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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 16, 1997
GREYHOUND LINES, INC.
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-10841 86-0572343
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
</TABLE>
15110 N. DALLAS PARKWAY
SUITE 600
DALLAS, TEXAS 75248
(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code: (972) 789-7000
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ITEM 5. OTHER EVENTS.
In connection with its concurrent offerings (the "Offerings") of 11 1/2%
Senior Notes due 2007 (the "Notes") and 8 1/2% Convertible Exchangeable
Preferred Stock (the "Preferred Stock") completed April 16, 1997, the Company
prepared a final offering memorandum for each offering which, in each case,
contains a pro forma financial statement of operations for the year ended
December 31, 1996, and a pro forma balance sheet as of December 31, 1996. These
pro forma financial statements are set forth below.
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The following unaudited pro forma condensed consolidated financial
information (the "Pro Forma Financial Information") has been prepared to
illustrate the effects on the Company's results of operations and financial
position of the Offerings and the application of the net proceeds therefrom. The
Pro Forma Financial Information is based on the historical audited financial
statements of the Company and the historical financial statements of Carolina
Trailways, which the Company entered into an agreement to acquire on March 5,
1997. The following Pro Forma Financial Information should be read in
conjunction with the historical financial statements of the Company, included in
the Company's Annual Report on Form 10-K filed with Securities and Exchange
Commission on March 19, 1997. The financial information presented for Carolina
Trailways is derived from unaudited financial information of Carolina Trailways
as of and for the year ended December 31, 1996, which management believes will
not differ materially from the audited financial statements of Carolina
Trailways currently being prepared.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1996 gives effect to the Offerings and the
application of the net proceeds therefrom as if such transactions had occurred
on January 1, 1996. The Unaudited Pro Forma Condensed Consolidated Statement of
Financial Position as of December 31, 1996 gives effect to the Offerings and the
application of the net proceeds therefrom as if such transactions had occurred
on that date. The Pro Forma Financial Information is not necessarily indicative
of either future results of operations or the results that might have occurred
had the transactions taken place on the indicated dates.
The pro forma adjustments are based upon available information. These
adjustments are directly attributable to the transactions referenced above, and
are expected to have a continuing impact on the Company's business, results of
operations, and financial position. The purchase of Carolina Trailways will be
accounted for using the purchase method of accounting, pursuant to which the
total purchase costs of the acquisition will be allocated to the tangible and
intangible assets and liabilities acquired based upon their estimated fair
values. The final allocation of the purchase price will be determined upon the
receipt of final appraisals of the acquired assets; however, such allocation is
not expected to differ materially from the preliminary allocation.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CAROLINA
1996 TRAILWAYS OFFERING 1996
HISTORICAL AS ADJUSTED(A) ADJUSTMENTS PRO FORMA
---------- -------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Operating Revenues
Transportation services
Regular route............................. $597,779 $15,803 $ -- $613,582
Package express........................... 33,527 381 -- 33,908
Food services................................ 21,363 -- -- 21,363
Other operating revenues..................... 48,189 450 -- 48,639
-------- ------- -------- --------
Total operating revenues............. 700,858 16,634 -- 717,492
-------- ------- -------- --------
Operating Expenses
Maintenance.................................. 73,441 2,429 -- 75,870
Transportation............................... 170,979 3,645 -- 174,624
Agents' commissions and station costs........ 131,715 2,938 -- 134,653
Marketing, advertising and traffic........... 25,811 122 -- 25,933
Insurance and safety......................... 41,088 619 -- 41,707
General and administration................... 80,496 2,336 -- 82,832
Depreciation and amortization................ 30,683 1,297 132 (b) 32,112
Operating taxes and licenses................. 49,831 713 -- 50,544
Operating rents.............................. 53,993 -- (458) (b) 53,535
Cost of goods sold -- food services.......... 13,774 -- -- 13,774
Other operating expenses..................... 8,243 4 -- 8,247
-------- ------- -------- --------
Total operating expenses............. 680,054 14,103 (326) 693,831
-------- ------- -------- --------
Operating Income............................... 20,804 2,531 326 23,661
Interest Expense............................... 27,346 920 17,250 (c) 24,768
(1,466) (d)
(15,267) (e)
(3,117) (f)
(702) (g)
(142) (b)
(534) (a)
480 (h)
Gain on Sale of Asset.......................... -- 305 -- 305
-------- ------- -------- --------
Income (Loss) Before Income Taxes and
Extraordinary Items.......................... (6,542) 1,916 3,824 (802)
Income Tax Provision........................... 62 -- -- 62
-------- ------- -------- --------
Income (Loss) Before Extraordinary Items....... (6,604) 1,916 3,824 (864)
Preferred Stock Dividends...................... -- -- 5,100 (i) 5,100
-------- ------- -------- --------
Net Income (Loss) Attributable to Common
Shareholders Before Extraordinary Items...... $ (6,604) $ 1,916 $ (1,276) (j) $ (5,964)
======== ======= ======== ========
Net Loss Per Share of Common Stock Before
Extraordinary Items.......................... $ (0.11) $ (0.11)
Weighted Average Shares Outstanding............ 58,263 58,263
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends(k)................. -- --
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CAROLINA
1996 TRAILWAYS OFFERING 1996
HISTORICAL AS ADJUSTED(A) ADJUSTMENTS PRO FORMA
---------- -------------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current Assets
Cash and cash equivalents............... $ 898 $ 1,587 $ -- $ 2,485
Other current assets.................... 60,416 2,958 -- 63,374
-------- ------- --------- --------
Total current assets............ 61,314 4,545 -- 65,859
Property, Plant and Equipment, net of
accumulated depreciation............. 314,454 2,745 5,250 (b) 322,449
Insurance and Security Deposits......... 76,180 -- -- 76,180
Intangibles, net of accumulated
amortization......................... 20,970 26,924 4,729 (l) 52,623
Other Long Term Assets.................. 27,364 232 -- 27,596
-------- ------- --------- --------
Total assets.................... $500,282 $34,446 $ 9,979 $544,707
======== ======= ========= ========
Current Liabilities
Accrued liabilities..................... $ 53,500 $ 1,494 $ (857) (m) $ 47,776
(6,361) (n)
Current maturities of long-term debt.... 11,662 1,783 (7,326) (n) 6,023
(96) (b)
Other current liabilities............... 53,287 1,908 -- 55,195
-------- ------- --------- --------
Total current liabilities....... 118,449 5,185 (14,640) 108,994
Reserve for Injuries and Damages.......... 40,099 -- -- 40,099
Revolving Credit Facility................. 10,665 25,900 (25,452) (o) 11,113
10% Senior Notes due 2007................. 138,679 -- (138,679) (n) --
11 1/2% Senior Notes due 2007............. -- -- 150,000 (p) 150,000
Other Long-Term Debt...................... 54,899 2,727 (1,464) (b) 56,162
Less: Current Maturities.................. (11,662) (1,783) 7,422 (n) (b) (6,023)
Other Liabilities......................... 8,272 2,417 -- 10,689
-------- ------- --------- --------
Total liabilities............... 359,401 34,446 (22,813) 371,034
-------- ------- --------- --------
Stockholders' Equity
Preferred stock......................... -- -- 60,000 (q) 60,000
Common stock............................ 585 -- -- 585
Capital in excess of par value.......... 229,104 -- (2,250) (q) 226,854
Retained deficit........................ (81,237) -- (24,958) (j) (106,195)
Less: Unfunded accumulated pension
obligation........................... (6,533) -- -- (6,533)
Less: Treasury stock, at cost........... (1,038) -- -- (1,038)
-------- ------- --------- --------
Total stockholders' equity...... 140,881 -- 32,792 173,673
-------- ------- --------- --------
Total liabilities and
stockholders' equity.......... $500,282 $34,446 $ 9,979 $544,707
======== ======= ========= ========
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
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NOTES TO PRO FORMA FINANCIAL INFORMATION
(a) The Company has entered into an agreement to acquire Carolina Trailways. The
acquisition is to be accounted for as a purchase business combination. The
purchase price, including acquisition costs, is estimated to be $21.2
million and has been allocated as follows (in thousands):
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<S> <C>
Tangible assets purchased................................... $ 7,522
Liabilities assumed......................................... 13,246
Purchase price in excess of net tangible assets
(goodwill)................................................ 26,924
</TABLE>
The adjusted condensed statement of operations data of Carolina Trailways
includes adjustments to (1) reduce compensation paid to officers to amounts
agreed to for periods after the acquisition and to eliminate management
fees paid to former stockholders, (2) adjust depreciation expense based
on new property, plant and equipment values and lives, and (3) record
amortization of goodwill over 30 years.
Approximately $4.4 million of existing Carolina Trailways indebtedness is
to be repaid upon the closing of such acquisition with a portion of the net
proceeds of the Offerings and is reflected as an Offering Adjustment.
(b) Represents the concurrent sale of an interest in one terminal, repayment of
related mortgage debt and the purchase of four other terminals.
(c) Represents the interest expense related to the Notes.
(d) Represents elimination of the additional interest expense related to the
interest rate swap agreements.
(e) Represents elimination of the interest expense related to the 10% Senior
Notes due 2007 (the "10% Senior Notes").
(f) Represents elimination of the amortization of the discount on the 10% Senior
Notes.
(g) Represents elimination of the interest expense on borrowings under the
Revolving Credit Facility to be repaid with a portion of the net proceeds of
the Offerings.
(h) Represents amortization of deferred debt issuance costs related to the
Notes.
(i) Represents the payment of cash dividends on the Preferred Stock (assuming
the over-allotment option is not exercised).
(j) Excludes an approximately $28.9 million extraordinary loss at January 1,
1996 on early extinguishment of debt related to the interest rate swap
agreements and unamortized debt discount and repayment premium related to
the 10% Senior Notes. The extraordinary loss would have been approximately
$25.0 million at December 31, 1996 and will be recorded in the period the
Offerings are consummated.
(k) As of December 31, 1996, earnings were insufficient to cover fixed charges
by $6.5 million on an historical basis, and $6.5 million on a pro forma
basis, giving effect to all adjustments described above. If, however, the
pro forma ratio of earnings to fixed charges were calculated to give effect
only to the refinancing of the 10% Senior Notes and the issuance only of
sufficient Notes and Preferred Stock therefor, earnings would have been
insufficient to cover fixed charges by $6.4 million. See Note (g) to
"Selected Consolidated Financial Information."
(l) Represents issuance costs related to the Notes.
(m) Represents the payment of accrued interest on the interest rate swap
agreements.
(n) Represents the payment of the outstanding principal balance and accrued
interest of the 10% Senior Notes.
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(o) Represents the payment of the purchase price and acquisition costs of
Carolina Trailways ($21.2 million) and the repayment of Carolina Trailways
indebtedness ($4.4 million).
(p) Represents the issuance of the Notes.
(q) Represents the issuance of 2,400,000 shares of Preferred Stock at $25.00 per
share pursuant to the Preferred Stock Offering, and the reduction to capital
in excess of par value for estimated issuance costs (assuming the
over-allotment option is not exercised).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREYHOUND LINES, INC.
By: /s/ STEVEN L. KORBY
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Steven L. Korby
Executive Vice President, Chief
Financial
Officer and Treasurer
Date: April 28, 1997
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