Revision History - Jerry Post

Several other corporate employees lasted a year or less. In the field, experienced
managers were routinely sacked to cut costs. Most of the terminals were staffed with parttime
workers and “customer-service associates.” These employees earned $6 an hour regardless
of their jobs, with little or no chance for a raise. Few of them had completed high
school. Turnover at some terminals ran 100 percent a year and 30 percent was common.
Ralph Borland, a long-time Greyhound manager working as vice-president for customer
satisfaction, notes that the turnover rate did not bother Greyhound management, since “If
people stayed around too long, they would get too sour and cynical.”
When touring facilities, customer-service executives were “shocked” to find terminal
workers making fun of customers and ignoring others. Ridership was falling. To cut costs
further, the number of buses and drivers was cut (down by half since the mid-1980s) and
routes were rescheduled. Bus drivers began complaining that they had to exceed speed limits
to meet the new schedules.
Financial Performance
Revenue and Net Income (Million $)
Year 12/31/2003 12/31/2002 12/31/2001 12/31/2000 12/31/1999 12/31/1998
Passenger 830.6 849.8 876.9 861.8 783.3 727.8
Package 39.5 40.0 41.2 42.4 41.5 36.2
Food 39.7 42.2 43.7 43.0 39.1 31.1
Other 65.7 60.0 60.6 67.0 62.1 53.3
Total 975.5 991.9 1,022.4 1,014.3 926.0 848.4
Net Income (28.9) (111.6) 2.0 12.6 (16.3) 35.2
Balance Sheet (Million $)
Year 2003 2002 2001 2000 1999
Current Assets 81.7 74.6 110.8 96.9 87.6
Long term Assets 456.5 486.8 577.6 581.2 564.5
Total Assets 538.2 561.3 688.5 138.2 175.3
Current Liabilities 140.5 153.4 126.3 138.2 175.3
Long term Liabilities 469.4 521.4 374.2 302.1 206.9
Total Liabilities 609.9 674.8 500.5 440.3 382.2
Stockholder Equity/Deficit (71.7) (113.5) 187.9 235.2 227.9
The problems at Greyhound are reflected in its financial performance. Obviously,
the company had problems when it declared bankruptcy. The company improved in the
mid- to late-1990s, but passenger revenue peaked in 2001 [annual reports]. Even more
amazing, check out the stockholder equity in 2002 and 2003. It is negative! How long can a
company survive when its liabilities exceed its assets?
In 1999, Greyhound was acquired by Laidlaw, a Canadian company that owns a diverse
collection of transportation firms. In June 2001, Laidlaw filed bankruptcy in the
United States and in Canada. Two years later, in June 2003, Laidlaw emerged from bankruptcy
protection [2003 annual report]. In response to this parent-company bankruptcy,
Greyhound effectively became more financially independent. In 2000, already facing problems,
Laidlaw cutoff funding [Heinzl 2000]. Within a couple of months, Greyhound secured
20