-----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, D0tRtvSxSIZCQ9+vP+JssYswrgZrkX+jS8/RPKDYhche7g6eyEwjp1hfRJduVvGG H9shTI/rkp0bk5nOVDZqrw== 0000891092-01-500172.txt : 20010516 0000891092-01-500172.hdr.sgml : 20010516 ACCESSION NUMBER: 0000891092-01-500172 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC EXPRESS TRANSPORTATION CORP CENTRAL INDEX KEY: 0001035423 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [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: 1635909 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 file001.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 March 31, 2001 or | | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______________ to ______________ Commission file number 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 and March 31, 2001 .......................................... 1 Consolidated Statements of Operations for the Three Month and Nine Month Periods Ended March 31, 2000 and 2001 ............................... 2 Consolidated Statements of Stockholder's Equity for the Nine Months Ended March 31, 2001 ........................ 3 Consolidated Statements of Cash Flows for the Nine Month Periods Ended March 31, 2000 and 2001 ............ 4 Notes to Consolidated Financial Statements .................... 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, March 31, 2000 2001 ------------- ------------- Assets Current: Cash and cash equivalents .................................. $ 5,585,901 $ 1,612,688 Current portion of marketable securities .................... 1,461,000 4,768,000 Accounts receivable, net of allowance for doubtful accounts . 57,911,467 61,610,534 Inventories ................................................. 10,675,606 16,438,987 Notes receivable ............................................ 15,901 -- Prepaid expenses and other current assets ................... 7,129,168 13,234,026 ------------- ------------- Total current assets ...................................... 82,779,043 97,664,235 ------------- ------------- Property, plant and equipment, less accumulated depreciation .. 158,784,748 177,077,107 ------------- ------------- Other assets: Goodwill, net ............................................... 11,817,606 11,573,175 Investments ................................................. 35,000 35,000 Marketable securities ....................................... 6,691,661 6,985,933 Transportation contract rights, net ......................... 21,586,626 20,164,052 Deferred financing and organization costs, net .............. 7,080,118 9,310,378 Due from parent company ..................................... 837,300 917,219 Deposit and other noncurrent assets ......................... 4,316,475 3,301,705 Deferred tax assets ......................................... 3,954,168 10,981,348 Covenant not to compete, net ................................ 521,000 439,000 ------------- ------------- Total other assets ........................................ 56,839,954 63,707,810 ------------- ------------- $ 298,403,745 $ 338,449,152 ============= ============= Liabilities and Stockholder's Equity Current: Current portion of long-term debt ........................... $ 1,907,563 $ 2,729,685 Insurance premium financing ................................. -- 8,145,517 Accounts payable ............................................ 2,759,257 5,559,674 Accrued compensation ........................................ 7,277,106 15,190,303 Current portion of insurance reserve ........................ 3,200,000 5,200,000 Accrued interest ............................................ 7,315,366 3,024,163 Other accrued expenses and current liabilities .............. 10,491,120 9,286,218 ------------- ------------- Total current liabilities ................................. 32,950,412 49,135,560 ------------- ------------- Long-term debt, net of current portion ........................ 214,470,878 241,450,083 ------------- ------------- Premium on bond issuance ...................................... 771,750 515,610 ------------- ------------- Other long-term liabilities ................................... 1,877,517 854,898 ------------- ------------- Commitments and contingencies Stockholder's equity: Common stock, no par value, authorized shares 200; issued and outstanding 100 ........................................... 250,000 250,000 Additional paid-in capital .................................. 46,698,517 56,698,517 Accumulated earnings (deficit) .............................. 536,372 (8,052,403) Accumulated other comprehensive income (loss) ............... 848,299 (2,403,113) ------------- ------------- Total stockholder's equity ................................ 48,333,188 46,493,001 ------------- ------------- $ 298,403,745 $ 338,449,152 ============= =============
See accompanying notes to consolidated financial statements. 1 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Statements of Operations
Three Months Ended Nine Months Ended March 31, March 31, ------------------------------ ------------------------------ 2000 2001 2000 2001 ------------- ------------- ------------- ------------- Revenues: Transportation Operations .......................... $ 93,500,744 $ 97,414,433 $ 227,465,595 $ 252,841,563 Bus Sales Operations ............................... 13,203,195 13,471,204 68,670,745 67,695,975 ------------- ------------- ------------- ------------- Total revenues ....................................... 106,703,939 110,885,637 296,136,340 320,537,538 ------------- ------------- ------------- ------------- Costs and expenses: Cost of operations - Transportation Operations ..... 75,979,302 81,062,943 188,356,785 212,633,197 Cost of operations - Bus Sales Operations .......... 12,118,397 12,799,480 62,174,171 62,623,266 General and administrative ......................... 3,750,206 7,088,555 17,982,177 21,493,695 Depreciation and amortization ...................... 5,248,271 5,642,854 13,815,133 17,185,371 ------------- ------------- ------------- ------------- 97,096,176 106,593,832 282,328,266 313,935,529 ------------- ------------- ------------- ------------- Income from operations ........................... 9,607,763 4,291,805 13,808,074 6,602,009 Interest expense (net) ............................... (6,528,150) (6,934,316) (18,947,598) (21,591,794) Other income (expense) ............................... (118,425) 139,939 (821,407) (626,170) ------------- ------------- ------------- ------------- Income (loss) before provision (benefit) for income taxes and cumulative effect of a change in accounting principle ........................ 2,961,188 (2,502,572) (5,960,931) (15,615,955) Provision (benefit) for income taxes ................. 1,332,537 (1,126,158) (2,682,415) (7,027,180) ------------- ------------- ------------- ------------- Net income (loss) before cumulative effect of a change in accounting principle ................. $ 1,628,651 $ (1,376,414) $ (3,278,516) $ (8,588,775) ------------- ------------- ------------- ------------- Cumulative effect of a change in accounting principle, net of benefit from income taxes of $245,875 ....... -- -- 300,511 -- ------------- ------------- ------------- ------------- Net income (loss) ................................ $ 1,628,651 $ (1,376,414) $ (3,579,027) $ (8,588,775) ============= ============= ============= =============
See accompanying notes to consolidated financial statements. 2 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Statements of Stockholder's Equity Nine months ended March 31, 2001
Common Retained Accumulated Stock Additional Earnings Other No par Paid-in (Accumulated Comprehensive Comprehensive Value Capital Deficit) Income Income (Loss) Total ------------ ------------ ------------ ------------- -------------- ------------- Balance, June 30, 2000 ............... $ 250,000 $ 46,698,517 $ 536,372 $ 848,299 48,333,188 Net loss ............................. -- -- (5,944,219) -- $ (5,944,219) (5,944,219) Unrealized loss on marketable securities .............. -- -- -- (508,190) (508,190) (508,190) ------------ Comprehensive loss ................... -- -- -- -- (6,452,409) -- ------------ ------------ ------------ ------------ ------------ Balance, September 30, 2000 .......... 250,000 46,698,517 (5,407,847) 340,109 41,880,779 Net loss ............................. -- -- (1,268,142) -- (1,268,142) (1,268,142) Contribution from parent company ..... -- 10,000,000 -- -- -- 10,000,000 Unrealized loss on marketable securities ............ -- -- -- (1,409,527) (1,409,527) (1,409,527) ------------ Comprehensive loss ................... -- -- -- -- (9,130,078) -- ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2000 ........... 250,000 56,698,517 (6,675,989) (1,069,418) 49,203,110 Net loss ............................. -- -- (1,376,414) -- (1,376,414) (1,376,414) Unrealized loss on marketable securities .............. -- -- -- (1,333,695) (1,333,695) (1,333,695) ------------ Comprehensive loss ................... -- -- -- -- $(11,840,187) -- ------------ ------------ ------------ ------------ ============ ------------ Balance, March 31, 2001 .............. $ 250,000 $ 56,698,517 $ (8,052,403) $ (2,403,113) -- $ 46,493,001 ============ ============ ============ ============ ============
See accompanying notes to consolidated financial statements. 3 Atlantic Express Transportation Corp. and Subsidiaries Consolidated Statements of Cash Flows
Nine Months Ended March 31, ------------------------------ 2000 2001 ------------- ------------- Cash flows from operating activities: Net loss ...................................................... $ (3,579,027) $ (8,588,775) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Gain on sale of marketable securities .................... (666,735) (93,131) Deferred income taxes .................................... (2,928,292) (7,027,180) Depreciation ............................................. 12,056,024 15,183,204 Amortization ............................................. 3,153,859 4,343,155 Write-off of accounts receivable ......................... -- (193,760) Reserve for doubtful accounts receivable ................. 90,000 90,000 Loss on sale of fixed assets ............................. 29,552 270,106 Decrease (increase) in: Accounts receivable ................................. (10,320,722) (3,595,307) Inventories ......................................... 4,951,870 (5,763,381) Prepaid expenses and other current assets ........... 337,996 (6,104,858) Deferred lease expense .............................. 12,651 -- Deposits and other noncurrent assets ................ (363,919) 1,014,770 Increase (decrease) in: Accounts payable .................................... (436,140) 2,800,417 Accrued expenses and other current liabilities ...... 2,635,683 4,417,092 Other long-term liabilities ......................... (794,088) (1,493,197) ------------- ------------- Net cash provided by (used in) operating activities . 4,178,712 (4,740,845) ------------- ------------- Cash flows from investing activities: Acquisition of subsidiaries (net of cash acquired of $97,584) . (14,956,593) -- Proceeds from sale of fixed assets ............................ 561,885 467,472 Additions to property, plant and equipment .................... (28,122,513) (28,026,563) Purchase of transportation contract rights .................... (49,092) (170,764) Additions to covenant not to compete .......................... (175,000) (50,000) Due from parent ............................................... 1,094 (79,919) Notes receivable .............................................. 22,442 15,901 Marketable securities sold (purchased), net ................... 1,938,532 (6,759,553) ------------- ------------- Net cash used in investing activities ............... (40,779,245) (34,603,426) ------------- ------------- Cash flows from financing activities: Additional paid-in capital .................................... 26,050,000 4,547,980 Proceeds of additional borrowings ............................. 24,780,924 103,440,254 Principal payments on borrowings .............................. (13,410,054) (75,902,427) Insurance premium financing ................................... -- 8,145,517 Deferred financing and organization costs ..................... (508,661) (4,860,266) ------------- ------------- Net cash provided by financing activities ................ 35,371,058 36,912,209 ------------- ------------- Net increase (decrease) in cash and cash equivalents ............... 311,676 (3,973,213) Cash and cash equivalents, beginning of period ..................... 2,581,372 5,585,901 ------------- ------------- Cash and cash equivalents, end of period ........................... $ 2,893,048 $ 1,612,688 ============= ============= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest ................................................. $ 20,950,228 $ 23,630,929 Income taxes ............................................. 110,596 256,380 Supplemental schedule of noncash investing and financing activities: Loans incurred for purchase of property, plant and equipment .. $ 1,225,152 $ 734,078 Liability incurred for acquisition of contract rights ......... 415,320 -- Contribution of buses as additional paid-in capital ........... -- 5,452,020
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, March 31, 2000 2001 ----------- ----------- Parts and fuel ..................... $ 5,735,321 $ 5,548,305 Buses .............................. 4,940,285 10,890,682 ----------- ----------- $10,675,606 $16,438,987 =========== =========== 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 twenty 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 quarters ended September 30, 2000, December 31, 2000 and March 31, 2001, total payments made by Central were $28,041,324, $18,202,677 and $7,350,207, respectively. In addition, as of March 31, 2001, Central was obligated to purchase $3,152,966 of vehicles from ABD. As of March 31 2001, $596,760 of deposits are classified as prepaid expenses. 3. 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 (the "Notes") as of and for the nine months ended March 31, 2001, and a consolidating balance sheet as of June 30, 2000 and consolidating statements of operations for the nine months ended March 31, 2001 and 2000. Condensed Consolidating Balance Sheet March 31, 2001
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------ ------------ ----------- ------------ Current assets ......... $ 269,877 $ 92,088,153 $ 5,306,205 $ -- $ 97,664,235 Investment in affiliates 90,482,640 -- -- (90,482,640) -- Total assets ........... 280,654,445 309,379,302 12,776,212 (264,360,807) 338,449,152 Current liabilities .... 3,133,626 40,821,932 10,254,466 (5,074,464) 49,135,560 Total liabilities ...... 237,748,922 254,684,770 10,781,691 (211,259,232) 291,956,151 Stockholder's equity ... 42,905,523 54,694,532 1,994,521 (53,101,575) 46,493,001
5 Condensed Consolidating Statement of Operations Three months ended March 31, 2001
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------ ------------ ----------- ------------ Net revenues .................... $ -- $ 110,823,689 $ 2,700,056 $ (2,638,108) $ 110,885,637 Income from operations .......... -- 4,282,299 9,506 -- 4,291,805 Income (loss) before income taxes -- (2,512,078) 9,506 -- (2,502,572) Net loss of subsidiaries ........ (1,376,414) -- -- 1,376,414 -- Net income (loss) ............... (1,376,414) (1,381,642) 5,228 (1,376,414) 1,376,414
Condensed Consolidating Statement of Operations Nine months ended March 31, 2001
Atlantic Express Non- Transportation Guarantor Guarantors Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated --------------- -------------- ------------- --------------- ------------- Net revenues .................... $ -- $ 320,249,930 $ 4,925,432 $ (4,637,824) $ 320,537,538 Income from operations .......... -- 6,467,209 134,800 -- 6,602,009 Income (loss) before income taxes -- (15,750,755) 134,800 -- (15,615,955) Net loss of subsidiaries ........ (8,588,775) -- -- 8,588,775 -- Net income (loss) ............... (8,588,775) (8,662,915) 74,140 8,588,775 (8,588,775)
Condensed Consolidating Statement of Cash Flows Nine months ended March 31, 2001
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------ ------------- ------------ ------------ Net cash provided by (used in) operating activities ....... $ 1,123,121 $(11,316,519) $ 5,452,553 $ -- $ (4,740,845) Net cash provided by (used in) investing activities ....... (72,676,152) 44,832,279 (6,759,553) -- (34,603,426) Net cash provided by (used in) financing activities ....... 71,458,962 (36,087,904) -- -- 35,371,058 Decrease in cash and cash equivalents ................ (94,069) (2,572,144) (1,307,000) -- (3,973,213) Cash and cash equivalents, beginning of period ........ 150,000 3,696,901 1,739,000 -- 5,585,901 ---------------------------------------------------------------------------- Cash and cash equivalents, end of period .............. $ 55,931 $ 1,124,757 $ 432,000 $ -- $ 1,612,688
Condensed Consolidating Balance Sheet June 30, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated ------------- -------------- ------------- ------------- ------------- Current assets ......... $ 5,460,699 $ 74,061,252 $ 3,257,092 $ -- $ 82,779,043 Investment in affiliates 104,712,281 -- -- (104,712,281) -- Total assets ........... 265,224,047 272,777,993 10,209,264 (249,807,859) 298,403,745 Current liabilities .... 6,785,671 22,956,740 3,208,001 -- 32,950,412 Total liabilities ...... 222,724,515 209,420,546 5,819,797 (187,894,301) 250,070,557 Stockholder's equity ... 42,499,532 63,357,447 4,389,467 (61,913,258) 48,333,188
6 Condensed Consolidating Statement of Operations Three months ended March 31, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- -------------- ------------ ------------- ------------ Net revenues .................... $ -- $ 88,895,376 $ 1,475,175 $ (999,858) $ 89,370,693 Income from operations .......... 4,400,000 3,522,377 419,535 -- 8,341,912 Income (loss) before income taxes 4,400,000 (2,220,388) 419,535 -- 2,599,147 Net loss of subsidiaries ........ (990,471) -- -- 990,471 -- Net income (loss) ............... 1,429,529 (1,221,215) 230,744 990,471 1,429,529
Condensed Consolidating Statement of Operations Nine months ended March 31, 2000
Atlantic Express Non- Transportation Guarantor Guarantors Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- ------------- ------------- -------------- ------------- Net revenues .................... $ -- $ 261,581,573 $ 1,846,200 $ (999,858) $ 262,427,915 Income from operations .......... 4,400,000 7,667,093 694,691 -- 12,761,784 Income (loss) before income taxes 4,400,000 (9,966,238) 694,691 -- (4,871,547) Cumulative effect of a change in accounting principal ....... -- (546,388) -- -- (546,388) Net loss of subsidiaries ........ (5,399,865) -- -- 5,399,865 -- Net Income (loss) ............... (2,979,865) (5,781,945) 382,080 5,399,865 (2,979,865)
Condensed Consolidating Statement of Cash Flows Nine months ended March 31, 2000
Atlantic Express Non- Transportation Guarantor Guarantor Elimination Corp. Subsidiaries Subsidiaries Entries Consolidated -------------- -------------- ------------- ------------ ------------ Net cash provided by (used in) operating activities ................................. $ (7,274,210) $ 13,629,454 $ (2,176,532) $ -- $ 4,178,712 Net cash provided by (used in) investing ..... activities ................................. (606,817) (42,110,960) 1,938,532 -- (40,779,245) Net cash provided by financing activities ................................. 8,805,924 28,106,285 -- -- 36,912,209 Increase (decrease) in cash and cash ........ equivalents .................................. 924,897 (375,221) (238,000) -- 311,676 Cash and cash equivalents, beginning of period (324,134) 2,247,506 658,000 -- 2,581,372 ------------------------------------------------------------------------- Cash and cash equivalents, end of period ..... $ 600,763 $ 1,872,285 $ 420,000 $ -- $ 2,893,048
7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion 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 March 31, 2001 compared to three months ended March 31, 2000. Revenues. Revenues from Transportation Operations were $97.4 million for the three months ended March 31, 2001 compared to $93.5 million for the three months ended March 31, 2000, an increase of $3.9 million or 4.2%. This increase was due primarily to (i) $4.3 million of new contracts awarded and $3.2 million net increase in contract rates and service requirements partially offset by $3.1 million decrease due to exits from under-performing contracts and $0.5 million of contracts lost. Revenues from Bus Sales Operations were $13.5 million for the three months ended March 31, 2001 compared to $13.2 million for the three months ended March 31, 2000, an increase of $0.3 million or 2.0%. Gross Profit. Gross profit from Transportation Operations was $16.4 million for the three months ended March 31, 2001 compared to $17.5 million for the three months ended March 31, 2000, a decrease of $1.2 million or 6.7%. As a percentage of revenues, gross profit decreased to 16.8 % for the three months ended March 31, 2001 from 18.7% for the three months ended March 31, 2000. This decrease was due primarily to increased labor costs. Gross profit from Bus Sales Operations was $0.7 million for the three months ended March 31, 2001 compared to $1.1 million for the three months ended March 31, 2000, a decrease of $0.4 million or 38.1%. As a percentage of revenues, gross profit decreased to 5.0% for the three months ended March 31, 2001 from 8.2% for the three months ended March 31, 2000. The reduction in gross profit percentage was due primarily to an increase in the proportion of sales made of commercial vehicles which have lower margins than school buses and increased competition (primarily in the New Jersey market) which has reduced margins. General and administrative expenses. General and administrative expenses for the Transportation Operations were $6.0 million for the three months ended March 31, 2001 compared to $2.8 million for the three months ended March 31, 2000, an increase of $3.2 million or 116.0 %. This increase was primarily due to a $3.9 million net credit in the prior period in relation to a litigation settlement in 2000 partially offset by $0.4 million decrease in recruitment expense in 2001. General and administrative expenses for the Bus Sales Operations for the three months ended March 31, 2001 were $1.1 million compared to $1.0 million for the three months ended March 31, 2000 an increase of $0.1 million or 12.0%. This increase was due primarily to increases in administrative payrolls. Depreciation and amortization expenses. Depreciation and amortization expenses for the Transportation Operations were $5.4 million for the three months ended March 31, 2001 compared to $5.0 million for the three months ended March 31, 2000, an increase of $0.4 million or 7.5%. This increase was due to (i) $0.2 million additional depreciation relating to the purchase of new vehicles and (ii) an increase of $0.2 million due primarily to the amortization of contract rights of newly acquired subsidiaries. Depreciation and amortization expenses for the Bus Sales Operations were $0.2 million for the three months ended March 31, 2001 and March 31, 2000, respectively. Income from operations. Income from operations was $4.3 million for the three months ended March 31, 2001 compared to $9.6 million ($5.7 million exclusive of a $3.9 million net credit in relation to the litigation settlement) for the three months ended March 31, 2000, a decrease of $5.3 million ($1.5 million exclusive of the litigation settlement). This decrease was due to the net effect of the items discussed above. 8 Net interest expense. Net interest expense was $6.9 million for the three months ended March 31, 2001 compared to $6.5 million for the three months ended March 31, 2000, an increase of $0.4 million or 6.2%. This increase was due primarily to (i) an increase in indebtedness of $12.2 million in relation to the acquisition of newly acquired subsidiaries; (ii) higher average indebtedness outstanding partially offset by $0.3 million decrease due to lower interest rates; and (iii) an increase of $0.3 million in amortization of deferred finance charges. Net loss. The Company generated a net loss of $1.4 million for the three months ended March 31, 2001 compared to net income of $1.6 million for the three months ended March 31, 2000, a decrease of $3.0 million. This decrease was due to the net effect of the items discussed above. Nine months ended March 31, 2001 compared to nine months ended March 31, 2000. Revenues. Revenues from Transportation Operations were $252.8 million for the nine months ended March 31, 2001 compared to $227.5 million for the nine months ended March 31, 2000, an increase of $25.4 million or 11.2%. This increase was due primarily to (i) $11.8 million of new contracts awarded; (ii) $2.9 million in additional summer work; and (iii) $9.5 million in relation to acquisition of new subsidiaries partially offset by $8.1 million decrease due to exit from under-performing contracts and $1.2 million of contracts lost. Revenues from Bus Sales Operations were $67.7 million for the nine months ended March 31, 2001 compared to $68.7 million for the nine months ended March 31, 2000, a decrease of $1.0 million or 1.4%. This decrease was due primarily to a decrease of $1.3 million in new bus sales partially offset by an increase of $0.3 million in other sales. Gross Profit. Gross profit from Transportation Operations was $40.2 million for the nine months ended March 31, 2001 compared to $39.1 million for the nine months ended March 31, 2000, an increase of $1.1 million or 2.8%. As a percentage of revenues, gross profit decreased to 15.9% for the nine months ended March 31, 2001 from 17.2% for the nine months ended March 31, 2000. The decrease in gross profit percentage was due primarily to increased labor costs. Gross profit from the Bus Sales Operations was $5.1 million for the nine months ended March 31, 2001 compared to $6.5 million for the nine months ended March 31, 2000, a decrease of $1.4 million or 21.9%. The reduction in gross profit percentage was due primarily to an increase in the proportion of sales made in the New Jersey market which has had historically lower gross profit margins then the New York market and increased competition which has reduced margins. As a percentage of revenues, gross profit decreased to 7.5% for the nine months ended March 31, 2001 from 9.5% for the nine months ended March 31, 2000. General and administrative expenses. General and administrative expenses for the Transportation Operations were $18.4 million for the nine months ended March 31, 2001 compared to $15.1 million for the nine months ended March 31, 2000, an increase of $3.3 million or 21.5%. This increase was primarily due to a $3.2 million net credit in the prior year period in relation to a litigation settlement in 2000. General and administrative expenses for the Bus Sales Operations were $3.1 million for the nine months ended March 31, 2001 compared to $2.9 million for the nine months ended March 31, 2000 an increase of $0.3 million or 9.0%. This increase was primarily due to increases in administrative payrolls. Depreciation and amortization expenses. Depreciation and amortization expenses for the Transportation Operations were $16.5 million for the nine months ended March 31, 2001 compared to $13.2 million for the nine months ended March 31, 2000, an increase of $3.3 million or 25.1%. This increase was due to (i) $1.5 million additional depreciation relating to the purchase of new vehicles; (ii) $1.3 million increase in depreciation of fixed assets of newly acquired subsidiaries; and (iii) $0.5 million in relation to amortization of contract rights primarily of newly acquired subsidiaries. Depreciation and amortization of the Bus Sales Operations were $0.6 million for the nine months ended March 31, 2001 and March 31, 2000, respectively. Income from operations. Income from operations was $6.6 million for the nine months ended March 31, 2001 compared to $13.8 million ($10.6 million exclusive of a $3.2 million net credit in relation to the litigation settlement) for the nine months ended March 31, 2000, a decrease of $7.2 million ($4.0 million exclusive of the litigation settlement. This decrease was due to the net effect of the items discussed above. 9 Net interest expense. Net interest expense was $21.6 million for the nine months ended March 31, 2001 compared to $18.9 million for the nine months ended March 31, 2000, an increase of $2.6 million or 14.0%. This increase was due primarily to (i) an increase in indebtedness of $15.4 million in relation to the acquisition of newly acquired subsidiaries; (ii) higher average indebtedness outstanding partially offset by $0.3 million decrease due to lower interest rates; and (iii) an increase of $0.9 million in the amortization of deferred financing costs. Loss before cumulative change in accounting principle and taxes. Loss before cumulative change in accounting principle and taxes was $8.6 million for the nine months ended March 31, 2001 compared to $3.3 million for the nine months ended March 31, 2000 an increase of $5.3 million. Net loss. The Company generated a net loss of $8.6 million for the nine months ended March 31, 2001 compared to a net loss of $3.6 million for the nine months ended March 31, 2000, an increase of $5.0 million due to the net effect of the items discussed above. Liquidity and Capital Resources Management anticipates total capital expenditures of $31.8 million in fiscal 2001 including approximately $5.9 million for the purchase of vehicles in relation to new contracts and maintenance capital expenditures for the fiscal year ended June 30, 2002. These vehicles have been or will be purchased prior to the Company's fiscal year end due to availability of inventory and favorable pricing. Approximately $28.8 million were made by March 31, 2001. This included approximately $22.4 million for purchase of new vehicles and $6.4 million for other property and equipment. Net Cash Used in Operating Activities. Net cash used in operating activities was $4.7 million for the nine months ended March 31, 2001 due to the following: (i) a net loss of $8.6 million plus non cash items of depreciation and amortization of $19.5 million less a $7.0 million increase in deferred tax benefit; (ii) $8.2 million use of cash for working capital; and (iii) $0.4 million other uses of funds. Net Cash Used in Investing Activities. For the nine months ended March 31, 2001, the Company made $28.8 million of capital expenditures to acquire additional vehicles, other property and equipment. Of these capital expenditures $0.7 million were directly financed. In addition, the Company made $6.8 million in net purchases of marketable securities. Net Cash Provided by Financing Activities. Net cash provided by financing activities totaled $35.4 million for the nine months ended March 31, 2001, due to (i) a $4.5 million cash contribution as part of a $10.0 million capital contribution from the Company's parent, Atlantic Express Transportation Group, Inc. ("AETG"); (ii) $103.4 million of net borrowings under the Company's revolving line of credit; (iii)$8.1 million of insurance premium financing, partially offset by $45.9 million of principal payments on borrowings, repayment of $30.0 million of the Company's 10 3/4% Senior Secured Notes due 2004 (the "Notes"); and $4.9 million of deferred financing costs. In addition AETG contributed $5.5 million of vehicles to the Company. The Company incurred $0.7 million of indebtedness to directly finance capital expenditures for the nine months ended March 31, 2001. Due to the current difficult insurance climate, the Company renewed its workers compensation policy for calendar year 2001 at substantially higher rates than those of the previous policy. This increase is expected to have an impact of approximately $1.0 million for the fiscal year ending June 30, 2001. The Company was able to extend its current automobile policy through June 2001 with no significant increase in rates. The Company anticipates significantly higher costs for automobile liability insurance for the fiscal year ending June 30, 2002. Under the terms of its contract with its largest school bus customer, the Company is able to recover a portion of the increase in automobile liability and workers compensation premium increases commencing with the school year beginning September 2001 and has negotiated with its largest paratransit customer to pass through all automobile liability insurance premium increases to that customer for the remainder of its existing contract with that customer. At this time the Company is not able to quantify the effect on margins or earnings of the expected net increase in automobile liability insurance premium for the fiscal year ending June 30, 2002. 10 The Company continues to experience higher fuel costs and higher labor costs due to a tight labor market which is impacting margins. The Company believes that its current operating cash flow, along with its borrowing capacity under its $125.0 million revolving credit facility (of which $11.1 million was undrawn at March 31, 2001) will provide it with sufficient liquidity to conduct its existing operations through June 30, 2002. At March 31 2001, the Company's total debt and stockholder's equity were $244.2 million and $46.5 million, respectively. 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 May 15, 2001 13 -----END PRIVACY-ENHANCED MESSAGE-----