interim Consolidated Statements of Cash Flows for the
Six months Ended June 30, 2001 and 2000 (Unaudited)....................................... 7
Notes to Interim Consolidated Financial Statements (Unaudited)............................... 8
Item 2. Management's Narrative Analysis of Results of Operations................................................. 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................................................... 15
SIGNATURES ................................................................................................ 16
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4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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5
GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
2001 2000
-------------------- ---------------------
(UNAUDITED)
Current Assets
Cash and cash equivalents ................................................. $ 9,451 $ 10,206
Accounts receivable, less allowance for doubtful accounts of $456 and $398. 51,324 57,923
Inventories, less allowance for shrinkage of $125 and $29 ................. 8,908 7,788
Prepaid expenses .......................................................... 5,102 4,847
Assets held for sale ...................................................... 4,142 4,198
Current portion of deferred tax assets .................................... 10,688 10,688
Other current assets ...................................................... 1,907 1,225
-------------------- ---------------------
Total Current Assets ................................................. 91,522 96,875
Prepaid pension plans .......................................................... 31,453 32,483
Property, plant and equipment, net of accumulated depreciation of $208,147
and $193,724 .............................................................. 413,758 409,070
Investments in unconsolidated affiliates ....................................... 15,076 15,989
Deferred income taxes .......................................................... 33,052 27,452
Insurance and security deposits ................................................ 24,573 24,692
Goodwill, net of accumulated amortization of $6,302 and $5,367 ................. 44,036 43,540
Intangible assets, net of accumulated amortization of $37,853 and $37,571 ...... 26,934 28,011
-------------------- ---------------------
Total Assets ......................................................... $ 680,404 $ 678,112
==================== =====================
Current Liabilities
Accounts payable .......................................................... $ 23,580 $ 24,714
Accrued liabilities ....................................................... 66,898 66,807
Rents payable ............................................................. 8,252 27,211
Unredeemed tickets ........................................................ 12,814 11,750
Current portion of environmental reserves ................................. 2,935 2,596
Current maturities of long-term debt ...................................... 6,180 5,079
-------------------- ---------------------
Total Current Liabilities ............................................ 120,659 138,157
Environmental reserves ......................................................... 4,905 5,698
Long-term debt, net ............................................................ 290,417 267,887
Minority interests ............................................................. 5,559 4,594
Other liabilities .............................................................. 31,349 23,951
-------------------- ---------------------
Total Liabilities .................................................... 452,889 440,287
-------------------- ---------------------
Redeemable preferred stock (2,400,000 shares authorized and
106,050 shares issued as of December 31, 2000) ............................. - 2,651
Stockholders' Equity
Common stock (1,000 shares authorized; par value $.01; 587
shares issued) ...................................................... - -
Capital in excess of par value ............................................ 320,393 321,237
Retained deficit .......................................................... (87,760) (80,945)
Accumulated other comprehensive loss, net of tax benefit of $2,756 ........ (5,118) (5,118)
-------------------- ---------------------
Total Stockholders' Equity ........................................... 227,515 235,174
-------------------- ---------------------
Total Liabilities and Stockholders' Equity ........................... $ 680,404 $ 678,112
==================== =====================
The accompanying notes are an integral part of these statements.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000 2001 2000
--------------- ---------------- --------------- ----------------
(Unaudited) (Unaudited)
OPERATING REVENUES
Transportation service
Passenger services .................. $ 223,629 $ 216,919 $ 415,252 $ 396,350
Package express ..................... 10,398 10,880 20,319 21,232
Food services ............................ 11,024 10,924 21,000 20,430
Other operating revenues ................. 19,887 19,008 37,064 33,859
--------------- ---------------- --------------- ----------------
Total Operating Revenues ............ 264,938 257,731 493,635 471,871
--------------- ---------------- --------------- ----------------
OPERATING EXPENSES
Maintenance .............................. 25,196 23,685 49,769 45,953
Transportation ........................... 66,312 63,544 128,871 121,824
Agents' commissions and station costs..... 47,456 45,712 92,547 87,914
Marketing, advertising and traffic ....... 9,701 8,276 18,399 15,754
Insurance and safety ..................... 14,261 13,933 26,438 25,503
General and administrative ............... 37,944 29,232 69,755 58,187
Depreciation and amortization ............ 11,873 11,000 23,203 21,517
Operating taxes and licenses ............. 16,084 15,543 31,377 30,454
Operating rents .......................... 12,757 21,329 33,284 41,871
Cost of goods sold - food services ....... 7,488 7,075 14,439 13,348
Other operating expenses ................. 988 1,676 2,687 2,256
--------------- ---------------- --------------- ----------------
Total Operating Expenses ............ 250,060 241,005 490,769 464,581
--------------- ---------------- --------------- ----------------
Operating Income ................................ 14,878 16,726 2,866 7,290
Interest Expense ................................ 7,651 5,870 14,963 11,022
--------------- ---------------- --------------- ----------------
Income (Loss) Before Income Taxes ............... 7,227 10,856 (12,097) (3,732)
Income Tax Provision (Benefit) .................. 3,087 3,255 (5,353) (1,493)
Minority Interests .............................. 154 (111) 26 (163)
--------------- ---------------- --------------- ----------------
Net Income (Loss) ............................... $ 3,986 $ 7,712 $ (6,770) $ (2,076)
=============== ================ =============== ================
The accompanying notes are an integral part of these statements.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
2001 2000
-------------------- ---------------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................................................... $ (6,770) $ (2,076)
Non-cash expenses and gains included in net loss ........................... 23,170 21,331
Net change in certain operating assets and liabilities ..................... (11,505) (1,105)
-------------------- ---------------------
Net cash provided by operating activities ................................ 4,895 18,150
-------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ....................................................... (16,565) (29,683)
Proceeds from assets sold .................................................. 546 18,128
Payments for business acquisitions, net of cash acquired ................... (1,320) -
Other investing activities ................................................. (383) (1,180)
-------------------- ---------------------
Net cash used for investing activities ................................... (17,722) (12,735)
-------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on debt and capital lease obligations ............................. (3,291) (4,130)
Redemption of preferred stock .............................................. (3,497) (19,407)
Proceeds from issuance of common stock to Laidlaw .......................... - 178,194
Purchase of common stock from Laidlaw ...................................... - (158,589)
Payment of quarterly preferred dividends ................................... (43) (1,605)
Proceeds from equipment borrowing .......................................... 7,850 -
Net change in revolving credit facility .................................... 11,053 -
-------------------- ---------------------
Net cash provided by (used for) financing activities ..................... 12,072 (5,537)
-------------------- ---------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ..................................... (755) (122)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................ 10,206 8,295
-------------------- ---------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...................................... $ 9,451 $ 8,173
==================== =====================
The accompanying notes are an integral part of these statements.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited Interim Consolidated Financial
Statements of Greyhound Lines, Inc. and Subsidiaries ("Greyhound" or the
"Company") include all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the Company's financial position as of
June 30, 2001, the results of its operations for the three and six months ended
June 30, 2001 and 2000 and cash flows for the six months ended June 30, 2001 and
2000. Due to the seasonality of the Company's operations, the results of its
operations for the interim period ended June 30, 2001 may not be indicative of
total results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations promulgated by the Securities and Exchange Commission. The
unaudited Interim Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements of Greyhound
Lines, Inc. and Subsidiaries and accompanying notes for the year ended December
31, 2000. Certain reclassifications have been made to the prior period
statements to conform them to the current year presentation. For the three and
six months ended June 30, 2001 and 2000, the Company's comprehensive income
(loss) approximated its net income (loss).
2. LAIDLAW BANKRUPTCY
On June 28, 2001, as part of a financial restructuring, Laidlaw USA, Inc.,
Laidlaw Inc., Laidlaw International Finance Corporation, Laidlaw Investments
Ltd., Laidlaw One, Inc. and Laidlaw Transporation, Inc. filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Western District of New York, under a
jointly administered case captioned, In re: Laidlaw USA, Inc., etal, Case No.
01-14099. On that date, Laidlaw Inc. and Laidlaw Investments Ltd. also filed
cases under the Canada Companies' Creditors Arrangement Act in the Ontario
Superior Court of Justice in Toronto, Canada, court file no. 01-CL-4178.
Laidlaw Inc. ("Laidlaw") is the ultimate parent company of Greyhound. Neither
Greyhound, nor any of its subsidiaries were included in, or made party to, these
reorganization filings and proceedings.
In August 2000, Laidlaw requested and authorized Greyhound to seek funding from
outside sources to satisfy the Company's seasonal cash requirements and capital
expenditure programs. 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 reorganization filings and proceedings 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. 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.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
(UNAUDITED)
3. REDEEMABLE PREFERRED STOCK
On March 30, 2001, the Company issued a redemption notice to the holders of the
outstanding shares of Redeemable Preferred Stock whereby any shares which had
not been validly tendered for conversion by April 27, 2001 were redeemed by the
Company at a price per share of $26.74625. During the notice period 98,700
shares, representing an aggregate conversion value of $3.3 million, were validly
tendered for conversion and the remaining 3,800 shares, representing an
aggregate redemption value of $0.1 million, were redeemed by the Company on
April 30, 2001. In May 2001 the Company's Restated Certificate of Incorporation
was amended to eliminate the authorization of preferred stock.
4. COMMON STOCK
In May 2001 the Company effectuated a reverse stock split whereby one share of
common stock was exchanged for every 100,000 shares outstanding. As a result the
number of common shares outstanding was reduced from 58,743,069 to 587.
Additionally, the Company's Restated Certificate of Incorporation was amended
such that the authorized number of shares of common stock, par value $.01, was
reduced from 100,000,000 shares to 1,000 shares. All of the historical shares
have been restated to reflect this reverse stock split.
5. NEW YORK PORT AUTHORITY
The Company operated 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 was 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
had paid 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 had 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 demonstrated that this fee reflected fair
market value. Nevertheless, because the Company did not yet have Port Authority
concurrence for the new fee structure, the Company continued to accrue for the
license fee based upon the 1994 agreement.
In May 2001, the Port Authority and the Company reached an agreement in
principle related to fees for the periods June 1999 through March 31, 2001 (the
"arrearage"), as well as on the form of the ongoing license fees. The agreement
on the arrearage calls for payment to the Port Authority of $12 million over a
10-year period, interest free. The terms of the agreement require an initial
lump sum payment of $1 million and equal monthly installments of $91,667
thereafter. The Company has recorded a reduction in operating rents of
approximately $7.5 million which represents the accrued rent outstanding to the
Port Authority at March 31, 2001 less the present value, using a discount rate
of 11%, of the $12 million payback agreement. The present value of the payback
agreement, less the current portion, is classified as part of other liabilities
while the current portion is classified as part of accounts payable on the
Interim Consolidated Statements of Financial Position. Additionally, effective
April 1, 2001, with Port Authority concurrence, the Company began paying the
monthly license fee based upon a flat fee per gate utilized and bus departure.
During the three months ended June 30, 2001, the license fee expense recorded by
the Company utilizing this new methodology was approximately $1.4 million lower
than the fee as calculated under the expired agreement. The Company and the Port
Authority are currently negotiating the final details of the payback agreement
and license agreement.
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GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
(UNAUDITED)
6. ACQUISITIONS
In May 2001, the Company acquired for $1.3 million, the remaining 50% interest
it had not already owned in a regional line-haul carrier operating in west
Texas. This acquisition has been included in the Company's results of operations
and financial condition since the date of acquisition.
7. NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, Statement of Financial Accounting Standards No. 142 ("SFAS No.
142"), "Accounting for Goodwill and Other Intangible Assets", was issued. This
statement establishes new accounting rules for goodwill and intangible assets
and is effective for fiscal years beginning after December 15, 2001. Under SFAS
No. 142, goodwill is not amortized, but is subject to specific impairment
testing at least on an annual basis. The Company is currently evaluating the
effect of this statement and has not yet determined the effect on its results of
operations and financial position.
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ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
GENERAL
Greyhound is the only nationwide provider of scheduled intercity bus
transportation services in the United States. The Company's primary business
consists of scheduled passenger service, package express service and food
services at certain terminals. The Company's consolidated operations include a
nationwide network of terminal and maintenance facilities, a fleet of
approximately 2,900 buses and approximately 1,800 sales outlets.
The Company's business is seasonal in nature and generally follows the pattern
of the travel industry as a whole, with peaks during the summer months and the
Thanksgiving and Christmas holiday periods. As a result, the Company's operating
cash flows are also seasonal with a disproportionate amount of the Company's
annual operating cash flows being generated during the peak travel periods. The
day of the week on which certain holidays occur, the length of certain holiday
periods, and the date on which certain holidays occur within the fiscal quarter,
may also affect the Company's quarterly results of operations.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of total operating revenue for the three and six months ended June
30, 2001 and 2000:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2001 2000 2001 2000
---------------- --------------- ---------------- ---------------
OPERATING REVENUES
Transportation service
Passenger services ....................... 84.4% 84.2% 84.1% 84.0%
Package express .......................... 3.9 4.2 4.1 4.5
Food services .............................. 4.2 4.2 4.3 4.3
Other operating revenues ................... 7.5 7.4 7.5 7.2
---------------- --------------- ---------------- ---------------
Total Operating Revenues ................. 100.0 100.0 100.0 100.0
---------------- --------------- ---------------- ---------------
OPERATING EXPENSES
Maintenance ................................ 9.5 9.2 10.1 9.7
Transportation ............................. 25.0 24.7 26.1 25.8
Agents' commissions and station costs ...... 17.9 17.7 18.7 18.7
Marketing, advertising and traffic ......... 3.7 3.2 3.7 3.3
Insurance and safety ....................... 5.4 5.4 5.4 5.4
General and administrative ................. 14.3 11.3 14.1 12.3
Depreciation and amortization .............. 4.5 4.3 4.7 4.6
Operating taxes and licenses ............... 6.1 6.0 6.4 6.5
Operating rents ............................ 4.8 8.3 6.7 8.9
Cost of goods sold - food services ......... 2.8 2.7 3.0 2.8
Other operating expenses ................... 0.4 0.7 0.5 0.5
---------------- --------------- ---------------- ---------------
Total Operating Expenses ................. 94.4 93.5 99.4 98.5
---------------- --------------- ---------------- ---------------
Operating Income ............................. 5.6 6.5 0.6 1.5
Interest Expense .............................. 2.9 2.3 3.1 2.3
---------------- --------------- ---------------- ---------------
Income (Loss) Before Income Taxes ............. 2.7 4.2 (2.5) (0.8)
Income Tax Provision (Benefit) ................ 1.1 1.3 (1.1) (0.3)
Minority Interests ............................ 0.1 (0.1) 0.0 (0.1)
---------------- --------------- ---------------- ---------------
Net Income (Loss) ............................. 1.5 3.0 (1.4) (0.4)
================ =============== ================ ===============
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The following table sets forth certain operating data for the Company for the
three and six months ended June 30, 2001 and 2000. Certain statistics have been
adjusted and restated from that previously published to provide consistent
comparisons.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2001 2000 % CHANGE 2001 2000 % CHANGE
-------------- --------------- -------------- ---------------- --------------- -------------
Regular Service Miles (000's)........ 88,234 87,996 0.3% 168,171 165,854 1.4%
Total Bus Miles (000's).............. 91,062 91,034 0.0% 173,325 171,148 1.3%
Passenger Miles (000's).............. 2,284,856 2,367,934 (3.5%) 4,277,907 4,322,304 (1.0%)
Passengers Carried (000's)........... 6,387 6,411 (0.4%) 12,120 12,047 0.6%
Average Trip Length (passenger
miles / passengers carried).......... 358 369 (3.0%) 353 359 (1.7%)
Load (avg. number of passengers
per regular service mile)............ 25.9 26.9 (3.7%) 25.4 26.1 (2.7%)
Load Factor (% of available seats
filled).............................. 51.9% 54.1% (4.1%) 51.0% 52.6% (3.0%)
Yield (regular route revenue /
passenger miles).....................$ 0.0979 $ 0.0916 6.9% $ 0.0971 $ 0.0917 5.9%
Total Revenue Per Total Bus Mile.....$ 2.909 $ 2.831 2.8% $ 2.848 $ 2.757 3.3%
Cost Per Total Bus Mile:
Maintenance.......................$ 0.277 $ 0.260 6.5% $ 0.287 $ 0.268 7.1%
Transportation....................$ 0.728 $ 0.698 4.3% $ 0.744 $ 0.712 4.5%
THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000 RESULTS OF OPERATIONS
Operating Revenues. Total operating revenues increased $7.2 million, up 2.8%,
and $21.8 million, up 4.6% for the three and six months ended June 30, 2001,
compared to the same periods in 2000.
Passenger services revenues increased $6.7 million, up 3.1%, and $18.9 million,
up 4.8%, for the three and six months ended June 30, 2001, compared to the same
period in 2000. The increases in regular route revenues reflect the impact of
the increase in yield offset somewhat by the decrease in passenger miles. In
response to rising fuel costs, the Company was able to implement broad-based
ticket price increases during the first quarter of 2000. While the Company has
been able to sustain, and in some cases further raise ticket prices, management
believes these increases have resulted in the decline in average trip length and
passenger miles.
Package express revenues decreased $0.5 million, down 4.4%, and $0.9 million,
down 4.3%, for the three and six months ended June 30, 2001, compared to the
same periods in 2000. The Company has continued to experience reduced standard
product deliveries (the traditional, low value, terminal to terminal market
segment) as a result of continued competition, as well as expanded and improved
product offerings, from larger package delivery companies.
Food services revenues increased $0.1 million, up 0.9%, and $0.6 million, up
2.8%, for the three and six months ended June 30, 2001, compared to the same
periods in 2000. Food services revenues increased over the prior year due
primarily to product price increases and increased locations, offset somewhat by
volume declines as a result of the decline in passenger miles.
Other operating revenues, consisting primarily of revenue from charter, travel
services and in-terminal sales and services, increased $0.9 million, up 4.6%,
and increased $3.2 million, up 9.5%, for the three and six months ended June 30,
2001, compared to the same periods in 2000. The increase is primarily
attributable to the Company's expansion during 2001 into "meet and greet"
service provided to cruise lines.
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Operating Expenses. Total operating expenses increased $9.1 million, up 3.8%,
and $26.2 million, up 5.6%, for the three and six months ended June 30, 2001,
compared to the same periods in 2000. The increase is attributable to a slight
increase in bus miles during the three months ended June 30, 2001 and a 1.3%
increases in bus miles operated for the six months ended June 30, 2001. In
addition, the Company experienced increases in fuel cost, wages, driver training
and hiring costs, pension costs, ticket and express commissions due to higher
sales and in health and welfare and management fees when compared with the same
periods in 2000.
Maintenance costs increased $1.5 million, up 6.4%, and $3.8 million, up 8.3%,
for the three and six months ended June 30, 2001, compared to the same periods
in 2000. On a per mile basis, maintenance cost increased 6.5% and 7.1%, for the
three and six months ended June 30, 2001, due to fewer buses under warranty,
increased material and labor related to body repairs and brake jobs, and higher
utility costs.
Transportation expenses, which consist primarily of fuel costs and driver
salaries, increased $2.8 million, up 4.4%, and $7.0 million, up 5.8%, for the
three and six months ended June 30, 2001, compared to the same periods in 2000.
Transportation expenses increased on a per-mile basis by 4.3% and 4.5%, for the
three and six months ended June 30, 2001, due largely to higher fuel prices,
driver wage increases and, during the six months ended June 30, 2001, higher
driver training and hiring costs of $1.3 million. For the three and six months
ended June 30, 2001, the average cost per gallon of fuel increased to $0.912 and
$0.924 per gallon, compared to $0.842 and $0.861 per gallon during the same
periods in 2000, resulting in increased fuel cost of $0.7 million and $1.4
million.
Agents' commissions and station costs increased $1.7 million, up 3.8%, and $4.6
million, up 5.3%, for the three and six months ended June 30, 2001, compared to
the same periods in 2000. The increase is primarily due to commissions from
increased ticket sales, terminal salary raises and increased utility costs.
Marketing, advertising and traffic expenses increased $1.4 million, up 17.2%,
and $2.6 million, up 16.8%, for the three and six months ended June 30, 2001,
compared to the same periods in 2000. The increase is due to production costs
related to new television advertisements and the timing of media advertising.
Insurance and safety costs increased $0.3 million, up 2.4%, and $0.9 million, up
3.7%, for the three and six months ended June 30, 2001, compared to the same
periods in 2000. The increase is principally due to the increase in revenues.
General and administrative expenses increased $8.7 million, up 29.8%, and $11.6
million, up 19.9%, for the three and six months ended June 30, 2001, compared to
the same periods in 2000. During the six months ended June 30, 2001, the
increase is due to higher health and welfare costs ($1.6 million) as a result of
a higher cost per participant, higher incentive plan costs ($4.2 million) and
management fee charges ($2.5 million) from the Company's parent, Laidlaw. In
addition, the Company has recorded $3.7 million increase to pension expense due
to a reduction in interest rates and deterioration in plan returns principally
related to equity investments. For the three months ended June 30, 2001, the
increase was due to the increases in incentive plan costs ($3.4 million),
Laidlaw management fees ($1.3 million) and pension costs ($3.7 million).
Depreciation and amortization expenses increased $0.8 million, up 7.9%, and $1.7
million, up 7.8%, for the three and six months ended June 30, 2001, compared to
the same periods in 2000. The increases are primarily due to capital
expenditures in prior periods.
Operating taxes and licenses expense increased $0.5 million, up 3.5%, and $0.9
million, up 3.0%, for the three and six months ended June 30, 2001, compared to
the same periods in 2000. The increases are due primarily to payroll taxes
resulting from increased salaries.
Operating rents decreased $8.6 million, down 40.2%, and $8.6 million, down
20.5%, for the three and six months ended June 30, 2001, compared to the same
periods in 2000. This is mainly due to the settlement of the Port Authority
license agreement. See Note 5 to the Interim Consolidated Financial statements
for further discussion.
Food services cost of goods sold increased $0.4 million, up 5.8%, and $1.1
million, up 8.2%, for the three and six months ended June 30, 2001, compared to
the same periods in 2000. This is primarily due to the increases in food costs
and the addition of new locations.
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Other operating expenses decreased $0.7 million, down 41.1% for the three months
ended June 30, 2001 and increased $0.4 million, up 19.1%, for the six months
ended June 30, 2001, compared to the same periods in 2000. The decrease for the
three months ended June 30, 2001 is due to a loss on the sale of revenue
equipment during the second quarter of 2000. For the six months ended June 30,
2001, the 2000 loss on revenue equipment was offset by losses on disposal of
property, plant and equipment experienced during the first quarter of 2001.
Interest expense increased $1.8 million, up 30.3%, and $3.9 million, up 35.8%,
for the three and six months ended June 30, 2001, compared to the same periods
in 2000, due to an increase in the average debt outstanding.
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. The Company's principal sources of liquidity are expected to be cash flow
from operations and borrowings under the Revolving Credit Facility. 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. As of June 30, 2001, the Company had outstanding borrowings
under the Revolving Credit Facility of $73.2 million and availability of $51.3
million.
Net cash provided by operating activities for the six months ended June 30, 2001
was $4.9 million, a decrease of $13.3 million compared to $18.2 million provided
by operating activities during the same period of 2000. The principal reason for
the decrease is a reduction, during the six months ended June 30, 2001, in rents
payable. Net cash used for investing activities for the six months ended June
30, 2001 was $17.7 million compared to $12.7 million net cash used for investing
during the same period in 2000. The $5.0 million change is principally due to
sale proceeds from assets sold in the six months of 2000. Net cash provided by
financing activities for the six months ended June 30, 2001 was $12.1 million as
compared to net cash used in financing activities of $5.5 million during the
same period in 2000. The $17.6 million difference is principally due to the
redemption of $19.4 million of Redeemable Preferred Stock in the six months
ended June 30, 2000.
The Company currently purchases insurance through Laidlaw with coverage subject
to a $50,000 deductible for physical damage to Company property and no
deductible for all other claims. Effective with the beginning of the Company's
new policy year, September 1, 2001, the Company will purchase coverage from
third-party insurers for claims up to $5 million with coverage subject to a $3
million deductible for automobile liability and a $1 million deductible for both
general liability and workers' compensation. The Company will purchase excess
coverage for automobile liability, general liability and workers' compensation
insurance through Laidlaw for claims which exceed $5 million. The Company will
continue to purchase from Laidlaw coverage for physical damage to Company
property subject to $50,000 deductible. Management believes the cash flow
requirements of the new program will be modestly higher during the first half of
the policy year, but comparable during the entire policy year to what the
requirements would have been had the old program been extended.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
On June 28, 2001 the Company filed a current report on Form 8-K with the
Securities and Exchange Commission reporting Other Events. No financial
statements were included.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 2001
GREYHOUND LINES, INC.
By: /s/ Jeffrey W. Sanders
----------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
ATLANTIC GREYHOUND LINES OF
VIRGINIA, INC.
By: /s/ Jeffrey W. Sanders
----------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
GLI HOLDING COMPANY
By: /s/ Jeffrey W. Sanders
----------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
GREYHOUND de MEXICO, S.A. de C.V.
By: /s/ Cheryl W. Farmer
----------------------------------------------
Cheryl W. Farmer
Examiner
SISTEMA INTERNACIONAL de
TRANSPORTE de AUTOBUSES, INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
TEXAS, NEW MEXICO & OKLAHOMA
COACHES, INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
T.N.M. & O. TOURS, INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
VERMONT TRANSIT CO., INC.
By: /s/ Jeffrey W. Sanders
---------------------------------------------
Jeffrey W. Sanders
Senior Vice President and Chief Financial Officer
16