<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>file001.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
================================================================================
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.
================================================================================
<PAGE>
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
<PAGE>
Atlantic Express Transportation Corp. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, March 31,
2000 2001
------------- -------------
<S> <C> <C>
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
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
Atlantic Express Transportation Corp. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------ ------------------------------
2000 2001 2000 2001
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
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)
============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Atlantic Express Transportation Corp. and Subsidiaries
Consolidated Statements of Stockholder's Equity
Nine months ended March 31, 2001
<TABLE>
<CAPTION>
Common Retained Accumulated
Stock Additional Earnings Other
No par Paid-in (Accumulated Comprehensive Comprehensive
Value Capital Deficit) Income Income (Loss) Total
------------ ------------ ------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
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
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Atlantic Express Transportation Corp. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
------------------------------
2000 2001
------------- -------------
<S> <C> <C>
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
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
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
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantor Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
-------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
5
<PAGE>
Condensed Consolidating Statement of Operations
Three months ended March 31, 2001
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantor Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
-------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
Condensed Consolidating Statement of Operations
Nine months ended March 31, 2001
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantors Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
--------------- -------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
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)
</TABLE>
Condensed Consolidating Statement of Cash Flows
Nine months ended March 31, 2001
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantor Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
-------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
Condensed Consolidating Balance Sheet
June 30, 2000
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantor Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
6
<PAGE>
Condensed Consolidating Statement of Operations
Three months ended March 31, 2000
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantor Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
-------------- -------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
Condensed Consolidating Statement of Operations
Nine months ended March 31, 2000
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantors Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
-------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
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)
</TABLE>
Condensed Consolidating Statement of Cash Flows
Nine months ended March 31, 2000
<TABLE>
<CAPTION>
Atlantic
Express Non-
Transportation Guarantor Guarantor Elimination
Corp. Subsidiaries Subsidiaries Entries Consolidated
-------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
7
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
</TEXT>
</DOCUMENT>