earnings results..here they are...not badAttention Business/Financial Editors:
Laidlaw Reports Strong Internal Revenue Growth In Core Bus Businesses; One-Time Charges Result in Second Quarter Loss
BURLINGTON, ON, April 27 /CNW/ - Laidlaw Inc. (NYSE:LDW; TSE:LDM) has
reported operating income, before interest, taxes and amortization (EBITA),
from the company's school busing, intercity and public transit operations, for
the three months ended February 29, 2000 of $49.1 million compared with $53.6
million in the same fiscal quarter in 1999.
Income from continuing operations, before one-time charges, was $0.6
million or $nil per share compared with $39.6 million or $0.12 per share for
the same 1999 fiscal quarter. The company recorded no equity income from
Safety-Kleen Corp. in the quarter. Results for 1999 included one-time gains
and other income of approximately $0.03 per share and equity earnings from
Safety-Kleen of approximately $0.02 per share. There was no contribution from
Greyhound in the 1999 quarter as the company was acquired mid-March 1999. Due
to the normal seasonality of Greyhound's business, the unit contributed a loss
of $0.04 per share in the current quarter. The balance of the difference
between the periods is accounted for by increased fuel and labor costs, debt
expansion, interest rate increases and a reduced allocation of interest
expense to discontinued operations. On a proforma basis, excluding Safety-
Kleen, other income and one-time items in both years, while including
Greyhound in both years, the year-to-year comparison for the quarter would be
$nil per share during the current period compared to $0.03 per share for the
same 1999 fiscal quarter. Fuel and labor cost increases account for $0.02 per
share in the 2000 quarter results.
Consolidated revenue from continuing busing operations increased 57% to
$729.3 million from the $463.5 million reported for the year-ago period.
Consolidated EBITA margin was 6.7% compared with 11.6% in the 1999 quarter due
to the factors discussed above.
"Results from our core busing operations are reasonable, given the
extremely tight labor market and year-over-year fuel price increases.
Particularly encouraging is the continued internal growth being demonstrated
by both segments, running at nearly 10% for the year-to-date. We are now
entering the strongest quarters for Greyhound as the summer travel season
begins on the U.S. Memorial Day weekend, May 29. Education Services' regular
operations wind down in June and receivables are collected in July and August,
bolstering the company's cash position," commented John R. Grainger, Laidlaw's
president and C.E.O.
OPERATING RESULTS
EDUCATION SERVICES
Revenue from the company's school busing operations increased 11.5% to
$387.6 million from the $347.7 million reported last year. Revenue growth was
primarily internal, due to price and volume increases - 9.7% - resulting from
route additions and higher pricing on underperforming contracts and from the
addition of routes converted from public sector operation.
Income from operations (EBITA) was off 4% at $45.4 million compared with
$47.4 million for the 1999 quarter. EBITA margins were reduced by increased
fuel and labor costs and days lost to inclement weather.
INTERCITY, TOUR AND PUBLIC TRANSIT
Revenue in the segment increased 195% to $341.7 million from the $115.8
million reported for the same 1999 period. Most of the growth - $220 million -
is attributable to the inclusion of Greyhound Lines, acquired in March of
1999. On a standalone basis, Greyhound's core, line-haul passenger operations
showed internal revenue growth of 9.2% in the quarter.
Income from operations (EBITA) was $3.7 million compared with $6.2
million for the prior-year period. The decline is the result of the inclusion
of Greyhound, which altered the segment's business mix and introduced a strong
seasonal pattern into Laidlaw's results, as well as fuel price increases
across the segment and driver-related cost increases in public transit
operations.
ACQUISITIONS
Five bus acquisitions were made during the quarter ended February 29,
four in education services, and one in the charter and tour business.
Annualized revenue acquired was $28.5 million, $20.0 million of which will be
generated from the purchase of a New Orleans-based tour coach operator.
SPECIAL CHARGES
On March 6, 2000, Safety-Kleen Corp. announced it had suspended three
senior officers and instituted an investigation of certain accounting
irregularities. Although Laidlaw holds a 44% interest in Safety-Kleen, the
company has neither details of the status of the investigation nor of its
outcome. Based on the available information, the company has written down the
holding by $560.0 million to its current trading value of $43.8 million. As a
result of the write down, a tax asset of $21.5 million, relating to the
holding, was charged to deferred income tax expense during the quarter.
Laidlaw has an outstanding guarantee on a $60 million note issued by
Safety-Kleen. The time within which Laidlaw might be required to make a
payment on its guarantee is in dispute and the recoverability of any such
payment from Safety-Kleen is uncertain. As a result, a provision of $45
million has been made.
The current situation in the ambulance service industry - difficulties
arising from requirements for physicians' approval of transports in order to
be reimbursed and potential purchasers' concerns about the future effects of a
proposed national rate schedule - has negatively impacted the value of our
discontinued healthcare businesses. As a result, effective February 29, 2000,
the carrying value of these assets has been written down by $834.5 million to
$830 million from the $1.66 billion at November 30, 1999.
As a result of these charges relating to Safety-Kleen and the
discontinued healthcare businesses, a net loss of $1.460 billion or $4.48 per
share was recorded for the quarter, compared with net income of $17.9 million
or $0.05 per share for the 1999 period.
SIX-MONTH RESULTS
For the six months ended February 29, 2000, operating income (EBITA) from
Laidlaw's core busing business was $146.1 million, an increase of 5.4% over
the $138.6 million for the same 1999 fiscal period. EBITA margins were 9.8%
compared with 14.2%.
Income from continuing operations, before all charges, was $53.5 million
or $0.16 per share compared with $115.2 million or $0.35 per share for the
year-ago period.
A net loss of $1.408 billion or $4.29 per share resulted from the second-
quarter charges related to Safety-Kleen and to the discontinued healthcare
operations. These results compare with a net income of $103.2 million or $0.31
per share for the first six months of fiscal 1999.
Revenue for the six-months was $1.497 billion compared with $974.3
million for the 1999 period.
BANKING ARRANGEMENTS
Laidlaw has received a waiver of financial covenant compliance on its
syndicated banking facility to May 31, 2000. The company has received $30
million under the facility, secured by accounts receivable, and has agreed to
make no further requests for advances. During the waiver period, no
acquisitions will be made and no dividends will be paid on the company's
common or preferred shares.
Discussions with the syndicate are ongoing in an endeavor to reach a
revised facility agreement by June 1, 2000. Unless a revised credit agreement
is negotiated by June 1, 2000, the company would not be in compliance with
financial covenants. As the waiver extends only to May 31, the bank debt and
the term debt due within one year, which otherwise would have been refinanced
from the bank line, have been classified as current liabilities on the
company's balance sheet.
"Laidlaw's management and board continue to place a strong emphasis on
the divestiture of the healthcare businesses, in order to reduce bank debt and
focus on the company's core operations. These divestitures will be
accomplished as quickly as possible," said Peter N. T. Widdrington, Laidlaw's
board chairman.
This news release contains forward-looking statements that involve a
number of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated by such forward-
looking statements are competitive pressures, changes in pricing policies,
actual proceeds received from asset sales, business conditions in the
marketplace, general economic conditions and the risk factors detailed from
time to time in the company's periodic reports and registration statements
filed with the Securities and Exchange Commission.
Laidlaw Inc. is North America's largest provider of school and intercity
bus transportation, municipal transit, patient transportation and emergency
department management services.
<<
LAIDLAW INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. $millions)
(unaudited)
Three Months Ended Six Months Ended
------------------ ------------------
February February February February
29, 2000 28, 1999 29, 2000 28, 1999
-------- -------- -------- --------
Revenue
Education services $387.6 $347.7 $814.1 $745.1
Transit & Tour services 341.7 115.8 683.0 229.2
-------- -------- -------- --------
Total revenue 729.3 463.5 1,497.1 974.3
Operating expenses 530.8 330.4 1,055.4 677.7
Selling, general and
administrative expenses 91.0 32.9 178.9 65.0
Depreciation expense 58.4 46.6 116.7 93.0
-------- -------- -------- --------
Income from operations before
amortization expense 49.1 53.6 146.1 138.6
Amortization expense 8.5 8.1 19.2 16.0
-------- -------- -------- --------
Income from operations 40.6 45.5 126.9 122.6
Interest expense (43.3) (17.5) (77.7) (33.4)
Interest, dividend and other
income 3.6 16.0 7.8 42.4
Equity in earnings of
Safety-Kleen Corp. - 6.6 10.8 16.5
Impairment loss (605.0) - (605.0) -
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes (604.1) 50.6 (537.2) 148.1
Income taxes 21.8 11.0 35.8 32.9
Income tax settlement - 21.0 - 21.0
-------- -------- -------- --------
Income (loss) from continuing
operations (625.9) 18.6 (573.0) 94.2
Income (loss) from discontinued
operations (834.5) (0.7) (834.5) 9.0
-------- -------- -------- --------
Net income (loss) for the
period ($1,460.4) $17.9 ($1,407.5) $103.2
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (loss) per share
Continuing operations ($1.92) $0.05 ($1.75) $0.28
Discontinued operations (2.56) - (2.54) 0.03
-------- -------- -------- --------
Net income (loss) for
the period ($4.48) $0.05 ($4.29) $0.31
-------- -------- -------- --------
-------- -------- -------- --------
Cash flow per share
Continuing operations $0.19 $0.24 $0.55 $0.59
Discontinued operations 0.06 0.08 0.10 0.20
-------- -------- -------- --------
$0.25 $0.32 $0.65 $0.79
-------- -------- -------- --------
-------- -------- -------- --------
Additional information
Income from operations before
amortization expense
Education services $45.4 $47.4 $126.9 $124.4
Transit & Tour services 3.7 6.2 19.2 14.2
-------- -------- -------- --------
Consolidated $49.1 $53.6 $146.1 $138.6
-------- -------- -------- --------
-------- -------- -------- --------
Operating margins before
amortization expense
Education services 11.7 % 13.6 % 15.6 % 16.7 %
Transit & Tour services 1.1 % 5.4 % 2.8 % 6.2 %
Consolidated 6.7 % 11.6 % 9.8 % 14.2 %
LAIDLAW INC.
CONSOLIDATED BALANCE SHEETS
(U.S. $millions)
February 29 August 31
2000 1999
------------- -----------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $59.7 $58.2
Short-term investments
- at cost which approximates market value 180.1 208.9
Trade and other accounts receivable
(net of allowance for doubtful accounts
of $4.3; August 31, 1999 - $3.2) 331.1 214.7
Income taxes recoverable 12.6 18.0
Parts and supplies 34.3 32.1
Other current assets 28.0 32.1
------------- -----------
Total current assets 645.8 564.0
------------- -----------
Net assets of discontinued operations 830.0 1,617.2
------------- -----------
Long-term investments
Investment in Safety-Kleen Corp. 58.8 593.0
Other 198.4 188.1
------------- -----------
257.2 781.1
------------- -----------
Property and equipment
Land 157.3 157.7
Buildings 226.4 212.9
Vehicles 1,597.3 1,600.7
Other 179.3 140.5
------------- -----------
2,160.3 2,111.8
Less: Accumulated depreciation
and amortization 717.5 631.7
------------- -----------
1,442.8 1,480.1
------------- -----------
Other assets
Goodwill (net of accumulated
amortization of $117.6;
August 31, 1999 - $104.3) 1,234.8 1,212.4
Deferred charges 30.6 31.2
Deferred income taxes 112.6 68.3
------------- -----------
1,378.0 1,311.9
------------- -----------
Total assets $4,553.8 $5,754.3
------------- -----------
LAIDLAW INC.
CONSOLIDATED BALANCE SHEETS
(U.S. $millions)
February 29 August 31
2000 1999
------------- -----------
(unaudited)
LIABILITIES
Current liabilities
Accounts payable $113.5 $139.4
Accrued liabilities 369.6 337.2
Current portion of long-term debt 1,156.0 9.3
------------- -----------
Total current liabilities 1,639.1 485.9
------------- -----------
Deferred items 208.6 242.0
------------- -----------
Long-term debt 2,250.1 3,113.3
------------- -----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preference Shares 7.9 8.0
Common Shares; issued and
outstanding 325,927,870
(August 31, 1999 - 330,209,655) 2,222.6 2,246.8
Cumulative foreign currency
translation adjustments (162.1) (168.4)
Deficit (1,612.4) (173.3)
------------- -----------
Total shareholders' equity 456.0 1,913.1
------------- -----------
Total liabilities and
shareholders' equity $4,553.8 $5,754.3
------------- -----------
------------- -----------
LAIDLAW INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. $millions)
(unaudited)
Six Months Ended
--------------------------
February 29 February 28
2000 1999
------------- -----------
Operating activities
Income (loss) from continuing
operations for the period $(573.0) $94.2
Items not affecting cash 751.9 100.6
------------- -----------
Cash provided by continuing operating
activities before financing working capital 178.9 194.8
Cash used in financing working capital (174.5) (132.8)
------------- -----------
Net cash provided by continuing operating
activities 4.4 62.0
Net cash used in discontinued operating
activities (41.5) (26.6)
------------- -----------
Net cash provided by (used in) operating
activities $(37.1) $35.4
------------- -----------
Investing activities
Purchase of property, equipment and other
assets, net of proceeds from sale $(60.7) $(74.2)
Expended on acquisitions (38.6) (22.4)
Net decrease in investments 19.7 63.9
------------- -----------
Net cash used in continuing investing
activities (79.6) (32.7)
Net cash used in discontinued investing
activities (22.1) (23.4)
------------- -----------
Net cash used in investing activities $(101.7) $(56.1)
------------- -----------
Financing activities
Net increase (decrease) in long-term
debt and other non-current liabilities $216.9 $(31.3)
Repurchase of shares for redemption (26.2) (0.2)
Proceeds from share issues 1.9 -
Dividends (31.6) (30.4)
------------- -----------
Net cash provided by (used in) continuing
financing activities 161.0 $(61.9)
Net cash provided by (used in) discontinued
financing activities (20.7) 57.0
------------- -----------
Net cash provided by (used in) financing
activities $140.3 $(4.9)
------------- -----------
Net increase (decrease) in cash and cash
equivalents $1.5 $(25.6)
Cash and cash equivalents - beginning of period 58.2 65.8
------------- -----------
Cash and cash equivalents - end of period $59.7 $40.2
------------- -----------
Additional Information
Details of revenue growth Three months ended February 29, 2000
------------------------- ------------------------------------------
Price & Acquisi- Foreign
Volume tions Exchange Total
------- --------- -------- --------
Education services 9.7 % 1.3 % 0.5 % 11.5 %
Transit & Tour services (0.5) % 194.0 % 1.6 % 195.1 %
Consolidated 7.2 % 49.4 % 0.7 % 57.3 %
Details of revenue growth Six months ended February 29, 2000
------------------------- ------------------------------------------
Price & Acquisi- Foreign
Volume tions Exchange Total
------- --------- -------- --------
Education services 7.7 % 1.2 % 0.4 % 9.3 %
Transit & Tour services (0.8) % 197.3 % 1.5 % 198.0 %
Consolidated 5.7 % 47.3 % 0.7 % 53.7 %
Three months ended Six months ended
------------------------- ------------------------
February 29 February 28 February 29 February 28
2000 1999 2000 1999
----------- ----------- ----------- -----------
Tax Rate * 25.0% 25.0% 25.0% 25.0%
February 29, 2000 August 31, 1999
------------------------- ------------------------
Debt/Equity 7.47:1 1.63:1
Income from operations Three months Ended Six months Ended
---------------------- --------------------- -------------------
($ millions) February February February February
29, 2000 28, 1999 29, 2000 28, 1999
-------- -------- -------- --------
Education services $38.5 $40.9 $113.0 $111.5
Transit & Tour services 2.1 4.6 13.9 11.1
-------- -------- -------- --------
Consolidated $40.6 $45.5 $126.9 $122.6
-------- -------- -------- --------
Operating margins
Education services 9.9% 11.8% 13.9% 15.0%
Transit & Tour services 0.6% 4.0% 2.0% 4.8%
Consolidated 5.6% 9.8% 8.5% 12.6%
* before unusual income tax charge