-----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, Ii+6IPJIDe0b05pQVlfwVyGg8PCPDcNFBAzyF7nbBz5dZOy5MvBqFN6fzl9Lw6TH FEorxTu92QnWOg9s+saLzA== 0000950134-99-007140.txt : 19990812 0000950134-99-007140.hdr.sgml : 19990812 ACCESSION NUMBER: 0000950134-99-007140 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 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: 99684235 BUSINESS ADDRESS: STREET 1: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727897000 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: 99684236 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: 333-27267-01 FILM NUMBER: 99684237 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: 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: 99684238 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: 99684239 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: 99684240 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: 99684241 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: 99684242 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: 99684243 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: 99684244 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 JUNE 30, 1999 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-10841 GREYHOUND LINES, INC. and its Subsidiaries identified in Footnote (1) below (Exact name of registrant as specified in its charter) DELAWARE 86-0572343 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 15110 N. DALLAS PARKWAY, SUITE 600 DALLAS, TEXAS 75248 (Address of principal executive offices) (Zip code) (972) 789-7000 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- As of August 10, 1999, the Registrant had 58,743,069 shares of Common Stock, $0.01 par value, outstanding. (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 JURISDICTION COMMISSION IDENTIFICATION OF NAME FILE NO. NO. INCORP. - ---- ------------ ---------------- ------------ Atlantic Greyhound Lines of Virginia, Inc. 333-27267-01 58-0869571 Virginia GLI Holding Company 333-27267-04 75-2146309 Delaware Greyhound de Mexico, S.A. de C.V. 333-27267-05 None Republic of Mexico 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 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 June 30, 1999, Atlantic Greyhound Lines of Virginia, Inc. had 150 shares of common stock outstanding (at a par value of $50.00 per share); GLI Holding Company had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); Greyhound de Mexico, S.A. de C.V. had 10,000 shares of common stock outstanding (at a par value of $0.10 Mexican currency per share); 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); Texas, New Mexico & Oklahoma Coaches, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); T.N.M. & O. Tours, Inc. had 1,000 shares of common stock outstanding (at a par value of $1.00 per share); and Vermont Transit Co., Inc. had 505 shares of common stock outstanding (no par value). Each of the above named co-registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period such co-registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. 2 3 GREYHOUND LINES, INC. AND SUBSIDIARIES
PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Interim Consolidated Statements of Financial Position as of June 30, 1999 (Unaudited) and December 31, 1998............................. 5 Interim Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited)............... 6 Condensed Interim Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 (Unaudited)......................... 7 Notes to Interim Consolidated Financial Statements (Unaudited)................. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................ 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.......................................................... 16 SIGNATURES .................................................................................. 17
3 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 4 5 GREYHOUND LINES, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31, 1999 1998 ----------- ------------ (UNAUDITED) Current Assets Cash and cash equivalents ................................................. $ 6,171 $ 4,736 Accounts receivable, less allowance for doubtful accounts of $188 and $198 44,996 40,774 Inventories, less allowance for shrinkage of $208 and $205 ................ 6,678 5,705 Prepaid expenses .......................................................... 5,572 5,170 Assets held for sale ...................................................... 4,959 3,029 Current portion of deferred tax assets .................................... 34,643 24,053 Other current assets ...................................................... 2,537 9,907 ------------ ------------ Total current assets ................................................... 105,556 93,374 Prepaid Pension Plans ......................................................... 27,917 27,917 Property, Plant and Equipment, net of accumulated depreciation of $163,101 and $151,468 .................................................. 415,907 362,417 Investments in Unconsolidated Affiliates ...................................... 14,730 13,560 Deferred Income Taxes ......................................................... 16,344 8,988 Insurance and Security Deposits ............................................... 40,178 67,908 Goodwill, net of accumulated amortization of $2,546 and $1,755 ................ 45,014 39,510 Intangible Assets, net of accumulated amortization of $29,830 and $28,503 ..... 27,473 29,704 ------------ ------------ Total assets ........................................................... $ 693,119 $ 643,378 ============ ============ Current Liabilities Accounts payable .......................................................... $ 28,701 $ 27,724 Accrued liabilities ....................................................... 61,198 64,819 Unredeemed tickets ........................................................ 12,122 12,143 Current portion of reserve for injuries and damages ....................... 22,967 22,967 Current maturities of long-term debt ...................................... 5,852 7,970 ------------ ------------ Total current liabilities .............................................. 130,840 135,623 Reserve for Injuries and Damages .............................................. 34,470 37,392 Long-Term Debt ................................................................ 180,631 225,688 Minority Interests ............................................................ 3,175 3,058 Other Liabilities ............................................................. 23,137 23,604 ------------ ------------ Total liabilities ...................................................... 372,253 425,365 ------------ ------------ Redeemable Preferred Stock (2,400,000 shares authorized and 1,746,886 shares issued as of June 30, 1999; aggregate liquidation preference $43,672) (Note 1) ............................... 43,672 -- Stockholders' Equity Preferred stock (10,000,000 shares authorized as of December 31, 1998; par value $.01) 8 1/2% Convertible Exchangeable Preferred Stock (2,760,000 shares authorized and 2,400,000 shares issued as of December 31, 1998; aggregate liquidation preference $60,000) (Note 1) ........... -- 60,000 Series A junior preferred stock (1,500,000 shares authorized as of December 31, 1998; none issued) .................................... -- -- Common stock (100,000,000 shares authorized; par value $.01; 58,743,069 and 60,255,117 shares issued as of June 30, 1999 and December 31, 1998 respectively) ..................................................... 587 603 Capital in excess of par value ............................................ 380,290 237,441 Retained deficit .......................................................... (96,164) (71,761) Accumulated Other Comprehensive Income, net of tax benefit of $3,181 ...... (7,519) (7,232) Less: Treasury stock, at cost (109,192 shares at December 31, 1998) ....... -- (1,038) ------------ ------------ Total stockholders' equity ............................................. 277,194 218,013 ------------ ------------ Total liabilities and stockholders' equity ......................... $ 693,119 $ 643,378 ============ ============
The accompanying notes are an integral part of these statements. 5 6 GREYHOUND LINES, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1999 1998 1999 1998 --------- --------- --------- --------- (UNAUDITED) (UNAUDITED) OPERATING REVENUES Transportation Services Passenger services ........................ $ 190,801 $ 180,611 $ 354,489 $ 334,270 Package express ........................... 10,222 8,816 18,776 16,789 Food services and related ..................... 9,862 7,863 17,662 14,896 Other operating revenues ...................... 17,468 13,957 32,164 26,012 --------- --------- --------- --------- Total operating revenues .............. 228,353 211,247 423,091 391,967 --------- --------- --------- --------- OPERATING EXPENSES Maintenance ................................... 21,457 20,655 42,905 40,535 Transportation ................................ 54,717 51,302 104,354 97,426 Agents' commissions and station costs ......... 42,644 38,378 82,625 73,552 Marketing, advertising and traffic ............ 7,246 6,865 14,237 13,906 Insurance and safety .......................... 12,642 12,799 24,372 24,442 General and administrative .................... 30,338 26,360 58,613 50,962 Depreciation and amortization ................. 10,982 9,403 20,739 17,842 Operating taxes and licenses .................. 14,329 14,164 28,697 27,666 Operating rents ............................... 18,205 16,133 36,893 31,897 Cost of goods sold - food services and related 6,410 5,136 11,765 9,905 Other operating expenses ...................... 685 696 1,605 1,381 --------- --------- --------- --------- Total operating expense ............... 219,655 201,891 426,805 389,514 --------- --------- --------- --------- Operating Income (Loss) .......................... 8,698 9,356 (3,714) 2,453 Settlement of Stock Options (see Note 3) ........ 1,365 -- 21,294 -- Interest Expense ................................. 5,377 7,305 11,657 13,959 --------- --------- --------- --------- Income (Loss) Before Income Taxes ................ 1,956 2,051 (36,665) (11,506) Income Tax Provision (Benefit) ................... 881 179 (16,472) (917) Minority Interest ................................ 267 (83) 323 (91) --------- --------- --------- --------- Net Income (Loss) Before Extraordinary Item ...... 808 1,955 (20,516) (10,498) Extraordinary Item (see Note 4) ................. -- -- 1,607 -- --------- --------- --------- --------- Net Income (Loss) ................................ 808 1,955 (22,123) (10,498) Preferred Dividends .............................. 988 1,296 2,277 2,592 --------- --------- --------- --------- Net Income (Loss) Attributable to Common Stockholders .................................... $ (180) $ 659 $ (24,400) $ (13,090) ========= ========= ========= ========= Net Income (Loss) Per Share of Common Stock: Basic and Diluted Net Income (Loss) Attributable to Common Stockholders Before Extraordinary Item .................................. $ 0.00 $ 0.01 $ (0.38) $ (0.22) Extraordinary Item ........................ -- -- (0.03) -- --------- --------- --------- --------- Net Income (Loss) Attributable to Common Stockholders .......................... $ 0.00 $ 0.01 $ (0.41) $ (0.22) ========= ========= ========= =========
The accompanying notes are an integral part of these statements. 6 7 GREYHOUND LINES, INC. AND SUBSIDIARIES CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, 1999 1998 ------------ ------------ (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net loss ..................................................... $ (22,123) $ (10,498) Extraordinary item ........................................... 1,607 -- Non-cash expenses and gains included in net loss ............. 3,557 14,919 Net change in certain operating assets and liabilities ...... 25,667 (19,928) ------------ ------------ Net cash provided by (used for) operating activities ..... 8,708 (15,507) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ......................................... (77,056) (10,750) Buses purchased for sale and leaseback ....................... -- (27,502) Proceeds from assets sold .................................... 364 240 Payments for business acquisitions, net of cash acquired ..... (7,420) (1,484) Other investing activities ................................... (984) (301) ------------ ------------ Net cash used for investing activities ................... (85,096) (39,797) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Payments on debt and capital lease obligations ............... (9,429) (2,952) Redemption of preferred stock ................................ (21,768) -- Parent company capital contributions ......................... 149,312 -- Proceeds from exercise of options ............................ -- 2,437 Payment of quarterly preferred dividends ..................... (2,507) (2,592) Net change in revolving credit facility ...................... (37,785) 58,853 ------------ ------------ Net cash provided by financing activities ................ 77,823 55,746 ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS ....................... 1,435 442 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................. 4,736 2,052 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD ........................ $ 6,171 $ 2,494 ============ ============
The accompanying notes are an integral part of these statements. 7 8 GREYHOUND LINES, INC. AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED) 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS In the opinion of management, the unaudited Interim Consolidated Financial Statements of Greyhound Lines, Inc. and Subsidiaries (the "Company") include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company's financial position as of June 30, 1999, the results of its operations for the three and six months ended June 30, 1999 and 1998 and cash flows for the six months ended June 30, 1999 and 1998. Due to the seasonality of the Company's operations, the results of its operations for the interim period ended June 30, 1999 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, 1998. On March 16, 1999, the Company's shareholders approved the Agreement and Plan of Merger ("Merger") with Laidlaw Inc. ("Laidlaw") and Laidlaw Transit Acquisition Corp. ("Laidlaw Transit"). On that date, Laidlaw Transit was merged with and into the Company, with the Company, as the surviving corporation, becoming a subsidiary of Laidlaw. As a result of the Merger, Laidlaw became the sole holder of the Company's Common Stock. Pursuant to the Merger, the Greyhound Preferred Stock, of which 72.8% or 1,746,886 shares remain outstanding, is convertible into the right to receive $33.33 in cash per share. As a result, the Preferred Stock has been classified as Redeemable Preferred Stock for periods after March 16, 1999. The consolidated financial statements of the Company do not reflect any purchase accounting adjustments relating to the Merger. 2. SIGNIFICANT ACCOUNTING POLICIES Earnings/Loss Per Share Basic 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"). The calculation of diluted earnings (loss) per share of Common Stock considers the effect of Common Stock equivalents outstanding during the period, the conversion of the Company's 8 1/2% Convertible Subordinated Debentures due 2007 (the "Convertible Debentures") and 8 1/2% Convertible Exchangeable Preferred Stock (the "Preferred Stock"). Common Stock equivalents represent the dilutive effect of the assumed exercise of certain outstanding stock options. As a result of the Merger, the Company no longer has any common stock options and the Preferred Stock and Convertible Debentures are no longer convertible into Common Stock. For the three months ended June 30, 1998, the assumed exercise of outstanding in-the-money stock options is dilutive and thus the shares have been included in the weighted average shares below. For the six months ended June 30, 1998, the assumed exercise of outstanding in-the-money stock options and conversion of Convertible Debentures and Preferred Stock have an anti-dilutive effect. As a result, these shares are excluded from the final determination of the weighted average shares outstanding. 8 9 The earnings (loss) per share calculation reflect earnings attributable to common shareholders after payment of preferred dividends. The following tables detail the components utilized to calculate earnings per share for the three and six months ended June 30, 1999 and 1998.
THREE MONTHS ENDED JUNE 30, 1999 SIX MONTHS ENDED JUNE 30, 1999 -------------------------------- ------------------------------ PER-SHARE PER-SHARE NET LOSS SHARES AMOUNT NET LOSS SHARES AMOUNT ------------ ------------ --------- ------------ ------------ ---------- BASIC AND DILUTED EARNINGS PER SHARE Net Loss attributable to common stockholders .......... $ (180,000) 58,743,069 $(0.00) $(24,400,000) 59,317,389 $(0.41) ============ ============ ====== ============ ============ =====
THREE MONTHS ENDED JUNE 30, 1998 SIX MONTHS ENDED JUNE 30, 1998 -------------------------------- ------------------------------ PER-SHARE PER-SHARE NET INCOME SHARES AMOUNT NET LOSS SHARES AMOUNT ------------ ------------ --------- ------------ ------------ ---------- BASIC EARNINGS PER SHARE Net Income (Loss) attributable to common stockholders ........ $ 659,000 59,905,542 $0.01 $(13,090,000) 59,668,804 $(0.22) ============ ============ ===== ============ ============ ===== DILUTED EARNINGS PER SHARE Net Income (Loss) attributable to common stockholders ........ $ 659,000 62,658,296 $0.01 $(13,090,000) 59,668,804 $(0.22) ============ ============ ===== ============ ============ =====
3. SETTLEMENT OF STOCK OPTIONS As a result of the Merger, the Company incurred $21.3 million in charges related to the settlement of the Company's outstanding stock options. 4. EXTRAORDINARY ITEM Following the Merger, all amounts outstanding under the Revolving Credit Facility were paid and the Revolving Credit Facility was terminated. As a result, the Company recorded a $1.6 million charge in the first quarter of 1999, net of a $1.3 million tax benefit, classified as an extraordinary item. This charge is related to the write-off of previously incurred debt issuance costs that were being amortized over the life of the Revolving Credit Facility. The Revolving Credit Facility was paid with capital contributions from Laidlaw. 9 10 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 in-terminal food services at certain terminals. The Company's consolidated operations include a nationwide network of terminal and maintenance facilities, a fleet of approximately 2,775 buses and approximately 1,800 sales outlets. RESULTS OF OPERATIONS The following table sets forth the Company's results of operations as a percentage of total operating revenue for the three and six months ended June 30, 1999 and 1998:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 1999 1998 1999 1998 ----- ----- ----- ----- Operating Revenues Transportation services Passenger services ........................... 83.6% 85.5% 83.8% 85.3% Package express .............................. 4.5 4.2 4.4 4.3 Food services and related ......................... 4.3 3.7 4.2 3.8 Other operating revenues .......................... 7.6 6.6 7.6 6.6 ----- ----- ----- ----- Total operating revenues ................. 100.0 100.0 100.0 100.0 Operating Expenses Maintenance ....................................... 9.4 9.8 10.1 10.3 Transportation .................................... 24.0 24.3 24.7 24.9 Agents' commissions and station costs ............. 18.7 18.2 19.5 18.8 Marketing, advertising and traffic ................ 3.2 3.2 3.4 3.5 Insurance and safety .............................. 5.5 6.1 5.8 6.2 General and administrative ........................ 13.3 12.5 13.9 13.0 Depreciation and amortization ..................... 4.8 4.5 4.9 4.6 Operating taxes and licenses ...................... 6.3 6.7 6.8 7.1 Operating rents ................................... 8.0 7.6 8.7 8.1 Cost of goods sold - food services and related .... 2.8 2.4 2.8 2.5 Other operating expenses .......................... 0.2 0.2 0.3 0.4 ----- ----- ----- ----- Total operating expenses ................. 96.2 95.5 100.9 99.4 ----- ----- ----- ----- Operating Income (Loss) ............................. 3.8 4.5 (0.9) 0.6 Settlement of stock options ......................... 0.6 0.0 5.0 0.0 Interest Expense .................................... 2.3 3.5 2.8 3.5 ----- ----- ----- ----- Income (Loss) Before Income Taxes ................... 0.9 1.0 (8.7) (2.9) Income Tax Provision (Benefit) ...................... 0.4 0.1 (3.9) (0.2) Minority Interest ................................... 0.1 0.0 0.1 0.0 ----- ----- ----- ----- Net Income (Loss) Before Extraordinary Item ......... 0.4 0.9 (4.9) (2.7) Extraordinary Item .................................. 0.0 0.0 0.4 0.0 ----- ----- ----- ----- Net Income (Loss) Attributable to Common Stockholders Before Preferred Dividends ............. 0.4 0.9 (5.3) (2.7) Preferred Dividends ................................. 0.4 0.6 0.5 0.6 ----- ----- ----- ----- Net Income (Loss) Attributable to Common Stockholders ........................................ 0.0 0.3 (5.8) (3.3) ===== ===== ===== =====
10 11 The following table sets forth certain operating data for the Company for the three and six months ended June 30, 1999 and 1998. Certain statistics have been adjusted and restated from that previously published to provide consistent comparisons.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, PERCENTAGE JUNE 30, PERCENTAGE 1999 1998 CHANGE 1999 1998 CHANGE --------- --------- --------- --------- --------- --------- Total Bus Miles (000's)................. 86,116 80,581 6.9 163,461 151,748 7.7 Passenger Miles (000's)................. 2,191,615 1,994,057 9.9 4,014,518 3,685,955 8.9 Passengers Carried (000's).............. 5,998 5,589 7.3 11,408 10,564 8.0 Average Trip Length (passenger miles/ passengers carried).................. 365 357 2.2 352 349 0.9 Load (avg. number of passengers per regular service mile)................ 26.3 25.5 3.1 25.3 25.0 1.2 Load Factor (% of available seats filled).............................. 54.2 54.1 0.2 52.4 53.2 (1.5) Yield (regular route revenue/passenger miles)............ $0.0871 $0.0906 (3.9) $0.0884 $0.0907 (2.5) Total Revenue Per Total Bus Mile....... 2.65 2.62 1.1 2.59 2.58 0.4 Cost Per Total Bus Mile: Maintenance......................... $ 0.249 $ 0.256 (2.7) $0.262 $0.267 (1.9) Transportation...................... 0.635 0.637 (0.3) 0.638 0.642 (0.6) Insurance and Safety................ 0.147 0.159 (7.6) 0.149 0.161 (7.5)
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 RESULTS OF OPERATIONS The Company's results of operations include the operating results of Peoria-Rockford Bus Company, Autobuses Americanos, Autobuses Amigos, On-Time Delivery and Larson Express (collectively the "acquisitions"). The purchases of Peoria-Rockford Bus Company, Autobuses Americanos and Autobuses Amigos were completed in the fourth quarter of 1998, the purchase of On-Time Delivery occurred during the first quarter of 1999 and the purchase of Larson Express occurred during the second quarter of 1999. The results for the acquisitions are included as of their respective purchase dates. Operating Revenues. Total operating revenues increased $17.1 million, up 8.1%, and $31.1 million, up 7.9%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. Acquisitions accounted for $6.9 million and $12.5 million of this growth for the three and six months, resulting in internal growth of $10.2 million, or 4.8%, and $18.6 million, or 4.7%, for the three and six months compared to the same periods in the prior year. Passenger services revenues increased $10.2 million, up 5.6%, and $20.2 million, up 6.0%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 (including $4.6 million and $8.9 million related to the acquisitions). The increases in regular route revenues reflect the consolidated impact of a 7.3% and 8.0% increase in the number of passengers carried for the three and six months, combined with a 2.2% and 0.9% increase in average trip length, partially offset by a 3.9% and 2.5% decrease in yield. The decrease in yield is a reflection of the longer trip length and promotional pricing in the long-haul corridors to meet airline competition. Package express revenues increased $1.4 million, up 15.9%, and $2.0 million, up 11.8%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 (including $1.9 million and $2.9 million related to the acquisitions). Excluding the acquisitions, the Company experienced a decline of $0.5 million and $0.9 million for the three and six months ended June 30, 1999, due to declines in our standard product offering (the traditional, low-value, terminal to terminal market segment) offset somewhat by gains in same day and priority product offerings. The declines in the standard offering are a result of continued competition, as well as expanded product offerings (such as United Parcel Service's guaranteed service "brown label" product), from larger next day package delivery companies. In response, the Company is increasing its focus on the same day delivery market niche through selling of priority service and the creation of new product offerings such as our Daily Direct, a guaranteed same day or early overnight service. Food services revenues increased $2.0 million, up 25.4%, and $2.8 million, up 18.6%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. Food services revenues increased over the prior year 11 12 due to the acquisition of eight in-terminal, concessionaire-operated locations that were previously Burger King locations ($1.3 million and $1.4 million for the three and six months ended June 30, 1999), the increase in passenger traffic discussed above, and increased phone card sales. Other operating revenues, consisting primarily of revenue from charter and other in-terminal sales and services, increased $3.5 million, up 25.2%, and $6.2 million, up 23.7%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. Excluding the acquisitions, the increase was due to increases in tenant income primarily as a result of the Peter Pan Pool, initiated on January 12, 1999, which results in income to the Company for sharing its terminal space and an increase in charter service revenue of $1.2 million, up 26.0%, and $2.3 million, up 29.2%, for the three and six months ended June 30, 1999. Operating Expenses. Total operating expenses increased $17.8 million, up 8.8%, and $37.3 million, up 9.6%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. The increase is attributable to an increase in bus miles operated (6.9% and 7.7% for the three and six months ended June 30, 1999 compared to the same periods in 1998), driver wage increases, increased terminal salaries, increased ticket commissions due to higher sales, an increase in the number of buses operated under operating leases, and $6.2 million and $11.5 million for the three and six months ended June 30, 1999, related to the operations of the acquisitions. Maintenance costs increased $0.8 million, up 3.9%, and $2.4 million, up 5.8%, due to increased bus miles and the inclusion of the acquisitions. Despite these increases, maintenance costs decreased on a cost per bus mile basis. Transportation expenses increased $3.4 million, up 6.7%, and $6.9 million, up 7.1%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 due to increased bus miles operated, an additional driver wage increase above normal annual increases due to renegotiation of the union contract in October 1998, and the inclusion of the acquisitions. The increased expenses were partially offset by a decrease in the cost per gallon of diesel fuel for the six months ended June 30, 1999, with no savings in the quarter as fuel prices have increased to 1998 levels. The average cost per gallon of fuel decreased to $0.53 for the six months ended June 30, 1999, compared to $0.57 per gallon during the same period in 1998. The lower fuel prices resulted in fuel cost savings of $1.1 million for the six months ended June 30, 1999, compared to the prior year. Agents' commissions and station costs increased $4.3 million, up 11.1%, and $9.1 million, up 12.3%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 primarily due to commissions associated with increased ticket sales, annual wage increases for terminal staff and the inclusion of the acquisitions. Additionally, the Peter Pan Pool increased terminal wages as the increase in sales resulted in increased staffing needs. Income from the Peter Pan Pool that offsets these costs is reflected in other operating revenue. Marketing, advertising and traffic expense increased $0.4 million, up 5.5%, and $0.3 million, up 2.4%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 but were virtually unchanged as a percentage of total revenues. Insurance and safety costs decreased $0.2 million, down 1.2%, and $0.1 million, down 0.3%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. Despite increased miles and the inclusion of the acquisitions, expenses have decreased as the Company is experiencing favorable trends due to safety programs. General and administrative expenses increased $4.0 million, up 15.1%, and $7.7 million, up 15.0%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 due primarily to increased expenses associated with remediation of the Company's computer systems related to the Year 2000 issue, the inclusion of the acquisitions and additions in administrative personnel. For the three and six months ended June 30, 1999, Year 2000 expenses totaled $1.4 million and $2.7 million, respectively. Depreciation and amortization increased $1.6 million, up 16.8%, and $2.9 million, up 16.2%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 due primarily to depreciation and goodwill amortization attributable to the acquisitions and depreciation related to increased capital expenditures in current and prior periods. Additionally, the Company has purchased 50 buses that were previously under operating leases. Operating taxes and licenses expense increased $0.2 million, up 1.2%, and $1.0 million, up 3.7%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. This increase results from higher payroll 12 13 taxes due to increased salaries, wages and head-counts related to higher business volume and the inclusion of the acquisitions. Operating rents increased $2.1 million, up 12.8%, and $5.0 million, up 15.7%, for the three and six months ended June 30, 1999, compared to the same periods in 1998 due to the inclusion of the acquisitions, combined with an increase in the number of buses financed under operating leases and increased facility rents. Food services cost of goods sold increased $1.3 million, up 24.8%, and $1.9 million, up 18.8%, for the three and six months ended June 30, 1999, compared to the same periods in 1998, primarily due to the 25.4% and 18.6% increase in Food services revenues for the same periods. As a result of Laidlaw Inc. ("Laidlaw") acquiring the Company, the Company incurred $21.3 million in charges related to the settlement of the Company's outstanding stock options. Interest expense decreased $1.9 million, down 26.4%, and $2.3 million, down 16.5%, for the three and six months ended June 30, 1999, compared to the same periods in 1998. The decrease is the result of a lower outstanding balance on the Company's Revolving Credit Facility through March 16, 1999. Additionally, on March 17, 1999, subsequent to the acquisition of the Company by Laidlaw, all amounts outstanding under the Revolving Credit Facility were paid and the Revolving Credit Facility was terminated. Additionally, the Company had an extraordinary item in March. This was a $1.6 million charge, net of tax benefit of $1.3 million, related to the termination of the Company's Revolving Credit Facility, which included the write-off of previously incurred debt issuance costs that were being amortized over the life of the Revolving Credit Facility. The Revolving Credit Facility was paid with capital contributions from Laidlaw. LIQUIDITY AND CAPITAL RESOURCES The Company's principal liquidity requirements are to provide working capital, to finance capital expenditures, including bus acquisitions, to meet debt service requirements, including the payment of interest on the 11 1/2% Senior Notes and to pay Preferred Stock dividends. The Company's principal sources of liquidity are expected to be cash flow from operations and funds provided by Laidlaw. The Company believes that its cash flow from operations, together with funds provided by Laidlaw will be sufficient to meet its liquidity needs. Operating activities produced cash of $8.7 million for the six months ended June 30, 1999. This is an improvement of $24.2 million from $15.5 million of cash used by operating activities in 1998. Net cash used by operating activities during the six months ended June 30, 1999, were negatively impacted by the $21.3 million payments for settlement of stock options, offset by a $23.8 million reduction in insurance deposits which were obtained following the issuance by Laidlaw of letters of credit and $12.2 million in security deposit returns due to an improved credit rating as a result of the Merger. Net cash used for investing activities increased $45.3 million, to $85.1 million in 1999 from $39.8 million in 1998, principally due to $7.4 million in payments for business acquisitions combined with a $38.8 million increase in capital expenditures. Net cash provided by financing activities increased $22.1 million to $77.8 million in 1999 from $55.7 million in 1998. This increase can primarily be attributed to the $149.3 million capital contribution provided by the Company's parent. This increase was partially offset by the retirement of the $37.8 million related to the Revolving Credit Facility and $21.8 million of Preferred Stock conversions. As a result of the Laidlaw acquisition of the Company, the Company made a one-time offer to repurchase all or any part of each holder's 11 1/2% Senior Notes at a price equal to 101% of the principal amount thereof plus interest, which was accepted by no holders of these notes. Additionally, the Company made a one-time offer to repurchase all or any part of each holder's Convertible Debentures at a price equal to 100% of the principal amount thereof plus interest, which was accepted in July by holders of $3.7 million of the outstanding $9.8 million. Also, the Preferred Stock became convertible into $33.33 in cash for each share of Preferred Stock, which is in excess of the liquidation preference. 13 14 SUBSTANTIAL LEVERAGE AND SEASONALITY The Company has consolidated indebtedness that is substantial in relation to its stockholders' equity. As of June 30, 1999, the Company had outstanding consolidated long-term indebtedness (including current portions) of approximately $186.5 million and total stockholders' equity of approximately $277.2 million. The seasonal fluctuations in the Company's cash flows can be significant. Generally, the first quarter and most of the second quarter are loss periods requiring the financing of substantial cash outflows for operations. However, the last half of the year (primarily the third quarter) provides substantial positive cash flows. COMPUTER SYSTEMS / YEAR 2000 READINESS Many existing computer systems, communications equipment, control devices and software products, including several used by the Company, are coded to accept only two-digit entries in the date code field. Beginning in the year 2000, these date code fields will need to accept four-digit entries to distinguish 21st century dates from 20th century dates. As a result, the Company's date critical functions related to the year 2000 and beyond, such as scheduling, dispatch, sales, purchasing, planning and financial systems may be materially adversely affected unless these systems are or become year 2000 ready. During the past three years, the Company has been replacing or upgrading its computer systems to improve operating efficiencies. Through some of these efforts, year 2000 ready applications or systems have been installed. The Company is preparing both its information technology ("IT") systems and its non-IT, technology enabled systems for the year 2000 by implementing the year 2000 Readiness Process, comprised of five phases: Assessment, Planning, Implementation, Testing and Clean Management. The first phase is an assessment of the Company's systems with respect to year 2000 readiness. During the Assessment phase, the Company, with the assistance of consultants, reviews individual applications and the hardware and network infrastructure supporting those applications. The assessment also includes non-"information technology" (non-IT) systems, such as fax machines, time clocks and bus maintenance test equipment. A comprehensive review and inventory of non-IT technology enabled equipment and functions will be completed in this phase. The assessment of all of the Company's IT systems was completed during the third quarter of 1998. The assessment of a substantial majority of the Company's non-IT systems have been completed and the remainder will be completed in the third quarter of 1999. The Assessment phase also involves an assessment of the readiness of third party vendors and suppliers. The Company has already issued year 2000 readiness questionnaires to some vendors and will continue this effort. However, responses to these inquiries have been limited. Nevertheless, as a normal course of business, the Company has contingency plans in place to deal with failures of most of the critical third-party systems. Where such contingency plans are not in place, the Company is in the process of developing those plans. The purpose of the Planning phase is to develop a detailed set of plans for bringing the Company's systems to year 2000 readiness. The Company first developed plans to prepare individual applications and platforms for year 2000 readiness. These individual plans were then consolidated into an overall plan for remediation of the IT systems. Priority has been given to the mission critical functions. For those non-mission critical systems that might not be ready for the year 2000, the overall plan calls for the development of contingency plans to minimize disruption to the business. The overall plan for IT systems was completed during the fourth quarter of 1998. The planning phase for non-IT systems is targeted for completion in the third quarter of 1999, following the completion of the Company's non-IT systems Assessment Phase. In the Implementation phase, the Company will bring the IT systems to a state of readiness as stand-alone units. Each application and its supporting infrastructure components will be remediated, replaced or upgraded, as appropriate. Each application will be tested to ensure the accuracy of current functionality and to ensure the continuance of the functionality into the year 2000 and beyond. To date, most of the infrastructure components and the majority of applications have been remediated. The Company completed the Implementation phase for mission critical IT systems in the second quarter of 1999. Non-mission critical IT systems and non-IT systems are expected to be made year 2000 ready by the end of third quarter of 1999. The Testing phase is the most complicated phase of the year 2000 Readiness Process. In this phase, IT systems are tested for year 2000 readiness, meaning that a series of tests using the same data but different dates is performed to 14 15 ensure readiness of the IT systems both prior to and after the year 2000. Testing of individual infrastructure components and applications will continue with the majority of testing completed by the third quarter of 1999. Clean Management is confirming that any newly acquired components or applications are deemed year 2000 ready before their introduction into the Company. The Clean Management phase of the year 2000 Readiness Process is conducted at the same time as all other phases. The Company currently has a disaster recovery plan that has put contingency planning in place to address problems that might occur in the ordinary course of business. However, the Company is starting to re-evaluate its contingency planning for critical operational areas that might be specifically affected by the year 2000 problem if the Company or suppliers are not ready. Throughout 1999, the Company will review the extent to which contingency plans may be required for any third parties that do not achieve year 2000 readiness, and the Company expects to complete those necessary contingency plans by the third quarter of 1999. The Company's total costs related to year 2000 assessment and remediation are based on presently available information. The total remaining costs related to the year 2000 assessment and remediation efforts are estimated to be between $7.0 million and $9.0 million, including internal salaries that would be incurred without remediation efforts. The Company estimates that approximately half of this amount will be capitalized, with the remainder being expensed as incurred. These costs will be funded through operating cash flows or from funds provided by Laidlaw. Since the Company has been replacing and upgrading its computer systems in the ordinary course of business, the Company cannot estimate the costs incurred to date related specifically to remediating year 2000 issues. The costs of the Company's year 2000 readiness project and the date on which the Company plans to complete the year 2000 modifications are based on management's estimates, which were derived utilizing numerous assumptions of future events including the continued availability of certain resources, third-party modification plans and other factors. The year 2000 issues present a number of risks that are beyond the Company's reasonable control, such as the failure of utility companies to deliver electricity, the failure of telecommunications companies to provide voice and data services, the failure of financial institutions to process transactions and transfer funds, and the impact on the Company of the effects of year 2000 issues on the economy in general or on the Company's business partners and customers. Although the Company believes that its year 2000 readiness program is designed appropriately to identify and address those year 2000 issues that are subject to the Company's reasonable control, the Company can make no assurance that its efforts will be fully effective or that the year 2000 issues will not have a material adverse effect on the Company's business, financial condition or results of operations. OTHER There were no other material changes in the Company's financial condition nor were there any substantive changes relative to matters discussed in the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations as presented in the Company's annual 10-K for the year ended December 31, 1998. 15 16 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 4.1 - Third Supplemental Indenture dated as of February 1, 1999, between the Registrant and Chase Manhattan Trust Company as Trustee. 4.2 - Fourth Supplemental Indenture dated as of May 14, 1999, between the Registrant and Chase Manhattan Trust Company as Trustee. 27 - Financial Data Schedule as of and for the six months ended June 30, 1999. (1) - ------------------------ (1) Filed only in EDGAR format with the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999. (b) REPORTS ON FORM 8-K During the three months ended June 30, 1999, the Company did not file any current reports on Form 8-K with the Securities and Exchange Commission. 16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 11, 1999 GREYHOUND LINES, INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer ATLANTIC GREYHOUND LINES OF VIRGINIA, INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer GLI HOLDING COMPANY By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer GREYHOUND de MEXICO S.A. de C.V. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer GRUPO CENTRO, INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer LOS BUENOS LEASING CO., INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer 17 18 SISTEMA INTERNACIONAL de TRANSPORTE de AUTOBUSES, INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer TEXAS, NEW MEXICO & OKLAHOMA COACHES, INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer T.N.M. & O. TOURS, INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer VERMONT TRANSIT CO., INC. By: /s/ Jeffrey W. Sanders ------------------------------- Jeffrey W. Sanders Senior Vice President and Chief Financial Officer 18 19 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION - ------- ----------- 4.1 - Third Supplemental Indenture dated as of February 1, 1999, between the Registrant and Chase Manhattan Trust Company as Trustee. 4.2 - Fourth Supplemental Indenture dated as of May 14, 1999, between the Registrant and Chase Manhattan Trust Company as Trustee. 27 - Financial Data Schedule as of and for the six months ended June 30, 1999. (1)
- ------------------------ (1) Filed only in EDGAR format with the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999. EX-4.1 2 3RD SUPPLEMENT INDENTURE DATED AS OF 2/1/99 1 EXHIBIT 4.1 - ------------------------------------------------------------------------------- GREYHOUND LINES, INC. and THE GUARANTOR NAMED HEREIN ------------------------------------------- SERIES A AND SERIES B 11 1/2 % SENIOR NOTES DUE 2007 ------------------------------------------- ------------------------------------------- THIRD SUPPLEMENTAL INDENTURE DATED AS OF FEBRUARY 1, 1999 ------------------------------------------- CHASE MANHATTAN TRUST COMPANY Trustee - ------------------------------------------------------------------------------- 2 This THIRD SUPPLEMENTAL INDENTURE, dated as of February 1, 1999, among Greyhound Lines, Inc., a Delaware corporation (the "Company"), the party identified under the caption "Guarantor" on the signature pages hereto (the "Guarantor") and Chase Manhattan Trust Company (successor to PNC Bank, National Association), as Trustee. RECITALS WHEREAS, the Company and PNC Bank, National Association 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 Guarantor and of the Trustee necessary to make this Third Supplemental Indenture a valid instrument legally binding on the Company, the Guarantor 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 Guarantor and the Trustee covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes as follows: ARTICLE I SECTION 1.01. This Third 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 Third Supplemental Indenture shall become effective immediately upon its execution and delivery by each of the Company, the Guarantor and the Trustee. ARTICLE 2 From this date, in accordance with Section 10.02 and by executing this Third Supplemental Indenture and the accompanying Subsidiary Guarantee (a copy of which is attached hereto), the Guarantor whose signature appears below is subject to the provisions of the Indenture to the extent provided for in Article 10 thereunder. 1 3 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 Third Supplemental Indenture. This Third 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 THIRD SUPPLEMENTAL INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. SECTION 3.04. The parties may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of such executed copies together shall represent the same agreement. IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the date first written above. GREYHOUND LINES, INC. By: ------------------------------- Name: Craig R. Lentzsch Title: President and CEO GUARANTOR: ON TIME DELIVERY SERVICE, INC. By: ------------------------------- Name: Jeffrey W. Sanders Title: Chief Financial Officer 2 4 CHASE MANHATTAN TRUST COMPANY, AS TRUSTEE By: ------------------------------- Name: Sheila Wallbridge Title: Assistant Vice President 3 5 Attachment to Third Supplemental Indenture SUBSIDIARY GUARANTEE Subject to Section 10.06 of the Indenture, the undersigned Guarantor hereby unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the, Indenture, the Notes and the Obligations of the Company under the Notes or under the Indenture, that: (a) the principal of, premium, if any, interest and Liquidated Damages, if any, on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on overdue principal, premium, if any, (to the extent permitted by law) interest on any interest, if any, and Liquidated Damages, if any, on the Notes and all other payment Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes will be promptly paid in full and performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other payment Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantor will be obligated to pay the same immediately. An Event of Default under the Indenture or the Notes shall constitute an event of default under this Subsidiary Guarantee, and shall entitle the Holders to accelerate the Obligations of the Guarantor hereunder in the same manner and to the same extent as the Obligations of the Company. The Guarantor hereby agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and the Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantor, or any Note Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to, and hereby waives, any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other 6 prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of acceleration of such Obligations as provided in Article 6 of the Indenture, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Subsidiary Guarantee. The Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. The obligations of the Guarantor to the Holders and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article 10 of the Indenture are incorporated herein by reference. This Subsidiary Guarantee is subject to release as and to the extent provided in Sections 10.04 and 10.05 of the Indenture. This is a continuing Guarantee and shall remain in full force and effect and shall be binding upon the Guarantor and its respective successors and assigns to the extent set forth in the Indenture until full and final payment of all of the Company's Obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a Subsidiary Guarantee of payment and not a guarantee of collection. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee or an authenticating agent under the Indenture by the manual signature of one of its authorized officers. For purposes hereof, the Guarantor's liability shall be limited to the lesser of (i) the aggregate amount of the Obligations of the Company under the Notes and the Indenture and (ii) the amount, if any, which would not have (A) rendered the Guarantor "insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the State of New York) or (B) left the Guarantor with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into; provided that, it will be a presumption in any lawsuit or other proceeding in which the Guarantor is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in clause (i) above unless any creditor, or representative of creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Guarantor is limited to the amount set forth in clause (ii) above. The Indenture provides that, in making any determination as to the solvency or sufficiency of capital of the Guarantor in accordance with the previous sentence, the right of the Guarantor to contribution from other Guarantors and any other rights such Guarantors may have, contractual or otherwise, shall be taken into account. 2 7 Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. [GUARANTOR] By: ----------------------------- Name: Title: 3 8 SUBSIDIARY GUARANTEE Subject to Section 10.06 of the Indenture, the undersigned Guarantor hereby unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the, Indenture, the Notes and the Obligations of the Company under the Notes or under the Indenture, that: (a) the principal of, premium, if any, interest and Liquidated Damages, if any, on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on overdue principal, premium, if any, (to the extent permitted by law) interest on any interest, if any, and Liquidated Damages, if any, on the Notes and all other payment Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes will be promptly paid in full and performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other payment Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantor will be obligated to pay the same immediately. An Event of Default under the Indenture or the Notes shall constitute an event of default under this Subsidiary Guarantee, and shall entitle the Holders to accelerate the Obligations of the Guarantor hereunder in the same manner and to the same extent as the Obligations of the Company. The Guarantor hereby agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and the Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantor, or any Note Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to, and hereby waives, any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of acceleration of such Obligations as provided in Article 6 of the Indenture, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Subsidiary Guarantee. The Guarantor shall have 9 the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. The obligations of the Guarantor to the Holders and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article 10 of the Indenture are incorporated herein by reference. This Subsidiary Guarantee is subject to release as and to the extent provided in Sections 10.04 and 10.05 of the Indenture. This is a continuing Guarantee and shall remain in full force and effect and shall be binding upon the Guarantor and its respective successors and assigns to the extent set forth in the Indenture until full and final payment of all of the Company's Obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a Subsidiary Guarantee of payment and not a guarantee of collection. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee or an authenticating agent under the Indenture by the manual signature of one of its authorized officers. For purposes hereof, the Guarantor's liability shall be limited to the lesser of (i) the aggregate amount of the Obligations of the Company under the Notes and the Indenture and (ii) the amount, if any, which would not have (A) rendered the Guarantor "insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the State of New York) or (B) left the Guarantor with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into; provided that, it will be a presumption in any lawsuit or other proceeding in which the Guarantor is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in clause (i) above unless any creditor, or representative of creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Guarantor is limited to the amount set forth in clause (ii) above. The Indenture provides that, in making any determination as to the solvency or sufficiency of capital of the Guarantor in accordance with the previous sentence, the right of the Guarantor to contribution from other Guarantors and any other rights such Guarantors may have, contractual or otherwise, shall be taken into account. E-2 10 Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. GUARANTOR: ON TIME DELIVERY SERVICE, INC. By: -------------------------------- Name: Title: E-3 EX-4.2 3 4TH SUPPLEMENTAL INDENTURE DATED AS OF 5/14/99 1 EXHIBIT 4.2 - ------------------------------------------------------------------------------- GREYHOUND LINES, INC. and THE GUARANTOR NAMED HEREIN ------------------------------------------- SERIES A AND SERIES B 11 1/2 % SENIOR NOTES DUE 2007 ------------------------------------------- ------------------------------------------- FOURTH SUPPLEMENTAL INDENTURE DATED AS OF MAY 14, 1999 ------------------------------------------- CHASE MANHATTAN TRUST COMPANY, N.A. Trustee - ------------------------------------------------------------------------------- 2 This FOURTH SUPPLEMENTAL INDENTURE, dated as of May 14, 1999, among Greyhound Lines, Inc., a Delaware corporation (the "Company"), the party identified under the caption "Guarantor" on the signature pages hereto (the "Guarantor") and Chase Manhattan Trust Company, N.A. (successor to PNC Bank, National Association), as Trustee. RECITALS WHEREAS, the Company and PNC Bank, National Association 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 Guarantor and of the Trustee necessary to make this Fourth Supplemental Indenture a valid instrument legally binding on the Company, the Guarantor 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 Guarantor and the Trustee covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes as follows: ARTICLE I SECTION 1.01. This Fourth 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 Fourth Supplemental Indenture shall become effective immediately upon its execution and delivery by each of the Company, the Guarantor and the Trustee. ARTICLE 2 From this date, in accordance with Section 10.02 and by executing this Fourth Supplemental Indenture and the accompanying Subsidiary Guarantee (a copy of which is attached hereto), the Guarantor whose signature appears below is subject to the provisions of the Indenture to the extent provided for in Article 10 thereunder. 1 3 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 Fourth Supplemental Indenture. This Fourth 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 FOURTH SUPPLEMENTAL INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. SECTION 3.04. The parties may sign any number of copies of this Fourth Supplemental Indenture. Each signed copy shall be an original, but all of such executed copies together shall represent the same agreement. IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, all as of the date first written above. GREYHOUND LINES, INC. By: ------------------------------- Name: Craig R. Lentzsch Title: President and CEO GUARANTOR: LSX DELIVERY, L.L.C. ON TIME DELIVERY SERVICE, INC. By: ------------------------------- Name: Jeffrey W. Sanders Title: Chief Financial Officer 2 4 CHASE MANHATTAN TRUST COMPANY, N.A. AS TRUSTEE By: ------------------------------- Name: Title: 3 5 Attachment to Fourth Supplemental Indenture SUBSIDIARY GUARANTEE Subject to Section 10.06 of the Indenture, the undersigned Guarantor hereby unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the, Indenture, the Notes and the Obligations of the Company under the Notes or under the Indenture, that: (a) the principal of, premium, if any, interest and Liquidated Damages, if any, on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on overdue principal, premium, if any, (to the extent permitted by law) interest on any interest, if any, and Liquidated Damages, if any, on the Notes and all other payment Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes will be promptly paid in full and performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other payment Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantor will be obligated to pay the same immediately. An Event of Default under the Indenture or the Notes shall constitute an event of default under this Subsidiary Guarantee, and shall entitle the Holders to accelerate the Obligations of the Guarantor hereunder in the same manner and to the same extent as the Obligations of the Company. The Guarantor hereby agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and the Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantor, or any Note Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to, and hereby waives, any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) 6 in the event of any declaration of acceleration of such Obligations as provided in Article 6 of the Indenture, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Subsidiary Guarantee. The Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. The obligations of the Guarantor to the Holders and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article 10 of the Indenture are incorporated herein by reference. This Subsidiary Guarantee is subject to release as and to the extent provided in Sections 10.04 and 10.05 of the Indenture. This is a continuing Guarantee and shall remain in full force and effect and shall be binding upon the Guarantor and its respective successors and assigns to the extent set forth in the Indenture until full and final payment of all of the Company's Obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a Subsidiary Guarantee of payment and not a guarantee of collection. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee or an authenticating agent under the Indenture by the manual signature of one of its authorized officers. For purposes hereof, the Guarantor's liability shall be limited to the lesser of (i) the aggregate amount of the Obligations of the Company under the Notes and the Indenture and (ii) the amount, if any, which would not have (A) rendered the Guarantor "insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the State of New York) or (B) left the Guarantor with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into; provided that, it will be a presumption in any lawsuit or other proceeding in which the Guarantor is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in clause (i) above unless any creditor, or representative of creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Guarantor is limited to the amount set forth in clause (ii) above. The Indenture provides that, in making any determination as to the solvency or sufficiency of capital of the Guarantor in accordance with the previous sentence, the right of the Guarantor to contribution from other Guarantors and any other rights such Guarantors may have, contractual or otherwise, shall be taken into account. 2 7 Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. [GUARANTOR] By: ------------------------------- Name: Title: 3 8 SUBSIDIARY GUARANTEE Subject to Section 10.06 of the Indenture, the undersigned Guarantor hereby unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the, Indenture, the Notes and the Obligations of the Company under the Notes or under the Indenture, that: (a) the principal of, premium, if any, interest and Liquidated Damages, if any, on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on overdue principal, premium, if any, (to the extent permitted by law) interest on any interest, if any, and Liquidated Damages, if any, on the Notes and all other payment Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes will be promptly paid in full and performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other payment Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantor will be obligated to pay the same immediately. An Event of Default under the Indenture or the Notes shall constitute an event of default under this Subsidiary Guarantee, and shall entitle the Holders to accelerate the Obligations of the Guarantor hereunder in the same manner and to the same extent as the Obligations of the Company. The Guarantor hereby agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and the Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantor, or any Note Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to, and hereby waives, any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of acceleration of such Obligations as provided in Article 6 of the Indenture, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Subsidiary Guarantee. The Guarantor shall have 9 the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. The obligations of the Guarantor to the Holders and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article 10 of the Indenture are incorporated herein by reference. This Subsidiary Guarantee is subject to release as and to the extent provided in Sections 10.04 and 10.05 of the Indenture. This is a continuing Guarantee and shall remain in full force and effect and shall be binding upon the Guarantor and its respective successors and assigns to the extent set forth in the Indenture until full and final payment of all of the Company's Obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a Subsidiary Guarantee of payment and not a guarantee of collection. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee or an authenticating agent under the Indenture by the manual signature of one of its authorized officers. For purposes hereof, the Guarantor's liability shall be limited to the lesser of (i) the aggregate amount of the Obligations of the Company under the Notes and the Indenture and (ii) the amount, if any, which would not have (A) rendered the Guarantor "insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the State of New York) or (B) left the Guarantor with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into; provided that, it will be a presumption in any lawsuit or other proceeding in which the Guarantor is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in clause (i) above unless any creditor, or representative of creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Guarantor is limited to the amount set forth in clause (ii) above. The Indenture provides that, in making any determination as to the solvency or sufficiency of capital of the Guarantor in accordance with the previous sentence, the right of the Guarantor to contribution from other Guarantors and any other rights such Guarantors may have, contractual or otherwise, shall be taken into account. E-2 10 Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. GUARANTOR: LSX DELIVERY, L.L.C. By: ------------------------------- Name: Jeffrey W. Sanders Title: Chief Financial Officer E-3 EX-27 4 FINANCIAL DATA SCHEDULE
5 0000813040 GREYHOUND LINES, INC. 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 6,171 0 45,184 188 6,678 105,556 579,008 163,101 693,119 130,840 180,631 43,672 0 587 276,607 693,119 0 423,091 0 277,941 0 0 11,657 (36,665) (16,472) (22,123) 0 1,607 0 (24,400) (0.41) (0.41)
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