Laidlaw Inc Case Study Discussion

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  1. Case papers should address the key issues that pertain to the financial strategy and then make clear recommendations with as much support as possible.
  2. Papers should beno more than three double-spaced pages (not including exhibits) and include a cover page with your name, the date, the course number, and the title of the assignment (case name).
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Case study Reference no 201-006-1 Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 This case was written by John D Sullivan,Boston University.It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.The case was compiled from published sources and generalised experience. © 2000,JD Sullivan,Boston University.Revised 2004. No part of this publication may be copied,stored,transmitted,reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. case centre Distributed by The Case Centre www.thecasecentre.org All rights reserved North America t +1 781 239 5884 f +1 781 239 5885 e info.usa@thecasecentre.org Rest of the world t +44 (0)1234 750903 f +44 (0)1234 751125 e info@thecasecentre.org Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Laidlaw,Inc 201-006-1 Laidlaw, Inc. Founded in 1924, Laidlaw had run solid for almost 75 years. But in 1999, the atmosphere changed for the Canadian corporation. Under an aggressive acquisition strategy that consumed the 1990s, along with growth in revenue came a heavy burden of Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 long-term debt surpassing $3.1 billion. What had once been a profitable company reporting Net Income of $346 million in 1998 had experienced a reversal of fortune. For fiscal year ending August of 1999, Laidlaw’s Net Income plunged to ($1.1) billion and for the nine months ending May of 2000, Net Income fell further to ($1.9) billion.1 As a short-term measure, management negotiated with bondholders to receive sufficient consents to permit certain subsidiaries to enter into secured banking agreements. The financing arrangements would provide a revolving line of credit in an amount up to $150 million with a letter of credit in amount up to $50 million from a group of financial institutions led by Canadian Imperial Bank of Commerce. In addition, a revolving line of credit would be available up to $125 million with a credit sub-facility in an amount up to $25 million for Greyhound Lines, Inc. from Foothill Capital Corporation, a wholly owned subsidiary of Wells Fargo. copyright 2000 – John D. Sullivan This case was written to stimulate class discussion and analysis and is not a critique of an effective or ineffective management situation. 1 Laidlaw – Investor Relations. www.laidlaw.com/laidlaw/investors/hls_three.html Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Background 201-006-1 The consent agreement, announced on October 25, 2000 in Dallas, Texas, only provides Laidlaw and Greyhound with a short-term solution to their financial problems. For the company to survive, it will need to implement a solid restructuring plan. The Company Laidlaw Inc. serves as a holding company and through operating its subsidiaries, throughout North America. Founded in 1924 by Robert Laidlaw, the company had built a reputation for waste management. But by the early 1990’s, through an acquisition and divestiture strategy (exhibit 1), the company became recognized for the yellow school Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 buses that hold its name. Under the leadership of James Bullock, the company sold off non-core holdings and diversified into health care with the acquisition of American Medical Response for approximately $1.1 billion in 1997. That same year, Laidlaw added to its health care portfolio with the purchase of EmCare, an emergency room manager, for $400 million. Adding to the company’s investment in waste management, Laidlaw purchased Safety-Kleen, a company specializing in hazardous waste management, in 1998 for $2 billion. Under the umbrella of its core transportation business, Greyhound Canada was acquired in 1997. To compliment this merger, Laidlaw followed with the purchase of Greyhound Lines Inc., in 1999 for $800 million. Greyhound is the only nationwide provider of scheduled inter-city bus transportation services in the United States. In the last three fiscal years, the percentage of revenue generated by the United States Operations has been 87.2%, 83.2% and 86.0%, respectively. The company intends to continue to expand throughout North America in each of its core businesses.2 2 Laidlaw Inc., Securities and Exchange Form 10K. August 1999. Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. provides essential and specialized services dedicated to the transportation of people 201-006-1 Education Services Laidlaw operates school buses and special education vehicles, primarily under the names Laidlaw Transit, Mayflower Contract Services, and National School Bus Services in the United States. In Canada, Laidlaw operates school buses under Laidlaw Transit and Charterways. Although Laidlaw purchased seven education service businesses in 1999, revenue growth was primarily attributable to price and volume growth including Laidlaw currently operates under 1,072 school boards in the United States and 61 in Canada providing transportation for approximately 2.3 million students each day. Contracts in the United States are generally three to five year agreements with options by Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 the school board to extend the contracts or solicit new bids. In Canada, most contracts are one-year agreements and negotiated or renewed annually. Rates are usually established on a per-diem basis and vary with the number of buses and students and length of each route. In addition to the transportation of students, the school bus fleet is also utilized for charters. Education services employs approximately 46,500 people to provide transportation services of which 2,800 provide executive, supervisory, clerical, and sales functions. Nearly 41,200 are considered part-time employees and approximately 47% are members of collective bargaining groups. The management of this division believes that management and work force have an excellent working relationship. Transit and Tour Services Laidlaw had acquired Greyhound Lines, Inc. during fiscal 1999 and had previously acquired Greyhound Canada Transportation Corp. in October 1997. Greyhound serves the “value-oriented” customer by offering scheduled passenger service Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. route additions and higher pricing on under performing contracts. 201-006-1 that connects rural and urban markets throughout the United States and Canada with 3,700 destinations, 20,000 daily departures, and a fleet of approximately 2,500 buses. Greyhound also provides package express service, charter bus service, and in many terminals, food service. The company also provides services to municipal transit customers through 225 contracts in the United States and Canada. Additional services include para-transit services providing access to transportation for mobility impaired tourist regions of the United States and Canada. Approximately 24,800 people are employed to provide transit and tour services. Of these employees, 3,400 persons serve executive, supervisory, clerical, and sales Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 functions. Nearly 5,400 employees are considered part-time and 9,900 are members of collective bargaining agreements. The Amalgamated Transit Union or ATU, represents 5,000 of Greyhound’s employees. The largest ATU agreement, which covers drivers and mechanics, expires on January 31, 2004.3 Greyhound’s business is seasonal in nature and tends to peak during the summer months and major holidays. As a result, cash flows experienced by the company also tend to be seasonal. Major Competitors in Education and Transit Services Although Laidlaw is the largest school bus company and special education transport operator in North America, it competes directly with other large companies and a substantial number of small local operators including school districts and other municipalities that operate their own education transit system. When contracts with 3 Laidlaw Inc., Securities and Exchange Form 10K. August 1999. Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. individuals, scheduled services under private contracts, and package tours to major 201-006-1 school boards expire, competition for extensions or new contracts is most prevalent in the areas of pricing and service. The transportation industry is highly competitive and includes individual automobile usage, low cost air travel, regional bus companies, and the train system. Greyhound competes in this industry based on cost and convenience. The largest bus charter service and the second largest bus company in the United States, Coach USA is operating under the restructuring plan of its United Kingdom parent Stagecoach Holdings. Coach USA provides airport ground transportation and Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 daily routes to special destinations for commuters. The company’s fleet consists of 9,500 buses, taxicabs, mini-coaches, and shuttle buses. Like Laidlaw, the company has fueled its rapid expansion through acquisitions and now operates in 35 states in the United States and throughout Canada. First Group Plc. First Group Plc., smaller than both Coach USA and Laidlaw, has taken advantage of Britain’s deregulation of the bus, coach, train, and airport industries. The company operates several rail lines in the UK and owns a 51% stake in the Bristol International Airport. As with Coach USA and Laidlaw, much of the company’s growth has been achieved through acquisitions. One acquisition in particular, Ryder’s bus division, has brought the company to the United States. Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Coach USA Inc. 201-006-1 National Railroad Passenger Corporation (Amtrak) National Railroad Passenger Corporation, or Amtrak, carries approximately 21 million passengers each year and operates 22,000 miles through 45 states in the US. A large “for-profit” company that has rarely been profitable receives subsidies through the United States federal government to ensure its operation. To lure passengers away from the lucrative shuttle flights on the East Coast, Amtrak has constructed a high-speed rail to Southwest Airlines Southwest Airlines has expanded its low cost, no frills, and no reserved seats Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 approach to air travel to serve more than 55 cities and 29 states in the US. To curb maintenance and training expenditures, the airline uses only Boeing 737s and currently uses approximately 320 planes. To trim back office expenditures, Southwest offers ticketless travel and operates its own reservation system. As part of the airlines expansion plans, Southwest has increased its routes throughout the East Coast and continues to thrive with its highly participative corporate culture and 27 years of profitability. Emergency Health Care Services Laidlaw provides healthcare transportation services, primarily under the name American Medical Response, and emergency room management services under the name EmCare. In 1999, the company had announced plans to divest both of these operations. The company provides health care transportation services from locations in 36 states in the United States and also operates in Ontario, Canada. These services consist of critical care transportation services, non-emergency ambulance and transfer services, Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. open in 2000. 201-006-1 and emergency response services. Annually, the company provides approximately five million ambulance responses and has more than 200 agreements with municipal or country public safety agencies to provide performance-based contracts for 911 responses. The company also provides comprehensive on-site medical care and transport services for all types of special events. Laidlaw also offers physician practice management services to hospital based and arranges contracts and schedules for their services. The company also assists in such operational areas as staff coordination, quality assurance, departmental accreditation, billing, record keeping, third party payment, and other administrative services. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Currently, Laidlaw has approximately 300 contracts for the management of emergency room departments and provides emergency services in 36 states to more than 5 million patients. As a result of poor financial performance, Laidlaw announced in March 1999 that approximately 2,200 positions or 10% of this division’s workforce would be eliminated. Under the restructuring plan, under performing locations would be closed or sold. As of fiscal year end 1998, Laidlaw employed approximately 24,500 employees in the health care division. Of these, 5,200 employees are executive, clerical, supervisory, and sales. 5,900 employees are considered part-time and approximately 53% are members of collective bargaining agreements. Major Competitors in Health Care Services Laidlaw is the largest provider of health care transportation services in the United States and competes both with large companies and a substantial number of smaller Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. emergency departments. The company recruits physicians, evaluates their credentials, 201-006-1 operators. The primary competition with the renewal or extension of contracts is based on price and service performed. Emergency physician practice management is also emerged in heavy competition. Competition for these contracts is usually based on cost and the ability to make physicians available as needed. In addition, competition is also based on maintaining the proper utilization and communication between the emergency room and other American Medical Alert Corp. American Medical Alert offers medical dispensing devices and fire burglar alarm Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 monitoring. Nearly 95% of the company’s sales come from monthly fees for leasing and monitoring its emergency response systems and other equipment. Primary customers for the service include individuals, hospitals, retirement homes, and the City of New York’s Homecare Service Program. Community Medical Transport, Inc. Community Medical Transport provides medical transportation offering ambulance services for patients that require basic medical care or supervision during transport to or from hospitals, nursing homes in the New York metro area. Rural Metro Corporation Rural Metro provides ambulance, fire protection, and other safety related services to municipal, residential, commercial, and industrial customers in the United States. The large health care ambulance provider, second only to American Medical Response, responds to emergence calls and offers non-emergency transport between health care Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. departments within the hospital. 201-006-1 facilities. Fees collected for ambulance services account for more than 80% of sales. The company also provides municipal and commercial fire fighting services and provides training for fire fighters for industrial manufacturing facilities. Rural Metro operates in more than 450 communities in 26 states, Canada, and South America. Med-Emerg International, Inc. industry. The company is divided into three primary divisions: Physician and Nurse Recruitment Services, Physician Management Services, and HealthyConnect.com, an online health care network. Med-Emerg International, Inc. owns clinics offering services Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 such as family practice, emergency care, chiropractic care, massage therapy, Chinese medicine, and family counseling. The company also provides short-term physician and nurse staffing and administrative support to emergency room departments and hospitals. The company’s web site is designed to link patients, physicians, and service providers. PhyAmerica Physician Group, Inc. PhyAmerica Physician Group, Inc. provides contract physicians primarily to emergency rooms to approximately 270 hospitals, government agencies, the military, the Veterans Administration, and correctional facilities. The company has refocused its attention to its main core contract business divesting businesses such as its HMO. Other Business Segments As of August 1999, Laidlaw owned approximately 44% of the shares of common stock of Safety-Kleen Corp. Safety-Kleen provides industrial waste services designed to collect, process, recycle and dispose of hazardous and industrial waste to more than Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Med-Emerg International, Inc. is emerging as a player in Canada’s medical 201-006-1 400,000 companies through over 200 locations. These services include collection and recovery services, provided to industrial, commercial and institutional customers and treatment and disposal services, defined by the technologies employed such as thermal treatment, landfill, and specialty services. On September 13, 1999, Laidlaw announced its plan to actively seek a buyer for its interest in Safety-Kleen. In addition to financial under performance, Safety-Kleen has received several irregularities and may have misled investors. Following the suits, the company hired Lazard Freres & Co LLC for financial advice. In the meantime, three top executives were suspended in May 2000 as a result of the accounting irregularities and new Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 management has been set in place to resolve any further issues with the company’s financial reporting. In October of 2000, Laidlaw sold its Manchu Wok Chinese food business to an investor group for an undisclosed amount. Manchu Wok is a chain of Chinese fast food restaurants that operates throughout North America, as well as two units in Poland. Major Competitors in Waste Management Allied Waste Industries, Inc. Allied Waste Industries, Inc. collects trash and garbage from approximately 9.9 million residential and commercial customers throughout the United States. As the number two waste management operator behind Waste Management, Inc., the company participates in every facet of the non-hazardous waste industry through 150 transfer stations, 160 landfills, and 90 recycling facilities. Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. class action suits since April 2000 alleging that the company had accounting 201-006-1 Republic Services, Inc. As the number three waste collector, Republic Services, Inc. provides waste disposal services for commercial, industrial, municipal, and residential customers through 151 collection companies in 24 states in the United States and one in Canada. The company also operates 55 landfills and more than 80 transfer stations. Waste Management, Inc., formerly USA Waste Services, is the largest waste service provider in the United States. The company serves municipal, business, and residential customers in the United States, Canada, and Mexico. Focusing on the Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 company’s core operations in North America, Waste Management is in the process of selling its solid and hazardous waste management services in Asia, Europe, the Pacific Rim, and South America. Conclusion Laidlaw is in a period of transition. Under an aggressive acquisition strategy, in addition to new divisions and base businesses, the company has added a significant amount of debt to its balance sheet. Under an agreement with its bondholders, the company has renewed hopes with a short-term financing agreement. However, for the company to survive, a restructuring plan must be set in place immediately. Otherwise, the only option available is bankruptcy protection. Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Waste Management, Inc. 201-006-1 Exhibit 1 1924 Founded in Ontario, Canada as a trucking company by Robert Laidlaw 1959 Company sold to Michael DeGroote 1969 Company shares listed on the Toronto Stock Exchange First Canadian solid waste management company acquired 1972 First Canadian intercity and charter bus company acquired 1978 First solid waste company acquired 1979 First Canadian school bus company acquired 1983 First US school bus company acquired Stock is listed NASDAQ 1984 Trucking business sold 1986 Entered US chemical waste management business with acquisition 1988 Canadian Pacific Limited purchased 1989 Tricil acquired – chemical waste management business 1990 DeGroote Retires Class A & B listed NYSE 1993 MedTrans acquired – Enters US ambulance business James Bullock becomes new President 1994 USPCI acquired – Waste management business 1995 Mayflower acquired – US school bus and transit company Care Line acquired – US ambulance business 1996 Charterways and National School Bus acquired Solid Waste Management Units sold 1997 American Medical Response acquired Laidlaw environmental sold Stock restructured to one class Greyhound Canada acquired EmCare and Spectrum acquired 1998 Laidlaw invests in Safety Kleen 1999 Greyhound Lines, Inc. acquired Sale of American Medical Response, EmCare & Safety Kleen announced Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 The Evolution of Laidlaw Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Education Services Transit & Tour Services Total Beta Daily Volume 2000 6 2 1999 7 7 8 14 Exhibit 3 Financial Statistics 52 Week Low (Nov 24, 00) 0.063 52 Week High (Jan 5, 00) 0.109 1.09 729,000 Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 201-006-1 Exhibit 2 Acquisitions by Division Nine Months Ended May 31 201-006-1 Exhibit 4 Consolidated Balance Sheets Assets (in millions) 31-May-00 31-Aug-99 Current Assets Cash Investments Accounts Rec Other $189 $174 $329 $96 $58 $209 $215 $82 Total Current Assets $788 $564 Net Assets Discontinued Operations $505 $1,617 Long Term Investments Safety Kleen Other $0 $206 $593 $188 $206 $781 PP & E Less Depr. Amort $2,208 $754 $2,112 $632 Net PP & E $1,454 $1,480 Other Assets Goodwill Deferred Charges Deferred Income Tax $1,212 $11 $0 $1,212 $31 $68 Total Other $1,223 $1,312 Total Assets $4,177 $5,754 Total LT Investments Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Assets 201-006-1 Exhibit 5 Consolidated Balance Sheets Liabilities & Shareholder Equity (in millions) 31-May-00 31-Aug-99 $93.5 $353.3 $3,457.2 $139.4 $337.2 $9.3 $3,904.0 $485.9 Deferred Items $166.9 $242.0 Long Term Debt $197.9 $3,113.3 $7.9 $2,222.6 ($167.6) $8.0 $2,246.8 ($168.4) ($2,155.0) ($173.3) ($92.1) $1,913.1 $4,176.7 $5,754.3 Current Liabilities Accounts Payable Accrued Liabilities Current Long Term Debt Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Total Current Liabilities Shareholder Equity Preference Shares Common Shares Foreign Currency Translation Deficit Total Shareholders Equity Total Liabilities & Equity Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Liabilities 201-006-1 Exhibit 6 Short Term Maturity Less than one year Weighted Average Interest Rate Book Value 1999 1998 1999 0.072 0.061 $9.3 Long Term Bank Debt Notes and Other Debentures 2000-2005 2000-2033 2000-2027 0.055 0.074 0.074 0.054 0.062 0.076 1998 $1.8 $649.2 $454.8 $137.3 $87.9 $2,326.8 $1,747.3 Total Long Term Debt $3,113.3 $2,290.0 Total Debt $3,122.6 $2,291.8 Exhibit 7 Debt to Equity Ratio T ra n s it & Tour S e rv ic e s 10% E d u c a tio n S e rv ic e s 90% E d u c a tio n S e rv ic e s T ra n s it & T o u r S e rv ic e s Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Long Term Debt As of August 1999 and August 1998) (in millions) 201-006-1 Exhibit 8 Education Services Revenue Income from Operations before Amortization Income from Operations Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Transit & Tour Services Revenue Income from Operations before Amortization Income from Operations 31-May-00 31-May-99 $1,255.1 $188.1 $1,159.9 $202.9 $167.1 $183.6 $1,053.6 $32.8 $530.2 $26.4 $19.8 $18.5 Exhibit 9 Laidlaw Sources of Revenue 1997 Transit & Tour Services 31% Education Services 69% Education Services Transit & Tour Services Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Income Snapshot (in millions) Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Transit & Tour Services 41% Education Services 59% Education Services Transit & Tour Services Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 201-006-1 Exhibit 10 Laidlaw Sources of Revenue 1999 Laidlaw Inc.- Revenue by business segment 1999 201-006-1 Exhibit 11 Laidlaw Consolidated Statements of Operations (in millions) Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Revenue Education Services Transit & Tour Total Revenue Nine Months Ended 31-May 2000 1999 $441.0 $414.8 $1,255.1 $1,159.9 $370.6 $811.6 $301.0 $715.8 $1,053.6 $2,308.7 $530.2 $1,690.1 Operating Expenses SG,& A Depreciation $581.8 $494.2 $1,637.2 $1,171.9 $94.8 $60.2 $77.9 $53.0 $273.7 $176.9 $142.9 $146.0 Amortization Expense $14.8 $11.2 $34.0 $27.2 Income from Operations $60.0 $79.5 $186.9 $202.1 Interest Expense Other Financing Other Income Earnings Safety Kleen Impairment Loss ($56.6) ($89.0) $2.5 $0.0 ($27.0) $0.0 $13.8 $10.8 ($134.3) ($89.0) $10.3 $10.8 ($60.4) $0.0 $56.2 $27.3 ($58.8) $0.0 ($663.8) $0.0 Income Before Tax ($141.9) $77.1 ($679.1) $225.2 Income Taxes Tax Other ($1.5) ($85.0) ($16.6) $0.0 ($15.8) ($106.5) ($49.5) ($21.0) Income\Loss from Op Discontinued Operations ($228.4) $60.5 ($801.4) $154.7 ($314.1) ($287.7) ($1,148.6) ($278.7) ($512.5) ($227.2) ($1,950.0) ($124.0) Net Loss for the Period Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 2000 Three Months Ended 31-May 1999 Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Education Services 90% Education Services Education Services Transit & Tour Services Exhibit 13 Laidlaw EBITA by Business Segment 1999 Transit & Tour Services 31% Education Services 69% Transit & Tour Services Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 201-006-1 Exhibit 12 Laidlaw EBITA by Business Segment 1997 Transit & Tour Services 10% ct -9 4 4 l-9 Ja 4 n95 Ap r-9 5 Ju l-9 5 O ct -9 5 Ja n96 Ap r-9 6 Ju l-9 6 O ct -9 6 Ja n97 Ap r-9 7 Ju l-9 7 O ct -9 7 Ja n98 Ap r-9 8 Ju l-9 8 O ct -9 8 Ja n99 Ap r-9 9 Ju l-9 9 O ct -9 9 Ja n00 Ap r-0 0 Ju l-0 0 O ct -0 0 O Ju r-9 n94 Ap Ja Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Calendar Year High Price Low Price Year End Price High P/E Low P/E Year End P/E Dividend Yield 16 14 12 10 8 6 4 1999 $10.50 $5.06 $5.25 20.92 10.09 10.46 5.33 1998 $16.63 $8.63 $10.06 20.42 10.60 12.36 2.58 Stock Price History 1997 $18.00 $11.63 $13.63 333.33 215.28 252.31 1.47 Exhibit 15 Market Capitalization History 1996 $12.25 $8.88 $11.75 30.78 22.30 29.52 1.62 price History Purchased for use by Chandler on 20-Mar-2019. Order ref F349692. You are permitted to view the material on-line and print a copy for your personal use until 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. 201-006-1 Exhibit 14 Stock Price History 1995 $10.13 $8.25 $9.88 37.78 30.78 36.85 1.62 2 0 201-006-1 1. How did Laidlaw weaken its financial strength? 2. Is Laidlaw’s decision to sell its stake in Safety Kleen appropriate given Safety Kleen’s legal troubles leading to filing for bankruptcy protection? 3. Given Safety Kleen’s financial troubles, how much is it worth? 4. Why is Laidlaw selling its health care division? 5. How would you value the health care division? 6. Would Laidlaw be better off implementing and fulfilling its restructuring plan of the health care division? 7. How competitive is the health care market? 8. How strong are Laidlaw’s Education, Transit, and Tourist Divisions? 9. Are these divisions strong enough to turn Laidlaw around? 10. What restructuring recommendations would you suggest in addition to the company’s strategy of selling Safety Kleen and its health care unit. 11. How would the unions impact any of Laidlaw’s restructuring plans?Does Laidlaw have sufficient time to turn the company around? Purchased for by 20-Mar-2019. Order F349692. You are permitted to view the material on-line and print a copy for your personal use 20-Mar-2020. Please note that you are not permitted to reproduce or redistribute it for any other purpose. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F349692 Suggested Questions for Students
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Running head: LAIDLAW.INC

Case Paper: Laidlaw.Inc
Institutional Affiliation
Name
Date

LAIDLAW.INC

2

Background
The Laidlaw has been in operation for a long while and seen its share of hay days. The
company which started in 1924 as a trucking company changed ownership in 1959 and has since
then experienced diversification to different industries and sectors.

From a sole trucking

company, the organization has diversified and acquired stakes in solid waste management, bus
transportation, school bus companies, chemical waste management, ambulance business
emergency response and so forth. The acquisition of the various assets has had its toll on the
organization’s operations leading to the acquisition of a huge debt level (Sullivan, 2004). This
paper aims to look at the key issues the company has faced and make recommendations that will
help the company deal with challenges it’s facing.
Key Issues
An examination of Laidlaw Company shows that currently, the organization faces various
key issues which have a bearing on their performance and operation. Some of the key issues that
faced the company include the heavy burden of long-term debt that the company has acquired as
a result of its aggressive ...


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