<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 1-10841
GREYHOUND LINES, INC.
and its Subsidiaries identified in Footnote (1) below
(Exact name of registrant as specified in its charter)
DELAWARE 86-0572343
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(Address of principal executive offices) (Zip code)
(972) 789-7000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
----- -----
As of August 11, 2000, the registrant had 58,743,069 shares of Common
Stock, $0.01 par value, outstanding all of which are held by the
registrant's parent company.
(1) This Form 10-Q is also being filed by the co-registrants specified under
the caption "Co-Registrants", each of which is a wholly-owned subsidiary
of Greyhound Lines, Inc. and each of which has met the conditions set
forth in General Instructions H(1)(a) and (b) of Form 10-Q for filing Form
10-Q in a reduced disclosure format.
(2) The registrant meets the conditions set forth in General Instructions
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the
reduced disclosure format.
<PAGE> 2
CO-REGISTRANTS
This Form 10-Q is also being filed by the following entities. Except as set
forth below, each entity has the same principal executive offices, zip code and
telephone number as that set forth for Greyhound Lines, Inc. on the cover of
this report:
<TABLE>
<CAPTION>
I.R.S. EMPLOYER JURISDICTION
COMMISSION IDENTIFICATION OF
NAME FILE NO. NO. INCORP.
---- ------------ --------------- ------------
<S> <C> <C> <C>
Atlantic Greyhound Lines of Virginia, Inc. 333-27267-01 58-0869571 Virginia
GLI Holding Company 333-27267-04 75-2146309 Delaware
Greyhound de Mexico, S.A. de C.V 333-27267-05 None Republic of
Mexico
Sistema Internacional de Transporte de Autobuses, Inc. 333-27267-08 75-2548617 Delaware
Texas, New Mexico & Oklahoma Coaches, Inc. 333-27267-10 75-0605295 Delaware
1313 13th Street
Lubbock, Texas 79408
(806) 763-5389
T.N.M. & O. Tours, Inc. 333-27267-11 75-1188694 Texas
(Same as Texas, New Mexico & Oklahoma
Coaches, Inc.)
Vermont Transit Co., Inc. 333-27267-12 03-0164980 Vermont
345 Pine Street
Burlington, Vermont 05401
(802) 862-9671
</TABLE>
As of June 30, 2000, Atlantic Greyhound Lines of Virginia, Inc. had 150 shares
of common stock outstanding (at a par value of $50.00 per share); GLI Holding
Company had 1,000 shares of common stock outstanding (at a par value of $0.01
per share); Greyhound de Mexico, S.A. de C.V. had 10,000 shares of common stock
outstanding (at a par value of $0.10 Mexican currency per share); Sistema
Internacional de Transporte de Autobuses, Inc. had 1,000 shares of common stock
outstanding (at a par value of $0.01 per share); Texas, New Mexico & Oklahoma
Coaches, Inc. had 1,000 shares of common stock outstanding (at a par value of
$0.01 per share); T.N.M. & O. Tours, Inc. had 1,000 shares of common stock
outstanding (at a par value of $1.00 per share); and Vermont Transit Co., Inc.
had 505 shares of common stock outstanding (no par value). Each of the above
named co-registrants (1) have filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period such co-registrant was required to file such
reports), and (2) have been subject to such filing requirements for the past 90
days.
2
<PAGE> 3
GREYHOUND LINES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Interim Consolidated Statements of Financial Position as of
June 30, 2000 (Unaudited) and December 31, 1999 ................. 5
Interim Consolidated Statements of Operations for the Three and
Six months Ended June 30, 2000 and 1999 (Unaudited) ............. 6
Condensed Interim Consolidated Statements of Cash Flows for the
Six months Ended June 30, 2000 and 1999 (Unaudited) ............. 7
Notes to Interim Consolidated Financial Statements (Unaudited) ..... 8
Item 2. Management's Narrative Analysis of Results of Operations ............ 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ..................................................... 14
Item 6. Exhibits and Reports on Form 8-K ...................................... 14
SIGNATURES .................................................................... 15
</TABLE>
3
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
4
<PAGE> 5
GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
Current Assets
Cash and cash equivalents................................................... $ 8,173 $ 8,295
Accounts receivable, less allowance for doubtful accounts of $393
and $402 ................................................................. 48,491 46,830
Inventories, less allowance for shrinkage of $226 and $226 ................. 8,271 7,494
Prepaid expenses............................................................ 4,664 5,694
Assets held for sale........................................................ 4,511 4,545
Current portion of deferred tax assets ..................................... 15,826 12,864
Other current assets ....................................................... 2,108 1,851
--------- ---------
Total Current Assets ................................................. 92,044 87,573
Prepaid pension plans ........................................................... 30,983 29,983
Property, plant and equipment, net of accumulated depreciation of $184,027
and $173,273 ............................................................... 397,040 397,077
Investments in unconsolidated affiliates ........................................ 17,133 16,028
Deferred income taxes ........................................................... 14,372 14,711
Insurance and security deposits ................................................. 22,643 22,220
Goodwill, net of accumulated amortization of $4,442 and $3,523 .................. 44,464 45,384
Intangible assets, net of accumulated amortization of $34,561 and $31,825 ....... 25,771 25,821
--------- ---------
Total Assets ......................................................... $ 644,450 $ 638,797
========= =========
Current Liabilities
Accounts payable ........................................................... $ 18,303 $ 23,824
Due to Laidlaw ............................................................. 50,339 42,560
Accrued liabilities ........................................................ 63,619 57,238
Rents payable .............................................................. 19,178 19,129
Unredeemed tickets ......................................................... 15,879 11,956
Redeemable Preferred Stock settlement obligations .......................... 29,275 --
Current portion of environmental reserves .................................. 1,180 1,473
Current maturities of long-term debt ....................................... 6,101 5,671
--------- ---------
Total Current Liabilities ............................................ 203,874 161,851
Environmental reserves .......................................................... 6,193 5,840
Long-term debt, net ............................................................. 170,022 174,581
Minority interests .............................................................. 4,192 4,233
Other liabilities ............................................................... 22,740 22,432
--------- ---------
Total Liabilities .................................................... 407,021 368,937
--------- ---------
Redeemable preferred stock (2,400,000 shares authorized; 217,550 and
1,678,150 shares issued as of June 30, 2000 and December 31, 1999) .......... 5,439 41,954
Stockholders' Equity
Common stock (100,000,000 shares authorized; par value $.01; 58,743,069
shares issued as of June 30, 2000 and December 31, 1999) ............. 587 587
Capital in excess of par value ............................................. 329,464 322,026
Retained deficit ........................................................... (95,536) (92,182)
Accumulated other comprehensive loss, net of tax benefit of $1,360 ......... (2,525) (2,525)
--------- ---------
Total Stockholders' Equity ........................................... 231,990 227,906
--------- ---------
Total Liabilities and Stockholders' Equity ........................... $ 644,450 $ 638,797
========= =========
</TABLE>
5
<PAGE> 6
GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
--------- --------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Transportation service
Passenger services .................... $ 216,919 $ 190,801 $ 396,350 $ 354,489
Package express ....................... 10,880 10,814 21,232 19,937
Food services .............................. 10,924 9,862 20,430 17,662
Other operating revenues ................... 20,116 17,468 35,912 32,164
--------- --------- --------- ---------
Total Operating Revenues .............. 258,839 228,945 473,924 424,252
--------- --------- --------- ---------
OPERATING EXPENSES
Maintenance ................................ 23,685 21,457 45,953 42,905
Transportation ............................. 63,544 54,717 121,824 104,354
Agents' commissions and station costs ...... 46,820 43,236 89,967 83,786
Marketing, advertising and traffic ......... 8,276 7,246 15,754 14,237
Insurance and safety ....................... 13,933 12,642 25,503 24,372
General and administrative ................. 29,232 30,338 58,187 58,613
Depreciation and amortization .............. 11,000 10,982 21,517 20,739
Operating taxes and licenses ............... 15,543 14,329 30,454 28,697
Operating rents ............................ 21,329 18,205 41,871 36,893
Cost of goods sold - food services ......... 7,075 6,410 13,348 11,765
Other operating expenses ................... 1,676 685 2,256 1,605
--------- --------- --------- ---------
Total Operating Expenses .............. 242,113 220,247 466,634 427,966
--------- --------- --------- ---------
Operating Income (Loss) ............................ 16,726 8,698 7,290 (3,714)
Settlement of Stock Options ........................ -- 1,365 -- 21,294
Interest Expense.................................... 5,870 5,377 11,022 11,657
--------- --------- --------- ---------
Income (Loss) Before Income Taxes .................. 10,856 1,956 (3,732) (36,665)
Income Tax Provision (Benefit) ..................... 3,255 881 (1,493) (16,472)
Minority Interests ................................. (111) 267 (163) 323
--------- --------- --------- ---------
Net Income (Loss) Before Extraordinary Item ........ 7,712 808 (2,076) (20,516)
Extraordinary Item, net of tax benefit of $1,310 ... -- -- -- 1,607
--------- --------- --------- ---------
Net Income (Loss) .................................. $ 7,712 $ 808 $ (2,076) $ (22,123)
========= ========= ========= =========
</TABLE>
6
<PAGE> 7
GREYHOUND LINES, INC. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................................. $ (2,076) $ (22,123)
Extraordinary item ....................................... -- 1,607
Non-cash expenses and gains included in net loss ......... 21,331 3,557
Net change in certain operating assets and liabilities... (1,105) 25,667
--------- ---------
Net cash provided by operating activities .............. 18,150 8,708
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ..................................... (29,683) (77,056)
Proceeds from assets sold ................................ 18,128 364
Payments for business acquisitions, net of cash acquired.. -- (7,420)
Other investing activities ............................... (1,180) (984)
--------- ---------
Net cash used for investing activities ................ (12,735) (85,096)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on debt and capital lease obligations ........... (4,130) (9,429)
Redemption of preferred stock ............................ (19,407) (21,768)
Proceeds from issuance of common stock to Laidlaw ........ 178,194 212,186
Purchase of common stock from Laidlaw .................... (158,589) (62,874)
Payment of quarterly preferred dividends ................. (1,605) (2,507)
Net change in revolving credit facility .................. -- (37,785)
--------- ---------
Net cash provided by (used for) financing activities.... (5,537) 77,823
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........ (122) 1,435
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .............. 8,295 4,736
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................... $ 8,173 $ 6,171
========= =========
</TABLE>
7
<PAGE> 8
GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited Interim Consolidated Financial
Statements of Greyhound Lines, Inc. and Subsidiaries (the "Company") include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company's financial position as of June 30, 2000, the results
of its operations for the three and six months ended June 30, 2000 and 1999 and
cash flows for the six months ended June 30, 2000 and 1999 and have been
prepared on a going concern basis which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
operations. Due to the seasonality of the Company's operations, the results of
its operations for the interim period ended June 30, 2000 may not be indicative
of total results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations promulgated by the Securities and Exchange Commission. The
unaudited Interim Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements of Greyhound
Lines, Inc. and Subsidiaries and accompanying notes for the year ended December
31, 1999. Certain reclassifications have been made to the prior period
statements to conform them to the current year presentation. For the three and
six months ended June 30, 2000 and 1999, the Company's comprehensive income
(loss) approximated its' net income (loss).
2. COMMITMENTS AND CONTINGENCIES
The Company's principal sources of liquidity are cash flow from operations and,
previously, funds provided by the Company's parent, Laidlaw Inc. ("Laidlaw"). In
its Quarterly Report on Form 10-Q for the period ended May 31, 2000 (the
"Laidlaw Form 10-Q"), Laidlaw reported that it had declared an interest payment
moratorium on all advances under its syndicated banking facility (the "Laidlaw
Facility") and on certain of its debentures totaling $1.954 billion (the
"Laidlaw Debentures"). As a consequence of the Laidlaw Facility covenant
violations and interest payment moratorium, the Laidlaw Facility and the Laidlaw
Debentures have become due on demand. Laidlaw is endeavoring to renegotiate and
restructure the Laidlaw Facility and Laidlaw Debentures. In the Laidlaw Form
10-Q, Laidlaw further reported that should repayment be demanded for the Laidlaw
Facility and/or the Laidlaw Debentures, Laidlaw may not be able to satisfy these
obligations, nor other obligations which become due in the normal course of
operations and may not be able to continue to operate as a going concern.
Additionally, Laidlaw has advised the Company that cash funding, after August 1,
2000, would be limited to the cash flow generated by the Company from its
operations and that additional funds from Laidlaw would not be available.
Laidlaw further requested and authorized the Company to seek additional funding
from outside financing sources for its seasonal cash requirements and capital
expenditure programs. The Company is in the early stages of seeking this
financing and there can be no assurances that alternate sources of financing, in
amounts necessary to meet Company's needs, will be available, and if available,
that the cost of such financing will not materially exceed the cost currently
experienced by the Company. Should alternate sources not be available or not be
sufficient to meet the Company's needs, the Company may be required to curtail
or defer non-essential or essential capital and operating expenditures and may
not be able to satisfy its obligations as they become due in the normal course
of operations and may not be able to continue to operate as a going concern. As
a result, the Company may not be able to realize its assets and settle its
liabilities in the normal course of operations.
The Company's primary uses of cash are for operating activities, capital
expenditures and debt service. As of June 30, 2000, the Company had $176.1
million of long-term indebtedness (including a current portion of $6.1 million,
excluding $29.3 in payments due to former holders of the Company's Redeemable
Preferred Stock, discussed below), principally, its 11-1/2% Senior Notes due
2007 in the amount of $150 million. Interest on the Senior Notes is payable in
semi-annual installments of $8.6 million, each April and October. The Company
has ordered ninety (90) new motor coaches from Motor Coach Industries
International, of which 33 were delivered as of the date of this report, with
the remaining buses to be delivered this fall. Payment for the buses, totaling
$27.5 million, is payable to Motor Coach in December 2000. As indicated above,
the Company will be seeking interim and permanent lease or purchase money
financing for these buses.
At March 31, 2000, the Company had 1,344,850 shares of Redeemable Preferred
Stock outstanding. Each share of Redeemable Preferred Stock is convertible, at
the option of the holder, into $33.33 in cash. On April 19, 2000, Laidlaw
instructed the Company that due to the limitation of funding available to
Laidlaw from its bank syndicate, it was not practical to make payment for
8
<PAGE> 9
Redeemable Preferred Stock presented for conversion. Accordingly, Laidlaw
advised the Company's transfer agent to reject shares that have been presented
for conversion and to return them to the holders.
On May 9, 2000, a lawsuit was filed by two holders of Redeemable Preferred Stock
alleging: (i) that the Company, in violation of federal securities laws,
materially misrepresented facts, and omitted reference to material facts, with
respect to the conversion rights of holders of the Redeemable Preferred Stock
and (ii) that the Company was in breach of the rights of holders of Redeemable
Preferred Stock as contained in the Company's Restated Certificate of
Incorporation. The suit sought recovery from the Company of the conversion
payments relating to the Redeemable Preferred Stock held by the plaintiffs,
totaling $17.4 million, costs, attorneys' fees and interest. Laidlaw was also
named as a defendant in the suit. Plaintiffs alleged that Laidlaw tortiously
interfered with the Company's obligations to the plaintiffs and sought
injunctive relief, actual and punitive damages, costs, attorneys' fees and
interest. The suit, Reliant Trading and Deutsche Bank AG, London Branch v.
Greyhound Lines, Inc. and Laidlaw Inc., is pending in the United States District
Court for the Eastern District of Wisconsin, Civil Action 00-C-0656. On May 31,
2000, another holder of Redeemable Preferred Stock, Silverado Arbitrage Trading
Ltd., filed a motion with the Court seeking to intervene in the lawsuit.
Silverado sought recovery of conversion payments totaling $4.9 million, costs,
attorneys' fees and interest from the Company and sought injunctive relief,
actual and punitive damages, costs, attorneys' fees and interest as to Laidlaw.
On June 8 and 15, 2000, the Company and Laidlaw reached separate confidential
settlements with the plaintiffs and Silverado whereby they will receive payments
from the Company of the conversion amounts for their Redeemable Preferred Stock,
together with interest accruing from May 1, 2000, in weekly installments through
August 31, 2000. Pending fulfillment of the Company's obligations under the
settlements, the foregoing litigation has been stayed.
Subsequently, the Company and Laidlaw entered into agreements or otherwise made
payment arrangements with additional holders of the Redeemable Preferred Stock
that had previously tendered their shares for conversion whereby such parties
would receive their conversion proceeds in installment payments through August
31, 2000. During the three-month period ending June 30, 2000, the Company made
$8.3 million in conversion payments to the converting holders and, as of June
30, 2000, recorded the remaining amounts payable under the agreements, totaling
$29.3 million, as a current liability.
Since June 30, 2000, the Company has made $19.7 million in additional conversion
payments to these parties and, as of August 11, 2000, $9.6 million remained
payable. As of the date of this report, the Company has made all required
payments called for under the agreements.
On August 1, 2000, the Company paid a quarterly dividend to holders of the
Redeemable Preferred Stock.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
GENERAL
Greyhound is the only nationwide provider of scheduled intercity bus
transportation services in the United States. The Company's primary business
consists of scheduled passenger service, package express service and food
services at certain terminals. The Company's consolidated operations include a
nationwide network of terminal and maintenance facilities, a fleet of
approximately 2,900 buses and approximately 1,800 sales outlets.
The Company's business is seasonal in nature and generally follows the pattern
of the travel industry as a whole, with peaks during the summer months and the
Thanksgiving and Christmas holiday periods. As a result, the Company's operating
cash flows are also seasonal with a disproportionate amount of the Company's
annual operating cash flows being generated during the peak travel periods. The
day of the week on which certain holidays occur, the length of certain holiday
periods, and the date on which certain holidays occur within the fiscal quarter,
may also affect the Company's quarterly results of operations.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of total operating revenue for the three and six months ended June
30, 2000 and 1999:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
OPERATING REVENUES
Transportation service
Passenger services ....................... 83.8% 83.4% 83.6% 83.5%
Package express .......................... 4.2 4.7 4.5 4.7
Food services .............................. 4.2 4.3 4.3 4.2
Other operating revenues ................... 7.8 7.6 7.6 7.6
----- ----- ----- -----
Total Operating Revenues ................. 100.0 100.0 100.0 100.0
----- ----- ----- -----
OPERATING EXPENSES
Maintenance 9.2 9.4 9.7 10.1
Transportation 24.5 23.9 25.7 24.6
Agents' commissions and station costs ...... 18.1 18.9 19.0 19.7
Marketing, advertising and traffic ......... 3.2 3.2 3.3 3.4
Insurance and safety ....................... 5.4 5.5 5.4 5.7
General and administrative ................. 11.3 13.2 12.3 13.8
Depreciation and amortization .............. 4.3 4.8 4.6 4.9
Operating taxes and licenses ............... 6.0 6.3 6.4 6.8
Operating rents ............................ 8.2 7.9 8.8 8.7
Cost of goods sold - food services ......... 2.7 2.8 2.8 2.8
Other operating expenses ................... 0.6 0.3 0.5 0.4
----- ----- ----- -----
Total Operating Expenses ................. 93.5 96.2 98.5 100.9
----- ----- ----- -----
Operating Income (Loss) ...................... 6.5 3.8 1.5 (0.9)
Settlement of Stock Options ................... -- 0.6 -- 5.0
Interest Expense .............................. 2.3 2.3 2.3 2.7
----- ----- ----- -----
Income (Loss) Before Income Taxes ............. 4.2 0.9 (0.8) (8.6)
Income Tax Provision (Benefit) ................ 1.3 0.4 (0.3) (3.9)
Minority Interests............................. (0.1) 0.1 (0.1) 0.1
----- ----- ----- -----
Net Income (Loss) Before Extraordinary Item ... 3.0 0.4 (0.4) (4.8)
Extraordinary Item ............................ -- -- -- 0.4
----- ----- ----- -----
Net Income (Loss) ............................. 3.0 0.4 (0.4) (5.2)
===== ===== ===== =====
</TABLE>
10
<PAGE> 11
The following table sets forth certain operating data for the Company for the
three and six months ended June 30, 2000 and 1999. Certain statistics have been
adjusted and restated from that previously published to provide consistent
comparisons.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2000 1999 % CHANGE 2000 1999 % CHANGE
---------- ------------ -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Regular Service Miles (000's) .... 87,996 83,437 5.5% 165,854 158,555 4.6%
Total Bus Miles (000's) .......... 91,034 86,116 5.7% 171,148 163,461 4.7%
Passenger Miles (000's) .......... 2,364,171 2,191,615 7.9% 4,322,304 4,014,518 7.7%
Passengers Carried (000's) ....... 6,414 5,998 6.9% 12,047 11,408 5.6%
Average Trip Length (passenger
miles / passengers carried) ...... 369 365 1.1% 359 352 2.0%
Load (avg. number of passengers
per regular service mile) ........ 26.9 26.3 2.3% 26.1 25.3 3.2%
Load Factor (% of available seats
filled) .......................... 54.1% 54.2% (0.1%) 52.6% 52.4% 0.4%
Yield (regular route revenue
/ passenger miles) ............... $ 0.0918 $ 0.0871 5.4% $ 0.0917 $ 0.0884 3.7%
Total Revenue Per Total Bus Mile.. $ 2.846 $ 2.659 7.0% $ 2.769 $ 2.595 6.7%
Cost Per Total Bus Mile:
Maintenance ................... $ 0.260 $ 0.249 4.4% $ 0.268 $ 0.262 2.3%
Transportation ................ $ 0.699 $ 0.635 10.1% $ 0.712 $ 0.638 11.6%
</TABLE>
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999 RESULTS OF OPERATIONS
The Company's results of operations include the operating results of On-Time
Delivery and LSX Delivery (collectively the "acquisitions"). The purchase of
On-Time Delivery occurred during the first quarter of 1999 and the acquisition
involving LSX Delivery occurred during the second quarter of 1999. The results
for the acquisitions are included as of their respective purchase dates.
Operating Revenues. Total operating revenues increased $29.9 million, up 13.1%,
and $49.7 million, up 11.7% for the three and six months ended June 30, 2000,
compared to the same periods in 1999.
Passenger services revenues increased $26.1 million, up 13.7%, and $41.9
million, up 11.8%, for the three and six months ended June 30, 2000, compared to
the same period in 1999. The increases in regular route revenues reflect the
impact of a 6.9% and 5.6% increase in the number of passengers carried for the
three and six months ended June 30, 2000, combined with 5.4% and 3.7% increases
in yield and 1.1% and 2.0% increases in average trip length.
Package express revenues increased $0.1 million, up 0.6%, and $1.3 million, up
6.5%, for the three and six months ended June 30, 2000, compared to the same
periods in 1999 (including $0.4 million and $1.7 million related to the
acquisitions). Excluding the acquisitions, the Company experienced a slight
decrease due to reduced standard product deliveries (the traditional, low value,
terminal to terminal market segment) offset somewhat by gains in same day and
priority product deliveries.
Food services revenues increased $1.1 million, up 10.8%, and $2.8 million, up
15.7%, for the three and six months ended June 30, 2000, compared to the same
periods in 1999. Food services revenues increased over the prior year due
primarily to the increase in passenger traffic and the addition of eight
in-terminal restaurants that were previously concessionaire-operated Burger King
locations.
Other operating revenues, consisting primarily of revenue from charter and
in-terminal sales and services, increased $2.6 million, up 15.2%, and $3.7
million, up 11.7%, for the three and six months ended June 30, 2000, compared to
the same periods in 1999. The increases are attributable to higher tenant
income, subsidy income and long distance commissions somewhat offset by a
reduction in interest income.
11
<PAGE> 12
Operating Expenses. Total operating expenses increased $21.9 million, up 9.9%,
and $38.7 million, up 9.0%, for the three and six months ended June 30, 2000,
compared to the same periods in 1999. The increase is attributable to 5.7% and
4.7% increases in bus miles operated for the three and six months ended June 30,
2000, increased fuel cost, higher driver wages, increased terminal salaries,
increased ticket and express commissions due to higher sales and $0.4 million
and $1.6 million for the three and six months ended June 30, 2000 related to the
operations of the acquisitions.
Maintenance costs increased $2.2 million, up 10.4%, and $3.0 million, up 7.1%,
for the three and six months ended June 30, 2000, compared to the same periods
in 1999, due to increased bus miles and higher labor costs.
Transportation expenses which consist primarily of fuel costs and driver
salaries, increased $8.8 million, up 16.1%, and $17.5 million, up 16.7%, for the
three and six months ended June 30, 2000, compared to the same periods in 1999,
due primarily to increased bus miles, fuel costs, and higher driver wages.
Transportation expenses increased on a per-mile basis by 10.1% and 11.6%, for
the three and six months ended June 30, 2000, due largely to higher fuel prices
in 2000 compared to the prior year, and to the impact of the driver wage
increases. For the three and six months ended June 30, 2000, the average cost
per gallon of fuel increased to $0.842 and $0.861 per gallon, compared to $0.576
and $0.531 per gallon during the same periods in 1999, resulting in increased
fuel cost of $4.1 million and $9.5 million.
Agents' commissions and station costs increased $3.6 million, up 8.3%, and $6.2
million, up 7.4%, for the three and six months ended June 30, 2000, compared to
the same periods in 1999. The increase is primarily due to commissions from
increased ticket sales, terminal salaries associated with staffing for the
increase in passengers, terminal salary raises and the inclusion of the
acquisitions.
Marketing, advertising and traffic expenses increased $1.0 million, up 14.2%,
and $1.5 million, up 10.7%, for the three and six months ended June 30, 2000,
compared to the same periods in 1999, due to an increase in spending to support
the increase in revenues.
Insurance and safety costs increased $1.3 million, up 10.2%, and $1.1 million,
up 4.6%, for the three and six months ended June 30, 2000, compared to the same
periods in 1999. The increase is principally due to the increase in revenues and
bus miles operated.
General and administrative expenses decreased $1.1 million, down 3.6%, and $0.4
million, down 0.7%, for the three and six months ended June 30, 2000, compared
to the same periods in 1999 due a reduction in expenses associated with
remediation of the Company's computer systems related to the Year 2000
preparation mostly offset by higher costs related to the increase in revenues
and higher health insurance costs in the year 2000. For the three and six months
ended June 30, 1999, Year 2000 expenses totaled $1.4 million and $2.7 million,
respectively.
Depreciation and amortization increased slightly during the three months ended
June 30, 2000 and increased by $0.8 million, or 3.8%, for the six months ended
June 30, 2000, compared to the same periods in 1999. The increases are primarily
due to higher capital expenditures in prior periods, and goodwill amortization
attributable to the acquisitions.
Operating taxes and licenses expense increased $1.2 million, up 8.5%, and $1.8
million, up 6.1%, for the three and six months ended June 30, 2000, compared to
the same periods in 1999 due to increased payroll taxes resulting from increased
salaries and head-counts related to higher business volume (including increased
miles operated) and increased fuel taxes resulting from increased miles.
Operating rents increased $3.1 million, up 17.2%, and $5.0 million, up 13.5%,
for the three and six months ended June 30, 2000, compared to the same periods
in 1999 due to the increase in revenues and an increase in the number of buses
financed under operating leases.
Food services cost of goods sold increased $0.7 million, up 10.4%, and $1.6
million, up 13.5%, for the three and six months ended June 30, 2000, compared to
the same periods in 1999, primarily due to the increases in food services
revenues.
Other operating expenses increased $1.0 million, up 144.7%, and $0.7 million, up
40.6%, for the three and six months ended June 30, 2000, compared to the same
periods in 1999 primarily due to losses on disposal of property, plant and
equipment experienced during the second quarter of 2000.
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<PAGE> 13
Interest expense increased $0.5 million, up 9.2%, for the three months ended
June 30, 2000 and decreased $0.6 million, down 5.4%, for the six months ended
June 30, 2000, compared to the same periods in 1999. For the three month period,
the increase is attributable to interest on the installment conversion payments
to certain preferred stockholders. For the six-month period, the decreased
expense is due to a reduction in the average debt outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are cash flow from operations and,
previously, funds provided by the Company's parent, Laidlaw Inc. ("Laidlaw"). In
its Quarterly Report on Form 10-Q for the period ended May 31, 2000 (the
"Laidlaw Form 10-Q"), Laidlaw reported that it had declared an interest payment
moratorium on all advances under its syndicated banking facility (the "Laidlaw
Facility") and on certain of its debentures totaling $1.954 billion (the
"Laidlaw Debentures"). As a consequence of the Laidlaw Facility covenant
violations and interest payment moratorium, the Laidlaw Facility and the Laidlaw
Debentures have become due on demand. Laidlaw is endeavoring to renegotiate and
restructure the Laidlaw Facility and Laidlaw Debentures. In the Laidlaw Form
10-Q, Laidlaw further reported that should repayment be demanded for the Laidlaw
Facility and/or the Laidlaw Debentures, Laidlaw may not be able to satisfy these
obligations, nor other obligations which become due in the normal course of
operations and may not be able to continue to operate as a going concern.
Additionally, Laidlaw has advised the Company that cash funding, after August 1,
2000, would be limited to the cash flow generated by the Company from its
operations and that additional funds from Laidlaw would not be available.
Laidlaw further requested and authorized the Company to seek additional funding
from outside financing sources for its seasonal cash requirements and capital
expenditure programs. The Company is in the early stages of seeking this
financing and there can be no assurances that alternate sources of financing, in
amounts necessary to meet Company's needs, will be available, and if available,
that the cost of such financing will not materially exceed the cost currently
experienced by the Company. Should alternate sources not be available or not be
sufficient to meet the Company's needs, the Company may be required to curtail
or defer non-essential or essential capital and operating expenditures and may
not be able to satisfy its obligations as they become due in the normal course
of operations and may not be able to continue to operate as a going concern. As
a result, the Company may not be able to realize its assets and settle its
liabilities in the normal course of operations.
The Company's primary uses of cash are for operating activities, capital
expenditures and debt service. As of June 30, 2000, the Company had $176.1
million of long-term indebtedness (including a current portion of $6.1 million,
excluding $29.3 in payments due to former holders of the Company's Redeemable
Preferred Stock, discussed below), principally, its 11-1/2% Senior Notes due
2007 in the amount of $150 million. Interest on the Senior Notes is payable in
semi-annual installments of $8.6 million, each April and October. The Company
has ordered ninety (90) new motor coaches from Motor Coach Industries
International, of which 33 were delivered as of the date of this report, with
the remaining buses to be delivered this fall. Payment for the buses, totaling
$27.5 million, is payable to Motor Coach in December 2000. As indicated above,
the Company will be seeking interim and permanent lease or purchase money
financing for these buses.
Net cash provided by operating activities for the six months ended June 30, 2000
was $18.2 million, an increase of $9.5 million from the $8.7 million generated
during the same period of 1999. The increase is due primarily to the improvement
in operating income. Net cash used for investing activities for the first half
of 2000 was $12.7 million compared to $85.1 million for the first half of 1999.
The decrease is due to $44.0 million in sale-leaseback proceeds received in the
first half of 2000, compared to no sale-leaseback proceeds during the same
period of 1999, reduced capital expenditures and no acquisition spending during
the first half of 2000 compared to the same period of 1999. Net cash used for
financing activities in the first half of 2000 was $5.5 million versus $77.8
million cash provided by financing activities during the same period in 1999.
The $83.4 million reduction in cash provided from financing activities is
primarily due to the improved operating income in 2000, as well as reduced
capital expenditures and increased sale-leaseback proceeds during 2000.
At March 31, 2000, the Company had 1,344,850 shares of Redeemable Preferred
Stock outstanding, which shares were convertible into $44.8 million in cash in
the aggregate. Following the presentation of a significant number of these
shares for conversion, the Company and Laidlaw entered into agreements or
otherwise made payment arrangements with converting holders representing $37.6
million of aggregate value whereby such parties would receive their conversion
proceeds in installment payments through August 31, 2000. During the three-month
period ending June 30, 2000, the Company made $8.3 million in conversion
payments to the converting holders and, subsequent to June 30 through August 11,
2000 the Company has made an additional $19.7 million in conversion payments. As
of August 11, 2000, $9.6 million remained payable under these agreements. As of
June 30, 2000, excluding the shares for which conversion payments were being
made, the Company had 217,550 shares of Redeemable Preferred Stock outstanding,
which shares are convertible into $7.3 million in cash in the aggregate.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 9, 2000, a lawsuit was filed by two holders of Redeemable Preferred Stock
alleging: (i) that the Company, in violation of federal securities laws,
materially misrepresented facts, and omitted reference to material facts, with
respect to the conversion rights of holders of the Redeemable Preferred Stock
and (ii) that the Company was in breach of the rights of holders of Redeemable
Preferred Stock as contained in the Company's Restated Certificate of
Incorporation. The suit sought recovery from the Company of the conversion
payments relating to the Redeemable Preferred Stock held by the plaintiffs,
totaling $17.4 million, costs, attorneys' fees and interest. Laidlaw was also
named as a defendant in the suit. Plaintiffs alleged that Laidlaw tortiously
interfered with the Company's obligations to the plaintiffs and sought
injunctive relief, actual and punitive damages, costs, attorneys' fees and
interest. The suit, Reliant Trading and Deutsche Bank AG, London Branch v.
Greyhound Lines, Inc. and Laidlaw Inc., is pending in the United States District
Court for the Eastern District of Wisconsin, Civil Action 00-C-0656. On May 31,
2000, another holder of Redeemable Preferred Stock, Silverado Arbitrage Trading
Ltd., filed a motion with the Court seeking to intervene in the lawsuit.
Silverado sought recovery of conversion payments totaling $4.9 million, costs,
attorneys' fees and interest from the Company and sought injunctive relief,
actual and punitive damages, costs, attorneys' fees and interest as to Laidlaw.
On June 8 and 15, 2000, the Company and Laidlaw reached separate confidential
settlements with the plaintiffs and Silverado whereby they will receive payments
from the Company of the conversion amounts for their Redeemable Preferred Stock,
together with interest accruing from May 1, 2000, in weekly installments through
August 31, 2000. Pending fulfillment of the Company's obligations under the
settlements, the foregoing litigation has been stayed. As of the date of this
report, the Company has made all required payments called for under the
settlement agreements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 - Financial Data Schedule as of and for the six months ended June 30,
2000. (1)
--------------------------------------------------------------------------------
(1) Filed only in EDGAR format with the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000.
(b) REPORTS ON FORM 8-K
On June 19, 2000 the Company filed a current report on Form 8-K with the
Securities and Exchange Commission reporting Other Events. No financial
statements were included.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 2000
GREYHOUND LINES, INC.
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
ATLANTIC GREYHOUND LINES OF
VIRGINIA, INC.
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
GLI HOLDING COMPANY
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
GREYHOUND de MEXICO, S.A. de C.V.
By: /s/ Cheryl W. Farmer
-------------------------------------
Cheryl W. Farmer
Examiner
SISTEMA INTERNACIONAL de
TRANSPORTE de AUTOBUSES, INC.
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
TEXAS, NEW MEXICO & OKLAHOMA
COACHES, INC.
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
T.N.M. & O. TOURS, INC.
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
VERMONT TRANSIT CO., INC.
By: /s/ Jeffrey W. Sanders
-------------------------------------
Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
15
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
