LAIDLAW INC - Year-End
Financial Results
Friday, December 22, 2000 03:14:27 AM - Market News Publishing
Toronto, Ontario, Dec. 22, 2000 (Market News Publishing via COMTEX) -- Laidlaw
Inc. announced its results for its fiscal year ended August 31, 2000 and the
direction of its financial restructuring process. For fiscal 2000, revenue from
the company's continuing Education Services and its Transit & Tour Services
operations increased 29.3% to $2.926 billion from $2.263 billion reported for
fiscal 1999. Earnings before interest, taxes and amortization (EBITA) were
$189.5 million, a decline of 29.4% from the $268.4 million reported for fiscal
1999. This decline was principally attributable to increased insurance costs as
well as higher labor and fuel costs due to prevailing economic conditions. The
increase in insurance costs primarily resulted from the adoption in fiscal 2000,
of a more conservative insurance reserve policy resulting in an increase of $48
million in the insurance reserve. For fiscal 2000, the company had a net loss of
$2.237 billion, or $6.84 per diluted share compared with a net loss of $1.119
billion, or $3.39 per diluted share for the prior year. There were 325.9 million
shares outstanding at August 31, 2000 compared with 330.2 million at the end of
fiscal 1999. The net loss was primarily attributable to the $1.276 billion
write-down in the company's carrying value of its healthcare businesses as a
result of their continued erosion in value, and the $604 million write-off of
the company's 44% ownership interest in Safety-Kleen Corp. relating to Safety-
Kleen's financial reporting and resulting liquidity problems that resulted in
its filing for bankruptcy protection. Additional provisions of $67 million
related to Safety-Kleen were expensed during the year. The consolidated
financial statements include the company's share of net earnings or losses of
Safety-Kleen. As a result of the Safety-Kleen matters, the accuracy of the
income and losses relating to Safety-Kleen has not been verified and further
adjustments might be necessary to the company's historical financial statements.
The net loss for fiscal 2000 also included $102 million in expenses relating to
the company's defaults under its credit agreement and bond indentures, losses on
the termination of interest rate swap contracts, professional fees and costs
relating to the company's restructuring efforts and the write-off of previously
deferred costs of issuing and administering the bonds. Interest expense related
to continuing operations for fiscal 2000 was $207 million compared to $92
million for fiscal 1999. Education Services Revenue from Education Services,
Laidlaw's school bus transportation unit, increased 7.6% to $1.428 billion for
fiscal 2000 from $1.327 billion for fiscal 1999. For fiscal 2000, reported EBITA
for the unit was $133.6 million compared with $185.0 million for the prior year.
Expenses related to driver shortages and increased fuel costs offset the
contribution from the increased revenue. A $21 million increase in insurance
reserve costs and expenses associated with exiting unfavorable contracts
combined to result in a lower overall contribution. Transit & Tour Services
Revenue from Transit & Tour Services, the company's intercity, public
transit and tour services unit, increased 60.2% to $1.498 billion from $935
million for fiscal 1999. This increase was primarily attributable to the
inclusion, for full fiscal 2000, of Greyhound Lines, Inc., which was acquired in
March 1999. The increase in revenue is also due to more customers taking the bus
in reaction to higher fuel prices for auto transportation. EBITA for the unit
declined to $55.9 million for fiscal 2000 from $83.4 million for fiscal 1999.
The decline in EBITA includes a $27 million increase in insurance reserves.
Financial Restructuring As a consequence of violations of certain financial
covenants under its bank credit agreement and bond indentures and the previously
announced interest payment moratorium, substantially all of the company's
long-term debt is due on demand and classified as current liabilities. The
company continues to seek to negotiate a resolution to its long-term capital
structure and liquidity issues. Mr. John R. Grainger, Laidlaw's president and
CEO, stated "We and our advisors have been working over the past several
months with the lenders under our credit facilities, and with an informal
committee of our bondholders, to develop a plan that will enable us to
restructure Laidlaw Inc.'s balance sheet and capitalize on the strengths in each
of our transportation businesses. "These discussions have been constructive
and we intend, through appropriate restructuring procedures, to put in place
during fiscal 2001 a plan to restore our balance sheet and financial
strength," Mr. Grainger continued. "As we continue our discussions
with our creditor constituencies, we remain committed to making certain that the
operating companies are able to honor all contractual obligations with no
disruption in services to their customers and communities." Laidlaw Inc.
will hold a conference call on January 5, 2001 to discuss the status of the
company's progress on the issues discussed in this release. Details of the
timing of the call will be announced in a news release January 2, 2001. Laidlaw
Inc. is a holding company for North America's largest providers of school and
intercity bus transportation, municipal transit, patient transportation and
emergency department management services. All dollar amounts are in U.S.
dollars. Certain statements contained in this release, including statements
regarding the status of financing arrangements, the status and outcomes of
restructuring discussions and proceedings, future operating results and market
opportunities, possible asset dispositions and other statements, that are not
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements involve
certain risks, uncertainties and assumptions that include, but are not limited
to: the negotiating positions of various constituencies and the results of
negotiations regarding restructuring plans; the company's ability to sell the
assets of its discontinued healthcare business; actual proceeds received from
any asset sales; market factors, including competitive pressures and changes in
pricing policies; the costs and risks associated with litigation; general
economic conditions; and other factors detailed in the Company's filings with
the Securities and Exchange Commission including the company's ability to
continue as a going concern. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual outcomes
may vary materially from those indicated.
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