-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Roc2ZI1jxj0rJGdUeerjv9zK1kMX/gEd1WnDnNjR7PWrGBfyzaeWWVPyEz4MFonS AOH52xtDiieqb+gvhMpH0w== /in/edgar/work/0000891092-00-001109/0000891092-00-001109.txt : 20001121 0000891092-00-001109.hdr.sgml : 20001121 ACCESSION NUMBER: 0000891092-00-001109 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC EXPRESS TRANSPORTATION CORP CENTRAL INDEX KEY: 0001035423 STANDARD INDUSTRIAL CLASSIFICATION: [4100 ] IRS NUMBER: 133924567 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24247 FILM NUMBER: 773975 BUSINESS ADDRESS: STREET 1: 7 NORTH STREET STREET 2: STATEN ISLAND CITY: NEW YORK STATE: NY ZIP: 10302-1205 BUSINESS PHONE: 7184427000 MAIL ADDRESS: STREET 1: 7 NORTH STREET STREET 2: STATEN ISLAND CITY: NEW YORK STATE: NY ZIP: 10302-1205 10-Q 1 0001.txt FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 September 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 0-24247 ---------------------------------------------- ATLANTIC EXPRESS TRANSPORTATION CORP. (Exact Name of Registrant as Specified in Its Charter) New York 13-392-3467 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 7 North Street, Staten Island, New York, 10302-1205 (Address of Principal Executive Offices) (Zip Code) (718) 442-7000 (Registrant's Telephone Number, Including Area Code) ________________________________________________________________________________ (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 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___ APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes___ No___ APPLICABLE ONLY TO CORPORATE REGISTRANTS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 100 Shares of Common Stock, no par value. ================================================================================ TABLE OF CONTENTS PART I. Financial Information Page ---- ITEM 1. Financial Statements: Consolidated Balance Sheets at June 30, 2000 (audited) and September 30, 2000 (unaudited)................................... 1 Consolidated Statements of Operations for the Three Month Periods Ended September 30,1999 (unaudited) and 2000 (unaudited)...................................................... 2 Consolidated Statements of Stockholder's Equity for the Three Months Ended September 30, 2000 (unaudited)...................... 3 Consolidated Statements of Cash Flows for the Three Month Periods Ended September 30, 1999 (unaudited) and 2000 (unaudited)........ 4 Notes to Consolidated Financial Statements (unaudited)................ 5-8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................ 9-11 PART II. Other Information 12 Signatures................................................................. 13 Index to Exhibits.......................................................... E-1 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Balance Sheets
June 30, September 30, 2000 2000 ------------ ------------- (audited) (unaudited) Assets Current: Cash and cash equivalents .................................... $ 2,502,575 $ 1,805,052 Current portion of marketable securities ..................... 1,461,000 3,090,000 Accounts receivable, net of allowance for doubtful accounts .. 50,962,057 48,449,167 Inventories .................................................. 10,279,483 9,873,251 Notes receivable ............................................. 15,901 -- Prepaid expenses and other current assets .................... 6,165,109 6,014,972 ------------ ------------ Total current assets ............................... 71,386,125 69,232,442 ------------ ------------ Property, plant and equipment, less accumulated depreciation ...... 124,934,071 133,091,360 ------------ ------------ Other assets: Goodwill, net ................................................ 11,817,606 11,736,129 Investments .................................................. 35,000 35,000 Marketable securities ........................................ 6,691,661 5,518,686 Transportation contract rights, net .......................... 3,329,311 3,238,284 Deferred financing and organization costs, net ............... 6,248,073 5,896,305 Due from parent company ...................................... 816,117 785,838 Deposits and other noncurrent assets ......................... 3,205,594 3,127,850 Deferred tax assets .......................................... 5,268,606 9,065,521 Covenant not to compete, net ................................. 80,000 70,000 ------------ ------------ Total other assets ................................. 37,491,968 39,473,613 ------------ ------------ $233,812,164 $241,797,415 ============ ============ Liabilities and Stockholder's Equity Current: Current portion of long-term debt ............................ $ 1,907,563 $ 2,990,270 Accounts payable ............................................. 1,952,700 3,452,806 Accrued compensation ......................................... 6,516,830 7,241,948 Current portion of insurance reserve ......................... 3,200,000 3,950,000 Accrued interest ............................................. 7,017,741 3,213,381 Other accrued expenses and current liabilities ............... 9,254,623 14,482,708 ------------ ------------ Total current liabilities .......................... 29,849,457 35,331,113 ------------ ------------ Long-term debt, net of current portion ............................ 178,270,878 186,718,345 ------------ ------------ Premium on bond issuance .......................................... 771,750 717,900 ------------ ------------ Other long-term liabilities ....................................... 1,802,517 1,061,361 ------------ ------------ Commitments and contingencies Stockholder's equity: Common stock, no par value - shares authorized 200; issued and outstanding 100 ......................................... 250,000 250,000 Additional paid-in capital ................................... 22,048,517 22,048,517 Accumulated earnings (deficit) ............................... (29,254) (4,669,930) Accumulated other comprehensive income........................ 848,299 340,109 ------------ ------------ Total stockholder's equity ......................... 23,117,562 17,968,696 ------------ ------------ $233,812,164 $241,797,415 ============ ============
See accompanying notes to consolidated financial statements. 1 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Statements of Operations
Three Months Ended September 30, ---------------------------- 1999 2000 ----------- ----------- (unaudited) Revenues: Transportation Operations...................................................... $43,785,012 $50,479,581 Bus Sales Operations .......................................................... 38,599,199 39,062,804 ----------- ----------- Total revenues ..................................................................... 82,384,211 89,542,385 ----------- ----------- Costs and expenses: Cost of Operations - Transportation Operations ................................ 40,468,547 46,310,958 Cost of Operations - Bus Sales Operations ..................................... 34,628,461 35,716,353 General and administrative .................................................... 5,910,604 5,704,989 Depreciation and amortization ................................................. 3,440,581 4,167,761 ----------- ----------- Total operating costs and expenses ................................................. 84,448,193 91,900,061 ----------- ----------- Loss from operations ..................................................... (2,063,982) (2,357,676) Interest expense (net) ............................................................. (5,617,233) (5,968,414) Other expense ...................................................................... (314,501) (111,501) ----------- ----------- Loss before other items and benefit from income taxes .................... (7,995,716) (8,437,591) Cumulative effect of a change in accounting principle, net of benefit from income taxes of $245,875 ................................................. (300,511) -- ----------- ----------- Loss before benefit from income taxes .................................... (8,296,227) (8,437,591) Benefit from income taxes .............................................................................. 3,598,070 3,796,915 ----------- ----------- Net loss ........................................................................... $(4,698,157) $(4,640,676) =========== ===========
See accompanying notes to consolidated financial statements. 2 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Statements of Stockholder's Equity Three months ended September 30, 2000
Accumulated Additional Accumulated other Common stock paid-in earnings comprehensive Comprehensive No par value capital (deficit) Income income (loss) Total ------------ ----------- ----------- ------------- ------------- -------------- Balance, June 30, 2000 .... 250,000 22,048,517 (29,254) 848,299 23,117,562 Net loss .................. -- -- (4,640,676) -- (4,640,676) (4,640,676) Unrealized loss on marketable securities.... -- -- -- (508,190) (508,190) (508,190) ------------ Comprehensive loss ........ -- -- -- -- $ (5,148,866) -- --------- ------------ ------------ ------------ ============ ------------ Balance, September 30, 2000 $ 250,000 $ 22,048,517 $ (4,669,930) $ 340,109 $ 17,968,696 ========= ============ ============ ============ ============
See accompanying notes to consolidated financial statements. 3 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Statements of Cash Flows
Three Months Ended September 30, ----------------------------- 1999 2000 ------------- ------------- (unaudited) Cash flows from operating activities: Net loss .................................................................. $ (4,698,157) $ (4,640,676) Adjustments to reconcile net loss to net cash provided by operating activities: Loss (gain) on sale of marketable securities ......................... (4,493) (86,560) Deferred income taxes ................................................ (3,843,947) (3,796,915) Depreciation ......................................................... 3,200,376 3,962,655 Amortization ......................................................... 641,390 597,314 Reserve for doubtful accounts receivable ............................. 30,000 30,000 Decrease (increase) in: Accounts receivable ............................................. (262,585) 2,482,890 Inventories ..................................................... 5,381,113 406,232 Prepaid expenses and other current assets ....................... 690,585 150,137 Deferred lease expense .......................................... 4,117 -- Deposits and other noncurrent assets ............................ 6,456 77,744 Increase (decrease) in: Accounts payable ................................................ 1,261,767 1,500,106 Accrued expenses and other current liabilities .................. (1,517,685) 2,898,843 Other long-term liabilities ..................................... (527,676) (741,156) ------------ ------------ Net cash provided by operating activities ............................ 361,261 2,840,614 ------------ ------------ Cash flows from investing activities: Proceeds from sale of fixed assets ........................................ -- 845,762 Additions to property, plant and equipment ................................ (7,428,749) (12,877,205) Purchase of transportation contract rights ................................ -- (11,782) Due from parent company ................................................... -- 30,279 Notes receivable .......................................................... 1,672 15,901 Marketable securities sold (purchased), net ............................... 243,909 (877,655) ------------ ------------ Net cash used in investing activities ................................ (7,183,168) (12,874,700) ------------ ------------ Cash flows from financing activities: Proceeds of additional borrowings ......................................... 6,469,809 9,753,000 Principal payments on borrowings .......................................... (165,574) (311,326) Deferred financing and organization costs ................................. -- (105,111) ------------ ------------ Net cash provided by financing activities ............................ 6,304,235 9,336,563 ------------ ------------ Net increase (decrease) in cash and cash equivalents ........................... (517,672) (697,523) Cash and cash equivalents, beginning of period ................................. 855,983 2,502,575 ------------ ------------ Cash and cash equivalents, end of period ....................................... $ 338,311 $ 1,805,052 ============ ============ Supplemental disclosures of cash flow information: Cash paid during the period for: Interest ............................................................. $ 8,651,538 $ 9,231,690 Income taxes ......................................................... 45,625 126,256 Supplemental schedule of noncash investing and financing activities: Loans incurred for purchase of property, plant and equipment .............. $ 340,000 $ 88,500 Liability incurred for acquisition of contract rights ..................... 415,320 --
See accompanying notes to financial statements. 4 Atlantic Express Transportation Corp. and Subsidiaries Notes to Consolidated Financial Statements 1. Basis of Accounting These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's financial statements as of and for the year ended June 30, 2000 as filed on Form 10-K. In the opinion of management, all adjustments and accruals (consisting only of normal recurring adjustments) which are necessary for a fair presentation of operating results are reflected in the accompanying financial statements. Operating results for the periods presented are not necessarily indicative of the results for the full fiscal year. 2. Inventories Inventories comprised the following: June 30, September 30, 2000 2000 ----------- ------------ Parts and fuel ..................... $ 5,339,198 $5,033,687 Buses .............................. 4,839,564 4,940,285 ----------- ---------- $10,279,483 $9,873,251 =========== ========== On August 11, 1999, after receiving a fairness opinion issued by an investment bank of national standing, Central New York Coach Sales and Service, Inc. and Jersey Bus Sales, Inc., both wholly-owned subsidiaries of the Company (collectively "Central") entered into an agreement with Atlantic Bus Distributors, Inc. ("ABD"), a wholly owned subsidiary of Atlantic Express Transportation Group, Inc. ("AETG") (the parent company), to order certain buses through ABD. Central is required to deposit from fifteen to thirty percent of the cost of these vehicles simultaneously with ABD's receipt of these vehicles from the manufacturers and pay the balance to ABD upon Central's delivery of these vehicles to its customers or within one hundred and twenty days, whichever comes first. The purchase price of each bus equals the price at which ABD purchased such bus, together with any costs incurred by ABD in connection with the purchase of any such vehicles. During the quarter ended September 30, 2000, total payments made by Central were $28,041,324. In addition, as of September 30, 2000, Central was obligated to purchase $10,188,835 of vehicles from ABD. As of September 30, 2000, $1,029,887 of deposits is classified as prepaid expenses. 3. Related Party Transactions In August 2000, AETG purchased $5.5 million of buses which it is leasing to the Company. These operating leases, with terms ranging from 3 to 5 years, provide for annual lease payments of approximately $0.7 million. 4. Subsequent Event Effective October 31, 2000, after receiving a fairness opinion issued by an investment bank of national standing, the Company sold four subsidiaries to an affiliate, Atlantic Transit, Corp. (ATC) for a purchase price of $4.3 million. The proceeds were used to reduce borrowings under the Company's revolving line of credit. Subject to compliance with the revolving credit agreement, the Company may re-borrow such amounts to provide the Company with additional working capital. In accordance with the Indenture for the Company's 10 3/4% Senior Secured Notes due 2004 (the "Notes"), the four subsidiaries were terminated as guarantors of the Notes, and all of the capital stock and the assets of the four subsidiaries were released as collateral for the Notes. For the quarter ended December 31, 2000, the Company will reflect a loss from sale of subsidiaries of approximately $3.6 million. The following tables reflect the effect such sales would have had on the statements of operations for the year ended June 30, 2000 and the three 5 months ended September 30, 2000 had such sales been made as of July 1, 1999, and the effect on the balance sheet as of September 30, 2000 had such sales been made as of that date: Condensed Consolidated Statement of Operations Year ended June 30, 2000
Historical Adjustments Pro Forma ------------- -------------- -------------- Revenues ................................. $ 353,481,004 $ (9,586,748) $ 343,894,256 ------------- ------------- ------------- Gross profit ............................. 52,467,506 (2,294,189) 50,173,317 ------------- ------------- ------------- Income (loss) before nonrecurring items, benefit from (provision for) income taxes and cumulative effect of a change in accounting principle ........ (4,565,170) 1,295,493 (5,860,663) ------------- ------------- ------------- Net income (loss) ........................ $ (3,778,929) $ 712,521 $ (4,491,450) ============= ============= =============
Condensed Consolidated Statement of Operations Three months ended September 30, 2000
Historical Adjustments Pro Forma ------------ ------------- ------------ Revenues ................................. $ 89,542,385 $ (1,314,251) $ 88,228,134 ------------ ------------ ------------ Gross profit ............................. 7,515,074 (54,426) 7,460,648 ------------ ------------ ------------ Income (loss) before nonrecurring items, benefit from (provision for) income taxes and cumulative effect of a change in accounting principle ........ (8,437,591) (259,309) (8,178,282) ------------ ------------ ------------ Net income (loss) ........................ $ (4,640,676) (142,620) $ (4,498,056) ============ ============ ============
Condensed Consolidated Balance Sheet September 30, 2000
Adjustments and Historical Eliminations Pro Forma ------------ ------------- ------------- Current assets ............................. $ 69,232,442 $ 2,857,485 $ 72,089,927 Contract rights and other non current assets 172,564,973 (5,766,965) 166,798,008 ------------ ------------ ------------ Total assets .......................... $241,797,415 $ (2,909,480) $238,887,935 ============ ============ ============ Current liabilities ........................ $ 35,331,113 $ (356,566) $ 34,974,547 Inter-company .............................. 954,747 954,747 Non current liabilities .................... 188,497,606 -- 188,497,606 ------------ ------------ ------------ Total liabilities ..................... $223,828,719 $ 598,181 $224,426,900 ============ ============ ============ Shareholder's equity ....................... 17,968,696 (3,507,661) 14,461,035 ------------ ------------ ------------ Total liabilities and shareholder's equity $241,797,415 $ (2,909,480) $238,887,935 ============ ============ ============
6 Supplemental Financial Information The following are unaudited condensed consolidating financial statements regarding the Company (on a stand-alone basis and on a consolidated basis) and its subsidiaries which are guarantors and non-guarantors of the Company's 10 3/4% Senior Secured Notes due 2004 as of and for the three months ended September 30, 2000, and a consolidating balance sheet as of June 30, 2000 and consolidating statements of operations and cash flows for the three months ended September 30, 1999. The following information does not give effect to the subsequent event described in Note 4. Condensed Consolidating Balance Sheet September 30, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------- ------------- -------------- ------------- Current assets ......... $ 614,577 $ 64,578,398 $ 4,039,467 $ -- $ 69,232,442 Investment in affiliates 50,963,486 -- -- (50,963,486) -- Total assets ........... 221,603,587 218,034,267 10,083,264 (207,923,703) 241,797,415 Current liabilities .... 3,020,536 28,068,324 4,242,253 -- 35,331,113 Total liabilities ...... 179,049,832 184,587,696 6,147,413 (145,956,222) 223,828,719 Stockholder's equity ... 42,553,755 33,446,571 3,935,851 (61,967,481) 17,968,696
Condensed Consolidating Statement of Operations Three months ended September 30, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------- ------------- ------------ ------------- Net revenues .............. $ -- $ 89,392,164 $ 1,150,079 $ (999,858) $ 89,542,385 Income (loss) from operations ................ -- (2,456,901) 99,225 -- (2,357,676) Income (loss) before income taxes ................ -- (8,536,816) 99,225 -- (8,437,591) Net loss of subsidiaries .. (4,640,676) -- -- 4,640,676 -- Net income (loss) ......... (4,640,676) (4,695,250) 54,574 4,640,676 (4,640,676)
Condensed Consolidating Statement of Cash Flows Three months ended September 30, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- -------------- ------------- ------------ ------------- Net cash provided by (used in) operating activities ........ $ (9,514,939) $ 12,356,898 $ (1,345) $ -- $ 2,840,614 Net cash provided by (used in) investing activities ........ (342,061) (11,654,984) (877,655) -- (12,874,700) Net cash provided by (used in) financing activities ........ 9,753,000 (416,437) -- -- 9,336,563 ------------ ------------ ------------ -------- ------------ Increase (decrease) in cash and cash equivalents ............ $ (104,000) $ 285,477 $ (879,000) $ -- $ (697,523) Cash and cash equivalents, beginning of period ......... 150,000 613,575 1,739,000 -- 2,502,575 ------------ ------------ ------------ -------- ------------ Cash and cash equivalents, end of period ............... $ 46,000 $ 899,052 $ 860,000 $ -- $ 1,805,052 ============ ============ ============ ======== ============
7 Condensed Consolidating Balance Sheet June 30, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- -------------- ------------- -------------- ------------- Current assets ......... $ 5,460,699 $ 62,668,334 $ 3,257,092 $ -- $ 71,386,125 Investment in affiliates 55,601,639 -- -- (55,601,639) -- Total assets ........... 216,113,405 206,708,073 10,209,264 (199,218,578) 233,812,164 Current liabilities .... 6,949,572 19,691,884 3,208,001 -- 29,849,457 Total liabilities ...... 182,396,073 168,566,252 5,819,797 (146,087,520) 210,694,602 Stockholder's equity ... 33,717,332 38,141,821 4,389,467 (53,131,058) 23,117,562
Condensed Consolidating Statement of Operations Three months ended September 30, 1999
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------- ------------ ----------- ------------- Net revenues ...................... $ -- $ 82,319,712 $ 64,499 $ -- $ 82,384,211 Income (loss) from operations ..... -- (2,079,720) 15,738 -- (2,063,982) Income (loss) before benefit from income taxes and cumulative effect of a change in accounting principle ...................... -- (8,011,454) 15,738 -- (7,995,716) Cumulative effect of a change in accounting principle, net of benefit from income taxes ...... -- (300,511) -- -- (300,511) Net loss of subsidiaries ...................... (4,698,157) -- -- -- 4,698,157 Net income (loss) ................. (4,698,157) (4,706,813) 8,656 4,698,157 (4,698,157)
Condensed Consolidating Statement of Cash Flows Three months ended September 30, 1999
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------ ------------ ----------- ------------ Net cash provided by (used in) operating activities ....... $(5,548,384) $ 6,388,054 $ (478,409) $ -- $ 361,261 Net cash provided by (used in) investing activities ....... (63,269) (7,363,808) 243,909 -- (7,183,168) Net cash provided by financing activities ....... 6,129,809 174,426 -- -- 6,304,235 ----------- ----------- ----------- -------- ----------- Increase (decrease) in cash and cash equivalents ........... $ 518,156 $ (801,328) $ (234,500) $ -- $ (517,672) Cash and cash equivalents, beginning of period ...... (324,134) 522,117 658,000 -- 855,983 ----------- ----------- ----------- -------- ----------- Cash and cash equivalents, end of period ............ $ 194,022 $ (279,211) $ 423,500 $ -- $ 338,311 =========== =========== =========== ======== ===========
8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company believes that this report contains forward-looking statements within the meaning of the federal securities laws and as such involve known and unknown risks and uncertainties. These statements may use forward-looking words such as "anticipate", "estimate", "expect", "will" or other similar words. These statements discuss future expectations or contain projections of future events. Actual results may differ materially from those expressed or implied by the forward-looking statements for various reasons, including general economic conditions, reliance on suppliers, labor relations and other factors, many of which are beyond the Company's control. Readers are cautioned not to place undue reliance on such forward-looking statements. Three months ended September 30, 2000 compared to three months ended September 30, 1999. Revenues. Revenues from Transportation Operations were $50.5 million for the three months ended September 30, 2000 compared to $43.8 million for the three months ended September 30, 1999, an increase of $6.7 million or 15.3%. This increase was due primarily to (i) $2.3 million additional summer revenues; (ii) $1.0 million as a result of new contracts awarded; and (iii) $3.4 million due to contract rate increases and service requirements of existing contracts (including one additional revenue day in New York City in September 2000 as compared to September 1999 which increased revenues by approximately $0.5 million). Revenues from Bus Sales Operations was $39.1 million for the three months ended September 30, 2000 compared to $38.6 million for the three months ended September 30, 1999, an increase of $0.5 million or 1.2%. This increase was primarily due to increases in parts and repair sales. Gross Profit. Gross profit from Transportation Operations was $4.2 million for the three months ended September 30, 2000 compared to $3.3 million for the three months ended September 30, 1999, an increase of $0.9 million or 25.7%. As a percentage of revenues, gross profit increased to 8.3% for the three months ended September 30, 2000 from 7.6% for the three months ended September 30, 1999. This increase was primarily due to a decrease in costs associated with a terminated contract partially offset by higher fuel costs. Gross profit from Bus Sales Operations was $3.3 million for the three months ended September 30, 2000 compared to $4.0 million for the three months ended September 30, 1999, a decrease of $0.6 million or 15.7%. As a percentage of revenues, gross profit decreased to 8.6% for the three months ended September 30, 2000 from 10.3% for the three months ended September 30, 1999. This decrease was primarily due to an increase in the proportion of sales of commercial vehicles made in the current quarter, which have lower gross profit margins than sales of school bus vehicles. General and administrative expenses. General and administrative expenses for the Transportation Operations were $4.7 million for the three months ended September 30, 2000 compared to $5.0 million for the three months ended September 30, 1999, a decrease of $0.3 million or 5.1%. This decrease was principally related to decreases in professional fees of $0.6 million partially offset by increases in advertising and recruitment expenses. As a percentage of revenues, general and administrative expenses decreased to 9.3% for the three months ended September 30, 2000 from 12.3% for the three months ended September 30, 1999. General and administrative expenses for the Bus Sales Operations for the three months ended September 30, 2000 were $1.0 million compared to $0.9 million for the three months ended September 30, 1999. As a percentage of revenues general and administrative expenses increased to 2.5% for the three months ended September 30, 2000 from 2.4% for the three months ended September 30, 1999. Depreciation and amortization expenses. Depreciation and amortization expenses for the Transportation Operations was $4.0 million for the three months ended September 30, 2000 compared to $3.2 million for the three months ended September 30, 1999, an increase of $0.7 million or 22.4%. This increase was due to additional depreciation due to the purchase of new vehicles. Depreciation and amortization expenses for the Bus Sales Operations was $0.2 million for the three months ended September 30, 2000 and 1999 respectively. Loss from operations. Loss from operations was $2.4 million for the three months ended September 30, 2000 compared to $2.1 million for the three months ended September 30, 1999, an increase of $0.3 million. This increase was due to the net effect of the items discussed above. 9 Net interest expense. Net interest expense was $6.0 million for the three months ended September 30, 2000 compared to $5.6 million for the three months ended September 30, 1999, an increase of $0.4 million or 6.3%. This increase was due primarily to higher average indebtedness outstanding during the three months ended September 30, 2000. Net loss. The Company generated a net loss of $4.6 million for the three months ended September 30, 2000 compared to a net loss of $4.7 million for the three months ended September 30, 1999, a decrease of $0.1 million. This decrease was due to the net effect of the items discussed above and the cumulative effect of a change in accounting principle. Liquidity and Capital Resources Management anticipates total capital expenditures of $22.6 million in fiscal 2001 of which approximately $13.0 million were made by September 30, 2000. This included approximately $10.9 million for purchase of new vehicles and $2.1 million for other property and equipment. Net Cash Provided By Operating Activities. Net cash provided by operating activities of $2.8 million for the three months ended September 30, 2000 resulted primarily from $7.4 million increases in source of funds for working capital plus non-cash items of depreciation and amortization of $4.6 million offset by (i) net loss of $4.6 million; (ii) $3.8 million increase in deferred income tax asset; and (iii) $0.7 million decrease in other sources of funds. Net Cash Used in Investing Activities. For the three months ended September 30, 2000, the Company made $13.0 million of capital expenditures to acquire additional vehicles, other property and equipment. Of these capital expenditures $0.1 million were directly financed. In addition the Company made $0.9 million net purchases of marketable securities. Net Cash Provided by Financing Activities. Net cash provided by financing activities totaled $9.3 million for the three months ended September 30, 2000, due primarily to $9.8 million net borrowings under the Company's revolving line of credit, partially offset by principal payments of $0.3 million on other borrowings. The Company continues to experience higher fuel costs which are impacting profit margins and increased advertising and recruitment costs due to a tight labor market. Effective October 31, 2000 after receiving a fairness opinion issued by an investment bank of national standing, the Company sold four subsidiaries to an affiliate for a purchase price $4.3 million (see Note 4 to Consolidated Financial Statements). The proceeds of the sale were used to reduce borrowings under the Company's revolving line of credit. Subject to compliance with the revolving credit agreement, the Company may re-borrow such amounts to provide the Company with additional working capital. The first quarter is historically the period of the Company's greatest use of its revolving line of credit due to the purchase of vehicles for the upcoming school year and seasonal lower revenues in this quarter. The Company believes that its current operating cash flow and its borrowing capacity under its $30 million revolving credit facility (of which $1.5 million was undrawn at September 30, 2000), will provide it with sufficient liquidity to conduct its operations for the balance of the year. Management has considered a variety of options to enhance the Company's liquidity and has formulated a proposal intended to provide the Company with greater financial flexibility and the ability to capitalize on additional business opportunities. The principal elements of the proposal include (i) establishing a $125 million revolving credit facility and modifying various provisions of the Indenture; (ii) receiving a capital contribution of $10 million from AETG; (iii) AETG contributing all of the stock of ATC and its subsidiaries to the Company; and (iv) offering to repurchase at par $30 million of its outstanding 10 3/4% Senior Secured Notes due February 1, 2004. 10 The Company is in the process of preparing an Offer to Purchase and Consent Solicitation Statement to present to its bondholders. There can be no assurance that the Company will be able to establish a larger credit facility or that its bondholders will provide the necessary consent to consummate the proposal. The foregoing statements do not constitute an offer to buy, or the solicitation of an offer to sell any securities. Such offer, if made, would only be made pursuant to a definitive offer to purchase and related documentation. At September 30, 2000, the Company's total debt and stockholder's equity were $189.7 million and $18.0 million respectively. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable. 11 PART II OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K a) Exhibits See Exhibit Index on Page E-1 for exhibits filed with this report on Form 10-Q. b) Reports on Form 8-K - None. 12 SIGNATURES In accordance with the requirements of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized. ATLANTIC EXPRESS TRANSPORTATION CORP. By: /s/ NATHAN SCHLENKER ------------------------------------- Nathan Schlenker Chief Financial Officer November 20, 2000 13 Index to Exhibits The following documents are exhibits to this Quarterly Report on Form 10-Q. For convenient reference, each exhibit is listed according to the Exhibit Table of Regulation S-K. The page number, if any, listed opposite an exhibit indicates the page number in the sequential numbering system on the manually signed original of this Quarterly Report on Form 10-Q where such exhibit can be found. Exhibit Sequential Page Number Exhibit Number ------ ------- ------ 27.1 Financial Data Schedule E-1 EX-27 2 0002.txt FDS --
5 This schedule contains summary financial information extracted from 10-Q at September 30, 2000 and is qualified in its entirety by reference to such financial statements 3-MOS JUN-30-2000 JUL-01-2000 SEP-30-2000 1,805,052 8,608,686 50,974,005 1,739,000 9,873,251 69,232,442 246,075,209 112,983,849 241,797,415 35,331,113 189,708,615 0 0 250,000 17,718,696 241,797,415 39,062,804 89,542,385 35,716,353 87,732,300 111,501 30,000 5,968,414 (8,437,591) (3,796,915) (8,437,591) 0 0 0 (4,640,676) 0 0
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