SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended JUNE 30, 1996 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: 0-28056
------------------
COACH USA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 76-0496471
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Riverway, Suite 600
Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 888-0104
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock of the Registrant, par value $.01 per
share, outstanding at August 14, 1996 was 11,405,411.
<PAGE>
COACH USA, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item I - Financial Statements
COACH USA, INC. PRO FORMA COMBINED
Introduction to Pro Forma Combined Financial Statements........ 4
Pro Forma Combined Statements of Income........................ 5
Pro Forma Combined Statements of Cash Flows.................... 6
Notes to Pro Forma Combined Financial Statements .............. 7
COACH USA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet........................... 8
Condensed Consolidated Statement of Income..................... 9
Condensed Consolidated Statement of Stockholders' Equity.......10
Condensed Consolidated Statement of Cash Flows.................11
Notes to Condensed Consolidated Financial Statements...........12
FOUNDING COMPANY PREDECESSOR FINANCIAL STATEMENTS
SUBURBAN TRANSIT CORP. AND RELATED COMPANIES
Combined Balance Sheets........................................15
Combined Statements of Income..................................16
Combined Statements of Cash Flows..............................17
Notes to Combined Financial Statements.........................18
GROSVENOR BUS LINES, INC. AND SUBSIDIARIES (OPERATING AS
GRAY LINE OF SAN FRANCISCO)
Consolidated Balance Sheets....................................20
Consolidated Statements of Income..............................21
Consolidated Statements of Cash Flows..........................22
Notes to Consolidated Financial Statements.....................23
LEISURE TIME TOURS
Balance Sheets.................................................25
Statements of Income...........................................26
Statements of Cash Flows.......................................27
Notes to Financial Statements..................................28
COMMUNITY BUS LINES, INC. AND RELATED COMPANIES
Combined Balance Sheets........................................29
Combined Statements of Income..................................30
Combined Statements of Cash Flows..............................31
Notes to Combined Financial Statements.........................32
CAPE TRANSIT CORP. (OPERATING AS ADVENTURE TRAILS)
Balance Sheets.................................................33
Statements of Income...........................................34
Statements of Cash Flows.......................................35
Notes to Financial Statements..................................36
ARROW STAGE LINES, INC.
Balance Sheets.................................................37
Statements of Income...........................................38
Statements of Cash Flows.......................................39
Notes to Financial Statements..................................40
COACH USA, INC.
Balance Sheets.................................................41
Statements of Income...........................................42
Statements of Cash Flows.......................................43
Notes to Financial Statements..................................44
2
COACH USA, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX - (CONTINUED)
PAGE
Item II - Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................................45
PART II - OTHER INFORMATION
Item 1 - Legal proceedings...........................................50
Item 6 - Exhibits and Reports on Form 8-K............................50
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
Signature...............................................................51
3
COACH USA, INC.
PART I, ITEM 1 -- FINANCIAL INFORMATION
GENERAL INFORMATION
PRO FORMA COMBINED FINANCIAL DATA
Coach USA, Inc. (the "Company" or "Coach USA") was founded in September
1995 to create a nationwide motorcoach service provider. On May 17, 1996, Coach
USA and six motorcoach businesses (the "Founding Companies") merged through a
series of separate transactions (the "Merger") simultaneously with the closing
of an initial public offering (the "Offering") . The consideration for the stock
of the Founding Companies consisted of a combination of cash and common stock of
the Company.
Between September 1995 and the consummation of the Offering, the Company
had not conducted any operations and all activities prior to the Offering
related to the Merger and the Offering. For accounting purposes and for purposes
of the presentation of the financial statements herein, May 31, 1996 has been
used as the effective date of the Merger.
The accompanying pro forma combined statements of income and cash flows of
the Company for the three months and six months ended June 30, 1995 and 1996
include the combined operations of the Founding Companies prior to the Offering
and the Merger and, in the case of the 1996 periods, one month of operations
after the Offering and Merger. The following pro forma combined statements of
income assume that the Offering and the Merger had occurred and the Company's
operations commenced on January 1, 1995.
The Founding Companies were not under common control or management through
May 1996. This pro forma information may not be indicative of actual results if
the transactions had occurred on the dates indicated or which may be realized in
the future. Neither expected benefits and cost reductions anticipated by the
Company nor future corporate costs of Coach USA nor interest expense savings on
offering proceeds have been reflected in the pro forma information for 1995, nor
for the first five months of 1996. The actual results of Coach USA and its
subsidiaries for the month of June 1996, inclusive of actual corporate costs and
interest expense savings have been included in the pro forma results for the
three and six months ended June 30, 1996.
Operating results for the interim periods are not necessarily indicative
of the results for full years. The results of the Founding Companies have
historically been subject to significant seasonal fluctuations. It is suggested
that these combined financial statements be read in conjunction with the
combined financial statements of the Company and the Founding Companies and the
notes thereto included in the Company's Registration Statement on Form S-1 (Reg.
No. 333-2704) relating to the Company's initial public offering, which was
declared effective by the Securities and Exchange Commission ("SEC") on May 10,
1996.
4
COACH USA, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA )
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1995 1996 1995 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES ..................................... $ 29,641 $ 31,561 $ 52,656 $ 55,782
OPERATING EXPENSES ........................... 22,712 24,020 42,764 45,080
-------- -------- -------- --------
Gross profit ........................... 6,929 7,541 9,892 10,702
GENERAL AND ADMINISTRATIVE EXPENSES .......... 3,715 3,309 7,002 8,875
-------- -------- -------- --------
Operating income ....................... 3,214 4,232 2,890 1,827
OTHER (INCOME) EXPENSE:
Interest expense .......................... 819 638 1,617 1,405
Interest income ........................... (111) (41) (151) (105)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES ................... 2,506 3,635 1,424 527
PROVISION FOR INCOME TAXES ................... 411 1,062 23 676
-------- -------- -------- --------
COMBINED NET INCOME (LOSS) ................... $ 2,095 $ 2,573 $ 1,401 $ (149)
======== ======== ======== ========
PRO FORMA ADJUSTMENTS:
Historical net income (loss) .............. $ 2,095 $ 2,573 $ 1,401 $ (149)
Pro forma compensation differential ....... 778 -- 1,287 2,639
Less: Pro forma provision for income taxes 948 422 1,103 653
-------- -------- -------- --------
PRO FORMA COMBINED NET INCOME ................ $ 1,925 $ 2,151 $ 1,585 $ 1,837
======== ======== ======== ========
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING ....... 9,084 10,351 9,084 9,658
======== ======== ======== ========
PRO FORMA NET INCOME PER COMMON
AND COMMON EQUIVALENT SHARE .................. $ .21 $ .21 $ .17 $ .19
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these pro
forma combined financial statements.
5
COACH USA, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- --------------------
1995 1996 1995 1996
------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $ 2,095 $ 2,573 $ 1,401 $ (149)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities-
Non-recurring, non-cash charge .................... -- -- -- 2,076
Depreciation ...................................... 1,250 1,199 2,401 2,365
(Gain) loss on sale of assets ..................... 4 (239) 4 (316)
(Gain) on sale of investments ..................... (5) (43) (54) (61)
Deferred tax provision (Benefit) .................. 414 320 (15) (50)
Changes in operating assets and liabilities-
Accounts receivable, net ....................... (331) (1,935) (871) (2,532)
Motor coach parts & supplies ................... (108) 181 (84) 88
Prepaid expenses and other current assets ...... 156 1,691 947 138
Accounts payable and accrued liabilities ....... 905 (763) 2,178 2,547
Other .......................................... (128) 199 73 278
------- -------- -------- --------
Net cash provided by operating activities ... 4,252 3,183 5,980 4,384
------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .................. (6,147) (10,920) (8,919) (14,596)
Proceeds from sales of property and equipment ........ 1,033 1,919 1,158 2,302
Purchases of investments ............................. (306) -- (535) --
Proceeds from sales of investments ................... -- 1,400 -- 2,249
------- -------- -------- --------
Net cash used in investing activities ....... (5,420) (7,601) (8,296) (10,045)
------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations .......... (3,681) (77,754) (7,598) (79,878)
Proceeds from issuance of long-term obligations ...... 5,622 60,941 10,714 63,915
Dividends ............................................ (1,392) (4,554) (1,592) (4,988)
Proceeds from stock sale ............................. -- 48,062 -- 48,062
Cash consideration of the Founding Company
purchase price .................................... -- (23,810) -- (23,810)
------- -------- -------- --------
Net cash provided by
financing activities ...................... 549 2,885 1,524 3,301
------- -------- -------- --------
NET DECREASE IN CASH .................................... (619) (1,533) (792) (2,360)
CASH AND CASH EQUIVALENTS, beginning of period .......... 4,790 2,797 4,963 3,624
------- -------- -------- --------
CASH AND CASH EQUIVALENTS, end of period ................ $ 4,171 $ 1,264 $ 4,171 $ 1,264
======= ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest ............................ $ 718 $ 755 $ 1,480 $ 1,553
Cash paid for income taxes ........................ 251 280 259 317
</TABLE>
The accompanying notes are an integral part of
these pro forma combined financial statements.
6
COACH USA, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
The Founding Companies have been managed throughout 1995 and through the
first three months of 1996 as independent private companies. Therefore, general
and administrative expenses for the periods presented reflect compensation and
related benefits that owners received from their respective businesses during
these periods. Pro forma adjustments have been presented for the purpose of
reflecting net income as if the Merger had occurred January 1, 1995. Certain
stockholders agreed to reductions in salaries and benefits in connection with
the Merger and entered into five-year employment agreements effective April 1,
1996 which provide for a set base salary, participation in future incentive
bonus plans, certain other benefits and two-year covenants not to compete
following termination of such person's employment.
The pro forma data presents compensation at the level the stockholders of
the Founding Companies agreed to receive from the respective Founding Company
subsequent to the Merger. In addition, the pro forma data presents the
incremental provision for income taxes as if all entities had been subject to
federal and state income taxes and for the impact of the compensation
differential discussed above.
During the three months ended March 31, 1996, Coach USA sold an aggregate
of 692,000 shares of Common Stock to management. As a result, Coach USA and the
Founding Companies on a pro forma combined basis incurred a non-recurring,
non-cash charge of $2,076,000, representing the difference between the amounts
paid for the shares and the estimated fair value of the shares on the date of
sale as if the companies were combined.
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
The computation of net income per common and common equivalent share for
the three months and six months ended June 30, 1995 is based upon 9,084,267
weighted average shares outstanding which includes (i) 2,165,724 shares issued
by Coach USA prior to the Offering, (ii) 5,099,687 shares issued to the
stockholders of the Founding Companies in connection with the Mergers, (iii)
1,700,714 of the 4,140,000 shares sold in the Offering to pay the cash portion
of the consideration for the Founding Companies, and (iv) 118,142 of the
4,140,000 shares sold in the Offering attributed to excess S Corporation
distributions.
The computation of net income per share for the three months and six
months ended June 30, 1996 is based upon 10,350,768 and 9,658,446 weighted
average shares outstanding, respectively, which includes (i) 2,165,724 shares
issued by Coach USA prior to the Offering, (ii) 5,099,687 shares issued to the
stockholders of the Founding Companies in connection with the Mergers, (iii)
1,700,714 of the 4,140,000 shares sold in the Offering to pay the cash portion
of the consideration for the Founding Companies, (iv) the weighted average
portion of 4,140,000 shares sold in the Offering, net of the shares sold to
cover the purchase of the Founding Companies, and (v) the dilution attributable
to outstanding options to purchase Common Stock, using the treasury stock
method.
Fully diluted net income per common and common equivalent share is equal
to primary earnings per share for all periods presented.
7
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
JUNE 30,
1996
-------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................... $ 1,264
Investments, including restricted of $541 ...................... 541
Accounts receivable, less allowance of $310 .................... 6,382
Motorcoach parts and supplies .................................. 2,311
Prepaid expenses and other current assets ...................... 3,844
-------
Total current assets ......................................... 14,342
PROPERTY AND EQUIPMENT, net ....................................... 66,692
OTHER ASSETS ...................................................... 454
-------
Total assets ................................................. $81,488
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations .................... $ 1,489
Accounts payable and accrued liabilities ....................... 19,173
-------
Total current liabilities .................................... 20,662
-------
LONG-TERM OBLIGATIONS, net of current maturities .................. 16,253
DEFERRED INCOME TAXES ............................................. 6,592
-------
Total liabilities ............................................ 43,507
-------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par, 30,000,000 shares authorized,
11,405,411 shares issued ....................................... 114
Additional paid-in capital ..................................... 36,991
Retained earnings .............................................. 876
-------
Total stockholders' equity ................................... 37,981
-------
Total liabilities and stockholders' equity ................... $81,488
=======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
8
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
ONE MONTH
ENDED
JUNE 30, 1996
-------
REVENUES ........................................................ $10,844
OPERATING EXPENSES .............................................. 8,155
Gross profit .............................................. 2,689
GENERAL AND ADMINISTRATIVE EXPENSES ............................. 1,099
-------
Operating income .......................................... 1,590
OTHER (INCOME) EXPENSE:
Interest expense, net ..................................... 80
INCOME BEFORE INCOME TAXES ...................................... 1,510
PROVISION FOR INCOME TAXES ...................................... 634
-------
NET INCOME ...................................................... $ 876
=======
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING ........................................... 11,758
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE ............... $ .07
The accompanying notes are an integral part of these
condensed consolidated financial statements.
9
COACH USA, INC. AND SUBSIDIARIES
COMBINED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
-------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE AT MAY 31, 1996 ............... 2,166 $ 22 $ 2,055 $ (2,053) $ 24
Initial Public Offering ............ 4,140 41 48,021 -- 48,062
Founding Companies shares .......... 5,099 51 6,323 9,155 15,529
Cash Distribution to Founders ...... -- -- (23,810) -- (23,810)
Deferred tax liability: S Corporation
to C Corporation ................. -- -- -- (2,700) (2,700)
Reorganization ..................... -- -- 4,402 (4,402) --
Net Income ......................... -- -- -- 876 876
-------- ------- --------- --------- ----------
BALANCE AT JUNE 30, 1996 .............. 11,405 $ 114 $ 36,991 $ 876 $ 37,981
======== ======= ========= ========= ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
10
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
ONE MONTH
ENDED
JUNE 30, 1996
------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 876
Adjustments to reconcile net income to net cash provided
by operating activities-
Depreciation.............................................. 432
Deferred tax benefit...................................... (256)
Net change in operating assets and liabilities............ 753
------
Net cash provided by operating activities............. 1,805
------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment......................... (1,192)
Proceeds from sales of investments.......................... 878
------
Net cash used in investing activities................. (314)
------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations................. (39,602)
Proceeds from issuance of long-term obligations............. 13,425
Proceeds from stock sale.................................... 48,062
Cash consideration of the Founding Company purchase price... (23,810)
-------
Net cash used in financing activities.......................... (1,925)
------
DECREASE IN CASH............................................... (434)
CASH AND CASH EQUIVALENTS, beginning of period................. 1,698
------
CASH AND CASH EQUIVALENTS, end of period....................... $1,264
======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 132
Cash paid for income taxes................................ 24
The accompanying notes are an integral part of these
condensed consolidated financial statements.
11
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
In September 1995, Coach USA, Inc. ("Coach USA" or the "Company") was
founded to create a national company providing motorcoach transportation
services.
Concurrent with the initial public offering of its common stock (the
"Offering"), wholly-owned subsidiaries of Coach USA merged with the following
six companies (each, a Founding Company and collectively, the Founding
Companies): Suburban Transit Corp. and related companies (Suburban), Grosvenor
Bus Lines, Inc. and subsidiaries, operating as Gray Line of San Francisco (Gray
Line SF), Leisure Time Tours (Leisure), Community Bus Lines, Inc. and related
companies (Community), Cape Transit Corp., operating as Adventure Trails
(Adventure), and Arrow Stage Lines, Inc. (Arrow). The Mergers have been effected
by Coach USA through issuance of its common stock and cash. Each of the Founding
Companies is a motorcoach company, which provides a wide range of commuter,
transit, recreation and excursion transportation services.
2. INITIAL PUBLIC OFFERING OF COMMON STOCK AND MERGER
On May 17, 1996 the Company completed the Offering, which involved the
public sale of 4,140,000 shares of Common Stock at a price of $14.00 per share.
The proceeds from the transaction, net of underwriting discounts and commissions
and after deducting expenses of the Offering, were approximately $48.1 million.
Of this amount, $23.8 million was used to pay the cash portion of the purchase
price for the Founding Companies. In addition, the remaining net proceeds were
used to repay indebtedness assumed by the Company in the Mergers, for working
capital, acquisitions and general corporate purposes.
Concurrent with the completion of the Offering discussed above, the
Company merged with the Founding Companies. The Company issued 5.1 million
shares of common stock to the stockholders of the Founding Companies, in
addition to the cash consideration discussed above, to effect the Merger.
3. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading.
Between September 1995 and the consummation of the Offering, the Company
did not conduct any operations and all activities prior to the Offering related
to the Merger and the Offering. For accounting purposes and for the purposes of
the presentation of the condensed consolidated financial statements herein, May
31, 1996 has been used as the effective date of the Merger. As such, the
condensed consolidated statements of income and cash flows only reflect one
month of consolidated operations. See the pro forma combined financial
statements.
12
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The interim condensed consolidated financial statements as of June 30,
1996, and for the one month ended June 30, 1996, are unaudited, and certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
omitted. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present the financial
position, results of operations and cash flows with respect to the consolidated
condensed interim financial statements, have been included. The results of
operations for interim period are not necessarily indicative of the results for
the entire fiscal year.
It is suggested that these condensed consolidated financial statements be
read in conjunction with the audited financial statements and notes thereto of
the combined Founding Companies included in Coach USA's prospectus dated May 14,
1996.
SEASONALITY
The timing of certain holidays, weather conditions and seasonal vacation
patterns may cause the Company's quarterly results of operations to fluctuate
significantly. The Company expects to realize higher revenues, operating income
and net income during the second and third quarters and lower revenues and net
income during the first and fourth quarters.
RECLASSIFICATIONS
Certain reclassifications have been made in prior periods to conform with
the current presentation. All significant intercompany transactions have been
eliminated in combination/consolidation.
4. INCOME TAXES
Certain of the Founding Companies were S Corporations for income tax
purposes and, accordingly, any income tax liabilities for the periods prior to
the Merger are the responsibility of the respective stockholders. Effective with
the Merger, the S Corporations converted to C Corporations. Accordingly, an
estimated deferred tax liability of $2.7 million has been recorded to provide
for the estimated future income tax liability as a result of the difference
between the book and tax basis of the net assets of these former S Corporations.
For purposes of these condensed consolidated financial statements, federal and
state income taxes have been provided for the post-acquisition periods.
5. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
The computation of net income per common and common equivalent share for
the one month ended June 30, 1996 is based upon 11,405,411 shares outstanding,
which includes (i) 2,165,724 shares issued by Coach USA prior to the Offering;
(ii) 5,099,687 shares issued to the stockholders of the Founding Companies in
connection with the Mergers; (iii) 1,700,714 shares sold in the Offering to pay
the cash portion of the consideration for the Founding Companies; (iv) the
weighted average portion of 4,140,000 shares sold in the Offering, net of the
shares sold to cover the purchase of the Founding Companies; and (v) 352,415
shares attributable to dilution for outstanding options to purchase Common
Stock, using the treasury stock method.
13
Fully diluted net income per common and common equivalent share is equal
to primary earnings per share for the period presented.
6. LONG TERM OBLIGATIONS
The Company is negotiating to replace its present $30 million revolving
credit facility with a three year, $115 million revolving credit facility with
eight banks. The interest rate applicable to borrowings under this facility is
the London Interbank Offering Rate ("LIBOR") plus 1.00%, with the rate
escalating as the Company's level of funded debt increases relative to its cash
flow. A commitment fee is payable on the unused portion of the facility. As of
August 14, 1996 the Company had borrowings of approximately $16.1 million
outstanding under the present facility.
14
SUBURBAN TRANSIT CORP. AND RELATED COMPANIES
COMBINED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, MAY 31,
1995 1996
------- -------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 1,861 $ 286
Accounts receivable, less allowance of $50 .......... 952 1,298
Notes receivable from stockholder ................... 652 --
Inventories ......................................... 796 639
Investments ......................................... 365 110
Prepaid expenses and other current assets ................ 577 442
------- -------
Total current assets ............................ 5,203 2,775
PROPERTY AND EQUIPMENT, net .............................. 10,826 12,550
OTHER ASSETS ............................................. 62 53
------- -------
Total assets .................................... $16,091 $15,378
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ......... $ 1,217 $ --
Accounts payable and accrued liabilities ............ 4,067 3,547
------- -------
Total current liabilities ....................... 5,284 3,547
LONG-TERM OBLIGATIONS, net of current maturities ......... 3,850 5,365
DEFERRED INCOME TAXES .................................... 2,055 2,046
------- -------
Total liabilities ............................... 11,189 10,958
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, 13,250 shares authorized,
549 shares issued ................................... 73 73
Retained earnings ................................... 4,829 4,347
------- -------
Total stockholders' equity ...................... 4,902 4,420
------- -------
Total liabilities and stockholders' equity ...... $16,091 $15,378
======= =======
The accompanying notes are an integral part of
these combined financial statements.
15
SUBURBAN TRANSIT CORP. AND RELATED COMPANIES
COMBINED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES .................................. $ 7,385 $ 5,137 $ 13,742 $ 11,520
OPERATING EXPENSES ........................ 6,200 4,453 12,038 10,648
--------- --------- --------- ---------
Gross profit ......................... 1,185 684 1,704 872
GENERAL AND ADMINISTRATIVE EXPENSES ....... 636 374 1,333 1,052
--------- --------- --------- ---------
Operating income (loss) .............. 549 310 371 (180)
OTHER (INCOME) EXPENSE:
Interest expense ..................... 122 87 205 197
Interest income ...................... (23) (23) (57) (39)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES ......... 450 246 223 (338)
PROVISION FOR INCOME TAXES ................ 105 136 47 --
--------- --------- --------- ---------
NET INCOME (LOSS)......................... $ 345 $ 110 $ 176 $ (338)
========= ========= ========= =========
PRO FORMA DATA:
Historical net income (loss)......... $ 345 $ 110 $ 176 $ (338)
Pro forma compensation differential .. 193 -- 336 140
Less: Pro forma provision
(benefit) for income taxes ........... 158 (58) 182 (83)
--------- --------- --------- ---------
PRO FORMA NET INCOME (LOSS) .............. $ 380 $ 168 $ 330 $ (115)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of
these combined financial statements.
16
SUBURBAN TRANSIT CORP. AND RELATED COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $ 345 $ 110 $ 176 $ (338)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Depreciation ...................................... 176 151 395 396
Deferred tax provision ............................ 145 119 81 (9)
Changes in operating assets and liabilities --
Accounts receivable, net ....................... 115 (57) 312 (346)
Inventories .................................... (75) 171 (60) 157
Prepaid expenses and other current assets ...... 11 35 150 135
Accounts payable and accrued liabilities ....... 473 (1,154) 840 (520)
Other .......................................... 53 651 17 661
--------- --------- --------- ---------
Net cash provided by operating activities ... 1,243 26 1,911 136
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ............... (920) (1,095) (2,646) (2,183)
Proceeds from sales (purchases) of investments .... (1) 255 (1) 255
--------- --------- --------- ---------
Net cash used in investing activities ....... (921) (840) (2,647) (1,928)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations ....... (7) (5,878) (2,897) (6,719)
Proceeds from issuance of long-term obligations ... 440 6,055 3,858 7,017
Dividends paid .................................... -- (81) -- (81)
--------- --------- --------- ---------
Net cash provided by
financing activities ..................... 433 96 961 217
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH ...................... 755 (718) 225 (1,575)
CASH AND CASH EQUIVALENTS, beginning of period ....... 1,696 1,004 2,226 1,861
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period ............. $ 2,451 $ 286 $ 2,451 $ 286
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ............................ $ 50 $ 46 $ 131 $ 154
Cash paid for income taxes ........................ 27 153 27 153
</TABLE>
The accompanying notes are an integral part of
these combined financial statements.
17
SUBURBAN TRANSIT CORP. AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Suburban Transit Corp. and its six related companies (collectively, the
"Company") operate city transit services, provide local commuter service and
provide motorcoach transportation services in the New York/New Jersey
metropolitan area. The Company also provides charter and group tour services.
The Company and its stockholders entered into a definitive agreement with
Coach USA, Inc. ("Coach USA"), pursuant to which the Company merged with a
subsidiary of Coach USA (the "Merger"). All outstanding shares of the Company's
common stock were exchanged for cash and shares of Coach USA's common stock
concurrent with the consummation of the initial public offering (the "Offering")
of the common stock of Coach USA on May 17, 1996.
2. BASIS OF PRESENTATION
The unaudited combined financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
The combined financial statements include the accounts and results of
operations of Suburban Transit Corp. and related companies which are under
common control and management of three related stockholders. All significant
intercompany transactions and balances have been eliminated.
For accounting purposes and for purposes of the presentation of the
financial statements herein, May 31, 1996, has been used as the effective date
of the Merger. The results of the Company for the month ended June 30, 1996 are
included in the Coach USA, Inc. condensed consolidated financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the two
months and five months ended May 31, 1996 and the three months and six months
ended June 30, 1995, are unaudited, and certain information and footnote
disclosures, normally included in financial statements prepared in accordance
with generally accepted accounting principles, have been omitted. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the combined interim financial statements, have been
included. The results of operations for the interim periods are not necessarily
indicative of the results for the entire fiscal year.
3. PRO FORMA NET INCOME
Pursuant to the Merger, the pro forma information has been presented for
the purpose of reflecting net income as if the Merger had occurred on January 1,
1995.
18
SUBURBAN TRANSIT CORP. AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS - (CONTINUED)
General and administrative expenses for the periods presented reflect
compensation and related benefits that owners received during the periods. One
owner agreed to reductions in salary and benefits in connection with the Merger
and entered into a five-year employment agreement which provides for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a two-year covenant not to compete following termination of such person's
employment.
The unaudited pro forma data present compensation at the level the
stockholder of the Company has agreed to receive from the Company subsequent to
the Merger. In addition, the pro forma data present the incremental provision
for income taxes as if the Company had been subject to federal income taxes and
for the income tax impact of the compensation differential discussed above.
19
GROSVENOR BUS LINES, INC. AND SUBSIDIARIES
(OPERATING AS GRAY LINE OF SAN FRANCISCO)
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
OCTOBER 31, MAY 31,
1995 1996
-------- --------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................ $ 401 $ 706
Accounts receivable, less allowance of $150 and $144 . 2,367 1,654
Notes receivable from stockholder .................... 229 347
Inventories .......................................... 474 458
Investments .......................................... 759 765
Prepaid expenses and other current asset ............. 1,001 1,038
-------- --------
Total current assets ............................... 5,231 4,968
PROPERTY AND EQUIPMENT, net ............................. 7,668 7,531
OTHER ASSETS ............................................ 365 255
-------- --------
Total assets ....................................... $ 13,264 $ 12,754
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations .......... $ 1,358 $ 983
Accounts payable and accrued liabilities ............. 2,260 1,913
-------- --------
Total current liabilities .......................... 3,618 2,896
LONG-TERM OBLIGATIONS, net of current maturities ........ 3,281 4,006
DEFERRED INCOME TAXES ................................... 1,183 1,187
-------- --------
Total liabilities .................................. 8,082 8,089
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, 6,000,000 shares authorized,
4,358,879 shares issued .............................. 6,529 6,529
Retained deficit ..................................... (1,347) (1,864)
-------- --------
Total stockholders' equity ......................... 5,182 4,665
-------- --------
Total liabilities and stockholders' equity ......... $ 13,264 $ 12,754
======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
20
GROSVENOR BUS LINES, INC. AND SUBSIDIARIES
(OPERATING AS GRAY LINE OF SAN FRANCISCO)
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES ............................... $ 7,529 $ 4,981 $ 12,811 $ 10,881
OPERATING EXPENSES ..................... 5,666 3,982 10,225 9,021
---------- ---------- ---------- ----------
Gross profit ...................... 1,863 999 2,586 1,860
GENERAL AND ADMINISTRATIVE EXPENSES .... 1,165 568 2,307 1,861
---------- ---------- ---------- ----------
Operating income (loss) ........... 698 431 279 (1)
OTHER (INCOME) EXPENSE:
Interest expense .................. 142 119 311 227
Interest income ................... (5) (8) (9) (17)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES ...... 561 320 (23) (211)
PROVISION (BENEFIT) FOR INCOME TAXES ... 207 157 (26) (55)
---------- ---------- ---------- ----------
NET INCOME (LOSS) ...................... $ 354 $ 163 $ 3 $ (156)
========== ========== ========== ==========
PRO FORMA DATA:
Historical net income (loss) ...... $ 354 $ 163 $ 3 $ (156)
Pro forma compensation differential 90 -- 178 176
Less: Pro forma provision (benefit)
for income taxes ................. 56 (24) 87 40
---------- ---------- ---------- ----------
PRO FORMA NET INCOME (LOSS) ............ $ 388 $ 187 $ 94 $ (20)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
21
GROSVENOR BUS LINES, INC. AND SUBSIDIARIES
(OPERATING AS GRAY LINE OF SAN FRANCISCO)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $ 354 $ 163 $ 3 $ (156)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Depreciation ..................................... 218 139 434 373
Deferred tax provision (benefit) ................ 220 422 (8) 230
Changes in operating assets and liabilities --
Accounts receivable, net ...................... (291) (13) (1,003) 7
Inventories ................................... (77) 1 (68) 7
Prepaid expenses and other current assets ..... 219 (482) 565 (153)
Accounts payable and accrued liabilities ...... 293 197 682 (39)
Other ......................................... (55) (310) (38) (239)
---------- ---------- ---------- ----------
Net cash provided by
operating activities ..................... 881 117 567 30
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .................. (85) (254) (198) (363)
Purchases of investments ............................. (254) (6) (254) (6)
---------- ---------- ---------- ----------
Net cash used in investing activities ....... (339) (260) (452) (369)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations .......... (2,979) (2,487) (2,978) (2,487)
Proceeds from issuance of long-term obligations ...... 2,444 3,164 2,807 3,409
---------- ---------- ---------- ----------
Net cash provided by (used in)
financing activities ....................... (535) 677 (171) 922
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH ........................... 7 534 (56) 583
CASH AND CASH EQUIVALENTS, beginning of period ............ 52 172 115 123
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period .................. $ 59 $ 706 $ 59 $ 706
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest ............................... $ 131 $ 145 $ 296 $ 283
Cash paid for income taxes ........................... 17 28 25 51
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
22
GROSVENOR BUS LINES, INC. AND SUBSIDIARIES
(OPERATING AS GRAY LINE OF SAN FRANCISCO)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
GROSVENOR BUS LINES, INC. AND SUBSIDIARIES
(OPERATING AS GRAY LINE OF SAN FRANCISCO)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Grosvenor Bus Lines, Inc., and subsidiaries (the "Company"), operating as
Gray Line of San Francisco, provides motorcoach sight-seeing services in the San
Francisco, California, Bay Area. The Company also provides charter and public
transit services.
The Company and its stockholders entered into a definitive agreement with
Coach USA, Inc. ("Coach USA"), pursuant to which the Company merged with a
subsidiary of Coach USA (the "Merger"). All outstanding shares of the Company's
common stock were exchanged for cash and shares of Coach USA's common stock
concurrent with the consummation of the initial public offering (the "Offering")
of the common stock of Coach USA on May 17, 1996.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
The consolidated financial statements include the accounts and results of
operations of Grosvenor Bus Lines, Inc., all its subsidiaries, and certain
transportation equipment owned by a stockholder and utilized in the operations
of the business. All significant intercompany transactions and balances have
been eliminated in consolidation.
For accounting purposes and for purposes of the presentation of the
consolidated financial statements herein, May 31, 1996, has been used as the
effective date of the Merger. The results of the Company for the month ended
June 30, 1996 are included in the Coach USA, Inc. condensed consolidated
financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the two
months and five months ended May 31, 1996 and the three months and six months
ended June 30, 1995, are unaudited, and certain information and footnote
disclosures, normally included in financial statements prepared in accordance
with generally accepted accounting principles, have been omitted. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the consolidated interim financial statements, have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
The unaudited consolidated financial statements for the six months ended
June 30, 1995 and the five months ended May 31, 1996 have been prepared by
subtracting the results of operations for the two months ended December 31, 1994
and 1995 from the results of operations for the eight months ended June 30, 1995
and the seven months ended May 31, 1996 for Gray Line SF. Gray Line SF's
revenues
23
were $3,579,000 and $3,878,000 and it incurred a net loss of $295,000 and
$361,000 in the two months ended December 31, 1994 and 1995, respectively.
3. PRO FORMA NET INCOME
Pursuant to the Merger, the pro forma information has been presented for
the purpose of reflecting net income as if the Merger had occurred on January 1,
1995.
General and administrative expenses for the periods presented reflect
compensation and related benefits that owners received during the periods. One
owner agreed to reductions in salary and benefits in connection with the Merger
and entered into a five-year employment agreement which provides for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a two-year covenant not to compete following termination of such person's
employment.
The unaudited pro forma data present compensation at the level the
stockholder of the Company agreed to receive from the Company subsequent to the
Merger. In addition, the pro forma data present the incremental provision for
income taxes as if the Company had been subject to federal income taxes and for
the income tax impact of the compensation differential discussed above.
24
LEISURE TIME TOURS
BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, MAY 31,
1995 1996
---------- ----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................... $ 1,315 $ 368
Accounts receivable, less allowance of $37 ........ 579 652
Inventories ....................................... 234 234
Investments, including restricted of $300 ......... 885 544
Prepaid expenses and other current assets ......... 1,055 877
---------- ----------
Total current assets ............................ 4,068 2,675
PROPERTY AND EQUIPMENT, net .......................... 13,479 14,451
OTHER ASSETS ......................................... 90 54
---------- ----------
Total assets .................................... $ 17,637 $ 17,180
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ....... $ 1,334 $ 40
Accounts payable and accrued liabilities .......... 5,271 6,103
---------- ----------
Total current liabilities ....................... 6,605 6,143
LONG-TERM OBLIGATIONS, net of current maturities ..... 2,999 8,679
DEFERRED INCOME TAXES ................................ 558 570
---------- ----------
Total liabilities ............................... 10,162 15,392
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $100 par, 100 shares authorized,
16 2/3 shares issued .............................. 2 2
Retained earnings ................................. 7,473 1,786
---------- ----------
Total stockholders' equity ...................... 7,475 1,788
---------- ----------
Total liabilities and stockholders' equity ...... $ 17,637 $ 17,180
========== ==========
The accompanying notes are an integral part of these financial statements.
25
LEISURE TIME TOURS
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES ................................. $ 5,165 $ 3,852 $ 8,949 $ 8,220
OPERATING EXPENSES ....................... 3,944 2,823 7,191 6,419
---------- ---------- ---------- ----------
Gross profit ........................ 1,221 1,029 1,758 1,801
GENERAL AND ADMINISTRATIVE EXPENSES ..... 441 343 893 828
---------- ---------- ---------- ----------
Operating income .................... 780 686 865 973
OTHER (INCOME) EXPENSE:
Interest expense .................... 84 141 154 208
Interest income ..................... (38) -- (40) (26)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES ............... 734 545 751 791
PROVISION FOR INCOME TAXES ............... 69 43 71 66
---------- ---------- ---------- ----------
NET INCOME ............................... $ 665 $ 502 $ 680 $ 725
========== ========== ========== ==========
PRO FORMA DATA:
Historical net income ............... $ 665 $ 502 $ 680 $ 725
Pro forma compensation differential . 24 -- 100 60
Pro forma provision for income taxes 258 176 295 291
---------- ---------- ---------- ----------
PRO FORMA NET INCOME ..................... $ 431 $ 326 $ 485 $ 494
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
LEISURE TIME TOURS
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................... $ 665 $ 502 $ 680 $ 725
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation .................................. 250 147 492 377
Loss on sale of assets ........................ 46 -- 46 --
Net gain on sale of investments ............... (5) (43) (54) (61)
Deferred tax provision (benefit) .............. 24 1 (17) 12
Changes in operating assets and liabilities--
Accounts receivable, net ................... (112) (57) (38) (73)
Inventories ................................ 9 -- 9 --
Prepaid expenses and other current assets .. (21) (19) (111) 178
Accounts payable and accrued liabilities ... (310) 579 147 832
Other ...................................... (8) (49) (14) (64)
---------- ---------- ---------- ----------
Net cash provided by operating activities 538 1,061 1,140 1,926
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ............. (2,244) (1,399) (2,264) (1,810)
Proceeds from sales of property and equipment ... 1,033 -- 1,033 90
Purchase of investments ......................... (20) -- (234) --
Proceeds from sales of investments .............. -- 293 -- 402
---------- ---------- ---------- ----------
Net cash used in
investing activities ................. (1,231) (1,106) (1,465) (1,318)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations ..... (39) (9,055) (275) (9,378)
Proceeds from issuance of long-term obligations . -- 12,214 744 12,214
Dividends paid .................................. (1,050) (4,141) (1,240) (4,391)
---------- ---------- ---------- ----------
Net cash used in
financing activities ................. (1,089) (982) (771) (1,555)
---------- ---------- ---------- ----------
NET DECREASE IN CASH ............................... (1,782) (1,027) (1,096) (947)
CASH AND CASH EQUIVALENTS, beginning of period ..... 2,908 1,395 2,222 1,315
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period............ $ 1,126 $ 368 $ 1,126 $ 368
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest .......................... $ 71 $ 106 $ 136 $ 192
Cash paid for income taxes ...................... 193 75 193 89
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
LEISURE TIME TOURS
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Leisure Time Tours (the "Company") provides motorcoach transportation
services through regularly scheduled excursion, charter and group tour services
primarily in the states of New Jersey, New York and Pennsylvania.
The Company and its stockholders entered into a definitive agreement with
Coach USA, Inc. ("Coach USA"), pursuant to which the Company merged with a
subsidiary of Coach USA (the "Merger"). All outstanding shares of the Company's
common stock were exchanged for cash and shares of Coach USA's common stock
concurrent with the consummation of the initial public offering (the "Offering")
of the common stock of Coach USA on May 17, 1996.
2. BASIS OF PRESENTATION
The unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
For accounting purposes and for purposes of the presentation of the
financial statements herein, May 31, 1996, has been used as the effective date
of the Merger. The results of the Company for the month ended June 30, 1996 are
included in the Coach USA, Inc. condensed consolidated financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the six
months ended June 30, 1995 and the five months ended May 31, 1996, are
unaudited, and certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principles, have been omitted. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the financial position, results of operations and cash flows with
respect to the interim financial statements, have been included. The results of
operations for the interim periods are not necessarily indicative of the results
for the entire fiscal year.
3. PRO FORMA NET INCOME
Pursuant to the Merger, the pro forma information has been presented for
the purpose of reflecting net income as if the Merger had occurred on January 1,
1995.
General and administrative expenses for the periods presented reflect
compensation and related benefits that owners received during the periods. One
owner agreed to reductions in salary and benefits in connection with the Merger
and entered into a five-year employment agreement which provides for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a two-year covenant not to compete following termination of such person's
employment.
The unaudited pro forma data present compensation at the level the
stockholder of the Company agreed to receive from the Company subsequent to the
Merger. In addition, the pro forma data present the incremental provision for
income taxes as if the Company had been subject to federal income taxes and for
the income tax impact of the compensation differential discussed above.
28
COMMUNITY BUS LINES, INC. AND RELATED COMPANIES
COMBINED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, MAY 31,
1995 1996
----------- -----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 209 $ 278
Accounts receivable, less allowance of $10 ..... 183 208
Inventories .................................... 307 289
Investments, including restricted of $580 and $0 1,046 --
Prepaid expenses and other current assets ...... 1,022 443
----------- -----------
Total current assets ......................... 2,767 1,218
PROPERTY AND EQUIPMENT, net ....................... 3,241 3,488
OTHER ASSETS ...................................... 137 160
----------- -----------
Total assets ................................... $ 6,145 $ 4,866
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations .... $ 497 $ --
Accounts payable and accrued liabilities ....... 2,953
2,524
Notes payable to stockholder ................... 171 --
----------- -----------
Total current liabilities .................... 3,621 2,524
LONG-TERM OBLIGATIONS, net of current maturities .. 1,191 2,014
----------- -----------
Total liabilities ............................ 4,812 4,538
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, 7,500 shares authorized,
3,600 shares issued ......................... 75 75
Additional paid-in capital ..................... 102 102
Retained earning ............................... 1,580 575
Treasury stock, at cost ........................ (424) (424)
----------- -----------
Total stockholders' equity ................... 1,333 328
----------- -----------
Total liabilities and stockholders' equity ... $ 6,145 $ 4,866
=========== ===========
The accompanying notes are an integral part of
these combined financial statements.
29
COMMUNITY BUS LINES, INC. AND RELATED COMPANIES
COMBINED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES ............................................... $ 3,758 $ 2,615 $ 6,598 $ 5,466
OPERATING EXPENSES ..................................... 3,085 2,183 5,644 4,687
---------- ---------- ---------- ----------
Gross profit ...................................... 673 432 954 779
GENERAL AND ADMINISTRATIVE EXPENSES .................... 635 244 1,063 668
---------- ---------- ---------- ----------
Operating income (loss) ........................... 38 188 (109) 111
OTHER (INCOME) EXPENSE:
Interest expense .................................... 68 26 143 83
Interest income ..................................... (12) -- (12) (13)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES ...................... (18) 162 (240) 41
PROVISION (BENEFIT) FOR INCOME TAXES ................... -- 65 (89) 17
---------- ---------- ---------- ----------
NET INCOME (LOSS) ...................................... $ (18) $ 97 $ (151) $ 24
========== ========== ========== ==========
PRO FORMA DATA:
Historical net income (loss) ........................ $ (18) $ 97 $ (151) $ 24
Pro forma compensation differential ................. 426 -- 585 143
Less: Pro forma provision (benefits) for income taxes 162 (4) 225 60
---------- ---------- ---------- ----------
PRO FORMA NET INCOME ................................... $ 246 $ 101 $ 209 $ 107
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
these combined financial statements.
30
COMMUNITY BUS LINES, INC. AND RELATED COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $ (18) $ 97 $ (151) $ 24
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Depreciation ....................................... 87 52 171 143
Gain on sale of assets ............................. (4) (19) (4) (96)
Deferred tax provision (benefit) ................... (3) 27 (92) (21)
Changes in operating assets and liabilities --
Accounts receivable, net ....................... (108) (65) (137) (25)
Inventories .................................... (4) 28 (16) 18
Prepaid expenses and other current assets ...... 205 (217) 361 100
Accounts payable and accrued liabilities ....... 597 395 60 (488)
Other .......................................... (71) (19) 8 (2)
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities ..................... 681 279 200 (347)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .................. (1,075) (602) (994) (602)
Proceeds from sales of property and equipment ........ -- 115 4 277
Purchases of investments ............................. (31) (61) (46) --
Proceeds from the sale of investments ................ -- -- -- 450
Net cash provided by (used in)
investing activities ..................... (1,106) (548) (1,036) 125
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations .......... (11) (2,199) (93) (2,376)
Proceeds from issuance of long-term obligations ...... 744 2,550 1,048 2,750
Dividends paid ....................................... (195) -- (195) (83)
---------- ---------- ---------- ----------
Net cash provided by
financing activities ..................... 538 351 760 291
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH ......................... 113 82 (76) 69
CASH AND CASH EQUIVALENTS, beginning of period .......... 80 196 269 209
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period ................ $ 193 $ 278 $ 193 $ 278
---------- ---------- ---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ............................... $ 78 $ 20 $ 152 $ 81
Cash paid for income taxes ........................... 14 -- 14 --
</TABLE>
The accompanying notes are an integral part of
these combined financial statements.
31
COMMUNITY BUS LINES, INC. AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Community Bus Lines, Inc., and its six affiliated companies (collectively,
the "Company") operate city transit services, provide local commuter service and
provide motorcoach charter and group tour services. The Company operates
primarily in the New York/New Jersey metropolitan area.
The Company and its stockholders entered into a definitive agreement with
Coach USA, Inc. ("Coach USA"), pursuant to which the Company merged with a
subsidiary of Coach USA (the "Merger"). All outstanding shares of the Company's
common stock were exchanged for cash and shares of Coach USA's common stock
concurrent with the consummation of the initial public offering (the "Offering")
of the common stock of Coach USA on May 17, 1996.
2. BASIS OF PRESENTATION
The unaudited combined financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
The combined financial statements include the accounts and results of
operations of Community Bus Lines, Inc., and certain related companies which are
under common control and management of six related stockholders. All significant
intercompany transactions and balances have been eliminated.
For accounting purposes and for purposes of the presentation of the
combined financial statements herein, May 31, 1996, has been used as the
effective date of the Merger. The results of the Company for the month ended
June 30, 1996 are included in the Coach USA, Inc. condensed consolidated
financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the five
months ended May 31, 1996 and the six months ended June 30, 1995, are unaudited,
and certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been omitted. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary to fairly present the financial
position, results of operations and cash flows with respect to the combined
interim financial statements, have been included. The results of operations for
the interim periods are not necessarily indicative of the results for the entire
fiscal year.
3. PRO FORMA NET INCOME
Pursuant to the Merger, the pro forma information has been presented for
the purpose of reflecting net income as if the Merger had occurred on January 1,
1995.
General and administrative expenses for the periods presented reflect
compensation and related benefits that owners received during the periods. One
owner agreed to reductions in salary and benefits in connection with the Merger
and entered into a five-year employment agreement which provides for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a two-year covenant not to compete following termination of such person's
employment.
The unaudited pro forma data present compensation at the level the
stockholder of the Company agreed to receive from the Company subsequent to the
Merger. In addition, the pro forma data present the incremental provision for
income taxes as if the Company had been subject to federal income taxes and for
the income tax impact of the compensation differential discussed above.
32
CAPE TRANSIT CORP.
(OPERATING AS ADVENTURE TRAILS)
BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, MAY 31,
1995 1996
--------- ----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 20 $ 56
Accounts receivable, less allowance of $16 ......... 141 228
Inventories ........................................ 326 326
Prepaid expenses and other current assets .......... 27 27
--------- ----------
Total current assets ............................. 514 637
PROPERTY AND EQUIPMENT, net ........................... 8,294 11,101
OTHER ASSETS .......................................... 36 14
--------- ----------
Total assets ..................................... $ 8,844 $ 11,752
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ........ $ 1,708 $ 431
Accounts payable and accrued liabilities ........... 1,223 1,363
Notes payable to stockholders ...................... 315 --
--------- ----------
Total current liabilities ........................ 3,246 1,794
LONG-TERM OBLIGATIONS, net of current maturities ...... 4,675 9,066
DEFERRED INCOME TAXES ................................. 142 145
--------- ----------
Total liabilities ................................ 8,063 11,005
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, 2,500 shares authorized,
300 shares issued ................................. 16 16
Retained earnings .................................. 765 731
--------- ----------
Total stockholders' equity ....................... 781 747
--------- ----------
Total liabilities and stockholders' equity ....... $ 8,844 $ 11,752
========= ==========
The accompanying notes are an integral part of these financial statements.
33
CAPE TRANSIT CORP.
(OPERATING AS ADVENTURE TRAILS)
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES .............................................. $ 2,897 $ 2,123 $ 5,239 $ 4,392
OPERATING EXPENSES .................................... 2,113 1,623 4,126 3,592
---------- ---------- ---------- ----------
Gross profit ..................................... 784 500 1,113 800
GENERAL AND ADMINISTRATIVE EXPENSES ................... 289 266 517 516
---------- ---------- ---------- ----------
Operating income ................................. 495 234 596 284
OTHER (INCOME) EXPENSE:
Interest expense ................................... 179 124 385 309
Interest income .................................... (3) -- (3) --
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES ..................... 319 110 214 (25)
PROVISION (BENEFIT) FOR INCOME TAXES .................. 30 11 20 (2)
---------- ---------- ---------- ----------
NET INCOME (LOSS) ..................................... $ 289 $ 99 $ 194 $ (23)
========== ========== ========== ==========
PRO FORMA DATA:
Historical net income (loss) ....................... $ 289 $ 99 $ 194 $ (23)
Pro forma compensation differential ................ 36 -- 71 17
Less: Pro forma provision (benefit) for income taxes 123 29 103 (1)
---------- ---------- ---------- ----------
PRO FORMA NET INCOME (LOSS) ........................... $ 202 $ 70 $ 162 $ (5)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
CAPE TRANSIT CORP.
(OPERATING AS ADVENTURE TRAILS)
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $ 289 $ 99 $ 194 $ (23)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Depreciation ....................................... 142 131 283 287
Deferred tax provision (benefit) ................... 28 7 21 (6)
Changes in operating assets and liabilities --
Accounts receivable, net ....................... (3) (71) (77) (87)
Inventories .................................... 9 -- 41 --
Prepaid expenses and other current assets ...... (27) (13) 65 --
Accounts payable and accrued liabilities ....... (51) 82 102 140
Other .......................................... (7) 27 -- 31
--------- ---------- --------- ----------
Net cash provided by (used in)
operating activities ........................ 380 262 629 342
--------- ---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .................. -- (2,552) (14) (3,094)
--------- ---------- --------- ----------
Net cash used in investing activities ....... -- (2,552) (14) (3,094)
--------- ---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations .......... (353) (5,846) (703) (6,073)
Proceeds from issuance of long-term obligations ...... 85 8,174 85 8,872
Dividends paid ....................................... (11) (1) (21) (11)
--------- ---------- --------- ----------
Net cash provided by (used in) financing
activities .............................. (279) 2,327 (639) 2,788
--------- ---------- --------- ----------
NET INCREASE (DECREASE) IN CASH ......................... 101 37 (24) 36
CASH AND CASH EQUIVALENTS, beginning of period .......... 4 19 129 20
--------- ---------- --------- ----------
CASH AND CASH EQUIVALENTS, end of period................. $ 105 $ 56 $ 105 $ 56
========= ========== ========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest ............................... $ 170 $ 157 $ 350 $ 304
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
CAPE TRANSIT CORP.
(OPERATING AS ADVENTURE TRAILS)
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Cape Transit Corp., operating as Adventure Trails (the "Company"),
provides motorcoach services to the Atlantic City, New Jersey casinos, including
shuttles from the airport, scheduled service from Philadelphia, Pennsylvania,
and contract service for employee shuttles. The Company also provides charter
and group tour services.
The Company and its stockholders entered into a definitive agreement with
Coach USA, Inc. ("Coach USA"), pursuant to which the Company merged with a
subsidiary of Coach USA (the "Merger"). All outstanding shares of the Company's
common stock were exchanged for cash and shares of Coach USA's common stock
concurrent with the consummation of the initial public offering (the "Offering")
of the common stock of Coach USA on May 17, 1996.
2. BASIS OF PRESENTATION
The unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
For accounting purposes and for purposes of the presentation of the
financial statements herein, May 31, 1996, has been used as the effective date
of the Merger. The results of the Company for the month ended June 30, 1996 are
included in the Coach USA, Inc. condensed consolidated financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the five
months ended May 31, 1996 and the six months ended June 30, 1995, are unaudited,
and certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been omitted. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary to fairly present the financial
position, results of operations and cash flows with respect to the interim
financial statements, have been included. The results of operations for the
interim periods are not necessarily indicative of the results for the entire
fiscal year.
3. PRO FORMA NET INCOME
Pursuant to the Merger, the pro forma information has been presented for
the purpose of reflecting net income as if the Merger had occurred on January 1,
1995.
General and administrative expenses for the periods presented reflect
compensation and related benefits that owners received during the periods. One
owner agreed to reductions in salary and benefits in connection with the Merger
and entered into a five-year employment agreement which provides for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a two-year covenant not to compete following termination of such person's
employment.
The unaudited pro forma data present compensation at the level the
stockholder of the Company agreed to receive from the Company subsequent to the
Merger. In addition, the pro forma data present the incremental provision for
income taxes as if the Company had been subject to federal income taxes and for
the income tax impact of the compensation differential discussed above.
36
ARROW STAGE LINES, INC.
BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, MAY 31,
1995 1996
------------ ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................... $ 286 $ 3
Accounts receivable, less allowance of $38 ... 1,021 929
Inventories .................................. 297 369
Investments .................................. 543 --
Prepaid expenses and other current assets .... 458 184
------------ ------------
Total current assets ....................... 2,605 1,485
PROPERTY AND EQUIPMENT, net ..................... 14,581 16,761
OTHER ASSETS .................................... 196 --
Total assets ................................. $ 17,382 $ 18,246
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations .. $ 1,887 $ 351
Accounts payable and accrued liabilities ..... 1,338 1,014
------------ ------------
Total current liabilities .................. 3,225 1,365
LONG-TERM OBLIGATIONS, net of current maturities 9,117 13,300
------------ ------------
Total liabilities .......................... 12,342 14,665
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $100 par, 990 shares authorized,
10 shares issued ............................. 1 1
Retained earnings ............................ 5,039 3,580
------------ ------------
Total stockholders' equity ................. 5,040 3,581
------------ ------------
Total liabilities and stockholders' equity . $ 17,382 $ 18,246
============ ============
The accompanying notes are an integral part of these financial statements.
37
ARROW STAGE LINES, INC.
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES .................................... $ 2,907 $ 2,009 $ 5,317 $ 4,459
OPERATING EXPENSES .......................... 1,704 801 3,540 2,558
---------- ---------- ---------- ----------
Gross profit ........................... 1,203 1,208 1,777 1,901
GENERAL AND ADMINISTRATIVE EXPENSES ......... 549 315 889 675
---------- ---------- ---------- ----------
Operating income ....................... 654 893 888 1,226
OTHER (INCOME) EXPENSE:
Interest expense ......................... 224 197 419 437
Interest income .......................... (30) (7) (30) (7)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES .................. 460 703 499 796
PROVISION FOR INCOME TAXES .................. -- -- -- --
---------- ---------- ---------- ----------
NET INCOME .................................. $ 460 $ 703 $ 499 $ 796
========== ========== ========== ==========
PRO FORMA DATA:
Historical net income .................... $ 460 $ 703 $ 499 $ 796
Pro forma compensation differential ...... 9 -- 17 27
Less: Pro forma provision for income taxes 191 303 211 346
---------- ---------- ---------- ----------
PRO FORMA NET INCOME ........................ $ 278 $ 400 $ 305 $ 477
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
ARROW STAGE LINES, INC.
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS SIX MONTHS FIVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, MAY 31, JUNE 30, MAY 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................... $ 460 $ 703 $ 499 $ 796
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation ................................ 377 146 626 356
Gain on sale of assets ...................... (38) (220) (38) (220)
Changes in operating assets and liabilities--
Accounts receivable, net ................. 68 (259) 72 (595)
Inventories .............................. 30 (23) 10 (98)
Prepaid expenses and other current assets (231) 66 (83) 101
Accounts payable and accrued liabilities . (97) (829) 347 111
Other .................................... (40) 8 100 --
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities ..................... 529 (408) 1,533 451
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ........... (1,823) (3,916) (2,682) (5,311)
Proceeds from sales of property and equipment . -- 1,935 -- 1,935
Proceeds from sales of investments ............ -- 41 -- 270
---------- ---------- ---------- ----------
Net cash used in investing activities .... (1,823) (1,940) (2,682) (3,106)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations ... (292) (12,687) (652) (13,243)
Proceeds from issuance of long-term obligations 1,909 15,359 2,172 16,228
Dividends paid ................................ (136) (331) (136) (422)
---------- ---------- ---------- ----------
Net cash provided by financing activities 1,481 2,341 1,384 2,563
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH .................. 187 (7) 235 (92)
CASH AND CASH EQUIVALENTS, beginning of period ... 50 10 2 95
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period ......... $ 237 $ 3 $ 237 $ 3
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ........................ $ 218 $ 149 $ 415 $ 407
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
ARROW STAGE LINES, INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Arrow Stage Lines, Inc. (the "Company"), provides motorcoach charter
services principally in the southwestern United States.
The Company and its stockholders entered into a definitive agreement with
Coach USA, Inc. ("Coach USA"), pursuant to which the Company merged with a
subsidiary of Coach USA (the "Merger"). All outstanding shares of the Company's
common stock were exchanged for cash and shares of Coach USA's common stock
concurrent with the consummation of the initial public offering (the "Offering")
of the common stock of Coach USA on May 17, 1996.
2. BASIS OF PRESENTATION
The unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
For accounting purposes and for purposes of the presentation of the
financial statements herein, May 31, 1996, has been used as the effective date
of the Merger. The results of the Company for the month ended June 30, 1996 are
included in the Coach USA, Inc. condensed consolidated financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the six
months ended June 30, 1995 and the five months ended May 31, 1996, are
unaudited, and certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principles, have been omitted. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the financial position, results of operations and cash flows with
respect to the interim financial statements, have been included. The results of
operations for the interim periods are not necessarily indicative of the results
for the entire fiscal year.
The unaudited financial statements for the six months ended June 30, 1995
and the five months ended May 31, 1996 have been prepared by subtracting the
results of operations for the three months ended December 31, 1994 and 1995 from
the results of operations for the nine months ended June 30, 1995 and the eight
months ended May 31, 1996 for Arrow. Arrow's revenues were $2,425,000 and
$2,211,000 and it had net income (loss) of $7,000 and $(232,000) for the three
months ended December 31, 1994 and 1995, respectively.
3. PRO FORMA NET INCOME
Pursuant to the Merger, the pro forma information has been presented for
the purpose of reflecting net income as if the Merger had occurred on January 1,
1995.
General and administrative expenses for the periods presented reflect
compensation and related benefits that owners received during the periods. One
owner agreed to reductions in salary and benefits in connection with the Merger
and entered into a five-year employment agreement which provides for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a two-year covenant not to compete following termination of such person's
employment.
The unaudited pro forma data present compensation at the level the
stockholder of the Company has agreed to receive from the Company subsequent to
the Merger. In addition, the pro forma data present the incremental provision
for income taxes as if the Company had been subject to federal income taxes and
for the income tax impact of the compensation differential discussed above.
40
COACH USA, INC.
BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, MAY 31,
1995 1996
-------- ---------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 1 $ 1
Deferred offering costs ............................ 188 5,173
-------- ---------
Total Current Assets ............................. 189 5,174
PROPERTY AND EQUIPMENT, net ........................... 9 49
Other Assets .......................................... -- 54
-------- ---------
Total assets ..................................... $ 198 $ 5,277
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities ........... $ 197 $ 5,253
-------- ---------
Total liabilities ................................ 197 5,253
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par, 30,000,000 shares
authorized, 1,473,724 and 2,165,724 shares issued 15 22
Additional Paid-in Capital ......................... -- 2,055
Retained earnings .................................. (14) (2,053)
-------- ---------
Total stockholders' equity ....................... 1 24
-------- ---------
Total liabilities and stockholders' equity ....... $ 198 $ 5,277
======== =========
The accompanying notes are an integral part of these financial statements.
41
COACH USA, INC.
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
TWO MONTHS FIVE MONTHS
ENDED ENDED
MAY 31, JUNE 30,
1996 1996
----- -------
REVENUES ............................................. $-- $ --
OPERATING EXPENSES ................................... -- --
----- -------
Gross profit .................................... -- --
GENERAL AND ADMINISTRATIVE EXPENSES .................. 100 2,176
----- -------
Operating loss .................................. (100) (2,176)
OTHER (INCOME) EXPENSE:
Interest expense .................................. 31 31
Interest income ................................... (170) (170)
----- -------
INCOME (LOSS) BEFORE INCOME TAXES .................... 39 (2,037)
PROVISION FOR INCOME TAXES ........................... 16 16
----- -------
NET INCOME (LOSS) .................................... $ 23 $(2,053)
===== =======
PRO FORMA DATA:
Historical net income (loss) ...................... $ 23 $(2,053)
Pro forma compensation differential ............... -- 2,076
Less: Pro forma provision for income taxes ........ -- --
PRO FORMA NET INCOME ................................. $ 23 $ 23
===== =======
The accompanying notes are an integral part of these financial statements.
42
COACH USA, INC.
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
TWO MONTHS FIVE MONTHS
ENDED ENDED
MAY 31, MAY 31,
1996 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................. $ 23 $ (2,053)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities --
Non-recurring, non-cash charge ................... $ -- $ 2,076
Depreciation ..................................... 1 1
Prepaid expenses and other current assets ..... (2,441) (4,985)
Accounts payable and accrued liabilities ...... 2,512 5,056
Other ......................................... (54) (54)
--------- ---------
Net cash provided by operating activities ... 41 41
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ................ (41) (41)
--------- ---------
Net cash used in investing activities ....... (41) (41)
--------- ---------
NET INCREASE (DECREASE) IN CASH ....................... -- --
CASH AND CASH EQUIVALENTS, beginning of period ........ 1 1
--------- ---------
CASH AND CASH EQUIVALENTS, end of period .............. $ 1 $ 1
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest ............................. $ -- $ --
The accompanying notes are an integral part of these financial statements.
43
COACH USA, INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
In September 1995, Coach USA, Inc. ("Coach USA" or the "Company") was
founded to create a national company providing motorcoach transportation
services.
Concurrent with the initial public offering of its common stock (the
"Offering"), wholly-owned subsidiaries of Coach USA merged (the "Merger") with
the following six companies (each, a Founding Company and collectively, the
"Founding Companies"): Suburban Transit Corp. and related companies (Suburban),
Grosvenor Bus Lines, Inc. and subsidiaries, operating as Gray Line of San
Francisco (Gray Line SF), Leisure Time Tours (Leisure), Community Bus Lines,
Inc. and related companies (Community), Cape Transit Corp., operating as
Adventure Trails (Adventure), and Arrow Stage Lines, Inc. (Arrow). The Mergers
have been effected by Coach USA through issuance of its common stock and cash.
Each of the Founding Companies is a motorcoach company, which provides a wide
range of commuter, transit, recreation and excursion transportation services.
2. BASIS OF PRESENTATION
The unaudited condensed financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
For accounting purposes and for purposes of the presentation of the
financial statements herein, May 31, 1996, has been used as the effective date
of the Merger. The results of the Company for the month ended June 30, 1996 are
included in the Coach USA, Inc. condensed consolidated financial statements.
INTERIM FINANCIAL INFORMATION
The interim financial statements as of May 31, 1996, and for the two
months and five months ended May 31, 1996, are unaudited, and certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
omitted. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present the financial
position, results of operations and cash flows with respect to the interim
financial statements, have been included. The results of operations for the
interim periods are not necessarily indicative of the results for the entire
fiscal year.
3. PRO FORMA NET INCOME
During the three months ended March 31, 1996, Coach USA sold an aggregate
of 692,000 shares of Common Stock to management. As a result, Coach USA incurred
a non-recurring, non-cash charge of $2,076,000, representing the difference
between the amounts paid for the shares and the estimated fair value of the
shares on the date of sale as if the companies were combined.
44
PART I, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company's motorcoach revenues are derived from fares charged to
individual passengers and fees charged under contracts to provide motorcoach
services. Operating expenses consist primarily of salaries and benefits for
drivers and mechanics, depreciation, maintenance, fuel, oil, insurance and
commissions to agents. General and administrative expenses consist primarily of
compensation and related benefits to the Founding Companies' owners and certain
key employees, administrative salaries and benefits, marketing, communications
and professional fees.
The Founding Companies have been managed prior to the Merger as
independent private companies, and, as such, their results of operations reflect
a variety of tax structures (S Corporations and C Corporations) which have
influenced, among other things, their historical levels of owners' compensation.
These owners and certain key employees agreed to certain reductions in their
compensation and benefits in connection with the organization of the Company and
the Mergers. The differential between the previous compensation and benefits of
these individuals and the compensation they agreed to receive subsequent to the
Mergers is referred to as "Compensation Differential." This Compensation
Differential and the related income tax effects have been reflected as pro forma
adjustments in the Coach USA pro forma financial information.
The Company has preliminarily analyzed the savings that it expects to
realize by consolidating certain general and administrative functions, including
reductions in insurance and employee benefit plan expenses. In addition, the
Company anticipates that it will realize benefits from: (i) the reduction in
interest payments related to the prepayment of a portion of the Founding
Companies' debt; (ii) its ability to borrow at lower interest rates than the
Founding Companies; and (iii) savings in other general and administrative areas.
The Company cannot, at this time, quantify these savings. It is anticipated that
these savings will be partially offset by the costs of being a public company
and the incremental increase in costs related to the Company's new corporate
management. However, these costs also cannot be accurately quantified.
Accordingly, neither the anticipated savings nor the anticipated costs have been
included in the pro forma financial information included herein. As a result,
historical combined results may not be comparable to, or indicative of, future
performance.
RESULTS OF OPERATIONS -- PRO FORMA COMBINED (UNAUDITED)
Three Months Ended Six Months Ended
JUNE 30, JUNE 30,
----------------- -----------------
1995 1996 1995 1996
------- ------- ------- -------
Revenues ............................... $29,641 $31,561 $52,656 $55,782
Operating Expenses ..................... 22,712 24,020 42,764 45,080
------- ------- ------- -------
Gross Profit ........................ 6,929 7,541 9,892 10,702
General and Administrative Expenses .... 2,937 3,309 5,715 6,236
Interest and Other ..................... 708 597 1,466 1,300
------- ------- ------- -------
Income Before Income Taxes ............. 3,284 3,635 2,711 3,166
Provision for Income Taxes ............. 1,359 1,484 1,126 1,329
------- ------- ------- -------
Pro Forma Net Income ................... $ 1,925 $ 2,151 $ 1,585 $ 1,837
======= ======= ======= =======
45
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The pro forma combined results discussed below occurred when the combined
Founding Companies were under common control and management for the month of
June 1996, all other periods reflected were not under common control or
management and may not be comparable to, or indicative of, future performance.
COMBINED RESULTS FOR THREE AND SIX MONTHS ENDED JUNE 1995 COMPARED TO 1996
Revenues increased by 6.5% and 5.9% to $31.6 million and $55.8 million,
respectively, for the three and six months ended June 30, 1996. The increase in
six month revenues was largely due to an increase in Leisure's revenues of $1.4
million, primarily attributable to significantly increased ridership on
scheduled service to the Atlantic City casinos, an increase in Gray Line SF's
revenues of $0.9 million, primarily attributable to an increase in the level of
municipal contract services, and an increase in Arrow's revenues of $0.4
million, primarily attributable to increased charter revenues.
Operating expenses increased 5.8%and 5.4% to $24.0 million and $45.1
million, respectively, for the three and six months ended June 30, 1996. The
increase in six month operating expenses was largely due to a combined increase
of $0.8 million at all of the locations attributable to higher fuel costs and
consumption. The remaining increase in costs of $1.5 million was largely due to
increased operations at all locations.
General and Administrative expenses after elimination of the compensation
differential and non-recurring stock compensation increased 12.7% and 9.1%,
respectively, as compared to the three months and six months ended June 30,
1995. The increase in general and administrative expenses in the three- and
six-month periods ended June 30, was largely due to an increase of $0.2 million
related to the establishment of corporate overhead required to execute the
acquisition program and to manage the consolidated group of companies and an
overall increase in operations.
Interest expense decreased $0.2 million as compared to the three months
and six months ended June 30, 1995, due to the re-payment of debt through the
use of proceeds of the Offering and due to lower rates from the Company's new
credit facility.
Pro forma net income, which has been adjusted for the Compensation
Differential and the pro forma provision for taxes, increased during the three
months ended June 30, 1996 as compared to the three months ended June 30, 1995.
EFFECTS OF COMBINATION
Effective in the second quarter of 1996, the Company began incurring
expenses, including salaries for members of senior management and administrative
staff, travel and office expenses, related to the establishment of its corporate
and administrative infrastructure. Management believes that these additional
costs will be offset by operational efficiencies achieved through integration of
the operations of these companies specifically in insurance and financing and
benefits to be derived as a result of the Company's acquisition program.
LIQUIDITY AND CAPITAL RESOURCES -- PRO FORMA COMBINED
Net cash provided by operating activities was $4.4 million for the six
months ended June 30, 1996. Capital expenditures during the period totaled $14.6
million. The majority of the capital expenditures were
46
for the purchase of motorcoach equipment. Typically motorcoaches are purchased
in the first two quarters prior to the seasonally strong summer months.
On May 17, 1996 the Company completed the Offering, which involved the
public sale of 4,140,000 shares of Common Stock at a price of $14.00 per share.
The proceeds from the transaction, net of underwriting discounts and commissions
and after deducting estimated expenses of the Offering, were approximately $48.1
million. Of this amount, $23.8 million was used to pay the cash portion of the
purchase price for the Founding Companies. In addition, the net proceeds were
used to repay indebtedness assumed by the Company in the Mergers, for working
capital and for general corporate purposes, which are expected to include future
acquisitions.
The Company is negotiating to replace its present $30 million revolving
credit facility with a three year, $115 million revolving credit facility with
eight banks. The interest rate applicable to borrowings under this facility is
the London Interbank Offering Rate ("LIBOR") plus 1.00%, with the rate
escalating as the Company's level of funded debt increases relative to its cash
flow. A commitment fee is payable on the unused portion of the facility. As of
August 14, 1996 the Company had borrowings of approximately $16.1 million
outstanding under this facility.
Management believes that the Company's revolving credit facility, its cash
flows from operations and the 3.5 million shares of common stock available under
its shelf registration statement provide sufficient liquidity to execute the
Company's acquisition and internal growth plans. Should the Company accelerate
its acquisition program, the Company may need to seek additional financing
through the public or private sale of equity or debt securities. There can be no
assurance that the Company could secure such financing if an when it is needed
or on terms the Company deems acceptable.
RESULTS OF OPERATIONS - CONSOLIDATED COACH USA, INC.
The Company conducted no significant operations from its inception through
the Offering and the Merger. For accounting purposes and the presentation of the
actual financial results herein, May 31, 1996 has been used as the effective
date of the Merger. The Company incurred various legal, accounting, marketing
and travel costs in connection with the Offering and the Merger. These costs are
reflected as deferred offering cost as of May 31, 1996.
Revenue for the one month ended June 30, 1996, was $10.8 million, and
gross profit for the one month was $2.7 million. Operating income was $1.6
million, and net income was $0.9 million. As previously mentioned, the Company
had no operations prior to the mergers in May 1996. For further discussion see
pro forma combined results discussed above.
INTERIM RESULTS -- SUBURBAN
Revenues for the five months ended May 31, 1996 remained at a relatively
constant pace compared with the six months ended June 30, 1995. As a percentage
of revenue, operating expenses for the five months ended May 31, 1996 increased
4.8% as compared to the six months ended June 30, 1995, primarily due to higher
fuel costs and increased maintenance and operating expenses which were largely a
result of unusual weather conditions. General and administrative expenses
remained relatively constant between the periods. Interest expense increased
$50,000 during the five months ended May 31, 1996 as compared to the same period
in the prior year due to higher levels of average debt outstanding resulting
from additional
47
motorcoaches purchased with borrowed funds. As a result of the foregoing,
Suburban incurred a pro forma net loss of $(0.1 million) for the five months
ended May 31, 1996 compared to income of $0.3 million for the six months ended
June 30, 1995.
INTERIM RESULTS -- GRAY LINE SF
Revenues for the five months ended May 31, 1996 increased in pace by
approximately 7% as compared to the six months ended June 30, 1995. This
increase was due to an increase in the level of municipal contract service.
Operating expenses for the five months ended May 31, 1996 increased by
approximately 9% pace as compared to the six months ended June 30, 1995,
primarily due to higher fuel costs and increased operations. General and
administrative expenses for the five months ended May 31, 1996 remained constant
as compared to the six months ended June 30, 1995. Interest expense decreased
slightly during the five months ended May 31, 1996 as compared to June 30, 1995
in the prior year due to lower levels of average debt outstanding. As a result
of the foregoing, the net income remained relatively constant between the
periods.
INTERIM RESULTS -- LEISURE
Revenues for the five months ended May 31, 1996 increased at a pace of
approximately 15% as compared to the six months ended June 30, 1995. The
increase in revenues was primarily the result of significantly increased
ridership on scheduled service to the Atlantic City casinos, which was only
partially offset by the unusual winter weather conditions experienced in much of
the Northeast in the first three months of the year. Operating expenses for the
five months ended May 31, 1996 increased at a pace of 10% as compared to the six
months ended June 30, 1995, primarily due to increased operating, fuel and
maintenance costs. General and administrative expenses remained relatively
constant between the periods. Interest expense increased by $54,000 during the
five months ended May 31, 1996 as compared to June 30, 1995, due to higher
levels of debt outstanding from additional motorcoaches purchased with borrowed
funds. As a result of the foregoing, net income increased at a pace of over 50%
for the five months ended May 31, 1996 as compared to net income for the six
months ended June 30, 1995.
INTERIM RESULTS -- COMMUNITY
Revenues for the five months ended May 31, 1996 remained relatively
constant in pace with the six months ended June 30, 1995. Operating expenses
also remained relatively constant in pace for the five months ended May 31, 1996
as compared to the six months ended June 30, 1995 as lower overall operating
costs were offset by higher fuel coats. General and administrative expenses
remained at a relatively constant pace between the periods. As a result of the
foregoing, net income remained relatively constant between the periods.
INTERIM RESULTS -- ADVENTURE TRAILS
Revenues for the five months ended May 31, 1996 increased in pace by
approximately 5% as compared to the six months ended June 30, 1995. The increase
in revenues was primarily the result of increased charter revenues somewhat
offset by a decrease in revenues in the first two months of 1996 because of
unusual winter weather conditions that limited the ability of motorcoaches to
operate. Operating expenses for the five months ended May 31, 1996 increased at
a pace of 6% relative to the six months ended June 30, 1995, primarily as a
result of increased operations and fuel costs. General and administrative
expenses remained at a relatively constant pace between the periods. Interest
expense
48
remained relatively constant between the periods. As a result of the foregoing,
the net income for the five months ended May 31, 1996 represents a slight
decrease in results as compared to the same period in 1995.
INTERIM RESULTS -- ARROW
Revenues for the five months ended May 31, 1996 increased in pace by over
7% as compared to the six months ended June 30, 1995. The increase in revenues
was primarily due to increased charter business in the months of April and May
only partially offset by reduced charter revenues resulting from winter weather
conditions that produced less snow in the Southwest and less favorable ski
conditions. Operating expenses for the five months ended May 31, 1996 decreased
slightly in pace as compared to the six months ended June 30, 1995, primarily
due to reduced maintenance costs. General and administrative expenses remained
relatively constant in pace between the periods. Interest expense increased $0.1
million during the five months ended May 31, 1996 as compared to the same period
in the prior year due to higher levels of debt outstanding from additional
motorcoaches purchased with borrowed funds. As a result of the foregoing, net
income increased by over 75% for the five months ended May 31, 1996.
SEASONALITY
The timing of certain holidays, weather conditions and seasonal vacation
patterns may cause the Company's quarterly results of operations to fluctuate
significantly. The Company expects to realize higher revenues, operating income
and net income during the second and third quarters and lower revenues and net
income during the first and fourth quarters.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121. "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121) which establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles and goodwill. Adoption is required in financial
statements for fiscal years beginning after December 15, 1995. The Company does
not expect the adoption of SFAS 121 to have a material effect, if any, on its
combined financial statements. The Company will adopt SFAS 121 in 1996.
49
COACH USA, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 6 of Notes to Combined Founding Companies' Financial Statements
included in the Company's Registration Statement on Form S-1 (Reg. No.
333-6525) relating to the Company's shelf registration statement, which
was declared effective by the SEC on July 16, 1996.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
50
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Coach USA, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COACH USA, INC.
Dated: August 14, 1996 By: /s/ LAWRENCE K. KING
Name: Lawrence K. King
Title:
Senior Vice President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMBINED FOUNDING COMPANIES COMBINED BALANCE SHEETS AND COMBINED
STATEMENTS OF INCOME, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 1-MO 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 MAR-31-1996
<CASH> 1,264,000 2,796,000
<SECURITIES> 541,000 2,750,000
<RECEIVABLES> 6,692,000 5,386,000
<ALLOWANCES> 310,000 301,000
<INVENTORY> 2,311,000 2,492,000
<CURRENT-ASSETS> 14,432,000 16,692,000
<PP&E> 97,219,000 90,785,000
<DEPRECIATION> 31,527,000 30,247,000
<TOTAL-ASSETS> 81,488,000 78,059,000
<CURRENT-LIABILITIES> 20,662,000 25,722,000
<BONDS> 0 0
0 0
0 0
<COMMON> 114,000 6,272,000
<OTHER-SE> 37,867,000 0
<TOTAL-LIABILITY-AND-EQUITY> 81,488,000 78,059,000
<SALES> 10,844,000 24,221,000
<TOTAL-REVENUES> 10,844,000 24,221,000
<CGS> 8,155,000 21,164,000
<TOTAL-COSTS> 9,254,000 24,654,000
<OTHER-EXPENSES> 0 599,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 80,000 786,000
<INCOME-PRETAX> 1,510,000 (1,032,000)
<INCOME-TAX> 634,000 (386,000)
<INCOME-CONTINUING> 876,000 (646,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 876,000 (646,000)
<EPS-PRIMARY> .07 0
<EPS-DILUTED> .07 0
</TABLE>
