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14-May-2008
Quarterly Report
General
Atlantic Express Transportation Corp. (''we'' or the ''Company'') is the third largest provider of school bus transportation in the United States and the leading provider in New York City, the largest market in which we operate. We have contracts with approximately 104 school districts in New York, Missouri, Massachusetts, California, Pennsylvania, New Jersey, and Illinois. For fiscal 2008, we have a contract to provide paratransit services in New York to physically and mentally challenged passengers who are unable to use standard public transportation. We also provide other transportation services, including fixed route transit, express commuter line and charter and tour buses through our coach services. As of March 31, 2008, we had a fleet of approximately 5,600 vehicles operating from approximately 50 facilities.
School bus transportation services accounted for 89.0% and 88.9% of our revenues from continuing operations for the nine months ended March 31, 2008 and 2007, respectively. Our school bus transportation contracts have provided a relatively predictable and stable stream of revenues over their terms, which generally initially range from one to five years. Since 1979, we have achieved substantial contract renewals, which we believe is due to (1) our reputation for passenger safety and providing efficient, on-time service, (2) our long-standing relationships with the school districts we service, (3) the preference of school districts to maintain continuity of service with their current proven contractor rather than risk the uncertainty associated with a replacement and (4) the disadvantage of prospective competitors, who generally would have to make substantially greater investments than we would in new equipment and who may experience difficulty obtaining suitable parking and maintenance facilities in our primary markets, especially in the New York City greater metropolitan area.
Paratransit and transit services accounted for 11.0% and 11.1% of our revenues from continuing operations for the nine months ended March 31, 2008 and 2007, respectively. The terms of our paratransit and transit contracts are initially for five years. These contracts are awarded by public transit systems through a public bidding or request for proposal (''RFP'') process. We are generally entitled to a specified charge per hour of vehicle service together with other fixed charges.
Results of Operations
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[[Image Removed]] [[Image Removed]] Three Months Ended March 31, [[Image Removed]] [[Image Removed]] Nine Months Ended March 31,
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[[Image Removed]] [[Image Removed]] (in millions, except percentages)
Revenues [[Image Removed]] [[Image Removed]] [[Image Removed]] $ 122.0 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 100.0 % [[Image Removed]] [[Image Removed]] [[Image Removed]] $ 122.4 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 100.0 % [[Image Removed]] [[Image Removed]] [[Image Removed]] $ 308.4 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 100.0 % [[Image Removed]] [[Image Removed]] [[Image Removed]] $ 311.2 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 100.0 %
Cost of [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]
operations [[Image Removed]] 110.9 [[Image Removed]] [[Image Removed]] 90.9 % [[Image Removed]] 107.0 [[Image Removed]] [[Image Removed]] 87.4 % [[Image Removed]] 285.5 [[Image Removed]] [[Image Removed]] 92.6 % [[Image Removed]] 278.9 [[Image Removed]] [[Image Removed]] 89.6 %
General and [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]
administrative [[Image Removed]] 4.7 [[Image Removed]] [[Image Removed]] 3.9 % [[Image Removed]] 4.8 [[Image Removed]] [[Image Removed]] 3.9 % [[Image Removed]] 13.3 [[Image Removed]] [[Image Removed]] 4.3 % [[Image Removed]] 13.4 [[Image Removed]] [[Image Removed]] 4.3 %
Depreciation and [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]
amortization [[Image Removed]] 4.8 [[Image Removed]] [[Image Removed]] 3.9 % [[Image Removed]] 4.7 [[Image Removed]] [[Image Removed]] 3.8 % [[Image Removed]] 14.1 [[Image Removed]] [[Image Removed]] 4.6 % [[Image Removed]] 13.8 [[Image Removed]] [[Image Removed]] 4.4 %
Contract rights [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]
impairment [[Image Removed]] 0.3 [[Image Removed]] [[Image Removed]] 0.2 % [[Image Removed]] - [[Image Removed]] [[Image Removed]] - [[Image Removed]] [[Image Removed]] 0.3 [[Image Removed]] [[Image Removed]] 0.1 % [[Image Removed]] - [[Image Removed]] [[Image Removed]] - [[Image Removed]]
Income (loss) [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]
from operations [[Image Removed]] 1.3 [[Image Removed]] [[Image Removed]] 1.1 % [[Image Removed]] 6.0 [[Image Removed]] [[Image Removed]] 4.9 % [[Image Removed]] (4.8 ) [[Image Removed]] (1.6 )% [[Image Removed]] 5.1 [[Image Removed]] [[Image Removed]] 1.6 %
Interest expense [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 11.3 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 9.3 % [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 6.8 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 5.6 % [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 30.8 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 10.0 % [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 20.1 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 6.4 %
Loss before
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Results of Operations - Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
Revenues. Revenues from school bus operations were $110.9 million for the three months ended March 31, 2008 compared to $111.3 million for the three months ended March 31, 2007, a decrease of $0.4 million, or 0.4%. This decrease was due primarily to a reduction of service requirements of $2.9 million, due primarily to less revenue days and a reduction in routes and $1.0 million in lost contracts, partially offset by $1.9 million of price increases, $1.2 million in new contracts and $0.4 million increase in DOE escort pass-through revenue.
Revenues from paratransit and transit operations were $11.1 million for the three months ended March 31, 2008 compared to $11.2 million for the three months ended March 31, 2007, a decrease of 0.2%.
Cost of Operations. Cost of operations of school bus operations was $100.8 million for the three months ended March 31, 2008 compared to $96.8 million for the three months ended March 31, 2007, an increase of $4.0 million or 4.1%. This increase was primarily due to a $2.0 million increase in fuel expense and an increase in wages and health and welfare costs under our New York City labor contract, partially offset by a decrease in workers compensation insurance expense. Salaries and wages were $54.2 million for the three months ended March 31, 2008 compared to $52.5 million for the three months ended March 31, 2007, an increase of $1.6 million due to contractual wage increases partially offset by fewer routes. As a percentage of revenues, salaries and wages increased to 48.9% for the three months ended March 31, 2008, from 47.2% for the three months ended March 31, 2007. As a percentage of revenues, cost of operations increased to 90.9% for the three months ended March 31, 2008, from 87.0% for the three months ended March 31, 2007.
Cost of operations of paratransit and transit operations were $10.1 million for the three months ended March 31, 2008 and 2007, respectively. This decrease was primarily due to salaries and wages, partially offset by a $0.2 million increase in fuel expense. As a percentage of revenues, salaries and wages decreased to 56.2% for the three months ended March 31, 2008, from 57.1% for the three months ended March 31, 2007. As a percentage of revenues, cost of operations decreased to 90.7% for the three months ended March 31, 2008, from 90.9% for the three months ended March 31, 2007.
General and administrative expenses. General and administrative expenses from school bus operations were approximately $4.0 million for the three months ended March 31, 2008 and 2007, respectively. As a percentage of revenues, general and administrative expenses increased to 3.7% for the three months ended March 31, 2008, from 3.6% for the three months ended and March 31, 2007.
General and administrative expenses from paratransit and transit operations were $0.7 million for the three months ended March 31, 2008 and 2007, respectively. As a percentage of revenues, general and administrative expenses decreased to 6.2% for the three months ended March 31, 2008, from 6.4% for the three months ended March 31, 2007.
Depreciation and amortization. Depreciation and amortization expense from school bus operations was $4.4 million for the three months ended March 31, 2008 compared to $4.3 million for the three months ended March 31, 2007, an increase of $0.1 million, or 2.1%.
Contract right impairment. Contract right impairment expense from school bus operations was $0.3 million for the three months ended March 31, 2008.
Operating income (loss) from operations. Operating income from school bus operations was $1.3 million for the three months ended March 31, 2008 compared to $6.1 million for the three months ended March 31, 2007, a decrease of $4.8 million, or 78.1%, due to the net effect of the items discussed above.
Operating loss from paratransit and transit operations was minimal for the three months ended March 31, 2008 compared to $0.1 million operating loss for the three months ended March 31, 2007, a decrease in loss of $0.1 million, due to the net effect of the items discussed above.
Interest expense. Interest expense was $11.3 million for the three months ended March 31, 2008 compared to $6.8 million for the three months ended March 31, 2007, an increase of $4.5 million, or 66.9%. The increase was primarily due to a $4.6 million non-cash change in fair market value of interest rate swap expense, $0.8 million increase in interest expense on the Notes compared to previous long-term borrowings, offset partially by a $0.2 million decrease in senior credit facility interest and a $0.6 million decrease in deferred financing expense.
Loss before provision for income taxes and discontinued operations. Due to the net effect of the items discussed above we experienced a loss of $10.0 million for the three months ended March 31, 2008, compared to a loss of $0.7 million for the three months ended March 31, 2007, an increase in loss of $9.3 million.
Results of Operations - Nine Months Ended March 31, 2008 Compared to Nine Months Ended March 31, 2007
Revenues. Revenues from school bus operations were $274.5 million for the nine months ended March 31, 2008 compared to $276.6 million for the nine months ended March 31, 2007, a decrease of $2.0 million, or 0.7%. This decrease was due to a reduction of service requirements of $7.3 million, due primarily to less revenue days and a reduction in DOE routes, a reduction in summer revenues of $0.5 million and $2.3 million in lost contracts, partially offset by $4.3 million of price increases, $2.8 million in new contracts and $1.0 million increase in DOE escort pass-through revenue.
Revenues from paratransit and transit operations were $33.9 million for the nine months ended March 31, 2008 compared to $34.6 million for the nine months ended March 31, 2007, a decrease of $0.7 million or 2.1%. This decrease was primarily a reduction of service requirements due to a ten day labor strike that affected our paratransit operations in December 2007, partially offset by price increases of $0.6 million.
Cost of Operations. Cost of operations of school bus operations was $254.8 million for the nine months ended March 31, 2008 compared to $247.8 million for the nine months ended March 31, 2007, an increase of $7.0 million or 2.8%. This increase was primarily due to a $3.8 million increase in fuel expense and increases in wages and health and welfare costs under our New York City labor contract, partially offset by decreases in vehicle and workers compensation insurance expense. Salaries and wages were $138.1 million for the nine months ended March 31, 2008 compared to $134.1 million for the nine months ended March 31, 2007, an increase of $4.0 million or 3.0% due to contractual wage increases partially offset by fewer routes. As a percentage of revenues, salaries and wages increased to 50.3% for the nine months ended March 31, 2008, from 48.5% for the nine months ended March 31, 2007. As a percentage of revenues, cost of operations increased to 92.8% for the nine months ended March 31, 2008, from 89.6% for the nine months ended March 31, 2007.
Cost of operations of paratransit and transit operations were $30.7 million for the nine months ended March 31, 2008 compared to $31.1 million for the nine months ended March 31, 2007, a decrease of $0.4 million or 1.4%. This decrease was primarily due to a $0.7 million decrease in driver wages, due primarily to a ten day labor strike that affected our paratransit operations in December 2007 and a $0.3 million decrease in liquidated damages, partially offset by a $0.5 million increase in fuel expense. As a percentage of revenues, salaries and wages decreased to 51.0% for the nine months ended March 31, 2008, from 51.3% for the nine months ended March 31, 2007. As a percentage of revenues, cost of operations increased to 90.5% for the nine months ended March 31, 2008, from 89.9% for the nine months ended March 31, 2007.
General and administrative expenses. General and administrative expenses from school bus operations were $11.2 million for the nine months ended March 31, 2008 compared to $11.3 million for the nine months ended March 31, 2007, a decrease of $0.1 million or 0.7%. As a percentage of revenues, general and administrative expenses were 4.1% for both the nine months ended March 31, 2008 and 2007.
General and administrative expenses from paratransit and transit operations were $2.1 million for the nine months ended March 31, 2008 and March 31, 2007, respectively. As a percentage of revenues, general and administrative expenses increased to 6.3% for the nine months ended March 31, 2008, from 6.0% for the nine months ended March 31, 2007.
Depreciation and amortization. Depreciation and amortization expense from school bus operations was $13.0 million for the nine months ended March 31, 2008 compared to $12.8 million for the nine months ended March 31, 2007, an increase of $0.2 million, or 2.1%.
Depreciation and amortization expense from paratransit and transit operations was $1.1 million for the nine months ended March 31, 2008 and for the nine months ended March 31, 2007, respectively.
Contract right impairment. Contract right impairment expense from school bus operations was $0.3 million for the nine months ended March 31, 2008.
Operating income (loss) from operations. Operating loss from school bus operations was $4.8 million for the nine months ended March 31, 2008 compared to income of $4.7 million for the nine months ended March 31, 2007, a difference of $9.5 million, or 202.9% due to the net effect of the items discussed above.
Operating income from paratransit and transit operations was minimal compared to $0.4 million for the nine months ended March 31, 2007, a decrease of $0.4 million, or 97.0%, due to the net effect of the items discussed above.
Interest expense. Interest expense was $30.8 million for the nine months ended March 31, 2008 compared to $20.1 million for the nine months ended March 31, 2007, an increase of $10.8 million, or 53.8%. The increase was primarily due to a $10.5 million non-cash change in fair market value of interest rate swap expense, $3.0 million increase in interest expense on the Notes compared to previous long-term borrowings, offset partially by a $0.8 million decrease in senior credit facility interest and a $1.7 million decrease in deferred financing expense.
Loss before benefit from income taxes and discontinued operations. Due to the net effect of the items discussed above we experienced a loss of $35.6 million for the nine months ended March 31, 2008 compared to a loss of $14.8 million for . . .
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