-----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, DWCnc5r+z3amKfdT0A0Td4UJWEptd4yyVxAe1SYSGj4t2P3DfFGnEFG2jSjWGZVi wqvhm+eQcGTQHNmGGcLWYA== 0000950134-97-008425.txt : 19971113 0000950134-97-008425.hdr.sgml : 19971113 ACCESSION NUMBER: 0000950134-97-008425 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREYHOUND LINES INC CENTRAL INDEX KEY: 0000813040 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [4100] IRS NUMBER: 860572343 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10841 FILM NUMBER: 97716555 BUSINESS ADDRESS: STREET 1: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 2147157000 MAIL ADDRESS: STREET 1: 15110 N DALLAS PARKWAY STREET 2: SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLI HOLDING CO CENTRAL INDEX KEY: 0000813041 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 752146309 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-13588-01 FILM NUMBER: 97716556 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727987415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC GREYHOUND LINES OF VIRGINIA INC CENTRAL INDEX KEY: 0001041393 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 580869571 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27627-01 FILM NUMBER: 97716557 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE BUS MANUFACTURING INC CENTRAL INDEX KEY: 0001041394 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 742472717 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-02 FILM NUMBER: 97716558 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FCA INSURANCE LTD CENTRAL INDEX KEY: 0001041395 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-03 FILM NUMBER: 97716559 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREYHOUND DE MEXICO SA DE CV CENTRAL INDEX KEY: 0001041396 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-05 FILM NUMBER: 97716560 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRUPO CENTRO INC CENTRAL INDEX KEY: 0001041397 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752692522 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-06 FILM NUMBER: 97716561 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SISTEMA INTERNACIONAL DE TRANSPORTE DE AUTOBUSES INC CENTRAL INDEX KEY: 0001041398 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752548617 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-08 FILM NUMBER: 97716562 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T&V HOLDING CO CENTRAL INDEX KEY: 0001041399 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752238995 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-09 FILM NUMBER: 97716563 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS NEW MEXICO & OKLAHOMA COACHES INC CENTRAL INDEX KEY: 0001041400 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 750605295 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-10 FILM NUMBER: 97716564 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TNM & O TOURS INC CENTRAL INDEX KEY: 0001041401 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 751188694 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-11 FILM NUMBER: 97716565 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERMONT TRANSIT CO INC CENTRAL INDEX KEY: 0001041402 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 030164980 STATE OF INCORPORATION: VT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-12 FILM NUMBER: 97716566 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOS BUENOS LEASING CO INC CENTRAL INDEX KEY: 0001041453 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 840434715 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-27267-07 FILM NUMBER: 97716567 BUSINESS ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897415 MAIL ADDRESS: STREET 1: C/O GREYHOUND LINES INC STREET 2: 15110 NORTH DALLAS PARKWAY SUITE 600 CITY: DALLAS STATE: TX ZIP: 75248 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 1-10841 GREYHOUND LINES, INC. AND ITS SUBSIDIARIES IDENTIFIED IN FOOTNOTE (1) BELOW (Exact name of registrant as specified in its charter) DELAWARE 86-0572343 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 15110 N. DALLAS PARKWAY, SUITE 600 DALLAS, TEXAS 75248 (Address of principal executive offices) (Zip code) (972) 789-7000 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OF COMMON STOCK OUTSTANDING AT NOVEMBER 10, 1997 --------------------- -------------------------------- $.01 PAR VALUE 59,325,022 SHARES (1) This Form 10-Q is also being filed by the co-registrants specified under the caption "Co-Registrants", each of which is a wholly-owned subsidiary of Greyhound Lines, Inc. and each of which has met the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q for filing Form 10-Q in a reduced disclosure format. 2 CO-REGISTRANTS This Form 10-Q is also being filed by the following entities. Except as set forth below, each entity has the same principal executive offices, zip code and telephone number as that set forth for Greyhound Lines, Inc. on the cover of this report:
I.R.S. EMPLOYER COMMISSION IDENTIFICATION STATE OF NAME FILE NO. NO. INCORP. - ---- ---------- --------------- ---------- Atlantic Greyhound Lines of Virginia, Inc. 333-27267-01 58-0869571 Virginia Eagle Bus Manufacturing, Inc. 333-27267-02 74-2472777 Delaware FCA Insurance Limited 333-27267-03 None Islands of Bermuda GLI Holding Company 333-27267-04 75-2146309 Delaware Greyhound de Mexico S.A. de C.V. 333-27267-05 None Republic of Mexico Grupo Centro, Inc. 333-27267-06 75-2692522 Delaware Los Buenos Leasing Co., Inc. 333-27267-07 85-0434715 New Mexico Sistema Internacional de Transporte de Autobuses, Inc. 333-27267-08 75-2548617 Delaware T & V Holding Company 333-27267-09 75-2238995 Delaware Texas, New Mexico & Oklahoma Coaches, Inc. 333-27267-10 75-0605295 Texas 1313 13th Street Lubbock, Texas 79408 (806) 763-5389 T.N.M. & O. Tours, Inc. 333-27267-11 75-1188694 Texas (Same as Texas, New Mexico & Oklahoma Coaches, Inc.) Vermont Transit Co., Inc. 333-27267-12 03-0164980 Vermont 106 Main Street Burlington, Vermont 05401 (802) 862-9671
As of October 31, 1997, Atlantic Greyhound Lines of Virginia, Inc. had 150 shares of common stock outstanding (at a par value of $50.00 per share); Eagle Bus Manufacturing, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); FCA Insurance Limited had 120,000 shares of common stock outstanding (at a par value of $1.00 per share); GLI Holding Company had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); Greyhound de Mexico S.A. de C.V. had 10,000 shares of common stock outstanding (at a par value of $0.10 Mexican currency per share); Grupo Centro, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); Los Buenos Leasing Co., Inc. had 1,000 shares of common stock outstanding (at a par value of $1.00 per share); Sistema Internacional de Transporte de Autobuses, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); T & V Holding Company had 3,000 shares of common stock outstanding (at a 2 3 par value of $0.01 per share); Texas, New Mexico & Oklahoma Coaches, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); T.N.M. & O. Tours, Inc. had 1,000 shares of common stock outstanding (at a par value of $1.00 per share); and Vermont Transit Co., Inc. had 505 shares of common stock outstanding (no par value). Each of the above named co-registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period such co-registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. 3 4 GREYHOUND LINES, INC. AND SUBSIDIARIES
PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Interim Consolidated Statements of Financial Position as of December 31, 1996 and September 30, 1997 (Unaudited)......................... 6 Interim Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 1996 and 1997 (Unaudited).......... 7 Condensed Interim Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1997 (Unaudited).................... 8 Notes to Interim Consolidated Financial Statements (Unaudited)................. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................... 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings................................................................ 21 Item 2. Changes in Securities............................................................ 22 Item 6. Exhibits and Reports on Form 8-K................................................. 23 SIGNATURES .................................................................................. 24
4 5 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 5 6 GREYHOUND LINES, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
DECEMBER 31, SEPTEMBER 30, 1996 1997 ------------ ------------ (UNAUDITED) Current Assets Cash and cash equivalents ....................................................... $ 898 $ 1,852 Accounts receivable, less allowance for doubtful accounts of $241 and $298 ............................................................. 32,844 40,560 Inventories ..................................................................... 3,840 4,494 Prepaid expenses ................................................................ 8,179 8,908 Assets held for sale, including buses held for sale/leaseback ................... 4,224 15,033 Other current assets ............................................................ 11,329 10,507 ------------ ------------ Total current assets ......................................................... 61,314 81,354 Prepaid Pension Plans ............................................................... 24,927 25,203 Property, Plant and Equipment, net of accumulated depreciation of $101,901 and $117,849 ........................................................ 314,454 334,852 Investments in Unconsolidated Affiliates ............................................ 2,437 5,336 Insurance and Security Deposits ..................................................... 76,180 79,710 Goodwill, net of accumulated amortization of $0 and $240 ............................ -- 30,393 Intangible Assets, net of accumulated amortization of $19,105 and $20,788 ........... 20,970 29,670 ------------ ------------ Total assets ................................................................. $ 500,282 $ 586,518 ============ ============ Current Liabilities Accounts payable ................................................................ $ 23,900 $ 25,294 Accrued liabilities ............................................................. 53,500 55,609 Unredeemed tickets .............................................................. 9,523 8,831 Current portion of reserve for injuries and damages ............................. 19,864 19,864 Current maturities of long-term debt ............................................ 11,662 7,649 ------------ ------------ Total current liabilities .................................................... 118,449 117,247 Reserve for Injuries and Damages .................................................... 40,099 40,252 Long-Term Debt ...................................................................... 192,581 240,990 Deferred Gains ...................................................................... 562 294 Other Liabilities ................................................................... 7,710 9,921 ------------ ------------ Total liabilities ............................................................ 359,401 408,704 ------------ ------------ Commitments and Contingencies (Note 6) Stockholders' Equity Preferred stock (10,000,000 shares authorized; par value $.01) 8 1/2% Convertible Exchangeable Preferred Stock (2,400,000 shares authorized and issued as of September 30, 1997; aggregate liquidation preference $60,000) ........................................................ -- 60,000 Series A Junior Preferred Stock (500,000 and 1,500,000 shares authorized as of December 31, 1996 and September 30, 1997, respectively; par value $.01; none issued) ............................................. -- -- Common stock (100,000,000 shares authorized; 58,469,469 and 59,395,814 shares issued as of December 31, 1996 and September 30, 1997 respectively; par value $.01) ................................................ 585 594 Capital in excess of par value .................................................. 229,104 229,117 Retained deficit ................................................................ (81,237) (104,326) Less: Unfunded accumulated pension obligation .................................. (6,533) (6,533) Less: Treasury stock, at cost (109,192 shares) .................................. (1,038) (1,038) ------------ ------------ Total stockholders' equity ................................................... 140,881 177,814 ------------ ------------ Total liabilities and stockholders' equity ............................... $ 500,282 $ 586,518 ============ ============
The accompanying notes are an integral part of these statements. 6 7 GREYHOUND LINES, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1997 1996 1997 --------- --------- --------- --------- (UNAUDITED) (UNAUDITED) OPERATING REVENUES Transportation Services Passenger services ................................................... $ 180,329 $ 196,737 $ 445,229 $ 488,138 Package express ...................................................... 8,394 11,412 25,055 26,895 Food services............................................................. 6,169 5,995 16,154 16,306 Other operating revenues ................................................. 13,154 14,380 35,507 39,863 --------- --------- --------- --------- Total operating revenues ......................................... 208,046 228,524 521,945 571,202 --------- --------- --------- --------- OPERATING EXPENSES Maintenance .............................................................. 18,538 20,175 54,852 57,994 Transportation ........................................................... 46,790 50,577 127,509 140,059 Agents' commissions and station costs .................................... 36,666 38,832 98,351 104,672 Marketing, advertising and traffic ....................................... 6,771 6,684 18,599 20,202 Insurance and safety ..................................................... 10,323 12,327 32,274 32,566 General and administrative ............................................... 21,323 24,630 62,745 68,105 Depreciation and amortization ............................................ 7,696 7,941 22,624 22,908 Operating taxes and licenses ............................................. 13,381 13,672 37,407 38,923 Operating rents .......................................................... 13,911 15,950 38,448 43,735 Cost of goods sold - Food services ....................................... 3,863 3,587 10,350 10,073 Other operating expenses ................................................. 2,397 2,660 6,103 7,215 --------- --------- --------- --------- Total operating expense .......................................... 181,659 197,035 509,262 546,452 --------- --------- --------- --------- OPERATING INCOME ............................................................ 26,387 31,489 12,683 24,750 Interest Expense ............................................................ 6,955 6,618 20,218 20,730 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES ........................................... 19,432 24,871 (7,535) 4,020 Income Tax Provision ........................................................ 34 83 145 248 --------- --------- --------- --------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ................................. 19,398 24,788 (7,680) 3,772 Extraordinary Item .......................................................... -- -- -- 25,323 --------- --------- --------- --------- NET INCOME (LOSS) ........................................................... 19,398 24,788 (7,680) (21,551) Preferred Dividends ......................................................... -- 1,275 -- 2,338 --------- --------- --------- --------- NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS .................................................. $ 19,398 $ 23,513 $ (7,680) $ (23,889) ========= ========= ========= ========= NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS BEFORE EXTRAORDINARY ITEM ................................................... $ 19,398 $ 23,513 $ (7,680) $ 1,434 ========= ========= ========= ========= Income (Loss) Per Share of Common Stock: Primary Net Income (Loss) Attributable to Common Stock- holders Before Extraordinary Item ................................ $ 0.33 $ 0.39 $ (0.13) $ 0.02 Extraordinary Item ................................................... -- -- -- (0.43) --------- --------- --------- --------- Net Income (Loss) Attributable to Common Stockholders ..................................................... $ 0.33 $ 0.39 $ (0.13) $ (0.41) ========= ========= ========= ========= Fully Diluted Net Income (Loss) Attributable to Common Stock- holders Before Extraordinary Item ................................ $ 0.33 $ 0.34 $ (0.13) $ 0.02 Extraordinary Item ................................................... -- -- -- (0.43) --------- --------- --------- --------- Net Income (Loss) Attributable to Common Stockholders ..................................................... $ 0.33 $ 0.34 $ (0.13) $ (0.41) ========= ========= ========= =========
The accompanying notes are an integral part of these statements. 7 8 GREYHOUND LINES, INC. AND SUBSIDIARIES CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, 1996 1997 ------------ ------------ (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net loss ..................................................... (7,680) (21,551) Extraordinary Item ........................................... -- 25,323 Non-cash expenses and gains included in net loss ............. 24,683 24,456 Net change in certain operating assets and liabilities ....... (26,785) (18,095) ------------ ------------ Net cash (used for) provided by operating activities ..... (9,782) 10,133 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ......................................... (28,997) (26,587) Buses purchased for sale/leaseback ........................... -- (15,712) Proceeds from assets sold including sale/leasebacks........... 13,752 5,693 Payments for business acquisitions, net of cash acquired ..... -- (40,070) Other investing activities ................................... (1,713) (1,654) ------------ ------------ Net cash used for investing activities ................... (16,958) (78,330) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Payments on debt and capital lease obligations ............... (3,249) (16,319) Proceeds from long-term borrowings ........................... 3,600 -- Proceeds from 11 1/2% Senior Notes and 8 1/2% Convertible Exchangeable Preferred Stock issuance .................... -- 203,205 Redemption of 10% Senior Notes ............................... -- (161,022) Payment of 8 1/2% Convertible Exchangeable Preferred Stock dividends ................................................ -- (1,488) Retirement of interest rate swap ............................. -- (3,010) Proceeds from options exercised .............................. 125 839 Net change in revolving credit facility ...................... 24,224 46,946 ------------ ------------ Net cash provided by financing activities ................ 24,700 69,151 ------------ ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ............ (2,040) 954 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................. 3,494 898 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD ........................ $ 1,454 $ 1,852 ============ ============
The accompanying notes are an integral part of these statements. 8 9 GREYHOUND LINES, INC. AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (UNAUDITED) 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS In the opinion of management, the unaudited Interim Consolidated Financial Statements of Greyhound Lines, Inc. and Subsidiaries (the "Company") include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company's financial position as of September 30, 1997, the results of its operations for the three and nine months ended September 30, 1996 and 1997 and cash flows for the nine months ended September 30, 1996 and 1997. Due to the seasonality of the Company's operations, the results of its operations for the interim period ended September 30, 1997 may not be indicative of total results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission. The unaudited Interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Greyhound Lines, Inc. and Subsidiaries and accompanying notes for the year ended December 31, 1996. 2. SIGNIFICANT ACCOUNTING POLICIES EARNINGS (LOSS) PER SHARE OF COMMON STOCK Primary earnings (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the weighted average shares of common stock of the Company ("Common Stock") and Common Stock equivalents outstanding during the period. Common Stock equivalents represent the dilutive effect of the assumed exercise of certain outstanding stock options. The calculation of fully diluted earnings (loss) per share of Common Stock considers the effect of conversion of the Company's 8.5% Convertible Subordinated Debentures due 2007 (the "Convertible Debentures") and 8.5% Convertible Exchangeable Preferred Stock (the "Preferred Stock"). For the three months ended September 30, 1996 and the nine months ended September 30, 1996 and 1997, however, the assumed exercise of outstanding in-the-money stock options and conversion of Convertible Debentures and Preferred Stock have an antidilutive effect. As a result, these shares are excluded from the final determination of the weighted average shares outstanding for those periods. For the three months ended September 30, 1997, the assumed exercise of outstanding in-the-money stock options and conversion of Convertible Debentures and Preferred Stock is dilutive and thus the shares have been included in the weighted average shares below. The weighted average shares outstanding used in the calculation of primary and fully diluted earnings (loss) per share of Common Stock for the three and nine months ended September 30, 1996 and 1997 are as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1997 1996 1997 ---------- ---------- ---------- ---------- Primary ............ 59,444,196 60,861,540 58,239,881 58,844,971 Fully Diluted ...... 59,444,196 73,961,475 58,239,881 58,844,971
During the three and nine months ended September 30, 1997, the earnings per share calculation reflects the pro rata impact of dividends which will accrue to the holders of the Preferred Stock over the period outstanding. The Company intends to adopt SFAS No. 128 "Earnings Per Share" (SFAS No. 128) effective December 15, 1997. This statement requires the replacement of primary and fully diluted earnings per share with basic and diluted earnings per share. The calculation of earnings per share under SFAS 128 will have a favorable impact on earnings per share as it excludes potentially dilutive options from the calculation of basic earnings per share. Additionally, the calculation of diluted earnings per share uses the average share price for the period rather than the more dilutive greater of average share price or end of the period price required by APB Opinion 15. The Company does not expect its adoption of SFAS 128 to have a material impact on the earnings per share calculation. 9 10 3. ACQUISITIONS During the quarter, the Company completed two acquisitions involving regional bus carriers. These purchases were accounted for using the purchase method of accounting; accordingly, the acquired companies results of operations are included in the consolidated financials from the dates of acquisition. On July 9, 1997, the Company purchased Carolina Trailways, a Mid-Atlantic bus carrier, for the purchase price of approximately $25.3 million comprised of $20.4 million in cash, the assumption of $4.1 million of indebtedness and the issuance of $0.75 million in Common Stock of the Company (167,597 shares based on average market prices of the Company's Common Stock prior to closing). Additionally, on August 25, 1997, the Company purchased Valley Transit, a South Texas bus carrier, for $19.0 million in cash. The allocation of the purchase price among assets and liabilities resulted in liabilities in excess of assets of $29.9 million, which has been recorded as Goodwill and is being amortized over a 30 year period. 4. SECURITIES OFFERINGS On April 16, 1997, the Company completed the sale of two private offerings of its securities. The Company issued $150.0 million aggregate principal amount of 11.5% Senior Notes due 2007 ("Senior Notes") and Preferred Stock with a liquidation preference of $60.0 million. The net proceeds to the Company from the aforementioned Senior Note and Preferred Stock offerings were approximately $203.4 million. In connection with the offerings, the Company retired its 10% Senior Notes due 2001 (the "Old Senior Notes"). As a result of the retirement of the Old Senior Notes and renegotiation of the Revolving Credit Facility, the Company recorded an extraordinary loss of $25.3 million. The loss includes $21.3 million to reflect the acceleration of the discount and prepayment premiums on the Old Senior Notes, the acceleration of payments, net of amounts accrued, under the interest rate swap agreements of $2.5 million and the write off of $1.5 million of debt issuance costs related to the prior revolving credit facility. Senior Notes The Company's Senior Notes bear interest at the rate of 11.5% per annum, payable each April 15 and October 15 commencing on October 15, 1997. The Senior Notes are redeemable at the option of the Company in whole or in part, at any time on or after April 15, 2002, at redemption prices of 105.750% in 2002, 103.834% in 2003, 101.917% in 2004 and 100% in 2005 and thereafter plus any accrued but unpaid interest. Upon a change of control of the Company, as defined in the indenture, the Company will be required to make an offer to repurchase all or any part of each holder's Senior Notes at a price equal to 101% of the principal amount thereof plus interest. The Senior Note indenture contains certain covenants that, among other things, limit the ability of the Company to incur additional indebtedness, pay dividends or make other distributions, repurchase equity interests or subordinated indebtedness, create certain liens, sell assets or enter into certain mergers or consolidations. Preferred Stock The Preferred Stock carries a liquidation preference of $25.00 per share plus accumulated and unpaid dividends. Dividends accrue at a rate per annum equal to 8.5% of the liquidation preference per share of Preferred Stock and are payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year commencing August 1, 1997. The Preferred Stock is convertible at any time after July 15, 1997, at the option of the holder thereof, into common stock of the Company at a conversion price of $4.875 per share. The Preferred Stock will be redeemable at the option of the Company in whole or in part, at any time on or after May 3, 2000, at redemption prices of 104.86% in 2000, 103.64% in 2001, 102.43% in 2002, 101.21% in 2003 and 100% in 2004 and thereafter plus accumulated and unpaid dividends. Upon a change of control of the Company (as defined), the Company will be required to make an offer to repurchase all or any part of each holder's Preferred Stock at a price equal to 100% of the liquidation preference plus accumulated and unpaid dividends. 5. LONG TERM DEBT During the second quarter, the Company renegotiated the terms of its Revolving Credit Facility. The amended facility increased the borrowing availability to $125.0 ($113.3 million activated as of September 30, 1997) and 10 11 provided a LIBOR-based interest rate option. Borrowings under the Revolving Credit Facility mature on May 21, 2002. The Revolving Credit Facility is secured by liens on substantially all of the assets of the Company. The Revolving Credit Facility is subject to certain operating and financial covenants. As of September 30, 1997, the Company was in compliance with all such covenants. 6. COMMITMENTS AND CONTINGENCIES SECURITIES AND DERIVATIVE LITIGATION; SEC INVESTIGATION. Between August and December 1994, seven purported class action lawsuits were filed by purported owners of the Company's Common Stock, Convertible Debentures and Old Senior Notes against the Company and certain of its former officers and directors. The suits sought unspecified damages for securities laws violations as a result of statements made in public reports and press releases and to securities analysts during 1993 and 1994 that were alleged to have been false and misleading. All the purported class action cases referred to above (with the exception of one suit that was dismissed before being served on any defendants) were transferred to the United States District Court for the Northern District of Texas, the Court in which the first purported class action suit was filed, and were pending under a case styled In re Greyhound Securities Litigation, Civil Action 3-94-CV-1793-G. A joint pretrial order was entered in the litigation which consolidated for pretrial and discovery purposes all of the stockholder actions and, separately, all of the debtholder actions. The joint pretrial order required plaintiffs to file consolidated amended complaints and excused answers to the original complaints. In July 1995, the plaintiffs filed their consolidated amended complaints, naming the Company, Frank J. Schmieder, J. Michael Doyle, Phillip W. Taff, Robert R. Duty, Don T. Seaquist, Charles J. Lee, Charles A. Lynch and Smith Barney Incorporated as defendants. Messrs. Lee, Lynch and Taff were subsequently dismissed from the case by the plaintiffs. In September 1995, the various defendants filed motions to dismiss plaintiffs' complaints. In October 1995, plaintiffs filed a motion seeking to certify the class of plaintiffs. On October 3, 1996, the Court ruled in favor of the Company and all other defendants, granting defendants' motions to dismiss. Pursuant to the Court's order, the complaints were dismissed, with leave granted to the plaintiffs to refile amended complaints within 20 days thereafter. On October 23, 1996, an amended complaint was tendered to the Court. All seven class representatives involved in the prior complaints were dropped from the case. A new purported class plaintiff, John Clarkson, was named. A motion was filed seeking leave to permit Mr. Clarkson to intervene as the new class representative. The amended complaint alleges a class period of May 4, 1993 to October 26, 1993 and has been brought only on behalf of holders of Common Stock. The amended complaint names the same defendants involved in the dismissed cases (the Company, Messrs. Schmieder, Doyle, Duty and Seaquist and Smith Barney Incorporated); no new defendants were added and none were dropped. The Court advised the parties that no responsive pleading needed to be filed to the amended complaint until such time as the Court ruled on the motion for intervention filed by Mr. Clarkson. In December 1996, the defendants filed responses to plaintiff's motion for intervention. In January 1997, the plaintiff filed a reply brief. On August 15, 1997, the Court denied Mr. Clarkson leave to intervene and dismissed the litigation, noting that all claims asserted had been adjudicated. On September 12, 1997, a notice of appeal was filed by counsel for the original seven plaintiffs, seeking a review of the Court's ruling of October 3, 1996. According to the appeals court schedule, briefing is to be completed by late January 1998. No date has been set for oral argument. In November 1994, a shareholder derivative lawsuit was filed by Harvey R. Rice, a purported owner of the Company's Common Stock, against present directors and former officers and directors of the Company and the Company as a nominal defendant. The suit seeks to recover monies obtained by certain defendants by allegedly trading in the Company's securities on the basis of nonpublic information and to recover monies for certain defendants' alleged fraudulent dissemination of false and misleading information concerning the Company's financial condition and future business prospects. The suit, filed in the Delaware Court of Chancery, New Castle County, is styled Harvey R. Rice v. Frank J. Schmieder, J. Michael Doyle, Charles A. Lynch, Richard J. Caley, Thomas F. Meagher, Thomas G. Plaskett, Kenneth R. Norton, Robert B. Gill, Alfred E. Osborne, Jr., J. Patrick Foley, Charles J. Lee and Greyhound Lines, Inc., Civil Action No. 13854. Pursuant to a stipulation, the time for all defendants to answer, move or otherwise plead with respect to the derivative complaint is not yet due. In May 1995, a lawsuit was filed on behalf of two individuals, purported owners of the Company's Common Stock, against the Company and certain of its former officers and directors. The suit sought unspecified damages for securities laws violations as a result of statements made in public reports and press releases and to securities analysts 11 12 during 1993 and 1994 that are alleged to have been misleading. The suit, filed in the United States District Court for the Northern District of Ohio, was styled James Illius and Theodore J. Krawec v. Greyhound Bus Lines, Inc., Frank J. Schmieder and J. Michael Doyle, Civil Action No. 1-95-CV-1140. The defendants filed a motion to transfer venue seeking to have the case transferred to the United States District Court for the Northern District of Texas where the class action litigation described above was pending. In September 1995, the defendants' motion was granted, and the matter was transferred and was consolidated into the class action litigation described above. On October 29, 1996, a purported class action lawsuit was brought by a purported holder of Common Stock against the Company, certain of its former officers and directors and Smith Barney and Morgan Stanley & Company, Inc. The suit seeks unspecified damages for alleged federal and Texas state securities laws violations in connection with a Common Stock offering made by the Company in May 1993. The suit, filed in the 44th Judicial District Court of Dallas County, Texas, is styled John Clarkson v. Greyhound Lines, Inc., Frank Schmieder, J. Michael Doyle, Robert R. Duty, Don T. Seaquist, Smith Barney, Inc. and Morgan Stanley & Company, Inc., Case No. 96-11329-B. Plaintiff, John Clarkson, is the same individual who sought to intervene in the Federal Court class action litigation described above, and the same law firms have appeared for the plaintiff in both cases. On December 20, 1996, the defendants filed their answers to the lawsuit and pleas in abatement asking the Court to stay all proceedings pending resolution of the intervention motion and Federal Court class action lawsuit. On February 28, 1997, the suit was transferred to a different judge in the 68th Judicial District Court in Dallas. On March 28, 1997, the Court denied the defendants' pleas in abatement requesting the stay. In addition, on September 12, 1997, plaintiff filed a motion seeking to certify the class of plaintiffs. This motion, which will be contested by the defendants, is presently scheduled to be heard by the Court on December 15, 1997. The Court has presently set a trial date for this case of June 1998. Based on a review of the litigation, a limited investigation of the underlying facts and discussions with legal and outside counsel, the Company does not believe that the outcome of this litigation would have a material adverse effect on its business, financial condition, results of operations and liquidity. The Company intends to defend against the actions vigorously. To the extent permitted by Delaware law, the Company is obligated to indemnify and bear the cost of defense with respect to lawsuits brought against its officers and directors. The Company maintains directors' and officers' liability insurance that provides certain coverage for itself and its officers and directors against claims of the type asserted in the subject litigation. The Company has notified its insurance carriers of the asserted claims. In January 1995, the Company received notice that the Securities and Exchange Commission is conducting a formal, non-public investigation into possible securities laws violations allegedly involving the Company and certain of its former officers, directors and employees and other persons. The Commission's Order of Investigation (the "Order of Investigation") states that the Commission is exploring possible insider trading activities, as well as possible violations of the federal securities laws relating to the adequacy of the Company's public disclosures with respect to problems with its passenger reservation system implemented in 1993 and lower-than-expected earnings for 1993. In addition, the Commission has stated that it will investigate the adequacy of the Company's record keeping with respect to the passenger reservation system and its internal auditing controls. Although the Commission has not announced the targets of the investigation, it does not appear from the Order of Investigation that the Company is a target of the insider trading portion of the investigation. In September 1995, the Commission served a document subpoena on the Company requiring the production of documents, most of which the Company had voluntarily produced to the Commission in late 1994. The Company has fully cooperated with the Commission's investigation of these matters. The Company has had no substantive contact with the Commission in connection with the investigation since January 1996. The probable outcome of this investigation cannot be predicted at this stage in the proceeding. ENVIRONMENTAL MATTERS The Company may be liable for certain environmental liabilities and clean-up costs relating to underground fuel storage tanks and systems in the various facilities presently or formerly owned or leased by the Company. Based upon surveys conducted solely by Company personnel or its experts, 48 locations have been identified as sites requiring potential clean-up and/or remediation as of September 30, 1997. The Company has estimated the clean-up and/or remediation costs of these sites to be $4.0 million, of which approximately $0.7 million is indemnifiable by the predecessor owner of Greyhound's domestic bus operations now known as Viad Corp. The Company has no 12 13 reason to believe that Viad Corp will not fulfill its indemnification obligations to the Company. However, if Viad Corp does not fulfill such obligations, the Company could have liability with respect to those matters. Additionally, the Company has a potential liability with respect to two locations which the EPA has designated Superfund sites. The Company as well as other parties designated by the EPA as potentially responsible parties face exposure for costs related to the clean-up of those sites. Based on the EPA's enforcement activities to date, the Company believes its liability at these sites will not be material because its involvement was as a de minimis generator of wastes disposed of at the sites. In light of its minimal involvement, the Company has been negotiating to be released from liability in return for the payment of immaterial settlement amounts. The Company has recorded a total environmental reserve of $3.0 million at September 30, 1997, a portion of which has also been recorded as a receivable from Viad Corp for indemnification. The environmental reserve relates to sites identified for potential clean-up and/or remediation and represents the present value of estimated cash flows discounted at 8.0%. As of the date of this filing, the Company is not aware of any additional sites to be identified, and management believes that adequate accruals have been made related to all known environmental matters. OTHER LEGAL PROCEEDINGS In addition to the litigation discussed above, the Company is a defendant in various lawsuits arising in the ordinary course of business, primarily cases involving personal injury and property damage claims and employment-related claims. Although these lawsuits involve a variety of different facts and theories of recovery, the majority arise from traffic accidents involving buses operated by the Company. The vast majority of the personal injury and property damage claims are covered by insurance for amounts in excess of the self-retention or deductible portion of the policies. Therefore, based on the Company's assessment of known claims and its historical claims payout pattern and discussion with legal and outside counsel and risk management personnel, management believes that there is no proceeding either threatened or pending against the Company relating to such personal injury and/or property damage claims arising out of the ordinary course of business that, if resolved against the Company, would materially exceed the amounts recorded. 13 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Greyhound is the only nationwide provider of scheduled intercity bus transportation services in the United States. The Company's primary business consists of scheduled passenger service, package express service and food services at certain terminals, which accounted for 86.1%, 5.0% and 2.6%, respectively, of the Company's total operating revenues for the three months ended September 30, 1997 and 85.4%, 4.7% and 2.9%, respectively, for the nine months ended September 30, 1997. The Company's operations include a nationwide network of terminal and maintenance facilities, a fleet of approximately 2,350 buses and approximately 1,650 sales outlets. RESULTS OF OPERATIONS The following table sets forth the Company's results of operations as a percentage of total operating revenues for the three and nine months ended September 30, 1996 and 1997:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1997 1996 1997 -------- -------- -------- -------- Operating Revenues Transportation services Passenger services ............................. 86.7% 86.1% 85.3% 85.4% Package express ................................ 4.0 5.0 4.8 4.7 Food services ....................................... 3.0 2.6 3.1 2.9 Other operating revenues ............................ 6.3 6.3 6.8 7.0 -------- -------- -------- -------- Total operating revenues ................... 100.0 100.0 100.0 100.0 Operating Expenses Maintenance ......................................... 8.9 8.8 10.5 10.2 Transportation ...................................... 22.5 22.1 24.4 24.5 Agents' commissions and station costs ............... 17.6 17.0 18.8 18.3 Marketing, advertising and traffic .................. 3.3 2.9 3.6 3.5 Insurance and safety ................................ 5.0 5.4 6.2 5.7 General and administrative .......................... 10.2 10.8 12.0 11.9 Depreciation and amortization ....................... 3.7 3.5 4.3 4.0 Operating taxes and licenses ........................ 6.4 6.0 7.2 6.8 Operating rents ..................................... 6.7 7.0 7.4 7.7 Cost of goods sold - food services ................... 1.9 1.5 2.0 1.8 Other operating expenses ............................ 1.1 1.2 1.2 1.3 -------- -------- -------- -------- Total operating expenses ................... 87.3 86.2 97.6 95.7 -------- -------- -------- -------- Operating Income ...................................... 12.7 13.8 2.4 4.3 Interest Expense ...................................... 3.4 2.9 3.9 3.7 -------- -------- -------- -------- Net Income (Loss) Before Extraordinary Item ........... 9.3 10.9 (1.5) 0.6 Extraordinary Item .................................... 0.0 0.0 0.0 4.4 -------- -------- -------- -------- Net Income (Loss) ..................................... 9.3 10.9 (1.5) (3.8) Preferred Dividends ................................... 0.0 0.6 0.0 0.4 -------- -------- -------- -------- Net Income (Loss) Attributable to Common Stockholders ............................... 9.3 10.3 (1.5) (4.2) ======== ======== ======== ========
14 15 The following table sets forth certain operating data for the Company for the three and nine months ended September 30, 1996 and 1997. Certain statistics have been adjusted and restated from that previously published to provide consistent comparisons.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, PERCENTAGE PERCENTAGE 1996 1997 CHANGE 1996 1997 CHANGE ------------ --------------- ------ ------------- ------------- ------ Regular Service Miles (000's) .......... 75,892 81,509 7.4 196,850 212,308 7.9 Total Bus Miles (000's) ................ 76,721 82,527 7.6 200,710 216,686 8.0 Passenger Miles (000's) ................ 1,894,668 2,073,198 9.4 4,650,896 5,207,472 12.0 Passengers Carried (000's) ............. 5,320 6,078 14.2 13,630 15,261 12.0 Average Trip Length (passenger miles/ passengers carried) .......... 356 341 (4.2) 341 341 0.0 Load (avg. number of passengers per regular service mile) ............... 25.0 25.4 1.6 23.6 24.5 3.8 Load Factor (% of available seats filled) ............................. 54.3 55.3 1.8 51.4 53.3 3.7 Yield (regular route revenue/passenger miles) ............ $ 0.0952 $ 0.0949 (0.3) $ 0.0957 $ 0.0937 (2.1) Total Revenue Per Total Bus Mile ....... 2.71 2.77 2.2 2.60 2.64 1.5 Operating Income Per Total Bus Mile .... 0.34 0.38 11.8 0.06 0.11 83.3 Cost Per Total Bus Mile: Maintenance ......................... $ 0.242 $ 0.244 0.8 $ 0.273 $ 0.268 (1.8) Transportation ...................... 0.610 0.613 0.5 0.635 0.646 1.7 Total Operating Costs ............... 2.368 2.388 0.8 2.537 2.522 (0.6)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997, AND 1996 RESULTS OF OPERATIONS Operating Revenues. Total operating revenues increased $20.5 million (or 9.8%) and $49.3 million (or 9.4%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996. Transportation service revenues increased $19.4 million (or 10.3%) and $44.7 million (or 9.5%) for the third quarter and first nine months of 1997 compared to the same periods in 1996. The increased transportation revenues are primarily due to regular route revenue increases of $16.4 million and $42.9 million for the three and nine months ended September 30, 1997. A portion of this increase, $6.2 million for the three and nine months ended September 30, 1997, is attributable to the inclusion of Carolina Trailways and Valley Transit. The remaining increase in transportation service revenue is attributable to an increase of $3.0 million (or 36.0%) and $1.8 million (or 7.3%) in package express revenue for the three and nine months ended September 30, 1997, compared to the same periods in 1996. Package express revenues increased significantly during the third quarter due to an increase in shipments handled as a result of the United Parcel Service strike in August and the retention of a portion of those customers subsequent to the strike. The increases in regular route revenues reflect an increase in the number of passengers carried (14.2% and 12.0% respectively) for the three and nine months ended September 30, 1997, compared to the same periods in 1996. The growth in passengers is driven by core growth in all trip lengths, as well as, incremental growth from promotional fares, increased advertising and the inclusion of Carolina Trailways and Valley Transit. The 0.3% and 2.1% decrease in yield for the three and nine months ended September 30, 1997, compared to the same periods in 1996 reflects the impact of more extensive promotional fare offerings in 1997. The decrease in trip length for the three months ended September 30, 1997, reflects the impact of Carolina Trailways and Valley Transit, both of whom have shorter trip lengths. Food Service revenues decreased $0.2 million (or 2.8%) and increased $0.2 million (or 0.9%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996. The increase for the year is due to increased passenger traffic, which was completely offset for the quarter by the conversion of many locations to a convenience store concept which resulted in increases in sales of retail products (including food products) which is reported as other operating revenues. 15 16 Other operating revenues, consisting primarily of revenue from charter and in-terminal sales and services, increased $1.2 million (or 9.3%) and $4.4 million (or 12.3%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due primarily to an increase in charter service revenues as well as an increase in revenues from other in-terminal services, such as calling card sales, prepaid ticket orders and increased sales of other retail products (including "convenience store" type food products mentioned above). Operating Expenses. Total operating expenses increased $15.4 million (or 8.5%) and $37.2 million (or 7.3%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996. The increase is due primarily to an increase in bus miles operated (7.6% and 8.0%, respectively), higher driver wages, increased terminal salaries, increased ticket and express commissions due to higher sales, and increased operating and casual bus rentals. Additionally, expenses attributable to the operations of Carolina Trailways and Valley Transit ($4.9 million for the three and nine months ended September 30, 1997) are included as of their acquisition dates, both of which occurred during the third quarter of 1997. Despite these increases, total operating expenses decreased as a percentage of total operating revenues. Maintenance costs increased $1.6 million (or 8.8%) and $3.1 million (or 5.7%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due to increased bus miles and the inclusion of Carolina Trailways and Valley Transit. Despite these increases, maintenance costs decreased as a percentage of total operating revenues. The Company intends to continue to manage the average age of its fleet in order to increase the reliability of its service while reducing overall costs. Transportation expenses increased $3.8 million (or 8.1%) and $12.6 million (or 9.8%) for the three months and nine months ended September 30, 1997, compared to the same periods in 1996 due to increased bus miles, a contractual driver wage increase and the inclusion of Carolina Trailways and Valley Transit. The additional miles resulted in higher fuel expense, higher driver wages and related driver expenses. Transportation expenses increased as a percentage of total operating revenues primarily due to the impact of the contractual wage increase which was partially offset by lower fuel prices. Agents' commissions and station costs increased $2.2 million (or 5.9%) and $6.3 million (or 6.4%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 primarily due to commissions associated with increased ticket and express sales, addition of terminal staff since the first quarter of 1996, pay increases for terminal staff and the inclusion of Carolina Trailways and Valley Transit. Despite these increases, agents' commissions and station costs decreased as a percentage of total operating revenues. Marketing, advertising and traffic expenses decreased $0.1 million (or 1.3%) and increased $1.6 million (or 8.6%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996. For the quarter, gross advertising expenses increased ($1.1 million) over the prior year; however, this increase was partially offset by bus wrap trade discounts ($0.8 million). Additionally, cost savings were recognized for the quarter related to bringing in-house certain computing services. Marketing, advertising and traffic costs decreased as a percentage of total operating revenues. Insurance and safety costs increased $2.0 million (or 19.4%) and $0.3 million (or 0.9%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due to increased bus miles and the inclusion of Carolina Trailways and Valley Transit. On a per-mile basis, insurance and claims expenses were higher for the three months ended September 30, 1997 versus the same period in 1996; however, they are lower for the nine months ended September 30, 1997, versus the same period in 1996. The Company may occasionally reflect fluctuations in its per-mile insurance costs during an interim period; however, over the longer term, the Company expects these costs to remain near current cost per-mile levels. General and administrative expenses increased $3.3 million (or 15.5%) and $5.4 million (or 8.5%) for the three and nine months ended September 30, 1997 compared to the same periods in 1996 due to additions to administrative personnel during late 1996, increased benefit costs Company-wide, officer severance, a higher management incentive plan expense related to improved company performance, and the inclusion of Carolina Trailways and Valley Transit. Despite these increases, general and administrative expenses as a percentage of total operating revenues have decreased slightly for the nine months ended September 30, 1997, compared to the same period in 1996. 16 17 Depreciation and amortization increased by $0.2 million (or 3.2%) and $0.3 million (or 1.3%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due to depreciation on the buses acquired in the fourth quarter of 1996 and the depreciation and amortization attributable to Carolina Trailways and Valley Transit. Operating taxes and licenses costs increased $0.3 million (or 2.2%) and $1.5 million (or 4.1%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due to increased fuel and oil taxes resulting from an increase in total bus miles, an increase in payroll taxes due to increased salaries and headcounts related to higher business volume, and the inclusion of Carolina Trailways and Valley Transit. Operating taxes and licenses costs decreased as a percentage of total operating revenues. Operating rents increased $2.0 million (or 14.7%) and $5.3 million (or 13.8%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due to an increase in the number of buses leased under operating leases in 1997, an increase in casual bus rentals related to the strong 1996 Christmas and 1997 New Year's holiday travel which caused increased rentals in early 1997 compared to 1996 and the inclusion of Carolina Trailways and Valley Transit. Operating rents increased as a percentage of total operating revenues. Other operating expenses increased $0.3 million (or 11.0%) and $1.1 million (or 18.2%) for the three and nine months ended September 30, 1997, compared to the same periods in 1996 due, in part, to an increase in food service costs related to higher retail sales (reflected in other operating revenues). Other operating expenses increased as a percentage of total operating revenues. Interest expense decreased $0.3 million (or 4.8%) for the quarter and increased $0.5 million (or 2.5%) for the year compared to the same periods in 1996. The quarterly decrease is the result of the renegotiation of lower interest rates under the Revolving Credit Facility, termination of the interest rate swap agreements and the retirement of a bus obligation. This decrease is partially offset by increased interest resulting from capital leases for 77 buses initiated in December 1996 and an increase in amortization of debt issuance costs. For the nine months ended September 30, 1997, however, increased borrowings on the revolver, primarily due to the acquisition of Carolina Trailways and Valley Transit, the five terminals purchased from Viad Corp and the buses purchased for sale/leaseback, more than offset the reduced interest expense resulting from the second quarter refinancing transactions. LIQUIDITY AND CAPITAL RESOURCES The Company's principal liquidity requirements are to provide working capital, to finance capital expenditures, including bus acquisitions, to pay quarterly dividends on the Preferred Stock and to meet debt service requirements. Debt service requirements include the payment of principal and interest on the borrowings under the Revolving Credit Facility and the payment of interest on the Senior Notes. The Company's principal sources of liquidity are expected to be cash flow from operations and borrowings under the Revolving Credit Facility. The Company believes that its cash flow from operations, together with borrowings under the Revolving Credit Facility, will be sufficient to meet its liquidity needs for the foreseeable future. Operating activities provided net cash of $10.1 million for 1997 compared to net cash used of $9.8 million for 1996, an increase of $19.9 million. The increase in net cash provided by operating activities is due primarily to increased operating income due to improved company performance in 1997 compared to 1996 and the acquisitions of Carolina Trailways and Valley Transit. Net cash used for investing activities increased $61.3 million, to $78.3 million in 1997 from $17.0 million in 1996, principally due to the acquisition of Carolina Trailways and Valley Transit, the purchase of five terminals from Viad Corp and the purchase of buses the Company intends to sell and leaseback. Net cash provided by financing activities increased $44.5 million to $69.2 million in 1997 from $24.7 million in 1996. This increase can be attributed to proceeds from the securities offerings (discussed below) and the net change in the revolver, offset by the redemption of the Old Senior Notes and the retirement of a bus financing obligation. As part of its operating strategy, the Company anticipates that it will continue to make significant capital investments in order to maintain and, where appropriate, make improvements and upgrades to its infrastructure, including its bus fleet, terminals and computer systems. The Company's experience indicates that as the age of its bus fleet increases (at September 30, 1997, the average age of the Company's bus fleet was 6.5 years), the 17 18 dependability and quality of service declines and maintenance cost per mile increases, which may make the Company less competitive. In addition, the Company believes that acquiring new buses and improving the Company's terminals and computer systems will permit the Company to continue to improve customer service, which the Company believes has contributed significantly to its improved operating results in 1995, 1996 and the first nine months of 1997. The Company estimates that capital expenditures for 1997 will total approximately $30.0 million, including the acquisition of five bus terminals the Company purchased from Viad Corp (see further discussion in the Securities Offerings section), and excluding bus acquisitions. The Company currently maintains a fleet of approximately 2,350 buses comprised of approximately 1,450 leased and 900 owned buses. The Company took delivery of 171 buses at an aggregate cost of $46.1 million through the nine months ended September 30, 1997. Sixty-eight of these buses were purchased by the Company and the balance were received under short-term operating leases. Of the buses purchased, 18 were sold and leased back, and substantially all of the remaining purchased buses are expected to be sold and leased back during the fourth quarter. Additionally, the Company is arranging permanent financing for the buses currently carried under short-term leases. During the fourth quarter of 1997 and the first half of 1998, the Company expects to take additional deliveries of approximately 187 buses at an aggregate cost of $54.6 million, the majority of which will be financed as operating leases. The Company generally uses lease financing with fixed purchase options as the principal source of bus financing in order to achieve the lowest net cost of bus financing. Depending on the specific terms of a lease, such a lease may be accounted for as either an operating or capital lease. The Company also acquires buses outright and at times purchases buses and subsequently engages in sale-leaseback transactions with respect to such buses. The Company requires significant cash flows to meet its debt service and other continuing obligations. As of September 30, 1997, the Company had $241.0 million (excluding $7.6 million of current maturities), of long-term indebtedness outstanding, including $57.6 million of borrowings under the Revolving Credit Facility (but excluding $20.9 million of issued and undrawn standby letters of credit. As of September 30, 1997, the Company had total availability of $34.8 million under the Revolving Credit Facility. During the second quarter, the Company renegotiated the terms of its Revolving Credit Facility. The amended facility increased the borrowing availability to $125.0 million ($113.3 million activated at September 30, 1997) and provided a LIBOR-based interest rate option which is expected to reduce annual interest expense. Borrowings under the Revolving Credit Facility mature on May 21, 2002. The Revolving Credit Facility is secured by liens on substantially all of the assets of the Company. The Revolving Credit Facility is subject to certain operating and financial covenants. As of September 30, 1997, the Company was in compliance with all such covenants. As of September 30, 1997, the Company had not entered into any new hedging agreements regarding interest rate risk. From the proceeds of the Securities Offerings detailed in the next paragraph, the Company retired its two existing interest rate swap agreements effective April 30, 1997, for $3.0 million. Management does not presently plan to enter into any additional interest rate hedging instruments in the future. The Company has entered into two advance purchase commitments for fuel. Under these agreements the Company agrees to take delivery of fuel at a specific location at a fixed price at a specific date in the future. The agreements have been entered into with two suppliers for approximately 30% of projected bulk fuel needs through August 1998, at an average price per gallon of $0.6155. Management believes that this strategy is a conservative method to hedge against fuel price fluctuations. SECURITIES OFFERINGS On April 16, 1997, the Company completed the sale of two private offerings of its securities. The Company issued $150.0 million aggregate principal amount of Senior Notes and a new class of Preferred Stock with a $60.0 million liquidation preference. On May 16, 1997, the Company filed with the SEC a registration statement on Form S-3, subsequently declared effective June 30, 1997, relating to resale by certain purchasers of the Preferred Stock of their shares of Preferred Stock acquired in the private offering. Further, on June 30, 1997, the Company offered to exchange the series of Senior Notes issued in the private offering (the "Series A Senior Notes") for an identical series of Senior Notes registered with the SEC on Form S-4, (the "Series B Senior Notes"). On August 7, 1997, the Company accepted all $150 million aggregate principal amount of the Series A Senior Notes outstanding in exchange for the issuance of a like principal amount of the Series B Senior Notes. 18 19 The net proceeds to the Company from the aforementioned Senior Note and Preferred Stock Offerings were approximately $203.4 million (after deducting discounts, commissions and offering expenses). The net proceeds of both offerings were used to (i) retire the Company's 10% Senior Notes due 2001, (ii) fund the acquisition of Carolina Trailways for $24.5 million (including the repayment of debt of Carolina Trailways); and (iii) retire certain interest rate swap agreements entered into by the Company for $3.0 million. The remaining net proceeds were used to repay borrowings under the Revolving Credit Facility and other debt obligations. The original "use of proceeds" from these offerings intended $6.7 million to be used to acquire four bus terminals. The terms of the purchase were modified, and the Company purchased five terminals (the aforementioned terminals plus an additional terminal) for $10.3 million from Viad Corp. During the second quarter, the company recorded an extraordinary loss of $25.3 million primarily related to the redemption of the 10% Senior Notes. The loss includes $21.3 million to reflect the acceleration of the discount for the 10% Senior Notes and prepayment premiums related to the redemption of the 10% Senior Notes. Another component reflects the acceleration of payments less amounts accrued under the interest rate swap agreements for $2.5 million. Lastly, as part of the renegotiation of the Revolving Credit Facility, the Company wrote-off $1.5 million in debt issuance costs related to the prior revolving credit facility. ACQUISITIONS On July 9, 1997, the Company completed its acquisition of Carolina Trailways, a Mid-Atlantic bus carrier, for the purchase price of approximately $25.3 million comprised of $20.4 million in cash, the payment of $4.1 million of indebtedness and the issuance of $0.75 million in Common Stock of the Company. On August 25, 1997, the Company completed its acquisition of Valley Transit, a South Texas bus carrier, for a purchase price of $19.0 million in cash. On September 24, 1997, a subsidiary of the Company entered into an agreement to purchase Golden State, a Southern California bus carrier, for a purchase price of $6.1 million comprised of $3.1 million in cash and $1.0 million in cash per year for the next three years. This transaction has not yet closed and is subject to approval by the Surface Transportation Board of the U.S. Department of Transportation ("STB"). SUBSTANTIAL LEVERAGE The Company has consolidated indebtedness that is substantial in relation to its stockholders' equity. As of September 30, 1997, the Company had outstanding consolidated long-term indebtedness (including current portions) of $248.6 million and total stockholders' equity of 177.8 million. HISTORY OF LOSSES The Company has had a net loss in each of its last three fiscal years. Although the Company has implemented strategic and operational initiatives intended to enhance revenues and operating income, the Company's operations generally are subject to economic, financial, competitive, seasonal and other factors, many of which are beyond its control. COMPETITION The transportation industry is highly competitive. The Company's primary sources of competition for passengers are automobile travel, low cost air travel from both regional and national airlines, and in certain markets, regional bus companies and trains. SELF INSURANCE AND DEPOSITS The Company maintains cash deposits held for insurance claims and bus lease collateral, which as of September 30, 1997 aggregated approximately $86.5 million, including the following deposits. The Company maintains $15.0 million on deposit in a trust fund to support its self-insurance program pursuant to the STB's approval of such 19 20 program. Additionally, as of September 30, 1997, the Company had pledged $36.5 million in cash to secure other liability insurance obligations. Depending on the Company's future claims history and the policies of its insurance carriers, such carriers could increase or decrease the amount of collateral that the Company is obligated to pledge to secure its liability insurance obligations. The Company also has deposits with a market value of $34.5 million pledged as collateral in connection with the sale and leaseback of 490 buses in 1993 and the first quarter of 1994. The Company's self-insurance accruals, which are reflected on the balance sheet, are based upon actuarial estimates. The continued availability of self-insurance authority from the STB or a decision by the Company's insurers to modify the Company's program substantially, by either increasing cost, reducing availability or increasing collateral, could have a materially adverse effect on the Company's financial condition. PENSION PLAN FUNDING The Company maintains six defined benefit pension plans, the most significant of which (the "ATU Plan") covers approximately 16,500 current and former employees, fewer than 1,300 of which are active employees of the Company. The ATU Plan was closed to new participants in 1983 and, as a result, over 80% of its participants are over the age of 50. For financial reporting and investment planning purposes, the Company currently uses an actuarial table that closely matches the actual experience related to the existing participant population. As a result of legislation enacted in 1994 by the United States Congress, the Company will be required to begin measuring its funding obligation under the ATU Plan utilizing an actuarial table prescribed by such legislation. Without the benefit of any additional relief, the application of the prescribed actuarial table would require the Company, based on assumed rates of return on the ATU Plan's investments, to begin making contributions to the ATU Plan beginning no earlier than 1998 in an aggregate amount over the next five years estimated to range from approximately $6 million to approximately $30 million. The Company pursued various forms of relief from this requirement. In the summer of 1997, further legislation was passed which reduced the funding thresholds over the next ten years for pension plans which meet particular criteria. The Company believes that the ATU Plan meets these criteria. Using the reduced funding thresholds and based upon the assumed rates of return for the ATU Plan's investments, the aggregate contributions over the next five years are estimated to range from approximately $4 million to $7 million. However, there is no assurance, that the ATU Plan will be able to obtain the assumed rate of return or that contributions to the ATU Plan will not be significant. SEASONALITY The Company's business is seasonal in nature and generally follows the pattern of the travel industry as a whole, with peaks during the summer months and the Thanksgiving and Christmas holiday periods. As a result, the Company's cash flows are seasonal in nature with a disproportionate amount of the Company's annual cash flows being generated during the peak travel periods. Therefore, an event that adversely affects ridership during any of these peak periods could have a material adverse effect on the Company's financial condition and results of operations for that year. The day of the week on which certain holidays occur, the length of certain holiday periods, and the date on which certain holidays occur within a fiscal quarter, may also affect the Company's quarterly results of operations. LITIGATION The Company is a party to various lawsuits the outcome of which, if adverse to the Company, could have a material adverse effect on its business, financial condition, results of operations and liquidity. See "Part II, Item 1 - Legal Proceedings". 20 21 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS SECURITIES AND DERIVATIVE LITIGATION; SEC INVESTIGATION Between August 1994 to December 1994, seven purported class action lawsuits were filed by purported owners of the Company's Common Stock, 8 1/2% Convertible Subordinated Debentures and Old Senior Notes against the Company and certain of its former officers and directors. The suits seek unspecified damages for securities laws violations. In November 1994, a shareholder derivative lawsuit was filed against present directors and former officers and directors of the Company and the Company as a nominal defendant. In October 1996, a purported class action lawsuit was filed by a purported owner of the Company's Common Stock in state court in Texas. In addition, in January 1995 the Company received notice that the Securities and Exchange Commission is conducting a formal, non-public investigation into possible securities laws violations allegedly involving the Company and certain other parties. See Note 6 to the Interim Consolidated Financial Statements for the three and nine months ended September 30, 1997, included elsewhere in this filing. OTHER LEGAL PROCEEDINGS In addition to the litigation discussed above, the Company is a defendant in various lawsuits arising in the ordinary course of business, primarily involving personal injury and property damage claims and employment-related claims. Although these lawsuits involve a variety of different facts and theories of recovery, the majority arise from traffic accidents involving buses operated by the Company. The vast majority of the personal injury and property damage claims are covered by insurance for amounts in excess of the self-retention or deductible portion of the policies. Therefore, based on the Company's assessment of known claims and its historical claims payout pattern and discussion with legal and outside counsel and risk management personnel, management believes that there is no proceeding either threatened or pending against the Company relating to such personal injury and/or property damage claims arising out of the ordinary course of business that, if resolved against the Company, would materially exceed the amounts recorded. 21 22 ITEM 2. CHANGES IN SECURITIES ISSUANCE OF SECURITIES IN CAROLINA TRAILWAYS ACQUISITION On July 9, 1997, in connection with the Company's acquisition of Carolina Trailways, the Company issued 167,597 shares of its Common Stock to one of the selling shareholders in partial consideration of his sale to the Company of his shares of capital stock in Carolina Trailways. Such shares were issued in a transaction exempt under Section 4(2) and Rule 506 under the Securities Act of 1933. In connection with such transaction, the Company relied upon certain representations from the selling shareholder, including among other things, as to his status as an "accredited investor" within the meaning of Rule 501(a) under the Securities Act of 1933. 22 23 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 4.1 - Second Supplemental Indenture dated as of August 25, 1997, between the Registrant and PNC Bank, N.A., as Trustee (2) 11.1 - Computation of Registrant's earnings per share for the three and nine months ended September 30, 1996. (1) 11.2 - Computation of Registrant's earnings per share for the three and nine months ended September 30, 1997. (2) 27 - Financial Data Schedule as of and for the nine months ended September 30, 1997. (2) - ------------------------------------------------------------------------------- (1) Incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. (2) Filed herewith. (b) REPORTS ON FORM 8-K During the quarter ended September 30, 1997, the Company did not file any current reports on Form 8-K with the Securities and Exchange Commission. 23 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf months by the undersigned thereunto duly authorized. Date: November 13, 1997 GREYHOUND LINES, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer (Duly Authorized Officer and Chief Accounting Officer) ATLANTIC GREYHOUND LINES OF VIRGINIA, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer EAGLE BUS MANUFACTURING, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer FCA INSURANCE LIMITED By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer GLI HOLDING COMPANY By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer GREYHOUND de MEXICO S.A. de C.V. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer GRUPO CENTRO, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer 24 25 LOS BUENOS LEASING CO., INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Financial Officer and Secretary SISTEMA INTERNACIONAL de TRANSPORTE de AUTOBUSES, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer T & V HOLDING COMPANY By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer TEXAS, NEW MEXICO & OKLAHOMA COACHES, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer T.N.M. & O. TOURS, INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer VERMONT TRANSIT CO., INC. By: /s/ T. Scott Kirksey --------------------------------------- T. Scott Kirksey Chief Accounting Officer 25 26 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.1 - Second Supplemental Indenture dated as of August 25, 1997, between the Registrant and PNC Bank, N.A., as Trustee. 11.2 - Computation of Registrant's earnings per share for the three and nine months ended September 30, 1997. 27 - Financial Data Schedule as of and for the nine months ended September 30, 1997. EX-4.1 2 2ND SUPPLEMENTAL INDENTURE DATED 8/25/97 1 EXHIBIT 4.1 - ------------------------------------------------------------------------------- GREYHOUND LINES, INC. and THE GUARANTORS NAMED HEREIN ---------------------------------------- SERIES A AND SERIES B 11 1/2% SENIOR NOTES DUE 2007 ---------------------------------------- ------------------- SECOND SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 25, 1997 ------------------- PNC BANK, NATIONAL ASSOCIATION Trustee - ------------------------------------------------------------------------------- 2 This SECOND SUPPLEMENTAL INDENTURE, dated as of August [25], 1997, among Greyhound Lines, Inc., a Delaware corporation (the "Company"), each of the parties identified under the caption "Guarantors" on the signature pages hereto (the "Guarantors") and PNC Bank, National Association, as Trustee. RECITALS WHEREAS, the Company and the Trustee entered into an Indenture, dated as of April 16, 1997 (the "Indenture"), pursuant to which the Company issued $150,000,000 in principal amount of 11 1/2% Senior Notes due 2007 (the "Notes"); and WHEREAS, Section 9.01(e) of the Indenture provides that the Company and the Trustee may amend or supplement the Indenture in order to execute a guarantee (a "Subsidiary Guarantee") to comply with Section 10.02 thereof without the consent of the Holders of the Notes; and WHEREAS, all acts and things prescribed by the Indenture, by law and by the Certificate of Incorporation and the Bylaws of the Company, of the Guarantors and of the Trustee necessary to make this Second Supplemental Indenture a valid instrument legally binding on the Company, the Guarantors and the Trustee, in accordance with its terms, have been duly done and performed; NOW, THEREFORE, to comply with the provisions of the Indenture and in consideration of the above premises, the Company, the Guarantors and the Trustee covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes as follows: ARTICLE 1 SECTION 1.01. This Second Supplemental Indenture is supplemental to the Indenture and does and shall be deemed to form a part of, and shall be construed in connection with and as part of, the Indenture for any and all purposes. SECTION 1.02. This Second Supplemental Indenture shall become effective immediately upon its execution and delivery by each of the Company, the Guarantors and the Trustee. 2 3 ARTICLE 2 From this date, in accordance with Section 10.02 and by executing this Second Supplemental Indenture and the accompanying Subsidiary Guarantee (a copy of which is attached hereto), the Guarantors whose signatures appear below are subject to the provisions of the Indenture to the extent provided for in Article 10 thereunder. ARTICLE 3 SECTION 3.01. Except as specifically modified herein, the Indenture and the Notes are in all respects ratified and confirmed (mutatis mutandis) and shall remain in full force and effect in accordance with their terms with all capitalized terms used herein without definition having the same respective meanings ascribed to them as in the Indenture. SECTION 3.02. Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Second Supplemental Indenture. This Second Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto. SECTION 3.03. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND Supplemental INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. SECTION 3.04. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of such executed copies together shall represent the same agreement. [NEXT PAGE IS SIGNATURE PAGE] 3 4 IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first written above. GREYHOUND LINES, INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer GUARANTORS: VALLEY TRANSIT CO., INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer VALLEY BUS CO., INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer 4 5 VALLEY EXPRESS COMPANY By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer VALLEY GMC TRUCK CO. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer VALLEY BUS SERVICE COMPANY By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer VALLEY GARAGE COMPANY, INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer 5 6 V.D.R. SERVICES, INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer FIRST BUS CORP. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer MOTOR COACH LEASING COMPANY, INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer FIRST TEXAS COMMERCIAL, INC. By: /s/ Steven L. Korby --------------------------------------- Steven L. Korby, Executive Vice President and Chief Financial Officer 6 7 PNC BANK, NATIONAL ASSOCIATION, as trustee By: --------------------------------------- Name: Title: 7 EX-11.2 3 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.2 Page 1 of 2 GREYHOUND LINES, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1997 ------------------ PRIMARY EARNINGS PER SHARE Net income ............................................................................... $ 23,513,000 ============ Shares Weighted average number of common shares issued ...................................... 59,377,968 Less weighted average treasury stock ................................................. (109,192) Assuming exercise of options reduced by the number of common shares which could have been purchased with the proceeds from exercise of such options ....... 1,592,764 ------------ Weighted average number of common shares outstanding, as adjusted .................... 60,861,540 ------------ Net income per share ..................................................................... $ 0.39 ============ FULLY DILUTED EARNINGS PER SHARE Net income ............................................................................... $ 23,513,000 Plus interest expense on 8 1/2% Convertible Subordinated Debentures ...................... 208,335 Plus dividends on the 8 1/2% Convertible Exchangeable Preferred Stock .................... 1,275,000 ------------ Adjusted net income ...................................................................... $ 24,996,335 ============ Shares Weighted average number of common shares issued ...................................... 59,377,968 Less weighted average treasury stock ................................................. (109,192) Assuming exercise of options reduced by the number of common shares which could have been purchased with the proceeds from exercise of such options ....... 1,592,764 Assuming conversion of 8 1/2% Convertible Subordinated Debentures into shares of Common Stock ................................................................. 792,243 Assuming conversion of the 8 1/2% Convertible Exchangeable Preferred Stock ........... 12,307,692 ------------ Weighted average number of common shares outstanding, as adjusted .................... 73,961,475 ------------ Net income per share ..................................................................... $ 0.34 ============
2 EXHIBIT 11.2 Page 2 of 2 GREYHOUND LINES, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
NINE MONTHS ENDED SEPTEMBER 30, 1997 ------------------ PRIMARY LOSS PER SHARE Net loss.................................................................................. $(23,889,000) ============ Shares Weighted average number of common shares issued....................................... 58,954,163 Less weighted average treasury stock ................................................. (109,192) Assuming exercise of options reduced by the number of common shares which could have been purchased with the proceeds from exercise of such options ....... --- * ------------ Weighted average number of common shares outstanding, as adjusted .................... 58,884,971 ------------ Net loss per share ....................................................................... $ (0.41) ============ FULLY DILUTED LOSS PER SHARE Net loss.................................................................................. $(23,889,000) Plus interest expense on 8 1/2% Convertible Subordinated Debentures ...................... --- ** Plus dividends on the 8 1/2% Convertible Exchangeable Preferred Stock..................... --- ** ------------ Adjusted net loss ........................................................................ $(23,889,000) ============ Shares Weighted average number of common shares issued....................................... 58,954,163 Less weighted average treasury stock.................................................. (109,192) Assuming exercise of options reduced by the number of common shares which could have been purchased with the proceeds from exercise of such options ....... --- * Assuming conversion of 8 1/2% Convertible Subordinated Debentures into shares of Common Stock .................................................................... --- ** Assuming conversion of the 8 1/2% Convertible Exchangeable Preferred Stock ........... --- ** ------------ Weighted average number of common shares outstanding, as adjusted .................... 58,884,971 ------------ Net loss per share ....................................................................... $ (0.41) ============
* Option exercises not considered in calculation as exercise would not have a dilutive effect. ** Not used in calculation of weighted average number of common shares due to the antidilutive effect of the assumed conversion of the 8 1/2% Convertible Subordinated Debentures and the 8 1/2% Convertible Exchangeable Preferred Stock. EX-27 4 FINANCIAL DATA SCHEDULE
5 0000813040 Greyhound Lines, Inc. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1,852 0 40,858 298 4,494 81,354 452,701 117,849 586,518 117,247 240,990 0 60,000 594 117,220 586,518 0 571,202 0 395,456 0 0 20,730 4,020 248 3,772 0 25,323 0 (23,889) (0.41) (0.41)
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