##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended May 31, 2006
 Commission file number 000-13109
 LAIDLAW INTERNATIONAL, INC.
  DELAWARE
    
    98-0390488(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 55 Shuman Boulevard, Suite 400
Naperville, Illinois, 60563
 (630) 848-3000
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
 o þ
 
 þ o




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##### 



LAIDLAW INTERNATIONAL, INC.
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements:Consolidated Balance Sheets as of May 31, 2006 (Unaudited) and
August 31, 2005
    
    
    2Consolidated Statements of Operations for the Three and Nine
Months Ended May 31, 2006 and 2005 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Nine Months Ended
May 31, 2006 and 2005 (Unaudited)
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 6. Exhibits
    
    
    23SIGNATURES
    
    
    24CertificationCertificationCertification
  1




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##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LAIDLAW INTERNATIONAL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 ($ in millions)
 May 31,
    
    
    August 31,2006
    
    
    2005(unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    212.1
    
    
    $
    217.3Accounts receivable
    
    
    331.2
    
    
    
    202.6Insurance collateral
    
    
    86.1
    
    
    
    81.9Parts and supplies
    
    
    39.6
    
    
    
    32.5Deferred income tax assets
    
    
    51.7
    
    
    
    42.4Other current assets
    
    
    25.1
    
    
    
    29.2Total current assets
    
    
    745.8
    
    
    
    605.9Property and equipmentLand
    
    
    173.8
    
    
    
    166.9Buildings
    
    
    185.5
    
    
    
    176.1Vehicles
    
    
    1,639.7
    
    
    
    1,447.2Other
    
    
    127.6
    
    
    
    116.42,126.6
    
    
    
    1,906.6Less: Accumulated depreciation
    
    
    (629.5
    )
    
    
    (471.5
    )1,497.1
    
    
    
    1,435.1Other assetsInsurance collateral
    
    
    333.9
    
    
    
    392.2Other long-term investments
    
    
    31.7
    
    
    
    40.3Contracts and customer relationships
    
    
    68.7
    
    
    
    73.4Deferred income tax assets
    
    
    259.0
    
    
    
    350.3Deferred charges and other assets
    
    
    13.8
    
    
    
    11.5707.1
    
    
    
    867.7Total assets
    
    $
    2,950.0
    
    
    $
    2,908.7
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LAIDLAW INTERNATIONAL, INC.
CONSOLIDATED
($ in millions)
 May 31,
    
    
    August 31,2006
    
    
    2005(unaudited)LIABILITIESCurrent liabilitiesAccounts payable
    
    $
    98.9
    
    
    $
    86.4Accrued employee compensation
    
    
    127.5
    
    
    
    105.7Other accrued liabilities
    
    
    101.9
    
    
    
    86.9Current portion of insurance reserves
    
    
    144.4
    
    
    
    141.6Current portion of long-term debt
    
    
    33.7
    
    
    
    27.8Total current liabilities
    
    
    506.4
    
    
    
    448.4Long-term debt
    
    
    262.0
    
    
    
    286.6Insurance reserves
    
    
    345.0
    
    
    
    344.4Pension liability
    
    
    126.0
    
    
    
    128.4Other long-term liabilities
    
    
    73.5
    
    
    
    100.7Total liabilities
    
    
    1,312.9
    
    
    
    1,308.5SHAREHOLDERS EQUITYCommon shares; $0.01 par value per share;
issued and outstanding 97.7 million
(August 31, 2005  100.2 million)
    
    
    1.0
    
    
    
    1.0Additional paid in capital
    
    
    1,243.6
    
    
    
    1,315.9Accumulated other comprehensive income
    
    
    61.5
    
    
    
    34.1Retained earnings
    
    
    331.0
    
    
    
    249.2Total shareholders equity
    
    
    1,637.1
    
    
    
    1,600.2Total liabilities and shareholders equity
    
    $
    2,950.0
    
    
    $
    2,908.7
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LAIDLAW INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 ($ in millions except per share amounts)
 (unaudited)
 Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue
    
    $
    860.7
    
    
    $
    836.1
    
    
    $
    2,496.5
    
    
    $
    2,413.5Compensation expense
    
    
    420.2
    
    
    
    413.2
    
    
    
    1,222.9
    
    
    
    1,206.9Vehicle related costs
    
    
    61.3
    
    
    
    64.5
    
    
    
    186.2
    
    
    
    191.6Fuel
    
    
    68.7
    
    
    
    54.8
    
    
    
    194.3
    
    
    
    153.7Insurance and accident claim costs
    
    
    46.7
    
    
    
    47.6
    
    
    
    128.3
    
    
    
    137.8Occupancy costs
    
    
    40.9
    
    
    
    39.3
    
    
    
    121.5
    
    
    
    116.4Depreciation and amortization
    
    
    62.1
    
    
    
    70.6
    
    
    
    177.8
    
    
    
    203.8Other operating expenses
    
    
    77.3
    
    
    
    84.1
    
    
    
    220.0
    
    
    
    231.3Operating income
    
    
    83.5
    
    
    
    62.0
    
    
    
    245.5
    
    
    
    172.0Interest expense
    
    
    (5.4
    )
    
    
    (20.0
    )
    
    
    (16.3
    )
    
    
    (59.1
    )Other income, net
    
    
    1.9
    
    
    
    4.5
    
    
    
    5.7
    
    
    
    9.5Income from continuing operations
before income taxes
    
    
    80.0
    
    
    
    46.5
    
    
    
    234.9
    
    
    
    122.4Income tax expense
    
    
    (36.5
    )
    
    
    (16.1
    )
    
    
    (95.6
    )
    
    
    (46.5
    )Income from continuing operations
    
    
    43.5
    
    
    
    30.4
    
    
    
    139.3
    
    
    
    75.9Income (loss) from discontinued
operations
    
    
    (9.4
    )
    
    
    (1.0
    )
    
    
    (12.9
    )
    
    
    220.1Net income
    
    $
    34.1
    
    
    $
    29.4
    
    
    $
    126.4
    
    
    $
    296.0Basic earnings (loss) per shareContinuing operations
    
    $
    0.44
    
    
    $
    0.30
    
    
    $
    1.40
    
    
    $
    0.76Discontinued operations
    
    
    (0.09
    )
    
    
    (0.01
    )
    
    
    (0.13
    )
    
    
    2.20Net income
    
    $
    0.35
    
    
    $
    0.29
    
    
    $
    1.27
    
    
    $
    2.96Diluted earnings (loss) per shareContinuing operations
    
    $
    0.44
    
    
    $
    0.30
    
    
    $
    1.40
    
    
    $
    0.74Discontinued operations
    
    
    (0.09
    )
    
    
    (0.01
    )
    
    
    (0.13
    )
    
    
    2.14Net income
    
    $
    0.35
    
    
    $
    0.29
    
    
    $
    1.27
    
    
    $
    2.88Dividends per share
    
    $
    0.15
    
    
    $
    
    
    
    $
    0.45
    
    
    $
    Average shares outstanding
    
    
    97.8
    
    
    
    100.2
    
    
    
    99.3
    
    
    
    100.1Effect of dilutive securities
    
    
    0.5
    
    
    
    0.3
    
    
    
    0.4
    
    
    
    2.7Average diluted shares outstanding
    
    
    98.3
    
    
    
    100.5
    
    
    
    99.7
    
    
    
    102.8
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LAIDLAW INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 ($ in millions)
 (unaudited)
 Nine Months Ended May 31,2006
    
    
    2005Operating activitiesNet income
    
    $
    126.4
    
    
    $
    296.0Loss (income) from discontinued operations
    
    
    12.9
    
    
    
    (220.1
    )Non-cash adjustments to net incomeDepreciation and amortization
    
    
    177.8
    
    
    
    203.8Deferred income taxes
    
    
    89.0
    
    
    
    43.7Other non-cash items
    
    
    1.6
    
    
    
    21.6Net change in certain operating assets and liabilitiesAccounts receivable
    
    
    (125.7
    )
    
    
    (137.3
    )Insurance collateral
    
    
    41.8
    
    
    
    (24.5
    )Accounts payable and accrued liabilities
    
    
    17.0
    
    
    
    17.3Insurance reserves
    
    
    6.6
    
    
    
    (5.2
    )Other assets and liabilities
    
    
    (25.8
    )
    
    
    3.9Net cash provided by operating activities
    
    $
    321.6
    
    
    $
    199.2Investing activitiesPurchase of property and equipment
    
    $
    (219.0
    )
    
    $
    (119.1
    )Proceeds from sale of property and equipment
    
    
    19.5
    
    
    
    10.1Net decrease in performance bond collateral
    
    
    0.6
    
    
    
    9.9Net decrease in other investments
    
    
    7.5
    
    
    
    3.2Net proceeds from sale of healthcare businesses
    
    
    0.5
    
    
    
    798.0Net proceeds from sale of other businesses
    
    
    5.3
    
    
    
    10.6Expended on acquisitions
    
    
    (4.5
    )
    
    
    (2.0
    )Net cash (used) provided by investing activities
    
    $
    (190.1
    )
    
    $
    710.7Financing activitiesRepurchase of common stock
    
    $
    (76.8
    )
    
    $
    (84.5
    )Dividend payments
    
    
    (44.6
    )
    
    
    Principal payment on Term A debt
    
    
    (15.0
    )
    
    
    Net decrease in other long-term debt
    
    
    (3.6
    )
    
    
    (5.6
    )Retire old Term B debt
    
    
    
    
    
    
    (593.8
    )Decrease in credit facility cash collateral
    
    
    
    
    
    
    60.5Net cash used by financing activities
    
    $
    (140.0
    )
    
    $
    (623.4
    )Discontinued operations (revised  see note 10)Operating cash flows
    
    $
    
    
    
    $
    3.9Investing cash flows
    
    
    
    
    
    
    (15.0
    )Financing cash flows
    
    
    
    
    
    
    (2.4
    )Net cash used by discontinued operations
    
    $
    
    
    
    $
    (13.5
    )Effect of exchange rate changes on cash
    
    $
    3.3
    
    
    $
    0.3Net (decrease) increase in cash and cash equivalents
    
    $
    (5.2
    )
    
    $
    273.3Cash and cash equivalents  beginning of period
    
    
    217.3
    
    
    
    154.2Cash and cash equivalents  end of period
    
    $
    212.1
    
    
    $
    427.5
  5




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LAIDLAW INTERNATIONAL, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND NINE MONTH PERIODS ENDED MAY 31, 2006
 (Unaudited)
 Note 1  Corporate overview and basis of presentation
 Corporate overview
  Basis of presentation
   New Accounting Standards
  6




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Note 2  Comprehensive income
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    34.1
    
    
    $
    29.4
    
    
    $
    126.4
    
    
    $
    296.0Net unrealized (loss) gain on
securities
    
    
    (2.4
    )
    
    
    1.3
    
    
    
    (5.6
    )
    
    
    0.2Net gain on interest rate swaps
    
    
    0.9
    
    
    
    
    
    
    
    2.8
    
    
    
    0.3Net gain on fuel hedge
    
    
    0.4
    
    
    
    
    
    
    
    0.4
    
    
    
    Foreign currency translation
adjustments
    
    
    12.9
    
    
    
    (7.0
    )
    
    
    29.8
    
    
    
    19.5Total comprehensive income
    
    $
    45.7
    
    
    $
    23.7
    
    
    $
    153.6
    
    
    $
    316.0
 Note 3  Discontinued operations
  
 Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue
    
    $
    
    
    
    $
    (50.0
    )
    
    $
    
    
    
    $
    646.2Pre-tax loss from operations
    
    
    
    
    
    
    (50.8
    )
    
    
    0.4
    
    
    
    (32.3
    )Provision for income taxes
    
    
    
    
    
    
    19.3
    
    
    
    (0.1
    )
    
    
    11.5Loss from discontinued operations
    
    
    
    
    
    
    (31.5
    )
    
    
    0.3
    
    
    
    (20.8
    )Pre-tax gain (loss) on sale of
businesses
    
    
    (10.0
    )
    
    
    31.1
    
    
    
    (13.8
    )
    
    
    232.1Income tax benefit (expense)
    
    
    0.6
    
    
    
    (0.6
    )
    
    
    0.6
    
    
    
    8.8Gain (loss) on sale after taxes
    
    
    (9.4
    )
    
    
    30.5
    
    
    
    (13.2
    )
    
    
    240.9Income (loss) from discontinued
operations
    
    $
    (9.4
    )
    
    $
    (1.0
    )
    
    $
    (12.9
    )
    
    $
    220.1
  7




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Note 4  Stock awards and options
  Stock options
 Restricted Shares
 Deferred Shares
 Note 5  Pension plans
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    2.7
    
    
    $
    2.2
    
    
    $
    8.2
    
    
    $
    6.5Interest cost
    
    
    13.0
    
    
    
    14.3
    
    
    
    39.2
    
    
    
    43.0Expected return on plan assets
    
    
    (13.8
    )
    
    
    (14.6
    )
    
    
    (41.3
    )
    
    
    (43.1
    )Net pension benefit cost
    
    $
    1.9
    
    
    $
    1.9
    
    
    $
    6.1
    
    
    $
    6.4
 8




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Note 6  Income tax
  Note 7  Material contingencies
 Legal proceedings
 Contingent Liabilities Relating to Sale of AMR
     9




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Other
  Environmental matters
  Income tax matters
  Note 8  Repurchase of common stock
    10




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Note 9  Insurance proceeds
   11




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Note 10  Cash flows from discontinued operations
   PredecessorCompanyThree
    
    
    
    NineMonths
    
    
    
    MonthsEnded
    
    
    
    EndedYear ended August 31,
    
    
    August 31,
    
    
    
    May 31,2005
    
    
    2004
    
    
    2003
    
    
    
    2003Discontinued operationsOperating activities
    
    $
    (1.8
    )
    
    $
    56.1
    
    
    $
    30.8
    
    
    
    $
    92.7Investing activities
    
    
    (15.0
    )
    
    
    (42.0
    )
    
    
    (15.5
    )
    
    
    
    (34.3
    )Financing activities
    
    
    (2.4
    )
    
    
    (7.4
    )
    
    
    (1.8
    )
    
    
    
    (11.5
    )Total cash flows
provided (used) by
discontinued
operations
    
    $
    (19.2
    )
    
    $
    6.7
    
    
    $
    13.5
    
    
    
    $
    46.9
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Note 11  Segment information
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Education servicesRevenue
    
    $
    483.7
    
    
    $
    464.0
    
    
    $
    1,367.9
    
    
    $
    1,321.0EBITDA
    
    
    117.7
    
    
    
    119.0
    
    
    
    325.0
    
    
    
    317.1GreyhoundRevenue
    
    $
    297.9
    
    
    $
    294.5
    
    
    $
    896.3
    
    
    $
    864.0EBITDA
    
    
    22.9
    
    
    
    9.6
    
    
    
    84.1
    
    
    
    46.5Public transitRevenue
    
    $
    79.1
    
    
    $
    77.6
    
    
    $
    232.3
    
    
    $
    228.5EBITDA
    
    
    5.0
    
    
    
    4.0
    
    
    
    14.2
    
    
    
    12.2Consolidated TotalRevenue
    
    $
    860.7
    
    
    $
    836.1
    
    
    $
    2,496.5
    
    
    $
    2,413.5EBITDA
    
    
    145.6
    
    
    
    132.6
    
    
    
    423.3
    
    
    
    375.8Depreciation and amortization expense
    
    
    (62.1
    )
    
    
    (70.6
    )
    
    
    (177.8
    )
    
    
    (203.8
    )Operating income
    
    
    83.5
    
    
    
    62.0
    
    
    
    245.5
    
    
    
    172.0Interest expense
    
    
    (5.4
    )
    
    
    (20.0
    )
    
    
    (16.3
    )
    
    
    (59.1
    )Other income, net
    
    
    1.9
    
    
    
    4.5
    
    
    
    5.7
    
    
    
    9.5Income tax expense
    
    
    (36.5
    )
    
    
    (16.1
    )
    
    
    (95.6
    )
    
    
    (46.5
    )Income (loss) from discontinued
operations
    
    
    (9.4
    )
    
    
    (1.0
    )
    
    
    (12.9
    )
    
    
    220.1Net income
    
    $
    34.1
    
    
    $
    29.4
    
    
    $
    126.4
    
    
    $
    296.0
  13




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ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 General
 Corporate overview
  Non-GAAP Measure
   Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005EBITDA
    
    $
    145.6
    
    
    $
    132.6
    
    
    $
    423.3
    
    
    $
    375.8Depreciation and amortization
    
    
    (62.1
    )
    
    
    (70.6
    )
    
    
    (177.8
    )
    
    
    (203.8
    )Interest expense
    
    
    (5.4
    )
    
    
    (20.0
    )
    
    
    (16.3
    )
    
    
    (59.1
    )Other income, net
    
    
    1.9
    
    
    
    4.5
    
    
    
    5.7
    
    
    
    9.5Income tax expense
    
    
    (36.5
    )
    
    
    (16.1
    )
    
    
    (95.6
    )
    
    
    (46.5
    )Income from continuing operations
    
    $
    43.5
    
    
    $
    30.4
    
    
    $
    139.3
    
    
    $
    75.9
 14




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Results of Operations
 Percentage of revenue
 Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Compensation expense
    
    
    48.8
    
    
    
    49.3
    
    
    
    48.9
    
    
    
    50.0Vehicle related costs
    
    
    7.1
    
    
    
    7.7
    
    
    
    7.5
    
    
    
    7.9Fuel
    
    
    8.0
    
    
    
    6.6
    
    
    
    7.8
    
    
    
    6.4Insurance and accident claim costs
    
    
    5.4
    
    
    
    5.7
    
    
    
    5.1
    
    
    
    5.7Occupancy costs
    
    
    4.8
    
    
    
    4.7
    
    
    
    4.9
    
    
    
    4.8Depreciation and amortization
    
    
    7.2
    
    
    
    8.5
    
    
    
    7.2
    
    
    
    8.5Other operating expenses
    
    
    9.0
    
    
    
    10.1
    
    
    
    8.8
    
    
    
    9.6Operating income
    
    
    9.7
    
    
    
    7.4
    
    
    
    9.8
    
    
    
    7.1Interest expense
    
    
    (0.6
    )
    
    
    (2.3
    )
    
    
    (0.6
    )
    
    
    (2.4
    )Other income, net
    
    
    0.2
    
    
    
    0.5
    
    
    
    0.2
    
    
    
    0.4Income from
continuing operations before income taxes
    
    
    9.3
    
    
    
    5.6
    
    
    
    9.4
    
    
    
    5.1Income tax expense
    
    
    (4.2
    )
    
    
    (2.0
    )
    
    
    (3.8
    )
    
    
    (2.0
    )Income from continuing operations
    
    
    5.1
    
    
    
    3.6
    
    
    
    5.6
    
    
    
    3.1Income (loss) from discontinued
operations
    
    
    (1.1
    )
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    9.2Net income
    
    
    4.0
    %
    
    
    3.5
    %
    
    
    5.1
    %
    
    
    12.3
    %
 Revenue, EBITDA and EBITDA margins by business segment are as follows ($ in millions):
 Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005RevenueEducation services
    
    $
    483.7
    
    
    $
    464.0
    
    
    $
    1,367.9
    
    
    $
    1,321.0Greyhound
    
    
    297.9
    
    
    
    294.5
    
    
    
    896.3
    
    
    
    864.0Public transit services
    
    
    79.1
    
    
    
    77.6
    
    
    
    232.3
    
    
    
    228.5Total
    
    $
    860.7
    
    
    $
    836.1
    
    
    $
    2,496.5
    
    
    $
    2,413.5EBITDAEducation services
    
    $
    117.7
    
    
    $
    119.0
    
    
    $
    325.0
    
    
    $
    317.1Greyhound
    
    
    22.9
    
    
    
    9.6
    
    
    
    84.1
    
    
    
    46.5Public transit services
    
    
    5.0
    
    
    
    4.0
    
    
    
    14.2
    
    
    
    12.2Total
    
    $
    145.6
    
    
    $
    132.6
    
    
    $
    423.3
    
    
    $
    375.8EBITDA MarginsEducation services
    
    
    24.3
    %
    
    
    25.6
    %
    
    
    23.8
    %
    
    
    24.0
    %Greyhound
    
    
    7.7
    
    
    
    3.3
    
    
    
    9.4
    
    
    
    5.4Public transit services
    
    
    6.3
    
    
    
    5.2
    
    
    
    6.1
    
    
    
    5.3Total
    
    
    16.9
    
    
    
    15.9
    
    
    
    17.0
    
    
    
    15.6
 15




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##### Table of Contents



Revenue and EBITDA by business segment
 Education services
   Greyhound
   Public transit
  16




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##### Table of Contents



Depreciation and amortization expense
  Three Months Ended
    
    
    Nine Months EndedMay 31,
    
    
    May 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Education services
    
    $
    40.4
    
    
    $
    49.5
    
    
    $
    113.5
    
    
    $
    144.2Greyhound
    
    
    19.3
    
    
    
    18.4
    
    
    
    57.1
    
    
    
    51.7Public Transit services
    
    
    2.4
    
    
    
    2.7
    
    
    
    7.2
    
    
    
    7.9Total
    
    $
    62.1
    
    
    $
    70.6
    
    
    $
    177.8
    
    
    $
    203.8
  Interest expense
  Other income, net
  Income tax expense
  17




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##### Table of Contents



Discontinued operations
   Liquidity and capital resources
     Stock repurchase program
    18




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Commitments and contingencies
  19




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##### Table of Contents



Forward-looking statements
  
    
    Economic and other market factors, including competitive pressures and changes
in pricing policies;
    
    The ability to implement initiatives designed to increase operating
efficiencies or improve results;
    
    Costs and risks associated with litigation;
    
    Changes in interpretations of existing, or the adoption of new, legislation,
regulations or other laws;
    
    The potential for rising labor costs and actions taken by organized labor unions;
    
    Continued increases in prices of fuel and potential shortages;
    
    Control of costs related to accident and other risk management claims;
    
    Terrorism and other acts of violence;
    
    The ability to produce sufficient future taxable income to allow us to recover
our deferred tax assets;
    
    The ability to repurchase the Companys common stock;
    
    The ability to complete the tender offer and implement changes to our debt
structure;
    
    Potential changes in the mix of businesses we operate; and
    
    The inability to earn sufficient returns on pension plan assets thus requiring
increased funding.
  20




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##### Table of Contents



LAIDLAW INTERNATIONAL, INC.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
   21




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##### Table of Contents



LAIDLAW INTERNATIONAL, INC.
 
 PART II. OTHER INFORMATION
 
 Item 1. Legal proceedings
 Contingent Liabilities Relating to Sale of AMR
     22




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##### Table of Contents



Other
  
 Item 1A. Risk factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (c)
    
    Purchases of Equity Securities by the Issuer
   Total number
    
    
    Approximateof shares
    
    
    dollar value ofpurchased as
    
    
    shares thatpart of a
    
    
    may yet beTotal number
    
    
    
    
    
    
    publicly
    
    
    purchasedof shares
    
    
    Average price
    
    
    announced
    
    
    under thepurchased
    
    
    paid per share
    
    
    program
    
    
    program(millions)Repurchase periodMarch 1  March 31
    
    
    862,500
    
    
    $
    27.27
    
    
    
    862,500
    
    
    $
    130.5April 1  April 30
    
    
    267,500
    
    
    
    27.18
    
    
    
    267,500
    
    
    
    123.2May 1  May 31
    
    
    
    
    
    NA
    
    
    
    
    
    
    
    123.2Total
    
    
    1,130,000
    
    
    
    27.25
    
    
    
    1,130,000
 
 Item 6. Exhibits
 31.1
    
    Principal Executive Officers Certifications Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Principal Financial Officers Certifications Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act
of 2002)
 23




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##### Table of Contents



SIGNATURES
  LAIDLAW INTERNATIONAL, INC.By: /s/ Douglas A. CartyDate: July 10, 2006
    
    Douglas A. Carty
Executive Vice President and Chief Financial Officer
Duly Authorized Officer and Principal Financial Officer
 24