<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-K

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM __________ TO __________
                         COMMISSION FILE NUMBER 1-10841

                              GREYHOUND LINES, INC.
              AND ITS SUBSIDIARIES IDENTIFIED IN FOOTNOTE (1) BELOW
             (Exact name of registrant as specified in its charter)

                    DELAWARE                                    86-0572343

          (State or other jurisdiction                       (I.R.S. employer
        of incorporation or organization)                  identification no.)

15110 N. DALLAS PARKWAY, SUITE 600, DALLAS, TEXAS                 75248
    (Address of principal executive offices)                    (Zip code)

                                 (972) 789-7000
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

<Table>
<S>                                                                     <C>
                       TITLE OF EACH CLASS                              NAME OF EACH EXCHANGE ON WHICH REGISTERED

8 1/2 % CONVERTIBLE SUBORDINATED DEBENTURES, DUE MARCH 31, 2007                   AMERICAN STOCK EXCHANGE
</Table>

           Securities registered pursuant to Section 12(g) of the Act:
                                      NONE.

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Aggregate market value of Common Stock held by non-affiliates of the
registrant on March 15, 2002, was $0.

     As of March 15, 2002, the registrant had 587 shares of Common Stock, $0.01
par value, outstanding all of which are held by the registrant's parent company.


(1)  THIS FORM 10-K IS ALSO BEING FILED BY THE CO-REGISTRANTS SPECIFIED UNDER
     THE CAPTION "CO-REGISTRANTS", EACH OF WHICH IS A WHOLLY-OWNED SUBSIDIARY OF
     GREYHOUND LINES, INC. AND EACH OF WHICH HAS MET THE CONDITIONS SET FORTH IN
     GENERAL INSTRUCTIONS I(1)(a) AND (b) OF FORM 10-K FOR FILING FORM 10-K IN A
     REDUCED DISCLOSURE FORMAT.


================================================================================


<PAGE>


CO-REGISTRANTS

This Form 10-K is also being filed by the following entities. Except as set
forth below, each entity has the same principal executive offices, zip code and
telephone number as that set forth for Greyhound Lines, Inc. on the cover of
this report:

<Table>
<Caption>
                                                                                     I.R.S. EMPLOYER       JURISDICTION
                                                               COMMISSION             IDENTIFICATION            OF
NAME                                                            FILE NO.                   NO.                INCORP.
----                                                           ----------            ---------------       ------------
<S>                                                          <C>                     <C>                 <C>

Atlantic Greyhound Lines of Virginia, Inc.                   333-27267-01              58-0869571        Virginia

GLI Holding Company                                          333-27267-04              75-2146309        Delaware

Greyhound de Mexico, S.A. de C.V.                            333-27267-05                 None           Republic of
                                                                                                         Mexico

Sistema Internacional de Transporte de Autobuses, Inc.       333-27267-08              75-2548617        Delaware
802 Commerce Street, 3rd Floor
Dallas, Texas 75201
(214) 849-8616

Texas, New Mexico & Oklahoma Coaches, Inc.                   333-27267-10              75-0605295        Delaware
1313 13th Street
Lubbock, Texas 79408
(806) 763-5389

T.N.M. & O. Tours, Inc.                                      333-27267-11              75-1188694        Texas
(Same as Texas, New Mexico & Oklahoma Coaches, Inc.)

Vermont Transit Co., Inc.                                    333-27267-12              03-0164980        Vermont
345 Pine Street
Burlington, Vermont 05401
(802) 862-9671
</Table>

As of December 31, 2001, Atlantic Greyhound Lines of Virginia, Inc. had 150
shares of common stock outstanding (at a par value of $50.00 per share); GLI
Holding Company had 1,000 shares of common stock outstanding (at a par value of
$0.01 per share); Greyhound de Mexico, S.A. de C.V. had 10,000 shares of common
stock outstanding (at a par value of $0.10 Mexican currency per share); Sistema
Internacional de Transporte de Autobuses, Inc. had 1,000 shares of common stock
outstanding (at a par value of $0.01 per share); Texas, New Mexico & Oklahoma
Coaches, Inc. had 1,000 shares of common stock outstanding (at a par value of
$0.01 per share); T.N.M. & O. Tours, Inc. had 1,000 shares of common stock
outstanding (at a par value of $1.00 per share); and Vermont Transit Co., Inc.
had 505 shares of common stock outstanding (no par value). Each of the above
named co-registrants (1) have filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period such co-registrant was required to file such
reports), and (2) have been subject to such filing requirements for the past 90
days.




                                       2
<PAGE>



                     GREYHOUND LINES, INC. AND SUBSIDIARIES

                               INDEX TO FORM 10-K


<Table>
<Caption>
                                                                                          PAGE NO.
                                                                                          --------
<S>        <C>                                                                           <C>
                                                  PART I

Item 1.     Business.....................................................................     4
Item 2.     Properties...................................................................     9
Item 3.     Legal Proceedings............................................................    10
Item 4.     Submission of Matters to a Vote of Security Holders..........................    11

                                                 PART II

Item 5.     Market for the Registrant's Common Equity and Related Stockholder Matters....    12
Item 6.     Selected Consolidated Financial Information..................................    13
Item 7.     Management's Discussion and Analysis of Financial Condition
                and Results of Operations................................................    14
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk...................    26
Item 8.     Financial Statements and Supplementary Data..................................    27
Item 9.     Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure.................................................    53

                                                PART III

Item 10.    Directors and Executive Officers of the Registrant...........................    54
Item 11.    Executive Compensation.......................................................    54
Item 12.    Security Ownership of Certain Beneficial Owners and Management...............    54
Item 13.    Certain Relationships and Related Transactions...............................    54

                                                PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K..............    55
</Table>




                                       3
<PAGE>


                                     PART I

ITEM 1. BUSINESS


GENERAL

     Greyhound Lines, Inc. and subsidiaries ("Greyhound" or the "Company") is
the only nationwide provider of scheduled intercity bus transportation services
in the United States. The Company serves the value-oriented customer by
connecting rural and urban markets throughout the United States, offering
scheduled passenger service to more than 2,600 destinations with a fleet of
approximately 2,900 buses and approximately 1,800 sales locations. The Company
also provides package express service, travel services and, in many terminals,
food service. For the year ended December 31, 2001, the Company generated total
operating revenues of $1.0 billion.

     The Company serves a diverse customer base, consisting primarily of low to
middle income passengers from a wide variety of ethnic backgrounds. Management
believes that the demographic groups that make up the core of the Company's
customer base are growing at rates faster than the U.S. population as a whole.
The Company believes that it is uniquely positioned to serve this broad and
growing market because (i) the Company's operating costs, which are lower on an
available-seat-mile basis than other modes of intercity transportation, enable
it to offer passengers everyday low prices, (ii) the Company offers the only
means of regularly scheduled intercity transportation in many of its markets,
and (iii) the Company provides additional capacity during peak travel periods to
accommodate passengers who lack the flexibility to shift their travel to
off-peak periods.

     On March 16, 1999, the Company's stockholders approved the Agreement and
Plan of Merger with Laidlaw Inc. ("Laidlaw") pursuant to which the Company
became a wholly owned subsidiary of Laidlaw (the "Merger").


MARKETS

     Passengers. While the Company's major passenger markets are large
metropolitan areas, its business is geographically fragmented with the 50
largest sales outlets accounting for approximately 50% of 2001 ticket sales, and
the 1,200 largest origin/destination city pairs producing only 45% of 2001
ticket sales. Demographic studies have shown that the Company's potential riders
are concentrated in the northeastern, southern and industrial mid-western United
States, as well as Texas and California. The typical passenger travels to visit
friends and relatives and generally has an annual income below $35,000. In many
cases, the Company's passengers report that they own automobiles considered
sufficiently reliable for a trip of a similar distance, but travel by bus
because they are traveling alone or because of the lower cost of bus travel. The
majority of the Company's customers usually make the decision to take a trip
only a short time before actually traveling and, for the most part, pay cash for
their tickets on the day of departure.

     Package Express. The Company's package express service targets commercial
shippers and delivery companies that require rapid delivery of small parcels,
typically within 400 miles. The Company's product offerings include standard
delivery, the traditional low-value, terminal-to-terminal delivery product, as
well as priority and same day delivery, premium priced products typically
delivered door to door. The Company satisfies the door-to-terminal portion of
priority and same day deliveries principally through relationships with over 300
courier companies, which serve over 400 markets. Shipments include automotive
repair parts, wholesale foods, computer parts and forms, fresh flowers,
eyeglasses, medical and dental supplies, architectural and legal documents and
pharmaceutical products. With its extensive network and multiple schedules, the
Company is able to provide expedited service, especially to rural areas. Most
shipments arrive at their destination on the same day they are shipped or by
8:00 a.m. the following morning. The Company also provides local courier
services through its subsidiaries On Time Delivery in Minneapolis, MN, LSX
Delivery in Chicago, IL and Greyhound Xpress Delivery in Houston, TX, and offers
a full compliment of shipping services through Greyhound Direct Logistics,
acting as a freight forwarder utilizing air, rail and trucking transportation.
During 2001 the Company began providing shipping services at its retail counters
in selected markets as an Authorized Shipping Outlet for United Parcel Service
and plans to expand this service to all major markets.



                                       4
<PAGE>


     Food Service. The Company's food service division gives passengers the
ability to enjoy quality food and purchase gifts and logo merchandise while
reaching their destinations in over 60 locations. In addition to cafeteria-style
restaurants, convenience store type "grab and go" facilities and gift shops, the
Company also offers national brand concepts such as Star Hardee's, KFC, Blimpies
and Pizza Hut.

     Travel Services. The Company offers charter services whereby a group of
individuals can reserve a bus and driver in certain cities for transportation to
and from specific events, such as concerts, sporting events, casinos,
conventions, etc. Generally the passenger business provides the bus and driver
resources for these charters on an "as available" basis, consequently resources
are primarily available in off-peak periods, generally weekdays outside of the
peak summer and holiday periods. During 2001, the Company expanded its travel
services offerings by establishing dedicated bus and driver resources for
charter operations in certain cities so that the operations in these cities are
not completely dependent on resource availability from the passenger business.
Additionally the Company began operating "meet and greet" services for cruise
lines at five ports in the United States. The "meet and greet" service consists
of meeting cruise line passengers (usually at airports) and transferring these
passengers and their baggage to and from cruise ships.


MARKETING AND ADVERTISING

     The Company's marketing and advertising philosophy is geared toward
stimulating extra travel through price awareness, improving the awareness and
image of Greyhound among potential customers and inducing first-time and repeat
travel. The Company uses various means to advertise its passenger travel
business including radio, television and print media (primarily yellow pages).
Additionally, the Company offers convenient around-the-clock fare and schedule
quotations via a toll-free telephone number through its telephone information
centers and through the Company's internet web site. The Company's telephone
centers and web site handled 38.6 million requests in 2001, a slight increase
over 2000. The Company also markets its passenger and in-terminal services
through advertising in the terminal facilities and on its ticket jackets.


OPERATIONS

     The Company utilizes approximately 172 company-operated bus terminals and
approximately 1,628 agency-operated terminals and/or sales agencies. Maintenance
garages are maintained at 26 strategic locations and are supplemented by
company-operated service islands and fueling points. The Company currently has
approximately 4,800 drivers based in approximately 89 different locations across
the country. In the Greyhound Lines unit, drivers report to driver supervisors
who are organized into 11 districts reporting to district managers of driver
operations. The scheduling and dispatch of the buses and drivers is a
centralized function that coordinates with the districts in the planning and
execution of daily operations. The flexing of capacity to meet demand is
accomplished through the management of national dispatch operations for
equipment and drivers, rental of additional buses to cover peak demand periods,
planning and coordinating extra sections with the districts and analyzing and
implementing pooling and through service arrangements with other carriers.
Annual planning of the fleet size and driver requirements by location is also
centralized. Subsidiaries of Greyhound Lines independently coordinate and manage
their own driver and fleet resources.

     Information technology is an integral component of the Company's
operations. The Company's information systems support, among other things, its
web site, scheduling and pricing, dispatch, operations planning, bus
maintenance, telephone information center, customer service, point of sale,
payroll and finance functions. As of December 31, 2001, the Company's automated
fare and schedule quotation and ticketing system, called TRIPS, was in use at
383 locations.



                                       5
<PAGE>


COMPETITION

     Passengers. The transportation industry is highly competitive. The
Company's primary sources of competition for passengers are automobile travel,
low cost air travel from both regional and national airlines, and in certain
markets, regional bus companies and trains. Typically, the Company's customers
decide to travel only a short time before their trip and purchase their tickets
on the day of travel. The Company's everyday low pricing strategy results in
"walk-up" fares substantially below comparable airline fares. In instances where
the Company's fares exceed an airline discount fare, the Company believes the
airline fares are temporary or are typically more restrictive and less readily
available than travel provided by the Company. However, the Company has also
instituted numerous advance purchase programs in order to attract the price
sensitive customer. Price, destination choices and convenient schedules are the
ways in which the Company meets this competitive challenge.

     The automobile is the most significant form of competition to the Company.
The out-of-pocket costs of operating an automobile are generally less expensive
than bus travel, particularly for multiple persons traveling in a single car.
The Company meets this competitive threat through price and convenient
scheduling.

     Additionally, the Company experiences competition from regional bus
companies. Price, frequency of service, and convenient scheduling are the
current strategies of the Company to meet this competition. The Company's
competitors possess operating authority for, but do not currently operate over,
numerous routes potentially competitive to the Company. Based on market and
competitive conditions, the regional bus companies could operate such routes in
the future. Competition by U.S.-based bus and van operators for the market
represented by Spanish speaking customers in the U.S. is growing. As of January
1, 1997, barriers to entry into the regular-route cross-border bus market
between the U.S. and Mexico were scheduled to be reduced under the North
American Free Trade Agreement ("NAFTA"), although entry into either market would
still be regulated by the respective U.S. and Mexican regulatory authorities.
The U.S. government currently has a blanket moratorium on grants of cross-border
authority to Mexican-domiciled regular-route motor carriers of passengers.
However, on March 19, 2002, the U.S. Department of Transportation ("DOT") issued
a series of rules establishing the process that Mexican-domiciled companies must
follow to obtain authority to perform cross-border bus operations into the
United States. These rules require Mexican companies to comply with all U.S.
safety requirements and labor and immigration laws. The establishment of these
procedures could lead to the lifting of the cross-border moratorium in 2002.
Should the moratorium be lifted, the Company could experience significant new
competition on routes, to, from and across Mexican border points. Additionally,
certain U.S.-based operators are providing cross-border service into Mexico at
this time. NAFTA also permits U.S. carriers to make controlling investments in
carriers domiciled in Mexico and permits Mexican carriers to make controlling
investments in carriers domiciled in the United States. In addition to bringing
new competition, the Company believes that the changes under NAFTA will increase
the volume of bus travel along both sides of the border and provide the Company
with a growth opportunity. The Company believes that the most effective way to
service passengers in this market is through joint ventures or other business
combinations with Mexico-based bus carriers and U.S.-based bus operators that
primarily serve these Spanish-speaking markets. The Company has established a
separate operating subsidiary that, through several joint ventures, provides
through-bus service at all major gateways between the United States and Mexico.

     Package Express. The Company faces intense competition in its package
express service from local courier services, the U.S. Postal Service and
overnight express and ground carriers. The Company continues to develop programs
to meet this competition and rebuild its package express business. These
programs focus on system upgrades to improve service, billing and tracking for
its customers, localized marketing strategies, and local, regional or national
alliances with, or acquisitions of, pick up and delivery carriers. Due to the
incremental nature of the package express business, the Company is able to
provide same-day intercity package express service at distances of up to 400
miles at a substantially lower price than those charged by other delivery
services.

     Food Service. The captive nature of the food service operations in the
Company's terminals limits competition; however, in some locations proximity of
terminals to fast food outlets and convenience stores can pose a competitive
factor.



                                       6
<PAGE>


     Travel Services. Charter services are provided by several thousand local
operators as well as a few regional and national carriers. Pricing, type of
equipment and consistency in service are the principal factors both in
generating new business and retaining existing customers. The Company
principally competes based upon price and consistency of service, and continues
to develop diversified product offerings as well as upgrade its bus resources in
order to meet the customers' demands.


SEASONALITY

     The Company's business is seasonal in nature and generally follows the
pattern of the travel industry as a whole, with peaks during the summer months
and the Thanksgiving and Christmas holiday periods. As a result, the Company's
cash flows are also seasonal with a disproportionate amount of the Company's
annual cash flows being generated during the peak travel periods. Therefore, an
event that adversely affects ridership during any of these peak periods could
have a material adverse effect on the Company's financial condition and results
of operations for that year. The day of the week on which certain holidays
occur, the length of certain holiday periods, and the date on which certain
holidays occur within a fiscal quarter, may also affect the Company's quarterly
results of operations.


WORKFORCE

     At March 1, 2002, the Company employed approximately 12,700 workers,
consisting of approximately 4,300 terminal employees, 4,800 drivers, 1,500
supervisory personnel, 900 mechanics, 500 telephone information agents, and 700
clerical workers. Of the total workforce, approximately 10,700 are full-time
employees and approximately 2,000 are part-time employees.

     At March 1, 2002, approximately 43% of the Company's employees were
represented by collective bargaining agreements. The Amalgamated Transit Union
(the "ATU") represents approximately 4,800 of the Company's employees, including
drivers, telephone information agents in the Omaha location, terminal workers in
seven locations and about half of the Company's mechanics. The largest ATU
agreement, which covers the drivers and maintenance employees, expires on
January 31, 2004. The International Association of Machinists and Aerospace
Workers (the "IAM") represents approximately 400 of the Company's employees,
including the remaining mechanics. The IAM agreements expire on October 1, 2004.
The Company also has bargaining agreements with the International Brotherhood of
Teamsters, which represent approximately 200 employees at five terminal
locations and the United Transportation Union, which represents approximately
100 employees at two of the Company's subsidiaries.


TRADEMARKS

     The Company owns the Greyhound name and trademarks and the "image of the
running dog" trademarks worldwide. The Company believes that this name and the
trademarks have substantial consumer awareness.


GOVERNMENT REGULATION

     The Department of Transportation. As a motor carrier engaged in interstate,
as well as intrastate, transportation of passengers and express shipments, the
Company is, and must remain, registered with the DOT. Failure to maintain a
satisfactory safety rating, designate agents for service of process or to meet
minimum financial responsibility requirements, after notice and opportunity to
remedy, may result in the DOT's ordering the suspension or revocation of the
registration of the Company and its right to provide transportation. DOT
regulations also govern the qualifications, duties and hours of service of
drivers, the standards for vehicles, parts and accessories, the maintenance of
records and the submission of reports pertaining to the Company's drivers, buses
and operations. The Company is subject to periodic and random inspections and
audits by the DOT or, pursuant to cooperative arrangements with the DOT, by
state police or officials, to determine whether the Company's drivers, buses and
records are in compliance with the DOT's regulations. The Company, from time to
time, has been cited by the DOT for noncompliance with its


                                       7
<PAGE>


regulations but, nevertheless, has retained a satisfactory safety rating. The
DOT establishes minimum financial responsibility requirements for motor
carriers; the Company has met these requirements and has been authorized to
partially self-insure its bodily injury and property damage liability. See
"Insurance Coverage." The DOT also administers regulations to assure compliance
with vehicle noise and emission standards prescribed by the Environmental
Protection Agency (the "EPA"). All of the buses in the Company's fleet contain
engines that comply with, or are exempt from compliance with, EPA regulations,
but, on occasion, the Company has been cited and fined for non-compliance with
noise or emission standards.

     Surface Transportation Board. The Company is also regulated by the DOT's
Surface Transportation Board (the "STB"). The STB must grant advance approval
for the Company to pool operations or revenues with another passenger carrier.
The STB, moreover, must authorize any merger by the Company with, or its
acquisition or control of, another motor carrier of passengers. The Company must
maintain reasonable through routes with other motor carriers of passengers, and,
if found not to have done so, the STB can prescribe them. The Company is party
to certain agreements, which are subject to STB authorization and supervision.

     State Regulations. As an interstate motor carrier of passengers, the
Company may engage in intrastate operations over any of its authorized routes.
By federal law, states are pre-empted from regulating the Company's fares or its
schedules, including the withdrawal of service over any route. However, the
Company's buses remain subject to state vehicle registration requirements, bus
size and weight limitations, fuel sales and use taxes, vehicle emissions, speed
and traffic regulations and other local standards not inconsistent with federal
requirements.

     Other. The Company is subject to regulation under the Americans with
Disabilities Act (the "ADA") pursuant to regulations adopted by DOT in September
1998. Beginning in October 2000, all new buses acquired by the Company for its
fixed route operations must be equipped with wheelchair lifts. Additionally, by
October 2006, one-half of the Company's fleet involved in fixed route operations
will be required to be lift-equipped, and by October 2012, such fleet will need
to be entirely lift-equipped. The regulations do not require the retrofitting of
existing buses with lift equipment. Nor do the regulations require the purchase
of accessible used buses. Under an initiative implemented in the spring of 2000,
and continuing until the fleet is fully equipped, the Company has begun to
provide an accessible bus to any disabled passenger who provides at least 48
hours notice. This initiative was implemented over 18 months in advance of the
October 2001 deadline required by DOT. Currently the added cost of a built-in
lift device in a new bus is approximately $35,000 plus the Company incurs
additional maintenance and employee training costs. Passenger revenues could
also be impacted by the loss of seating capacity when wheelchair passengers are
on the bus, partially offset by potentially increased ridership by disabled
persons.


INSURANCE COVERAGE

     Following the Merger, the Company began to purchase its insurance through
Laidlaw with coverage subject to a $50,000 deductible for property damage claims
and no deductible for all other claims. Additionally, on December 31, 1999, the
Company transferred liability for all known, and unknown claims, and all related
insurance reserves, associated with the period prior to March 16, 1999 to
Laidlaw for which Laidlaw received compensation in an amount equal to the book
value of the reserves. Effective with the beginning of the Company's new policy
year, September 1, 2001, the Company purchased coverage from third-party
insurers for claims up to $5.0 million with coverage subject to a $3.0 million
deductible for automobile liability and a $1.0 million deductible for both
general liability and workers' compensation. The Company purchases excess
coverage for automobile liability, general liability and workers' compensation
insurance through Laidlaw for claims which exceed $5.0 million. The Company has
continued to purchase from Laidlaw coverage for physical damage to Company
property subject to a $50,000 deductible.

     The predecessor agency to the STB granted the Company authority to
self-insure its automobile liability exposure for interstate passenger service
up to a maximum level of $5.0 million per occurrence, which has been continued
by the DOT. To maintain self-insurance authority, the Company is required to
provide periodic financial information and claims reports, maintain a
satisfactory safety rating by the DOT, a tangible net worth of $10.0 million (as
of December 31, 2001, the Company's tangible net worth was $116.0 million) and a
$15.0 million trust fund (currently fully funded) to provide security for
payment of claims. The Company is required by the DOT, some states and some of
its


                                       8
<PAGE>


insurance carriers to maintain collateral deposits or provide other security
pursuant to its insurance program. At December 31, 2001, the Company maintained
$22.2 million of collateral deposits including the above $15.0 million trust
fund and had issued $20.5 million of letters of credit in support of these
programs.

     Insurance coverage and risk management expense are key components of the
Company's cost structure. The loss of self-insurance authority from the DOT or a
decision by the Company's insurers to modify the Company's program
substantially, by either increasing cost, reducing availability or increasing
collateral, could have a material adverse effect on the Company's liquidity,
financial condition, and results of operations.


ENVIRONMENTAL MATTERS

     The Company may be liable for certain environmental liabilities and
clean-up costs at the various facilities presently or formerly owned or leased
by the Company. Based upon surveys conducted solely by Company personnel or its
experts, 30 active and 13 inactive locations have been identified as sites
requiring potential clean-up and/or remediation as of December 31, 2001.
Additionally, the Company is potentially liable with respect to five active and
seven inactive locations which the Environmental Protection Agency ("EPA") has
designated as Superfund sites. The Company, as well as other parties designated
by the EPA as potentially responsible parties, face exposure for costs related
to the clean-up of those sites. Based on the EPA's enforcement activities to
date, the Company believes its liability at these sites will not be material
because its involvement was as a de minimis generator of wastes disposed of at
the sites. In light of its minimal involvement, the Company has been negotiating
to be released from liability in return for the payment of nominal settlement
amounts.

     The Company has recorded a total environmental liability of $8.3 million at
December 31, 2001 of which approximately $1.4 million is indemnifiable by the
predecessor owner of the Company's domestic bus operations, now known as Viad
Corp. The environmental liability relates to sites identified for potential
clean-up and/or remediation and represents the present value of estimated cash
flows discounted at 8.0%. The Company expects the majority of this environmental
liability to be paid over the next five to ten years. As of the date of this
report, the Company is not aware of any additional sites to be identified, and
management believes that adequate accruals have been made related to all known
environmental matters.


ITEM 2. PROPERTIES


LAND AND BUILDINGS

     At December 31, 2001, the Company used 584 parcels of real property in its
operations, of which it owned 170 properties and leased 414 properties. Of those
properties, 417 are bus terminals, 33 are maintenance facilities, 29 are
terminal/maintenance facilities, and the remaining properties consist of driver
dormitories, parking/storage lots, office/storage/warehouse buildings and
telephone information centers. These properties are located throughout the
United States, with one in Canada. The Company believes the current makeup of
its properties is adequate for its operations, and although there can be no
assurance, based on its recent experience, the Company believes that it will be
able to find suitable replacement properties on acceptable terms for any
properties the Company chooses to replace, or which are condemned, or for which
leases are not renewed or are otherwise terminated.

     The Company operates out of its largest sales location, the Port Authority
Bus Terminal of New York (the "Port Authority"), on a month-to-month basis
pursuant to several lease agreements and a license agreement. The Port Authority
has been in discussions to develop the air rights above the terminal and should
an agreement on the development be reached the Company would likely be required
to temporarily relocate its operations within the Port Authority. Such
relocation, if required, could result in an increase in the costs to operate out
of the Port Authority and potentially impact ticket and food service revenues.

                                       9
<PAGE>


FLEET COMPOSITION AND BUS ACQUISITIONS

     During 2001, the Company took delivery of 154 new buses, and retired 84
buses, resulting in a fleet of 2,902 buses at December 31, 2001 of which the
Company owned 1,208 buses and leased an additional 1,694 buses. The average age
of the Company's bus fleet at December 31, 2001, was 6.2 years compared to 5.8
years at December 31, 2000.

     Motor Coach Industries, Inc. or its affiliate, Motor Coach Industries
Mexico, S.A. de C.V., hereafter referred to collectively as "MCI", produced all
but 66 of these buses. The Company is party to a long-term supply agreement with
MCI. The agreement extends through 2007, but may be canceled at the end of any
year upon six months notice. If the Company decides to acquire new buses, the
Company and its affiliates must purchase at least 80% of its new bus
requirements from MCI pursuant to the agreement, however, during 2002 the
Company is not obligated to maintain the 80% minimum under certain conditions.


ITEM 3. LEGAL PROCEEDINGS

GOLDEN STATE INDICTMENT

     In December 2001, Gonzalez, Inc. d/b/a Golden State Transportation ("Golden
State") and 22 current and former employees and agents of Golden State were
indicted as part of a 42-count federal criminal proceeding. The case, filed
before the United States District Court for the District of Arizona, is styled
U.S. v. Gonzalez, Inc, et al., Case No. CR 01-1696-TUC-RCC. The indictment
alleges that the defendants were engaged in a conspiracy, spanning over a
two-year period, to transport and harbor illegal aliens within the United
States. As part of the indictment, the U.S. Government has sought a forfeiture
of substantially all of Golden State's assets and obtained a restraining order
restricting access to bank accounts and restraining certain other real property
and vehicles. The restraining order allows Golden State to continue to operate
its business in the ordinary course and the order has been modified to permit
the payment of certain normal course expenses.

     Golden State and the individuals have pleaded not guilty to the charges.
Golden State intends to vigorously defend the matter. No trial date has been set
for this case. Golden State is currently in the process of obtaining and
assessing the significant volume of evidence amassed by the Government. At this
early stage in the proceeding, the probable outcome of this case cannot be
predicted. Additionally, management is unable to make a reasonable estimate of
the liability that may result from the final resolution of the indictment.
Accordingly, no liability relating to this matter has been recorded in the
Company's Consolidated Financial Statements.

     Greyhound has a 51.4% ownership interest in Golden State and as such
includes Golden State's results of operations and financial condition in the
Company's Consolidated Financial Statements. For the year ended December 31,
2001, Golden State accounted for 3.3% of the Company's consolidated revenues and
5.5% of consolidated operating income. At December 31, 2001, the Company's
investment in Golden State totaled $7.9 million. In addition, the Company leases
to, or guarantees the leases of, 67 of Golden State's buses. As of the date of
this report these buses are subject to $12.4 million of third-party liens, which
is comparable to management's estimate of the fair market value of the buses.



                                       10
<PAGE>


OTHER LEGAL PROCEEDINGS

     In addition to the matter discussed above, the Company is a defendant in
various lawsuits arising in the ordinary course of business, primarily cases
involving personal injury and property damage claims and employment-related
claims. Although these lawsuits involve a variety of different facts and
theories of recovery, the majority arise from traffic accidents involving buses
operated by the Company. The vast majority of these claims are covered by
insurance for amounts in excess of the deductible portion of the policies.
Management believes that there are no proceedings either threatened or pending
against the Company relating to such personal injury, property damage and
employment-related claims that, if resolved against the Company, would
materially exceed the amounts recorded as estimated liabilities by the Company.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None




                                       11
<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

     All of the Company's outstanding common stock is held by a subsidiary of
Laidlaw Inc. and, therefore, the common stock is not traded on any established
public trading market. The Company has not paid dividends in the past and,
furthermore, the indenture governing the Company's 11 1/2 % Senior Notes and the
agreement governing the Company's revolving credit facility limit the ability of
the Company to pay dividends. At December 31, 2001, the maximum dividend that
the Company could pay to Laidlaw was $33.1 million under the most restrictive of
the agreements.




                                       12
<PAGE>


ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION

     The statement of operations data and statement of financial position data
set forth below have been derived from the audited Consolidated Financial
Statements of the Company for each of the respective periods indicated. The
following financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Business" and the Consolidated Financial Statements and notes thereto included
elsewhere in this filing. Certain reclassifications have been made to prior
period statements to conform them to the December 31, 2001 classifications.

<Table>
<Caption>
                                                                      YEARS ENDED DECEMBER 31,
                                           -------------------------------------------------------------------------
                                               2001           2000          1999(a)         1998(b)        1997(c)
                                           ------------   ------------   ------------    ------------   ------------
                                                                        (IN THOUSANDS)
<S>                                        <C>            <C>            <C>             <C>            <C>

STATEMENT OF OPERATIONS DATA:

Total Operating Revenues ...............      1,022,420      1,014,317        925,990         848,445        773,816

Operating Income .......................         29,912         43,800         25,530          46,831         37,106

Net Income (Loss) ......................   $      1,986   $     12,570   $    (16,320)   $     35,232   $    (16,925)
                                           ============   ============   ============    ============   ============


STATEMENT OF FINANCIAL POSITION DATA:
Total Assets ...........................   $    688,457   $    678,121   $    652,056    $    643,378   $    566,593
Long-Term Debt (d) .....................        280,566        275,617        222,206         233,658        212,422
Stockholders' Equity ...................        187,919        235,174        227,906         218,013        179,599
</Table>

----------

(a)  For the year ended December 31, 1999, the Company recorded a $21.3 million
     charge related to the settlement of the Company's outstanding stock
     options.

(b)  During the third quarter of 1998, the Company recognized a tax benefit
     related to previously reserved deferred tax assets. As a result, the
     Company had a $16.9 million tax benefit for the year.

(c)  For the year ended December 31, 1997, the Company recorded an extraordinary
     loss of $25.3 million relating to (i) the retirement of an interest rate
     swap ($2.5 million), (ii) the retirement of the 10% Senior Notes ($21.3
     million) and (iii) the write-off of debt issuance costs ($1.5 million).

(d)  Long-term debt includes current maturities of long-term debt of $8.0
     million in 2001, $5.1 million in 2000, $5.7 million in 1999, $8.0 million
     in 1998 and $4.5 million in 1997; also included is redeemable preferred
     stock of $2.7 million in 2000 and $42.0 million in 1999.



                                       13
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

     Greyhound is the only nationwide provider of scheduled intercity bus
transportation services in the United States. The Company's primary business
consists of scheduled passenger service, package express service and food
services at certain terminals, which accounted for 84.5%, 4.0% and 4.3%,
respectively, of the Company's total operating revenues for 2001. The Company's
operations include a nationwide network of terminal and maintenance facilities,
a fleet of approximately 2,900 buses and approximately 1,800 sales outlets.

RESULTS OF OPERATIONS

     The following table sets forth the Company's results of operations as a
percentage of total operating revenues for 2001, 2000 and 1999:

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                     ----------     ----------    ----------
                                                        2001           2000          1999
                                                     ----------     ----------    ----------
<S>                                                  <C>            <C>           <C>

     Operating Revenues
       Passenger services ........................         84.5%          85.0%         84.6%
       Package express ...........................          4.0            4.2           4.5
       Food services .............................          4.3            4.2           4.2
       Other operating revenues ..................          7.2            6.6           6.7
                                                     ----------     ----------    ----------
              Total Operating Revenues ...........        100.0          100.0         100.0
                                                     ----------     ----------    ----------
     Operating Expenses
       Maintenance ...............................          9.9            9.3           9.8
       Transportation ............................         25.1           25.0          23.8
       Agents' commissions and station costs .....         18.6           18.3          19.0
       Marketing, advertising and traffic ........          3.5            3.1           3.4
       Insurance and safety ......................          5.9            5.2           5.5
       General and administrative ................         12.7           12.4          12.9
       Depreciation and amortization .............          4.8            4.5           4.8
       Operating taxes and licenses ..............          6.2            6.0           6.5
       Operating rents ...........................          7.1            8.4           8.4
       Cost of goods sold - Food services ........          2.9            2.9           2.8
       Other operating expenses ..................          0.4            0.6           0.3
                                                     ----------     ----------    ----------
              Total Operating Expenses ...........         97.1           95.7          97.2
                                                     ----------     ----------    ----------
     Operating Income ............................          2.9            4.3           2.8
     Settlement of Stock Options .................          0.0            0.0           2.3
     Interest Expense ............................          2.8            2.3           2.4
     Income Tax Provision (Benefit) ..............         (0.1)           0.8          (0.5)
     Minority Interest ...........................          0.0            0.0           0.2
     Extraordinary Item ..........................          0.0            0.0           0.2
                                                     ----------     ----------    ----------
     Net Income (Loss) ...........................          0.2%           1.2%         (1.8)%
                                                     ==========     ==========    ==========
</Table>



                                       14
<PAGE>


     The following table sets forth certain operating data for the Company for
2001, 2000 and 1999. Certain statistics have been adjusted and restated from
those previously published to provide consistent comparisons.

<Table>
<Caption>
                                                                           YEARS ENDED DECEMBER 31,
                                                                 --------------------------------------------
                                                                     2001            2000            1999
                                                                 ------------    ------------    ------------
<S>                                                              <C>             <C>             <C>

Regular Service Miles (000's) ................................        349,978         348,789         339,752
Total Bus Miles (000's) ......................................        358,502         356,831         347,392
Passenger Miles (000's) ......................................      9,069,687       9,190,943       8,739,219
Passengers Carried (000's) ...................................         24,825          25,386          24,698
Average Trip Length (passenger miles / passengers carried) ...            365             362             354
Load (avg. number of passengers per regular service mile) ....           25.9            26.4            25.7
Load Factor (% of available seats filled) ....................           51.8%           53.3%           52.9%
Yield (regular route revenue / passenger miles) ..............   $     0.0953    $     0.0938    $     0.0896
Average Ticket Price .........................................   $      34.81    $      33.95    $      31.72
Total Revenue Per Total Bus Mile .............................   $       2.85    $       2.84    $       2.66
Operating Income Per Total Bus Mile ..........................   $       0.08    $       0.12    $       0.07
Cost per Total Bus Mile:
  Maintenance ................................................   $      0.283    $      0.265    $      0.262
  Transportation .............................................   $      0.717    $      0.712    $      0.635
</Table>


YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Operating Revenues. Total operating revenues increased $8.1 million, up
0.8% for the year ended December 31, 2001 compared to the same period in 2000.

     Passenger services revenues increased $2.3 million, or 0.3%, in 2001
compared to 2000 as a 1.6% increase in yield offset a 1.3% decrease in passenger
miles. During 2000, rising fuel costs, which dramatically increased automobile
travel costs and resulted in the airlines adding fuel surcharges to their ticket
prices, allowed the Company to implement broad-based ticket price increases
(which increased yield) throughout 2000 while still maintaining growth in
passenger miles. During the first half of 2001 the Company further raised ticket
prices resulting in a 5.9% increase in yield and, through the first quarter,
continued to achieve growth (2.0%) in passenger miles. The continued ticket
price increases, combined with stabilized fuel costs and airline price
discounting due to softening business travel demand, however, resulted in a 3.5%
decline in passenger miles during the second quarter. In response to this
decline, during the third quarter the Company reduced both prices and
restrictions on advance purchase fares and lowered some walkup fares. The slight
reduction in ticket prices that these actions produced were not enough to offset
the effects of significant reductions in retail fuel prices and airline ticket
prices which resulted in continued declines (1.3%) in passenger miles during the
third quarter. This decline was somewhat mitigated by a substantial increase in
passengers during the shutdown of the air system following the events of
September 11, 2001. Subsequent to the events of September 11, 2001 the Company
experienced significant declines in its short haul markets (450 miles and less),
principally due to the reduced travel in the Northeastern United States, while
long haul travel (over 450 miles) increased dramatically as passengers chose bus
travel instead of air travel. On October 3, 2001 an incident on one of the
Company's buses resulted in a six-hour shutdown of operations nationwide. This
shutdown and general heightened security concerns, caused material declines in
sales during the week of the incident. Although the level of sales decline
lessened each subsequent week, passenger revenue declined 6.5% during the fourth
quarter compared to prior year. While long haul passenger traffic grew, declines
in short haul passengers more than offset this growth resulting in a 1.9%
decline in passenger miles during the fourth quarter. This change in passenger
mix resulted in an increase in average trip length of 8.3% and, because longer
trips produce lower revenue per passenger mile, also produced a 4.6% decline in
yield.



                                       15
<PAGE>


     Package express revenues decreased $1.2 million, down 2.9% in 2001 compared
to 2000. The Company has continued to experience reduced standard product
deliveries (the traditional, low value, terminal to terminal market segment) as
a result of continued competition, as well as expanded and improved product
offerings from larger package delivery companies. In response, the Company
continues to increase its focus on the same day delivery market niche through
the selling of Daily Direct, a guaranteed same day or early next morning
service. In addition, in November 2000 the Company began offering freight
forwarding services and in May 2001 began providing shipping services as an
Authorized Shipping Outlet for United Parcel Service. During 2001, Daily Direct
and these new services accounted for $1.8 million in revenues, an 86.2% increase
over the prior year.

     Food services revenues increased $0.6 million, up 1.5% for the year ended
December 31, 2001 compared to the same period in 2000. Food services revenues
increased over the prior year due primarily to product price increases and
increased locations, offset somewhat by volume declines as a result of the
decline in passenger miles.

     Other operating revenues, consisting primarily of revenue from travel
services and in-terminal sales and other services increased $6.4 million, up
9.5% in 2001 compared to 2000. The increase is primarily attributable to the
Company's expansion during 2001 into "meet and greet" service provided to cruise
lines.

     Operating Expenses. Total operating expenses increased $22.0 million, up
2.3% for the year ended December 31, 2001 compared to the same period in 2000.
The increase in expenses is due primarily to wage increases, higher driver
hiring costs, increased maintenance costs due to fewer buses under warranty,
increased insurance, marketing and pension costs, partially offset by lower fuel
costs and lower terminal rents.

     Maintenance costs increased $6.8 million, up 7.2% in 2001 compared to 2000.
On a per mile basis, maintenance costs increased 6.8% due to 190 fewer buses
under warranty in 2001 compared to 2000, a slightly higher average fleet age,
wage increases for mechanics, increased material and labor related to body
repairs and brake jobs and higher utility costs.

     Transportation expenses, which consist primarily of fuel costs and driver
wages, increased $3.0 million, up 1.2% for the year ended December 31, 2001
compared to the same period in 2000. During 2001 the average cost per gallon of
fuel decreased to $0.85 from $0.94 in 2000 resulting in reduced costs of $5.4
million. On a per mile basis, excluding the effects of fuel price changes,
transportation expenses increased 2.9% during 2001, due mainly to contractual
driver wage increases and higher driver training and hiring costs.

     Agents' commissions and station costs increased $4.7 million, up 2.5% in
2001 compared to 2000. The increase for the year ended December 31, 2001 is due
to wage increases for customer service employees and increases in utility and
security costs. As a percentage of revenue, agents commissions and station costs
increased slightly to 18.6%, compared to 18.3% in the prior year, principally
due to increased security costs and passenger revenue declines experienced in
the fourth quarter of 2001.

     Marketing, advertising and traffic expenses increased $4.0 million, or
12.7%, in 2001 compared to 2000 and increased as a percent of revenue to 3.5%
compared to 3.1% in the prior year. The increase in 2001 was principally due to
production costs related to new television advertisements, spending for
development of new markets, and media spending to raise brand awareness with
certain targeted demographic groups.

     Insurance and safety costs increased $7.3 million, up 13.8% in 2001
compared to 2000, and increased as a percentage of revenue to 5.9% compared to
5.2% in the prior year. The increase is due to an increase in the cost of excess
insurance coverage, growth in the average cost per claim due principally to
medical inflation and an increase in the number of severe accidents.

     General and administrative expenses increased $4.2 million, up 3.3% for the
year ended December 31, 2001 compared to the same period in 2000, increasing
slightly as a percentage of revenue. The increase is primarily due to a $5.2
million increase in pension expense due to a reduction in interest rates and
deterioration in plan returns principally related to equity investments, higher
management fee charges ($1.6 million) from the Company's parent Laidlaw, offset
by a decrease in management incentive plan costs ($2.6 million).



                                       16
<PAGE>


     Depreciation and amortization increased $3.8 million, or 8.5% for the year
ended December 31, 2001 compared to the same period in 2000. The increase is
primarily due to higher capital expenditures in prior periods.

     Operating taxes and licenses expense increased $2.0 million, up 3.2% in
2001 compared to 2000 due to increased payroll taxes resulting from increased
wages, increased property and real estate taxes and unusual state fuel tax
refunds received in the prior year.

     Operating rents decreased $12.4 million, down 14.6% for the year ended
December 31, 2001 compared to the same period in 2000. The decrease is mainly
due to the restructuring of the Port Authority license agreement. See Note 16 of
the Consolidated Financial Statements for further discussion.

     Food services cost of goods sold increased $0.5 million, up 1.6% in 2001
compared to 2000 due primarily to increases in food costs and the addition of
new locations.

     Other operating expenses decreased $1.9 million, down 29.2% for the year
ended December 31, 2001 compared to the same period in 2000. The decrease is due
to the write-down of an investment in 2000.

     Interest expense increased $5.4 million, up 23.0% for the year ended
December 31, 2001 compared to the same period in 2000, due to an increase in the
average debt outstanding, partially offset by a reduction in rates.

     For the year ended December 31, 2001, the Company's income tax benefit
includes a $2.5 million benefit for the recognition of previously unrecognized
deferred tax assets. Exclusive of this item, the Company would have recorded tax
expense at an effective rate of 143.1%, compared to a 38.0% rate in the prior
period. The lower level of pre-tax income in 2001 compared to 2000, combined
with the effects of non-deductible goodwill amortization and other permanent tax
differences, produces a higher effective rate.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

         The Company's results of operations include the operating results of On
Time Delivery, the addition of nine in-terminal restaurants that were previously
concessionaire-operated Burger King locations, and LSX Delivery (collectively
the "acquisitions"). The purchase of On Time Delivery occurred during the first
quarter of 1999 and the acquisitions involving the restaurants and LSX Delivery
occurred during the second quarter of 1999. The results for the acquisitions are
included as of their respective purchase dates.

     Operating Revenues. Total operating revenues increased $88.3 million (or
9.5%) for the year ended December 31, 2000 compared to the same period in 1999.
Acquisitions accounted for $2.5 million of this growth, resulting in internal
growth of $85.8 million or 9.3%.

     Passenger services revenues increased $78.5 million (or 10.0%) in 2000
compared to 1999. The increase in regular route revenues reflects the
consolidated impact of a 4.7% increase in yield and a 5.2% increase in passenger
miles. These improvements were principally due to the following:

     1)   Since the marginal cost of intercity travel by automobile is
          principally fuel, the fuel price increases that occurred during 2000
          produced dramatic increases in automobile travel costs, thus allowing
          the Company to increase yield and still remain price competitive.

     2)   As a result of the fuel price increases, many airlines increased
          ticket prices by instituting fuel price surcharges. These surcharges
          allowed the Company to raise prices (and increase yield). And, because
          bus travel is more fuel efficient than air travel, the ticket price
          differential between long-haul bus travel and air travel increased,
          thus improving long-haul bus travel economics which resulted in an
          increased average trip length and increased passenger miles.



                                       17
<PAGE>


     3)   During the first half of 2000, the Company modified its promotional
          pricing program so that longer trip length ticket prices were
          generally increased compared to the old program and shorter,
          intermediate, trip length ticket prices were generally decreased. The
          overall effect of this change was to increase yield and decrease
          average trip length. The decrease in average trip length due to
          promotional ticket sales was more than offset by increases in walk-up
          sales due to the factors discussed above.

     Package Express revenue increased $0.9 million (or 2.2%) in 2000 compared
to 1999 (including $1.6 million related to the On Time Delivery and LSX Delivery
acquisitions). Excluding the acquisitions, the Company experienced a $0.7
million decrease in revenue due to reduced standard product deliveries (the
traditional, low-value, terminal to terminal market segment) offset somewhat by
gains in same day and priority product deliveries. The declines in the standard
product are a result of continued competition, as well as expanded and improved
product offerings from larger package delivery companies.

     Food services revenues increased $3.9 million (or 10.0%) for the year ended
December 31, 2000, compared to the same period in 1999. The restaurant
acquisitions contributed $0.9 million of this increase while the remaining $3.0
million was due primarily to the increase in passenger traffic discussed above.

     Other operating revenues, consisting primarily of revenue from travel
services and other in-terminal sales and services, increased $5.0 million (or
8.0%) for the year ended December 31, 2000 compared to the same period in 1999.
The increase was primarily due to increases in tenant income received by the
Company for sharing its terminal space with other bus companies and increased
commissions on long distance calls placed from Company pay phones.

     Operating Expenses. Total operating expenses increased $70.1 million (or
7.8%) for the year ended December 31, 2000, compared to the same period in 1999.
The increase is due primarily to increased bus miles (2.7%), increased fuel
cost, higher driver wages and hiring costs, increased terminal salaries,
increased ticket and express commissions due to higher sales, an increase in
buses operated under operating leases, and $2.4 million related to the
operations of the acquisitions.

     Maintenance costs increased $3.7 million (or 4.0%) for the year ended
December 31, 2000, compared to the same period in 1999, primarily due to
increased bus miles. On a per-mile basis, maintenance cost increased by 1.1%.

     Transportation expenses, which consist primarily of fuel costs and driver
salaries, increased $33.5 million (or 15.2%) for the year ended December 31,
2000, compared to the same period in 1999, due primarily to increased bus miles,
higher fuel costs, and increased driver wages and hiring costs. During 2000 the
average cost per gallon of fuel increased to $0.94 per gallon, compared to $0.61
per gallon in 1999, resulting in increased fuel cost of $19.2 million. Excluding
the effects of fuel price increases, transportation expenses increased on a
per-mile basis by 3.6% compared to the prior year.

     Agents' commissions and station costs increased $10.2 million (or 5.8%) for
the year ended December 31, 2000, compared to the same period in 1999, primarily
due to commissions from increased ticket sales, terminal salaries associated
with staffing for the increase in passengers, and salary raises for terminal
employees. As a percentage of revenue, agents commissions and station costs
decreased to 18.3%, compared to 19.0% in the prior year, principally due to a
significant portion of the current year's revenue growth coming from ticket
price increases.

     Marketing, advertising and traffic expenses increased $0.2 million (or
0.7%) for the year ended December 31, 2000, compared to the same period in 1999,
decreasing slightly as a percentage of total operating revenues.

     Insurance and safety costs increased $1.7 million (or 3.3%) for the year
ended December 31, 2000, compared to the same period in 1999, due primarily to
increased bus miles. Insurance and safety costs decreased slightly as a
percentage of revenue and are virtually flat on a per mile basis.

     General and administrative expenses increased $5.8 million (or 4.9%) for
the year ended December 31, 2000, compared to the same period in 1999,
decreasing slightly as a percentage of revenue. The increase in expenses is due
to higher health and welfare costs ($5.6 million) as a result of more
participants and a higher cost per participant, higher incentive plan costs
($4.1 million) due to the Company's improved financial performance over 1999 and
management fee charges from the Company's parent, Laidlaw ($2.3 million). These
increases were offset somewhat


                                       18
<PAGE>
by computer remediation costs ($4.9 million) and merger-related costs ($2.9
million) incurred in 1999 and not repeated in 2000.

     Depreciation and amortization expense increased $0.7 million (or 1.5%) for
the year ended December 31, 2000, compared to the same period in 1999, primarily
due to increased capital expenditures in the current and prior periods, offset
somewhat by lower software amortization costs.

     Operating taxes and license costs increased $1.4 million (or 2.3%) for the
year ended December 31, 2000, compared to the same period in 1999, primarily due
to increased payroll taxes resulting from increased salaries and head-counts
related to higher business volume (including increased miles operated) and
increased fuel taxes due to increased miles, partially offset by unusual state
fuel tax refunds received in 2000.

     Operating rents increased $6.7 million (or 8.6%) for the year ended
December 31, 2000, compared to the same period in 1999, primarily due to an
increase in facilities rents and the number of buses leased under operating
leases.

     Food services and related cost of goods sold increased $2.8 million (or
10.6%) for the year ended December 31, 2000, compared to the same period in
1999, primarily due to the increase in food services revenue.

     Other operating expenses increased $3.4 million for the year ended December
31, 2000, compared to the same period in 1999, due to the write-down of an
investment and losses on disposals of property, plant and equipment.

     As a result of the Merger, the Company incurred $21.3 million in charges
during 1999 related to the settlement of the Company's outstanding stock
options.

     Interest expense increased $1.5 million (or 7.0%) for the year ended
December 31, 2000, compared to the same period in 1999. The increase in interest
expense is primarily attributable to interest on installment conversion payments
to certain preferred stockholders and an increase in the average debt
outstanding.

     For the year ended December 31, 2000, the Company recorded tax expense at
an effective rate of 38.0%, compared to tax benefits recorded at a 26.0% rate
for the prior period. The lower rate of benefit recorded in the prior year is
principally the result of non-deductible goodwill amortization.

     In 1999, the Company recorded an extraordinary loss of $1.9 million, net of
tax benefit of $1.0 million, related to the termination of the Company's
previous revolving credit facility. The amount represents the write-off of
previously incurred debt issuance costs that were being amortized over the life
of the revolving credit facility.


CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements requires management to make
estimates and assumptions relating to the reporting of results of operations,
financial condition and related disclosure of contingent assets and liabilities
at the date of the financial statements. Actual results may differ from those
estimates under different assumptions or conditions. The following are the
Company's most critical accounting policies, which are those that require
management's most difficult, subjective and complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain and may change in subsequent periods.

     Contingencies. As discussed in Note 16 of the Consolidated Financial
Statements, management is unable to make a reasonable estimate of the liability
that may result from the final resolution of the Golden State indictment.
Further assessments of the potential liability will be made as additional
information becomes available. Management currently does not believe this
proceeding will have a material adverse effect on the Company's consolidated
financial position. It is possible; however, that future results of operations
for any particular quarterly or annual period could be materially affected by
changes in our assumptions related to this proceeding.


                                       19
<PAGE>


     Accounting for Income Taxes. The Consolidated Statements of Financial
Position reflect deferred tax assets as of December 31, 2001 of $60.8 million,
net of a valuation allowance of $27.5 million. The valuation allowance is
required due to uncertainties related to the Company's ability to utilize all of
its net operating loss ("NOL") carryforwards before they expire, which is based
on estimates of future taxable income over the fifteen and twenty year NOL
carryforward period. In the event that actual results differ from these
estimates, or these estimates are adjusted in future periods, or if there is a
material change in the actual effective tax rates or time period within which
the underlying temporary differences become taxable or deductible, the Company
may need to change the valuation allowance. Subsequent revisions to the
valuation allowance could cause the Company's provision for income taxes to vary
significantly from period to period, although cash tax payments would remain
unaffected until the benefit of the NOL is utilized.

     Claims Liability. The Company establishes reserves for automobile
liability, general liability and worker's compensation claims that have been
reported but not paid and claims that have been incurred but not reported. These
reserves are developed using actuarial principles and assumptions which consider
a number of factors, including historical claim payment patterns and changes in
case reserves, the assumed rate of increase in health care costs and property
damage repairs, and the discount rate. The amount of these reserves could differ
from the Company's ultimate liability related to these claims due to changes in
the Company's accident reporting, claims payment and settlement practices or
claims reserve practices, as well as differences between assumed and future cost
increases and discount rates.

     The Company may be liable for certain environmental liabilities and
clean-up costs in the various facilities presently or formerly owned or leased
by the Company. Additionally, the Company has potential liability with respect
to locations that the EPA has designated as Superfund sites. The Company has
recorded an environmental liability for those sites identified for potential
clean-up and/or remediation based upon the present value of estimated future
cash flows discounted at 8.0%. The future cash flows are estimated by the
Company's internal staff and outside environmental consultants based on testing
and remediation work plans that have been established for the various projects.
Management expects the majority of this environmental liability to be paid over
the next five to ten years. The recorded liability could differ from the
Company's ultimate liability due to timing and cost uncertainties related to
variations in the required scope of work that are inherent in any clean-up
project.

     Pension. The determination of the Company's obligation and expense for
pension benefits is dependent on the selection of certain assumptions and
factors. These include assumptions about the discount rate, expected return on
plan assets and rate of future compensation increases as determined by
management. In addition, the Company's actuarial consultants also use factors to
estimate such items as retirement age and mortality rates. The assumptions and
factors used by the Company may differ materially from actual results due to
changing market and economic conditions, earlier or later retirement ages or
longer or shorter life spans of participants. These differences may result in a
significant impact to the amount of pension obligation or expense recorded by
the Company. Due to a reduction in interest rates and deterioration in plan
returns, during 2001 the Company was required to increase its additional minimum
pension liability by $48.5 million, net of tax effect of $26.1 million and
recorded a $5.2 million increase in pension expense.


NEW ACCOUNTING PRONOUNCEMENTS

     In 2002, Statement of Financial Accounting Standards No. 142, "Accounting
for Goodwill and Other Intangible Assets" became effective and as a result, the
Company will cease to amortize goodwill and indefinite lived intangible assets.
During 2001, the Company recorded $2.6 million of amortization related to these
items and would have recorded a similar amount during 2002. In lieu of
amortization, the Company is required to perform an initial impairment review of
goodwill during the first six months of 2002 and then on a periodic basis
thereafter. The Company has not yet determined what effect, if any, the initial
impairment review will have on the Company's financial position and results of
operations.




                                       20
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal liquidity requirements are to provide working
capital, to finance capital expenditures, including bus acquisitions and to meet
debt service requirements, including the payment of interest on the 11 1/2%
Senior Notes. The Company's principal sources of liquidity are expected to be
cash flow from operations, proceeds from operating lease or other equipment
financings for new bus purchases and borrowings under the Revolving Credit
Facility. The Company believes that its cash flow from operations, together with
borrowings under the Revolving Credit Facility, will fund its working capital
and near-term capital expenditure needs.

     Net cash provided by operating activities was $51.0 million, $32.5 million
and $74.9 million for the years ended December 31, 2001, 2000 and 1999,
respectively. Net cash provided by operating activities in 2001 includes cash
used by changes in operating assets and liabilities of $9.0 million, principally
due to spending on intangible assets, compared to $28.5 million in 2000,
principally due to repayments of intercompany amounts due Laidlaw. In 1999, net
cash provided by operating activities included cash provided by changes in
operating assets and liabilities of $55.9 million, principally due to a
reduction in insurance and security deposits, offset by a $21.3 million payment
for the settlement of stock options. Net cash used for investing activities was
$33.7 million, $41.2 million and $81.2 million for 2001, 2000 and 1999,
respectively, principally due to capital expenditures, consisting primarily of
acquisitions of buses and real estate and facility improvements, totaling $36.0
million, $63.7 million and $78.9 million for 2001, 2000 and 1999, respectively.
Net cash provided (used) by financing activities was $(6.6) million, $10.6
million and $9.8 million for 2001, 2000 and 1999, respectively. The decrease in
cash provided by financing activities in 2001 is principally due to the reduced
level of capital expenditures.

     The Company requires significant cash flows to meet its debt service and
other continuing obligations. As of December 31, 2001, the Company had $280.6
million of long-term indebtedness outstanding (including current portions),
including $58.0 million of borrowings under the Revolving Credit Facility and
$150.0 million of 11 1/2% Senior Notes. As of December 31, 2001, the Company had
availability of $40.5 million under the Revolving Credit Facility.

     The Revolving Credit Facility provides for advances up to a maximum of $125
million based upon 85% of the appraised wholesale value of certain bus
collateral and 50% of the fair market value of certain real property collateral.
The Revolving Credit Facility has two interest rate options, prime and LIBOR. As
of December 31, 2001, borrowings under the Revolving Credit Facility were
available to the Company at prime rate plus 0.5% and LIBOR plus 2.0%. The
weighted-average interest rate for all Revolving Credit Facility borrowings was
4.0% at December 31, 2001. Borrowings under the Revolving Credit Facility mature
on October 24, 2003.

     The Revolving Credit Facility is secured by liens on substantially all of
the assets of the Company and the stock and assets of certain of its
subsidiaries. The Revolving Credit Facility is subject to certain affirmative
and negative operating and financial covenants, including maximum total debt to
EBITDA ratio; minimum EBITDA to interest ratio; minimum shareholder's equity;
limitation on non-bus capital expenditures; limitations on additional liens,
indebtedness, guarantees, asset disposals, advances, investments and loans; and
restrictions on the redemption or retirement of certain subordinated
indebtedness or equity interests, payment of dividends and transactions with
affiliates, including Laidlaw. As of December 31, 2001, the Company was in
compliance with all such covenants.


BUS OPERATING LEASES

     The Company generally uses lease financing with purchase options (residual
values) as the principal source of bus financing in order to achieve the lowest
net cost of bus financing. These leases typically have terms of seven years and
contain set residual values and residual value guarantees; although some leases
are for terms as long as twelve years and contain no residual values or residual
value guarantees. Because the Company generally retires buses after twelve to
fourteen years of operation, buses are typically purchased at lease expiration
at the residual value, or fair market value for those leases that do not contain
residual values.


                                       21
<PAGE>


     Most of the leases are designed to qualify as operating leases for
accounting purposes and, as such, only the monthly lease payment is recorded in
the statement of operations and the liability and value of the underlying buses
are not recorded on the statement of financial position. At December 31, 2001,
the net present value of future operating lease payments, plus the residual
value or estimated fair market value for those leases that do not contain
residual values, discounted at the rate implicit in the lease was $316.7
million.

     Of those operating leases that contain residual value guarantees, the
aggregate residual value at lease expiration is $140.3 million, of which the
Company has guaranteed $87.6 million. Based on current and historical used bus
values, management believes the value of the buses at lease expiration will
exceed the residual value guarantees, therefore, the Company has also recorded
no liability related to the residual value guarantees. To date, the Company has
never incurred any liability as a result of residual value guarantees.


LAIDLAW REORGANIZATION

     On June 28, 2001, as part of a financial restructuring, Laidlaw USA, Inc.,
Laidlaw Inc., Laidlaw International Finance Corporation, Laidlaw Investments
Ltd., Laidlaw One, Inc. and Laidlaw Transportation, Inc. filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Western District of New York, under a
jointly administered case captioned, In re: Laidlaw USA, Inc., et al, Case No.
01-14099. On that date, Laidlaw Inc. and Laidlaw Investments Ltd. also filed
cases under the Canada Companies' Creditors Arrangement Act in the Ontario
Superior Court of Justice in Toronto, Canada, court file no. 01-CL-4178.

     Laidlaw Inc. is the ultimate parent company of Greyhound. Neither
Greyhound, nor any of its subsidiaries were included in, or made party to, these
reorganization filings and proceedings.

     The reorganization filings and proceedings do not cause a cross default
with any of the Company's debt which would place the Company's debt in default
with its financial institutions and, as of the date of this report, the Company
is in compliance with all covenants in its various debt agreements. Although the
outcome of the foregoing matters is uncertain, management believes that the
likely outcome will have no material impact on the Company's financial position,
cash flows or results of operations.


POTENTIAL PENSION PLAN FUNDING REQUIREMENTS

     The Company maintains nine defined benefit pension plans, the most
significant of which (the "ATU Plan") covers approximately 14,500 current and
former employees, fewer than 1,200 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and over 85% of its
participants are over the age of 50. Under the terms of the Company's collective
bargaining agreement participants in the ATU Plan continue to accrue benefits as
long as no contributions are due from the Company. The ATU Plan actuary advised
the Company and the union that the decline in the stock market during 2001 had
made it likely that contributions to the ATU Plan would be required in calendar
year 2002. The Company and union met and agreed to freeze service and wage
accruals effective March 15, 2002. Before November 1, 2002, the ATU Plan actuary
will review the situation for 2003. If no contributions from the Company will be
required in 2003, the current freeze of accruals may be lifted on January 1,
2003. If it is determined that a contribution will be required, the union and
the Company will meet to negotiate a method of avoiding the contribution. If the
Company and the union are unable to agree upon a method to avoid a contribution
the freeze will continue for at least an additional year.

     For financial reporting and investment planning purposes, the Company
currently uses an actuarial mortality table that closely matches the actual
experience related to the existing participant population. For funding purposes,
legislation passed by the United States Congress mandates the use of a
prescribed actuarial mortality table and discount rates that differ from those
used by the Company for financial reporting and investment planning purposes.
Based upon the application of the actuarial mortality table, discount rates and
funding calculations prescribed by current regulations, and further assuming a
continuation of the freeze of wage and service accruals and that the ATU Plan
assets can obtain annual investment returns of 7.5%, estimated Company
contributions to the ATU Plan total $51



                                       22
<PAGE>


million over the next five years. Lowering the assumed investment return on ATU
plan assets to 5% results in estimated contributions over the next five years of
$84 million, while a 10% return results in estimated contributions over the next
five years of $26 million. However, no contributions are projected during the
next two years under either of the three scenarios discussed above.
Nevertheless, there is no assurance that the ATU Plan will be able to earn the
assumed rate of return, that new regulations may result in changes in the
prescribed actuarial mortality table and discount rates, or that there will be
market driven changes in the discount rates, which would result in the Company
being required to make contributions in the future that differ significantly
from the estimates above.


SELF INSURANCE

     The Company had previously purchased its insurance through Laidlaw with
coverage subject to a $50,000 deductible for property damage claims and no
deductible for all other claims. Effective with the beginning of the Company's
new policy year, September 1, 2001, the Company purchased coverage from
third-party insurers for claims up to $5.0 million with coverage subject to a
$3.0 million deductible for automobile liability and a $1.0 million deductible
for both general liability and workers' compensation. The Company purchases
excess coverage for automobile liability, general liability and workers'
compensation insurance through Laidlaw for claims which exceed $5.0 million. The
Company has continued to purchase from Laidlaw coverage for physical damage to
Company property subject to a $50,000 deductible.

     The Company maintains deposits and letters of credit that support its
self-insurance program and secure insurance claims. At December 31, 2001, the
Company maintained $22.2 million of collateral deposits, including a $15.0
million trust fund to support its self-insurance program pursuant to the DOT's
approval of such program, and had issued $20.5 million of letters of credit.

     Management believes the cash flow requirements of the new insurance program
will be modestly higher during the first half of the policy year, but comparable
during the entire policy year to what the requirements would have been had the
old program with Laidlaw been extended. Although not currently expected, the
loss of self-insurance authority from the DOT or a decision by the Company's
insurers to modify the Company's program substantially, by either increasing
cost, reducing availability or increasing collateral, could have a material
adverse effect on the Company's liquidity, financial condition, and results of
operations.


GOLDEN STATE INDICTMENT

     In December 2001, Gonzalez, Inc. d/b/a Golden State Transportation ("Golden
State") and 22 current and former employees and agents of Golden State were
indicted as part of a 42-count federal criminal proceeding. The case, filed
before the United States District Court for the District of Arizona, is styled
U.S. v. Gonzalez, Inc, et al., Case No. CR 01-1696-TUC-RCC. The indictment
alleges that the defendants were engaged in a conspiracy, spanning over a
two-year period, to transport and harbor illegal aliens within the United
States. As part of the indictment, the U.S. Government has sought a forfeiture
of substantially all of Golden State's assets and obtained a restraining order
restricting access to bank accounts and restraining certain other real property
and vehicles. The restraining order allows Golden State to continue to operate
its business in the ordinary course and the order has been modified to permit
the payment of certain normal course expenses.

     Golden State and the individuals have pleaded not guilty to the charges.
Golden State intends to vigorously defend the matter. No trial date has been set
for this case. Golden State is currently in the process of obtaining and
assessing the significant volume of evidence amassed by the Government. At this
early stage in the proceeding, the probable outcome of this case cannot be
predicted. Additionally, management is unable to make a reasonable estimate of
the liability that may result from the final resolution of the indictment.
Accordingly, no liability relating to this matter has been recorded in the
Company's Consolidated Financial Statements.




                                       23
<PAGE>


     Greyhound has a 51.4% ownership interest in Golden State and as such
includes Golden State's results of operations and financial condition in the
Company's Consolidated Financial Statements. For the year ended December 31,
2001, Golden State accounted for 3.3% of the Company's consolidated revenues and
5.5% of consolidated operating income. At December 31, 2001, the Company's
investment in Golden State totaled $7.9 million. In addition, the Company leases
to, or guarantees the leases of, 67 of Golden State's buses. As of the date of
this report these buses are subject to $12.4 million of third-party liens, which
is comparable to management's estimate of the fair market value of the buses.

NEW YORK PORT AUTHORITY

     The Company operates out of its largest sales location, the Port Authority,
on a month-to-month basis pursuant to several lease agreements and a license
agreement. The Port Authority has been in discussions to develop the air rights
above the terminal and should an agreement on the development be reached the
Company would likely be required to temporarily relocate its operations within
the Port Authority. Such relocation, if required, could result in an increase in
the costs to operate out of the Port Authority and potentially impact ticket and
food service revenues.

FOURTH QUARTER OF 2001 AND 2002 OUTLOOK

     Subsequent to the events of September 11, 2001 the Company experienced
significant declines in its short haul markets (450 miles and less), principally
due to the reduced travel in the Northeastern United States, while long haul
travel (over 450 miles) increased dramatically as passengers chose bus travel
instead of air travel. On October 3, 2001 an incident on one of the Company's
buses resulted in a six-hour shutdown of operations nationwide. This shutdown
and general heightened security concerns, caused material declines in sales
during the week of the incident. Although the level of sales decline lessened
each subsequent week, passenger revenue declined 6.5% during the fourth quarter
compared to prior year. While long haul passenger traffic grew, declines in
short haul passengers more than offset this growth resulting in a 1.9% decline
in passenger miles during the fourth quarter. This change in passenger mix
resulted in an increase in average trip length of 8.3% and, because longer trips
produce lower revenue per passenger mile, also produced a 4.6% decline in yield.
In response to the decline in passenger revenues the Company began reducing
schedule service miles in late October, with further reductions in early and
late November, resulting in a 1.4% decline in regular service miles during the
fourth quarter of 2001 as compared to the same period in 2000. The decline in
revenue and an increase in security costs more than offset the cost reductions
produced by the decline in regular service miles, resulting in an operating loss
of $2.9 million during the fourth quarter of 2001, compared to operating income
of $7.3 million during the fourth quarter of 2000.

     The Company has continued to experience declines in passenger revenue,
although the amounts of the declines have appeared to plateau. During the two
months ended February 28, 2002, passenger revenues were 5.8% below the
comparable period in 2001. Continuing strength in long haul passenger traffic
was more than offset by weakness in short haul passengers, resulting in a 2.5%
decline in passenger miles and a 3.4% decline in yield during the first two
months of 2002. Reductions in regular service miles implemented during the
fourth quarter have continued, producing a 2.4% decline in regular service miles
during the first two months of 2002 compared to the first two months of 2001.

     Management anticipates that passenger revenue will continue to be below
prior year until the fourth quarter of 2002, with the summer approaching prior
year levels when the Company normally experiences increased long haul ridership.
To align costs with the decrease in revenue, the Company has put in place
several cost reduction initiatives including reductions in regular service miles
and hiring of field personnel, limiting corporate hiring to critical positions,
deferring merit wage increases and reducing spending for advertising,
consulting, travel and training.




                                       24
<PAGE>


RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-K

     Statements in this Form 10-K that are not purely historical facts,
including statements regarding our beliefs, expectations, intentions,
projections or strategies for the future, may be "forward-looking statements"
under the Private Securities Litigation Reform Act of 1995. All forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from the plans, intentions and expectations reflected in or
suggested by the forward-looking statements. Such risks and uncertainties
include, among others, the general economic condition of the United States and
the future level of bus travel demand; the impact of future terrorist incidents;
operational disruptions as a result of bad weather; the Company's future yields;
increased costs for security; the cost and availability of excess insurance
coverage and the Company's ability to retain authority to self-insure; the
impact of changes in fuel prices; the effect of future Government regulations;
potential pension plan funding requirements; limitations on financing
flexibility and availability due to changing credit markets and the uncertainty
surrounding the outcome of the Laidlaw Inc. reorganization proceedings; and
other factors described from time to time in the Company's publicly available
Securities and Exchange Commission filings. The Company undertakes no obligation
to publicly update or revise any forward-looking statements to reflect events or
circumstances that may arise after the date of this filing.





                                       25
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The following discussion about the Company's market risk includes
"forward-looking statements" that involve risk and uncertainties. Actual results
could differ materially from these projections. The Company is currently exposed
to market risk from changes in commodity prices for fuel, investment prices and
interest rates. The Company does not use derivative instruments to mitigate
market risk, nor does the Company use market risk sensitive instruments for
speculative or trading purposes.

COMMODITY PRICES. The Company currently has exposure to commodity risk from its
fuel inventory and its advance purchase commitments for fuel. The Company has
fuel inventory at December 31, 2001, at a carrying value of $0.7 million. The
Company's fuel inventory is used in operations before a change in the market
price of fuel could have a material effect on the Company's results of
operation. Additionally, the Company has entered into an advance purchase
commitment for fuel whereby the Company has agreed to take delivery of a total
of 4.2 million gallons through July 2002 at a fixed price of $2.5 million. A 10%
increase or decrease in the cost of fuel would not have a material effect on
this commitment or the Company's results of operations. For the year ended
December 31, 2001, the Company recorded $49.4 million in fuel expense (exclusive
of fuel taxes). While a 10% increase or decrease in the cost of fuel would have
a material effect on the Company's operating expenses, generally periods of
rising fuel costs have allowed the Company to increase average ticket prices and
periods of declining fuel costs have required the Company to lower ticket costs,
thus providing some hedge against fuel price fluctuations.

INVESTMENT PRICES. The Company currently has exposure in the market price of
investments in its available for sale securities. At December 31, 2001, the
Company has approximately $6.8 million of investments classified as available
for sale and a 10% decrease in the market price would not have a material effect
on the Company's financial position. As required by generally accepted
accounting principles, the Company has reported these investments at fair value,
with any unrecognized gains or losses excluded from earnings and reported in a
separate component of stockholders' equity.

INTEREST RATE SENSITIVITY. The Company currently has exposure to interest rates
from its long-term debt as it relates to the Company's Revolving Credit Facility
and the Laidlaw subordinated debt. The Revolving Credit Facility utilizes a
variable rate based on prime and LIBOR. As of December 31, 2001, the Revolving
Credit Facility utilized prime plus 0.5% and LIBOR plus 2.0% with an outstanding
balance of $58.0 million. The weighted-average interest rate for all Revolving
Credit Facility borrowings was 4.0% at December 31, 2001. Borrowings under the
Revolving Credit Facility mature on October 24, 2003.

The Laidlaw subordinated debt matures 91 days after the maturity of the
Revolving Credit Facility. Interest on the debt accrues at the Applicable
Federal Rate (2.5% at December 31, 2001) and is payable at maturity. The
outstanding balance as of December 31, 2001 was $35.0 million.

A 10% increase or decrease in variable interest rates would not have a material
effect on the Company's results of operations or cash flows.

The table below presents principal cash flows and related weighted average
interest rates by contractual maturity dates for fixed rate debt as of December
31, 2001:

Long Term Debt:

<Table>
<Caption>
                                   2002        2003        2004        2005        2006      THEREAFTER       TOTAL      FAIR VALUE
                                 --------    --------    --------    --------    --------    ----------    ----------    ----------
<S>                              <C>         <C>         <C>         <C>         <C>         <C>           <C>           <C>

Fixed Rate Debt (in thousands)   $  6,114    $  8,898    $  2,054    $  2,193    $  1,687    $  162,346    $  183,292    $  172,175
Average Interest Rate ........        9.8%        9.7%        9.3%        9.4%        9.7%         11.3%         11.1%           --
</Table>




                                       26
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                                                      PAGE NO.
                                                                                                      --------
<S>                                                                                                   <C>

Management Report on Responsibility for Financial Reporting .......................................      28

Report of Independent Accountants..................................................................      29

Consolidated Statements of Financial Position as of December 31, 2001 and 2000.....................      30

Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000, and 1999........      31

Consolidated Statements of Stockholder's Equity for the Years Ended December 31, 2001, 2000,
     and 1999......................................................................................      32

Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999........      33

Notes to Consolidated Financial Statements.........................................................      34

Schedule II - Valuation and Qualifying Accounts - For the Years Ended December 31, 2001, 2000,
     and 1999......................................................................................      52
</Table>








                                       27
<PAGE>


                       MANAGEMENT REPORT ON RESPONSIBILITY
                             FOR FINANCIAL REPORTING

     The management of Greyhound Lines, Inc. and its subsidiaries (the
"Company") has the responsibility for preparing the accompanying consolidated
financial statements and for their integrity and objectivity. The statements
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis and are not misstated due to fraud or material
error. The financial statements include amounts that are based on management's
best estimates and judgments. Management also prepared the other information in
the annual report on Form 10-K and is responsible for its accuracy and
consistency with the financial statements.

     The Company's consolidated financial statements have been audited by
PricewaterhouseCoopers LLP (the "Independent Accountants"). Management has made
available to the Independent Accountants all the Company's financial records and
related data, as well as the minutes of the stockholders' and directors'
meetings. Furthermore, management believes that all representations made to the
Independent Accountants during their audits were valid and appropriate.

     Management of the Company has established and maintains a system of
internal control that provides reasonable assurance as to the integrity and
reliability of the financial statements, the protection of assets from
unauthorized use or disposition, and the prevention and detection of fraudulent
financial reporting. The system of internal control provides for appropriate
division of responsibility and is documented by written policies and procedures
that are communicated to employees with significant roles in the financial
reporting process and updated as necessary. Management continually monitors the
internal control system for compliance. The Company maintains an internal
auditing program that independently assesses the effectiveness of the internal
controls and recommends possible improvements thereto. In addition, as part of
their audits of the Company's consolidated financial statements, the Independent
Accountants considered the Company's system of internal control to the extent
they deemed necessary to determine the nature, timing and extent of audit tests
to be applied. Management has considered the internal auditors' and Independent
Accountants' recommendations concerning the Company's system of internal control
and has taken actions that the Company believes respond appropriately to these
recommendations. Management believes that the Company's system of internal
control is adequate to accomplish the objectives discussed herein.

     Management also recognizes its responsibility for fostering a strong
ethical climate so that the Company's affairs are conducted according to the
highest standards of personal and corporate conduct. This responsibility is
characterized and reflected in the Company's code of corporate conduct, which is
publicized throughout the Company. The code of conduct addresses, among other
things, the necessity of ensuring open communication within the Company;
potential conflicts of interests; compliance with all domestic and foreign laws,
including those relating to financial disclosure; and the confidentiality of
proprietary information. The Company maintains a systematic program to assess
compliance with these policies.

Jeffrey W. Sanders
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)

Cheryl W. Farmer
Vice President and Controller
(Principal Accounting Officer)

Dallas, Texas
March 28, 2002




                                       28
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Stockholder of Greyhound Lines, Inc:

     In our opinion, the consolidated financial statements listed in the
accompanying index, present fairly, in all material respects, the financial
position of Greyhound Lines, Inc. and its subsidiaries at December 31, 2001 and
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements and the financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PricewaterhouseCoopers LLP
Dallas, Texas
March 25, 2002



                                       29
<PAGE>


                     GREYHOUND LINES, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                                                         DECEMBER 31,
                                                                                 ----------------------------
                                                                                     2001            2000
                                                                                 ------------    ------------
<S>                                                                              <C>             <C>
Current Assets
   Cash and cash equivalents .................................................   $     20,913    $     10,206
   Accounts receivable, less allowance for doubtful accounts of $915 and $398          59,977          57,932
   Inventories, less allowance for shrinkage of $177 and $29 .................          8,409           7,788
   Prepaid expenses ..........................................................          7,158           4,847
   Current portion of deferred tax assets ....................................         12,238          10,688
   Other current assets ......................................................          2,154           5,423
                                                                                 ------------    ------------
         Total Current Assets ................................................        110,849          96,884
Prepaid pension plans ........................................................           --            32,483
Property, plant and equipment, net of accumulated depreciation of $229,502
    and $193,724 .............................................................        412,027         409,070
Investments in unconsolidated affiliates .....................................         15,896          15,989
Deferred income taxes ........................................................         48,609          27,452
Insurance and security deposits ..............................................         29,142          24,692
Goodwill, net of accumulated amortization of $7,250 and $5,367 ...............         43,087          43,540
Intangible assets, net of accumulated amortization of $41,411 and $37,571 ....         28,847          28,011
                                                                                 ------------    ------------
         Total Assets ........................................................   $    688,457    $    678,121
                                                                                 ============    ============

Current Liabilities
    Accounts payable .........................................................   $     24,638    $     24,723
    Accrued liabilities ......................................................         66,961          66,807
    Rents payable ............................................................         11,839          27,211
    Unredeemed tickets .......................................................         12,001          11,750
    Current portion of claims liability ......................................          2,935           2,596
    Current maturities of long-term debt .....................................          7,975           5,079
                                                                                 ------------    ------------
         Total Current Liabilities ...........................................        126,349         138,166

Pension obligation ...........................................................         46,432           3,205
Claims liability .............................................................         18,615           5,698
Long-term debt, net ..........................................................        272,591         267,887
Minority interests ...........................................................          6,166           4,594
Other liabilities ............................................................         30,385          20,746
                                                                                 ------------    ------------
         Total Liabilities ...................................................        500,538         440,296

Redeemable preferred stock (2,400,000 shares authorized; 106,050
         shares issued as of December 31, 2000) ..............................             --           2,651

Commitments and Contingencies (Notes 1, 2, 15 and 16)

Stockholder's Equity
     Common stock (1,000 shares authorized; par value $.01; 587 shares issued)             --              --
     Capital in excess of par value ..........................................        320,391         321,237
     Retained deficit ........................................................        (79,003)        (80,945)
     Accumulated other comprehensive loss, net of tax benefit of $28,791
         and $2,756 ..........................................................        (53,469)         (5,118)
                                                                                 ------------    ------------
         Total Stockholder's Equity ..........................................        187,919         235,174
                                                                                 ------------    ------------
         Total Liabilities and Stockholder's Equity ..........................   $    688,457    $    678,121
                                                                                 ============    ============
</Table>

        The accompanying notes are an integral part of these statements.



                                       30
<PAGE>


                     GREYHOUND LINES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                    YEARS ENDED DECEMBER 31,
                                                          --------------------------------------------
                                                              2001            2000            1999
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
Operating Revenues
   Passenger services .................................   $    864,101    $    861,790    $    783,299
   Package express ....................................         41,222          42,441          41,510
   Food services ......................................         43,673          43,042          39,124
   Other operating revenues ...........................         73,424          67,044          62,057
                                                          ------------    ------------    ------------
         Total Operating Revenues .....................      1,022,420       1,014,317         925,990
                                                          ------------    ------------    ------------
Operating Expenses
   Maintenance ........................................        101,507          94,659          90,999
   Transportation .....................................        257,013         254,003         220,477
   Agents' commissions and station costs ..............        190,445         185,772         175,550
   Marketing, advertising and traffic .................         35,536          31,535          31,325
   Insurance and safety ...............................         60,165          52,867          51,178
   General and administrative .........................        129,406         125,234         119,396
   Depreciation and amortization ......................         48,911          45,067          44,396
   Operating taxes and licenses .......................         63,161          61,209          59,818
   Operating rents ....................................         72,527          84,912          78,222
   Cost of goods sold - food services .................         29,275          28,812          26,045
   Other operating expenses ...........................          4,562           6,447           3,054
                                                          ------------    ------------    ------------
         Total Operating Expenses .....................        992,508         970,517         900,460
                                                          ------------    ------------    ------------
Operating Income ......................................         29,912          43,800          25,530
Settlement of Stock Options ...........................           --              --            21,294
Interest Expense ......................................         28,963          23,542          21,993
                                                          ------------    ------------    ------------
Net Income (Loss) Before Income Taxes .................            949          20,258         (17,757)
Income Tax Provision (Benefit) ........................         (1,092)          7,702          (4,612)
Minority Interests ....................................             55             (14)          1,278
                                                          ------------    ------------    ------------
Net Income (Loss) Before Extraordinary Item ...........          1,986          12,570         (14,423)
Extraordinary Item (net of a tax benefit of $1,021) ...             --              --           1,897
                                                          ------------    ------------    ------------
Net Income (Loss) .....................................   $      1,986    $     12,570    $    (16,320)
                                                          ============    ============    ============
</Table>



        The accompanying notes are an integral part of these statements.



                                       31
<PAGE>



                     GREYHOUND LINES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                    (IN THOUSANDS, EXCEPT SHARE INFORMATION)

<Table>
<Caption>
                                                                                                         ACCUMULATED       TOTAL
                                                                                 CAPITAL IN                 OTHER      COMPREHENSIVE
                                           COMMON STOCK      TREASURY STOCK      EXCESS OF    RETAINED  COMPREHENSIVE     INCOME
                                         SHARES    AMOUNT   SHARES     AMOUNT    PAR VALUE     DEFICIT       LOSS         (LOSS)
                                         ------    ------   ------    -------    ----------   --------  -------------  ------------
<S>                                     <C>        <C>      <C>       <C>        <C>          <C>       <C>            <C>

BALANCE, JANUARY 1, 1999                    602    $   --        1    $(1,038)   $ 238,044    $(71,761)   $ (7,232)
Issuance of stock in connection with
   employee benefits plans                   --        --       --         --         (108)         --          --
Dividends on preferred stock                 --        --       --         --           --      (4,101)         --
Purchase and cancellation of shares         (15)       --       (1)     1,038     (267,969)         --          --
Redemption of preferred stock                --        --       --         --       (6,012)         --          --
Issuance of stock to Laidlaw                 --        --       --         --      358,658          --          --
Comprehensive Income (Loss):
   Market value adjustment for
     securities held                         --        --       --         --           --          --         682    $      682
   Adjustment for minimum pension
       obligation, net of tax of $1,821      --        --       --         --           --          --       4,025         4,025
   Net Loss                                  --        --       --         --           --     (16,320)         --       (16,320)
                                                                                                                      ----------
              Total Comprehensive (Loss)                                                                              $  (11,613)
                                         ------    ------   ------    -------    ---------    --------    --------    ==========

BALANCE, DECEMBER 31, 1999                  587        --       --         --      322,613     (92,182)     (2,525)

Dividends on preferred stock                 --        --       --         --           --      (1,333)         --
Redemption of preferred stock                --        --       --         --      (13,096)         --          --
Purchase and cancellation of shares          --        --       --         --     (256,884)         --          --
Issuance of stock to Laidlaw                 --        --       --         --      268,604          --          --
Comprehensive Income (Loss):
   Adjustment for minimum pension
       obligation, net of tax of $1,396      --        --       --         --           --          --      (2,593)   $   (2,593)
   Net Income                                --        --       --         --           --      12,570          --        12,570
                                                                                                                      ----------
              Total Comprehensive Income                                                                              $    9,977
                                         ------    ------   ------    -------    ---------    --------    --------    ==========
BALANCE, DECEMBER 31, 2000                  587        --       --         --      321,237     (80,945)     (5,118)

Dividends on preferred stock                 --        --       --         --           --         (44)         --
Redemption of preferred stock                --        --       --         --         (846)         --          --
Comprehensive Income (Loss):
   Market value adjustment for
     securities held, net of tax of $89      --        --       --         --           --          --         166    $      166
   Adjustment for minimum pension
       obligation, net of tax of $26,124     --        --       --         --           --          --     (48,517)      (48,517)
   Net Income                                --        --       --         --           --       1,986          --         1,986
                                                                                                                      ----------
              Total Comprehensive (Loss)                                                                              $  (46,365)
                                         ------    ------   ------    -------    ---------    --------    --------    ==========

BALANCE, DECEMBER 31, 2001                  587    $   --       --    $    --    $ 320,391    $(79,003)   $(53,469)
                                         ======    ======   ======    =======    =========    ========    ========
</Table>



        The accompanying notes are an integral part of these statements.


                                       32
<PAGE>



                     GREYHOUND LINES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                               YEARS ENDED DECEMBER 31,
                                                                    --------------------------------------------
                                                                        2001            2000            1999
                                                                    ------------    ------------    ------------
<S>                                                                 <C>             <C>             <C>
Cash Flows From Operating Activities
   Net Income (Loss)............................................... $      1,986    $     12,570    $    (16,320)
   Extraordinary item..............................................           --              --           1,897
   Non-cash expenses and gains included in net income (loss)
     Depreciation and amortization.................................       48,911          45,067          44,396
     Other non-cash expenses and gains, net........................        9,087           3,385         (10,922)
  Net Change in Certain Operating Assets and Liabilities
     Accounts receivable...........................................       (2,045)        (11,093)         (4,855)
     Inventories...................................................         (621)           (294)         (1,789)
     Prepaid expenses..............................................       (2,311)            847            (482)
     Other current assets..........................................          783             626           8,052
     Insurance and security deposits...............................       (4,450)         (2,472)         45,828
     Intangible assets.............................................       (7,082)         (5,312)         (4,583)
     Accounts payable..............................................          (85)            899          (3,964)
     Due to Laidlaw................................................           --         (18,904)         28,505
     Accrued liabilities and rents payable.........................      (15,232)         14,683          17,451
     Claims liability..............................................       13,256             981         (28,350)
     Unredeemed tickets............................................          251            (206)           (186)
     Other liabilities.............................................        8,557          (8,304)            269
                                                                    ------------    ------------    ------------
        Net Cash Provided by Operating Activities..................       51,005          32,473          74,947
                                                                    ------------    ------------    ------------

Cash Flows From Investing Activities
     Capital expenditures..........................................      (36,011)        (63,735)        (78,915)
     Proceeds from assets sold.....................................        2,035          23,059           6,052
     Payments for business acquisitions, net of cash acquired......       (1,320)             --          (7,491)
     Other investing activities....................................        1,548            (521)           (796)
                                                                    ------------    ------------    ------------
        Net Cash Used for Investing Activities.....................      (33,748)        (41,197)        (81,150)
                                                                    ------------    ------------    ------------

Cash Flows From Financing Activities
     Payments on debt and capital lease obligations................       (5,765)         (5,812)        (11,919)
     Redemption of Preferred Stock.................................       (3,497)        (52,399)        (24,058)
     Proceeds from issuance of Common Stock to Laidlaw.............           --         268,604         358,658
     Purchase of Common Stock from Laidlaw.........................           --        (256,884)       (266,931)
     Redemption of 8 1/2% Debentures...............................          (32)           (205)         (3,740)
     Payment of Preferred Stock dividends..........................          (44)         (2,241)         (4,355)
     Net change in revolving credit facility.......................       (4,148)         62,148         (37,785)
     Proceeds from equipment borrowings............................        7,850              --              --
     Other financing activities....................................         (914)         (2,576)           (108)
                                                                    ------------    ------------    ------------
        Net Cash (Used) Provided by Financing Activities...........       (6,550)         10,635           9,762
                                                                    ------------    ------------    ------------

Net Increase in Cash and Cash Equivalents..........................       10,707           1,911           3,559
Cash and Cash Equivalents, Beginning of Year.......................       10,206           8,295           4,736
                                                                    ------------    ------------    ------------
Cash and Cash Equivalents, End of Year............................. $     20,913    $     10,206    $      8,295
                                                                    ============    ============    ============
</Table>


        The accompanying notes are an integral part of these statements.


                                       33
<PAGE>


                     GREYHOUND LINES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

1. BACKGROUND AND OPERATING ENVIRONMENT

     Greyhound Lines, Inc. and subsidiaries ("Greyhound" or the "Company") is
the only nationwide provider of scheduled intercity bus service in the United
States. The Company provides various services including scheduled passenger
service, package express service, travel services and food service at certain
terminals. The Company's operations include a nationwide network of terminal and
maintenance facilities, a fleet of approximately 2,900 buses and approximately
1,800 sales outlets. The Company's wholly-owned operating subsidiaries include
Texas, New Mexico & Oklahoma Coaches, Inc. ("TNM&O"), Vermont Transit Co., Inc.
("Vermont Transit"), Carolina Coach Company ("Carolina Coach"), Valley Transit
Co., Inc., On Time Delivery Service, Inc., LSX Delivery, L.L.C., Greyhound
Xpress Delivery, L.L.C., Greyhound Shore Services, L.L.C., and Peoria Rockford
Bus Lines, L.L.C. Additionally, the Company maintains investments in several
other companies, principally joint ventures with Mexico-based bus carriers and
U.S.-based carriers that primarily serve Spanish-speaking markets. The Company
is subject to regulation by the Department of Transportation (the "DOT") and
certain states.

     On March 16, 1999, the Company's stockholders approved the Agreement and
Plan of Merger with Laidlaw Inc. ("Laidlaw") pursuant to which the Company
became a wholly owned subsidiary of Laidlaw (the "Merger). The consolidated
financial statements of the Company do not reflect any purchase accounting
adjustments relating to the Merger.

     As a result of the Merger, the Company incurred $21.3 million in charges
during 1999 related to the settlement of the Company's outstanding stock
options.

     On June 28, 2001, as part of a financial restructuring, Laidlaw USA, Inc.,
Laidlaw Inc., Laidlaw International Finance Corporation, Laidlaw Investments
Ltd., Laidlaw One, Inc. and Laidlaw Transporation, Inc. filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Western District of New York, under a
jointly administered case captioned, In re: Laidlaw USA, Inc., et al, Case No.
01-14099. On that date, Laidlaw Inc. and Laidlaw Investments Ltd. also filed
cases under the Canada Companies' Creditors Arrangement Act in the Ontario
Superior Court of Justice in Toronto, Canada, court file no. 01-CL-4178.

     Laidlaw is the ultimate parent company of Greyhound. Neither Greyhound nor
any of its subsidiaries were included in, or made party to, these reorganization
filings and proceedings.

     In August 2000, Laidlaw requested and authorized Greyhound to seek funding
from outside sources to satisfy the Company's seasonal cash requirements and
capital expenditure programs. On October 24, 2000, the Company entered into a
two-year $125 million revolving credit facility to fund its working capital and
near-term capital expenditure needs. With the closure of this agreement
Greyhound became independent of Laidlaw for financing purposes. On November 14,
2001, the revolving credit agreement was amended whereby the expiration date was
extended one year and the letter of credit sub-facility was increased from $25.0
million to $35.0 million.

     The reorganization filings and proceedings do not cause a cross default
with any of the Company's debt which would place the Company's debt in default
with its financial institutions and, as of the date of this report, the Company
is in compliance with all covenants in its various debt agreements. Although the
outcome of the foregoing matters is uncertain, management believes that the
likely outcome will have no material impact on the Company's financial position,
cash flows or results of operations.



                                       34
<PAGE>


2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of
the Company. Investments in companies that are 20% to 50% owned ("affiliates")
are accounted for using the equity method. All significant intercompany
transactions and balances have been eliminated.

Certain Reclassifications

     Certain reclassifications have been made to the prior period statements to
conform them to the current year presentation.

Cash and Cash Equivalents

     Cash and cash equivalents include short-term investments that are part of
the Company's cash management portfolio. These investments are highly liquid and
have original maturities of three months or less.

Inventories

     Inventories are stated at the lower of cost or market, with costs
determined using the weighted average method.

Property, Plant and Equipment

     Property, plant and equipment, including capitalized leases, are recorded
at cost, including interest during construction, if any. Depreciation is
recorded over the estimated useful lives or lease terms and range from three to
twenty years for structures and improvements, four to eighteen years for revenue
equipment, and five to ten years for all other items. The Company principally
uses the straight-line method of depreciation for financial reporting purposes
and accelerated methods for tax reporting purposes. Maintenance costs are
expensed as incurred, and renewals and betterments are capitalized.

Investments in Equity and Debt Securities

     At December 31, 2001, the Company held one equity security and several debt
securities which are classified as "available-for-sale" securities and reported
at fair value. Any temporary gains and losses associated with changes in market
value of the securities are excluded from operating results and are recognized,
net of taxes, as a separate component of stockholders' equity until realized.
Fair value of securities is determined based on market prices and gains and
losses are determined using the securities' cost.

     During 1999, the Company's equity investment had ceased trading on a
national exchange and the Company accounted for this investment on the
historical cost basis at December 31, 1999. During 2000, this investment resumed
active trading at a significantly lower trading value than its historical cost.
As a result, the Company recognized in its operating results for 2000 a
permanent reduction of value of $1.8 million, before taxes, for this investment.

Goodwill

     Goodwill represents the excess of cost over fair value of assets as
prescribed by the purchase method of accounting. The Company is amortizing
goodwill on a straight-line basis over a 10 to 30 year period.

Debt Issuance Costs

     Costs incurred related to the issuance of debt are deferred, and such costs
are amortized to interest expense over the life of the related debt.


                                       35
<PAGE>


Software Development Costs

     Direct costs of materials and services consumed in developing or obtaining
internal use software and certain payroll costs for employees directly
associated with internal use software projects are capitalized. Amortization of
these costs begins when the software is available for its intended use and is
recognized on a straight-line basis over 5 years.

Claims Liability

     The Company maintains comprehensive automobile liability, general
liability, worker's compensation and property insurance to insure its assets and
operations. The Company had previously purchased insurance through Laidlaw with
coverage subject to a $50,000 deductible for physical damage to Company property
and no deductible for all other claims. Effective with the beginning of the
Company's new policy year, September 1, 2001, the Company purchased coverage
from third-party insurers for claims up to $5 million with coverage subject to a
$3 million deductible for automobile liability and a $1 million deductible for
both general liability and workers' compensation. The Company purchases excess
coverage for automobile liability, general liability and workers' compensation
insurance through Laidlaw for claims which exceed $5 million. The Company has
continued to purchase from Laidlaw coverage for physical damage to Company
property subject to a $50,000 deductible.

     Claims resolved against the Company, which do not exceed the deductible,
are paid out of operating cash flows. A claims liability has been established
for these claims payments and is based on an assessment of actual claims and
claims incurred but not reported, discounted at 6.0%. The reserve is developed
using actuarial principles and assumptions which consider a number of factors,
including historical claim payment patterns and changes in case reserves, the
assumed rate of increase in health care costs and property damage repairs, and
the discount rate. The amount of these reserves could differ from the Company's
ultimate liability related to these claims due to changes in the Company's
accident reporting, claims payment and settlement practices or claims reserve
practices, as well as differences between assumed and future cost increases and
discount rates. This liability also includes an estimate of environmental
liabilities. The environmental liability includes all sites identified for
potential clean-up and/or remediation and represents the present value of
estimated cash flows discounted at 8.0%.

Revenue Recognition

     Passenger services revenue is recognized when transportation is provided
rather than when a ticket is sold. The amount of passenger ticket sales not yet
recognized as revenue is reflected as unredeemed tickets on the Consolidated
Statements of Financial Condition. Evaluations of this estimated liability are
performed periodically and any adjustments are included in results of operations
during the periods in which the evaluations are completed. These adjustments
relate primarily to differences between the Company's statistical estimation of
refunds, travel dates, interline transactions, and sales from manual locations,
for which the final settlement or travel occurs in periods subsequent to the
sale of the related tickets at amounts or for travel dates other than as
originally estimated. Because the majority of the Company's customers purchase
their tickets on the day of departure, the liability for unredeemed tickets, and
any related adjustments, have been materially consistent from year to year.

Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.



                                       36
<PAGE>


Long-Lived Assets

     Identifiable intangibles, long-lived assets and goodwill are assessed for
impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Important factors which could trigger an
impairment review include significant underperformance relative to historical or
projected future operating results, significant changes in the use of the
acquired assets or the strategy for the overall business, and significant
negative industry or economic trends. If indicators of impairment are present,
management evaluates the carrying value of property and equipment and
intangibles, including goodwill, in relation to the projection of future
undiscounted cash flows of the underlying business. Projected cash flows are
based on historical results adjusted to reflect management's best estimate of
future market and operating conditions, which may differ from actual cash flow.

New Accounting Pronouncements

     In 2002, Statement of Financial Accounting Standards No. 142, "Accounting
for Goodwill and Other Intangible Assets" became effective and as a result, the
Company will cease to amortize goodwill and indefinite lived intangible assets.
During 2001, the Company recorded $2.6 million of amortization related to these
items and would have recorded a similar amount during 2002. In lieu of
amortization, the Company is required to perform an initial impairment review of
goodwill during the first six months of 2002 and then on a periodic basis
thereafter. The Company has not yet determined what effect, if any, the initial
impairment review will have on the Company's financial position and results of
operations.


3. STATEMENTS OF CASH FLOWS SUPPLEMENTARY DISCLOSURES

     Cash paid for interest was $27.4 million, $22.4 million and $22.3 million
for the years ended December 31, 2001, 2000 and 1999, respectively. During the
year ended December 31, 2000, the Company made cash payments of $5.8 million to
Laidlaw for the Company's share of federal income taxes, based upon the
Company's separate taxable income, included by Laidlaw on its U.S. consolidated
tax return for the tax year ended August 31, 1999. There were no cash payments
for federal income taxes for the years ended December 31, 2001 and 1999.

     In 2001, non-cash investing and financing activities included $7.2 million
of buses acquired with seller provided financing. In 2000, non-cash investing
and financing activities included the issuance of $33.3 million of subordinated
debt to Laidlaw in satisfaction of accounts payable due from the Company to
Laidlaw and $3.2 million of buses acquired under a capital lease. In 1999,
non-cash investing and financing activities included a sale of property in
exchange for a $2 million note that was repaid in 2000.


4. INVENTORIES

     Inventories consisted of the following (in thousands):

<Table>
<Caption>
                                                 DECEMBER 31,
                                         ----------------------------
                                             2001            2000
                                         ------------    ------------
<S>                                      <C>             <C>

Service parts ........................   $      5,822    $      4,854
Fuel .................................            700             874
Food service operations ..............          2,064           2,089
                                         ------------    ------------
   Total Inventories .................          8,586           7,817
   Less:  Allowance for shrinkage ....           (177)            (29)
                                         ------------    ------------
      Inventories, net ...............   $      8,409    $      7,788
                                         ============    ============
</Table>




                                       37
<PAGE>


5. PREPAID EXPENSES

     Prepaid expenses consisted of the following (in thousands):

<Table>
<Caption>
                                    DECEMBER 31,
                            ---------------------------
                                2001           2000
                            ------------   ------------
<S>                         <C>            <C>

Taxes and licenses ......   $      2,773   $      2,241
Insurance ...............          2,102            598
Rents ...................            660          1,205
Other ...................          1,623            803
                            ------------   ------------
  Prepaid expenses ......   $      7,158   $      4,847
                            ============   ============
</Table>


6. BENEFIT PLANS

Pension Plans

     The Company has nine defined benefit pension plans. The first plan (the
"ATU Plan") covers substantially all of the ongoing hourly employees hired
before November 1, 1983. The ATU Plan provides normal retirement benefits to the
covered employees based upon a percentage of average final earnings, reduced pro
rata for service of less than 15 years. Under the terms of the Company's
collective bargaining agreement participants in the ATU Plan continue to accrue
benefits as long as no contributions are due from the Company. The ATU Plan
actuary advised the Company and the union that the decline in the stock market
during 2001 had made it likely that contributions to the ATU Plan would be
required in calendar year 2002. The Company and union met and agreed to freeze
service and wage accruals effective March 15, 2002. Before November 1, 2002, the
ATU Plan actuary will review the situation for 2003. If no contributions from
the Company will be required in 2003, the current freeze of accruals may be
lifted on January 1, 2003. If it is determined that a contribution will be
required, the union and the Company will meet to negotiate a method of avoiding
the contribution. If the Company and the union are unable to agree upon a method
to avoid a contribution the freeze will continue for at least an additional
year. The second plan covered salaried employees through May 7, 1990, when the
plan was curtailed. The third plan is a multi-employer pension plan, instituted
in 1992, to cover certain union mechanics represented by the International
Association of Machinists and Aerospace Workers. The fourth plan covered
substantially all employees at Vermont Transit through June 30, 2000, when the
plan was curtailed. The remaining plans are held by T.N.M.&O. and Carolina Coach
and cover substantially all of their salaried and hourly personnel. It is the
Company's policy to fund the minimum required contribution under existing laws.





                                       38
<PAGE>


<Table>
<Caption>
                                                          YEARS ENDED DECEMBER 31,
                                                --------------------------------------------
                                                    2001            2000            1999
                                                ------------    ------------    ------------
                                                               (IN THOUSANDS)
<S>                                             <C>             <C>             <C>

COMPONENTS OF NET PERIODIC PENSION COST:

Service Cost ................................   $      4,828    $      4,953    $      5,309
Interest Cost ...............................         51,405          51,966          50,605
Expected Return on Assets ...................        (53,191)        (58,725)        (56,785)
Amortization of Actuarial (Gain) Loss .......            692             438             (34)
                                                ------------    ------------    ------------
Net Periodic Pension Expense (Income) .......   $      3,734    $     (1,368)   $       (905)
                                                ============    ============    ============
</Table>

<Table>
<Caption>
                                                                       YEARS ENDED DECEMBER 31,
                                                                    -----------------------------
                                                                        2001             2000
                                                                    ------------     ------------
                                                                           (IN THOUSANDS)
<S>                                                                 <C>              <C>

CHANGE IN BENEFIT OBLIGATION:


Benefit Obligation at Beginning of Year .........................   $    698,473     $    736,138
Service Cost ....................................................          4,828            4,953
Interest Cost ...................................................         51,405           51,966
Plan Participants' Contributions ................................            448              110
Actuarial (Gain) Loss ...........................................         37,201          (14,915)
Benefits Paid ...................................................        (78,850)         (79,779)
                                                                    ------------     ------------
Benefit Obligation at End of Year ...............................   $    713,505     $    698,473
                                                                    ------------     ------------

CHANGE IN PLAN ASSETS:

Fair Value of Plan Assets at Beginning of Year ..................   $    740,098     $    795,466
Actual Return on Plan Assets ....................................         (7,473)          20,554
Employer Contributions ..........................................          2,665            3,747
Plan Participants' Contributions ................................            448              110
Benefits Paid ...................................................        (78,850)         (79,779)
                                                                    ------------     ------------
Fair Value of Plan Assets at End of Year ........................   $    656,888     $    740,098
                                                                    ------------     ------------

Funded Status ...................................................   $    (56,617)    $     41,625
Unrecognized Net Loss (Gain) ....................................         92,700           (4,473)
                                                                    ------------     ------------
Prepaid Benefit Cost (Net Amount Recognized) ....................   $     36,083     $     37,152
                                                                    ============     ============

AMOUNTS RECOGNIZED IN THE STATEMENTS OF FINANCIAL POSITION:

Prepaid Benefit Cost ............................................   $         --     $     32,483
Accrued Benefit Liability .......................................        (46,432)          (3,205)
Accumulated Other Comprehensive Loss ............................         82,515            7,874
                                                                    ------------     ------------
Prepaid Benefit Cost (Net Amount Recognized) ....................   $     36,083     $     37,152
                                                                    ============     ============
</Table>

     In determining the benefit obligations and service costs for the Company's
defined benefit pension plans, the following assumptions were used:

<Table>
<Caption>
                                                                       YEARS ENDED DECEMBER 31,
                                                                    -----------------------------
                                                                        2001             2000
                                                                    ------------     ------------
<S>                                                                 <C>              <C>

WEIGHTED-AVERAGE ASSUMPTIONS FOR END OF YEAR DISCLOSURE:

Discount Rate ...................................................           7.25%            7.76%
Rate of Salary Progression ......................................           4.10%            4.10%
Expected Long-Term Rate of Return on Plan Assets ................           7.52%            7.78%
</Table>



                                       39
<PAGE>


     Statement of Financial Accounting Standards No. 87, "Employers Accounting
for Pensions," required the Company to record an increase in the minimum
liability of $48.5 million, net of a tax benefit of $26.1 million, as of
December 31, 2001 and an increase in the minimum liability of $2.6 million, net
of a tax benefit of $1.4 million, as of December 31, 2000. These amounts are
reflected as a component of comprehensive income.

     As of December 31, 2001, five of the Company's pension plans have
accumulated benefit obligations in excess of plan assets, for which the
projected benefit obligations, accumulated benefit obligations and fair value of
plan assets are $705,271, $697,388 and $649,417, respectively. As of December
31, 2000, two of the Company's pension plans have accumulated benefit
obligations in excess of plan assets, for which the projected benefit
obligations, accumulated benefit obligations and fair value of plan assets are
$43,438, $43,438 and $41,316, respectively. As of December 31, 2001, seven of
the Company's pension plans have projected benefit obligations in excess of plan
assets, for which the projected benefit obligations, accumulated benefit
obligations and fair value of plan assets are $713,310, $704,302 and $656,680,
respectively. As of December 31, 2000, four of the Company's pension plans have
projected benefit obligations in excess of plan assets, for which the projected
benefit obligations, accumulated benefit obligations and fair value of plan
assets are $49,514, $48,856 and $47,328, respectively.

     Plan assets consist primarily of government-backed securities, corporate
equity securities, guaranteed insurance contracts, annuities and corporate debt
obligations.

     Included in the above is a multi-employer pension plan, instituted in 1992,
to cover certain union mechanics, for which the Company made contributions of
$0.7 million and $0.8 million for the years ended December 31, 2001 and 2000,
respectively.

Cash or Deferred Retirement Plans

     The Company sponsors 401(k) cash or deferred retirement plans that cover
substantially all of its ongoing salaried, hourly and represented employees.
Costs to the Company related to these plans were $3.1 million, $3.3 million, and
$2.9 million for the years ended December 31, 2001, 2000 and 1999, respectively.

Other Plans

     A contributory trusteed health and welfare plan has been established for
all active hourly employees represented by the ATU National Local 1700 for
drivers, mechanics, and the Omaha Ticket Information Center. Other employees who
are represented by a collective bargaining agreement may be under a Greyhound
contributory health and welfare plan or a multi-employer plan established by the
respective union. A contributory health and welfare plan has been established
for salaried employees and all other hourly employees who are not represented by
collective bargaining agreements. For the years ended December 31, 2001, 2000
and 1999, the Company incurred costs of $28.5 million, $27.5 million, and $21.9
million, respectively, related to these plans. No post-retirement health and
welfare plans exist.

     The Company also has a defined contribution Supplemental Executive
Retirement Plan (the "SERP"), which covers only key executives of the Company.
For the years ended December 31, 2001, 2000 and 1999, the Company incurred costs
of $0.8 million, $0.7 million and $0.8 million, respectively, related to the
SERP.



                                       40
<PAGE>


7. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consisted of the following (in thousands):

<Table>
<Caption>
                                                          DECEMBER 31,
                                                 ----------------------------
                                                     2001            2000
                                                 ------------    ------------
<S>                                              <C>             <C>

Land and improvements ........................   $     90,000    $     83,310
Structures and improvements
  Owned ......................................        139,042         129,200
  Capitalized leased assets ..................          1,172           1,397
  Lease interests ............................          4,376           4,376
  Leasehold improvements .....................         42,272          38,989
Revenue equipment
  Owned ......................................        256,324         242,707
  Capitalized leased assets ..................         18,005          21,719
  Leasehold improvements .....................          7,906           5,918
Furniture and fixtures .......................         66,449          60,275
Vehicles, machinery and equipment ............         15,983          14,903
                                                 ------------    ------------
Property, plant and equipment ................        641,529         602,794
    Accumulated depreciation .................       (229,502)       (193,724)
                                                 ------------    ------------
        Property, plant and equipment, net ...   $    412,027    $    409,070
                                                 ============    ============
</Table>


     During 2001, the Company took delivery of 154 new buses, all but 10 of
which were manufactured by Motor Coach Industries, Inc. ("Motor Coach"). The
Company purchased 49 of these buses and 105 were financed as long-term operating
leases.

     During 2000, the Company took delivery of 289 new buses, all but 50 of
which were manufactured by Motor Coach. The Company purchased 117 of these
buses, 162 were financed as long-term operating leases and 10 were financed as
capital leases. In addition, the Company purchased 46 buses from an expiring
operating lease.

     Accumulated depreciation of capitalized leased revenue equipment amounted
to $5.4 million and $4.8 million at December 31, 2001, and 2000, respectively.


8. INSURANCE AND SECURITY DEPOSITS

     Insurance and security deposits consisted of the following (in thousands):

<Table>
<Caption>
                                                        DECEMBER 31,
                                                ---------------------------
                                                    2001           2000
                                                ------------   ------------
<S>                                             <C>            <C>
Insurance deposits ..........................   $     22,241   $     17,294
Security deposits ...........................          5,862          6,095
Other .......................................          1,039          1,303
                                                ------------   ------------
        Insurance and security deposits .....   $     29,142   $     24,692
                                                ============   ============
</Table>

     The Company is required by the DOT, some states and some of its insurance
carriers to maintain collateral deposits or provide other security pursuant to
its insurance program. In addition to the collateral deposits reflected in the
table above, at December 31, 2001 the Company also issued $20.5 million of
letters of credit in support of these programs.




                                       41
<PAGE>


9. INTANGIBLE ASSETS

     Intangible assets consisted of the following (in thousands):

<Table>
<Caption>
                                          DECEMBER 31,
                                  ----------------------------
                                      2001            2000
                                  ------------    ------------
<S>                               <C>             <C>

Trademarks ....................   $     10,237    $     10,237
Software ......................         46,070          42,463
Debt issuance costs ...........          9,758           8,829
Deferred lease costs ..........          3,847           3,847
Other .........................            346             206
                                  ------------    ------------
Intangible assets .............         70,258          65,582
  Accumulated amortization ....        (41,411)        (37,571)
                                  ------------    ------------
    Intangible assets, net ....   $     28,847    $     28,011
                                  ============    ============
</Table>

     Trademarks are amortized using the straight-line method over 15 years.


10. ACCRUED LIABILITIES

     Accrued liabilities consisted of the following (in thousands):

<Table>
<Caption>
                                                               DECEMBER 31,
                                                       ---------------------------
                                                           2001           2000
                                                       ------------   ------------
<S>                                                    <C>            <C>

Compensation, benefits and payroll-related taxes ...   $     26,889   $     25,274
Unvouchered invoices ...............................         11,010         11,730
Interest ...........................................          4,083          4,255
Operating, property and income taxes ...............          6,360          7,647
Other expenses .....................................         18,619         17,901
                                                       ------------   ------------
    Accrued liabilities ............................   $     66,961   $     66,807
                                                       ============   ============
</Table>

11. LONG-TERM DEBT

     Long-term debt consisted of the following (in thousands):

<Table>
<Caption>
                                                                                           DECEMBER 31,
                                                                                   ----------------------------
                                                                                       2001            2000
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>

Secured Indebtedness
  Revolving bank loan, prime plus 0.5% or LIBOR plus 2.0% (weighted average
    4.0% at December 31, 2001 and 8.7% at
    December 31, 2000) due 2003 ................................................   $     58,000    $     62,148
  Capital lease obligations (weighted average 9.8% at December 31, 2001
    and 9.9% at December 31, 2000) due through 2033 ............................         16,143          18,629
  Real estate and equipment notes (weighted average 9.7% at December
    31, 2001 and 11.0% at December 31, 2000) due through 2008 ..................         15,526           1,625
Unsecured Indebtedness
  11 1/2% Senior notes, due 2007 ...............................................        150,000         150,000
  Laidlaw subordinated debt (2.5% at December 31, 2001 and
    5.9% at December 31, 2000) due 2004 ........................................         35,036          33,604
  8 1/2% Convertible debentures, due 2007 ......................................          5,613           5,674
  Other long-term debt (weighted average 7.9% at December 31, 2001
    and 5.6% at December 31, 2000) due through 2008 ............................            248           1,286
                                                                                   ------------    ------------
Long-term debt .................................................................        280,566         272,966
  Less current maturities ......................................................         (7,975)         (5,079)
                                                                                   ------------    ------------
      Long-term debt, net ......................................................   $    272,591    $    267,887
                                                                                   ============    ============
</Table>


                                       42
<PAGE>


     At December 31, 2001, maturities of long-term debt for the next five years
ending December 31 and all years thereafter, are as follows (in thousands):

<Table>
<S>                                                    <C>
             2002..................................    $    7,975
             2003..................................        68,969
             2004..................................        37,396
             2005..................................         2,193
             2006..................................         1,687
             Thereafter............................       162,346
                                                       ----------
                                                       $  280,566
                                                       ==========
</Table>

Revolving Credit Facility

     The Company is party to a $125 million revolving credit facility, with a
$35 million letter of credit sub-facility, ("Revolving Credit Facility") with
Foothill Capital Corporation. Letters of credit or borrowings are available
under the Revolving Credit Facility subject to a maximum of $125 million based
upon 85% of the appraised wholesale value of certain bus collateral and 50% of
the fair market value of certain real property collateral. As of December 31,
2001, the Company had outstanding borrowings under the Revolving Credit Facility
of $58.0 million, issued letters of credit of $26.5 million and availability of
$40.5 million. Borrowings under the Revolving Credit Facility were available to
the Company at December 31, 2001 at a rate equal to Wells Fargo Bank's prime
rate plus 0.5% per annum or LIBOR plus 2.0% as selected by the Company. The
interest rates are subject to quarterly adjustment based upon the Company's
ratio of debt to earnings before interest, taxes, depreciation and amortization
as defined in the agreement ("EBITDA") for the four previous quarters. Letter of
credit fees are based on the then applicable LIBOR margin. The Revolving Credit
Facility is secured by liens on substantially all of the assets of the Company
and the stock and assets of certain of its subsidiaries. The Revolving Credit
Facility is subject to certain affirmative and negative operating and financial
covenants, including maximum total debt to EBITDA ratio; minimum EBITDA to
interest ratio; minimum shareholder's equity; limitation on non-bus capital
expenditures; limitations on additional liens, indebtedness, guarantees, asset
disposals, advances, investments and loans; and restrictions on the redemption
or retirement of certain subordinated indebtedness or equity interest, payment
of dividends and transactions with affiliates, including Laidlaw. As of December
31, 2001, the Company was in compliance with all such covenants.

11 1/2% Senior Notes

     The Company's 11 1/2% Senior Notes due 2007 (the "11 1/2% Senior Notes")
bear interest at the rate of 11 1/2% per annum, payable each April 15 and
October 15. The 11 1/2% Senior Notes are redeemable at the option of the Company
in whole or in part, at any time on or after April 15, 2002, at redemption
prices of 105.750% in 2002, 103.834% in 2003, 101.917% in 2004 and 100% in 2005
and thereafter plus any accrued but unpaid interest. The 11 1/2% Senior Note
indenture contains certain covenants that, among other things, limit the ability
of the Company to incur additional indebtedness, pay dividends or make other
distributions, repurchase equity interests or subordinated indebtedness, create
certain liens, sell assets or enter into certain mergers or consolidations. As
of December 31, 2001, the Company was in compliance with all such covenants.

Laidlaw Subordinated Debt

     The intercompany loan is subordinate to the Revolving Credit Facility and
matures 91 days after the maturity of the Revolving Credit Facility. Interest on
the loan accrues at the Applicable Federal Rate and is payable at maturity.

8 1/2% Convertible Debentures

     Interest on the 8 1/2% Convertible Subordinated Debentures due 2007
("Convertible Debentures") is payable semiannually (each March 31 and September
30). The Convertible Debentures may be converted into $525.27 in cash per $1,000
principal amount of Convertible Debentures.



                                       43
<PAGE>


     For the year ended December 31, 1999, the Company recorded an extraordinary
loss of $1.9 million, net of tax benefit of $1.0 million, related to the
termination of the Company's previous revolving credit facility. The amount
represents the write-off of previously incurred debt issuance costs that were
being amortized over the life of the revolving credit facility.


12. COMMON STOCK

     In May 2001 the Company effectuated a reverse stock split whereby one share
of common stock was exchanged for every 100,000 shares outstanding. As a result
the number of common shares outstanding was reduced from 58,743,069 to 587.
Additionally, the Company's Restated Certificate of Incorporation was amended
such that the authorized number of shares of common stock, par value $.01, was
reduced from 100,000,000 shares to 1,000 shares. All of the historical shares
have been restated to reflect this reverse stock split.


13. INCOME TAXES

Tax Allocation Agreement

     Effective with the Merger, the Company became a member of Laidlaw's U.S.
consolidated tax return group ("U.S. Group") and subject to a tax allocation
agreement. The Company is allocated its share of the tax liability of the U.S.
Group or receives a benefit for any losses used by the U.S. Group based on its
separate taxable income or loss.

Income Tax Provision

     The income tax provision (benefit) consisted of the following (in
thousands):

<Table>
<Caption>
                                                        YEARS ENDED DECEMBER 31,
                                              --------------------------------------------
                                                  2001            2000            1999
                                              ------------    ------------    ------------
<S>                                           <C>             <C>             <C>
Current
   Federal ................................   $     (5,908)   $      2,087    $      2,313
   State ..................................          1,487           1,525             868
                                              ------------    ------------    ------------
         Total Current ....................         (4,421)          3,612           3,181
                                              ------------    ------------    ------------

Deferred
   Federal ................................          4,544           5,137          (7,843)
   State ..................................         (1,215)         (1,047)             50
                                              ------------    ------------    ------------
         Total Deferred ...................          3,329           4,090          (7,793)
                                              ------------    ------------    ------------
         Income tax provision (benefit) ...   $     (1,092)   $      7,702    $     (4,612)
                                              ============    ============    ============
</Table>

     Additionally, the Company recorded a $1.0 million benefit for income taxes
as an offset to the extraordinary loss recorded in 1999.

Effective Tax Rate

     The differences, expressed as a percentage of income before taxes and
extraordinary item, between the statutory and effective federal income tax rates
are as follows:

<Table>
<Caption>
                                                                           YEARS ENDED DECEMBER 31,
                                                                ---------------------------------------------
                                                                    2001             2000            1999
                                                                ------------     ------------    ------------
<S>                                                             <C>              <C>            <C>

Statutory tax rate ..........................................           35.0%            35.0%          (35.0)%
State income taxes, net of federal benefit ..................           18.6              1.5             3.4
Recognition of previously unrecognized deferred tax asset ...         (258.2)              --              --
Other .......................................................           89.5              1.5             5.6
                                                                ------------     ------------    ------------
   Effective tax rate .......................................         (115.1)%           38.0%          (26.0)%
                                                                ============     ============    ============
</Table>



                                       44
<PAGE>


Deferred Tax Assets

     Significant components of deferred income taxes were as follows (in
thousands):

<Table>
<Caption>
                                                                        DECEMBER 31,
                                                                ----------------------------
                                                                    2001            2000
                                                                ------------    ------------
<S>                                                             <C>             <C>

Deferred Tax Assets
   Federal and state NOL carryforwards ......................   $     71,216    $     76,975
   Other accrued expenses and liabilities ...................         18,809          12,653
   Pension liabilities ......................................         17,114              --
   Other deferred tax assets ................................          1,858           1,197
                                                                ------------    ------------
     Total deferred tax assets ..............................        108,997          90,825
                                                                ------------    ------------
Deferred Tax Liabilities
   Tax over book depreciation and amortization ..............         20,502          18,649
   Pension assets ...........................................             --           8,840
   Other deferred tax liabilities ...........................            148             146
                                                                ------------    ------------
     Total deferred tax liabilities .........................         20,650          27,635
                                                                ------------    ------------
Net deferred tax assets .....................................         88,347          63,190
Valuation allowance .........................................        (27,500)        (25,050)
                                                                ------------    ------------
     Net deferred tax assets, net of valuation allowance ....   $     60,847    $     38,140
                                                                ============    ============
</Table>

     During 2000, the Company recorded a $23.1 million increase in the valuation
allowance for net operating losses from prior years which may not be used before
they expire. Also in 2000, a $2.0 million reduction in the valuation allowance
was recorded due to the expiration of a net operating loss of a subsidiary,
which could only be used against its income. For 2001 an additional allowance of
$2.5 million was recorded.

Availability and Amount of NOL's

     As a result of the ownership change from the Merger and in a previous
period, Section 382 of the Internal Revenue Code places an annual limitation on
the amount of federal net operating loss ("NOL") carryforwards which the Company
and the U.S. group may utilize. Consequently, the Company's NOL carryforwards
are subject to an annual limitation of $22.2 million and a fifteen to twenty
year carryforward period. The NOL carryforwards of $184.7 million expire as
follows (in thousands):

<Table>
<S>                                                  <C>
             2005...................................  $   34,460
             2006...................................       2,865
             2007...................................       9,818
             2008...................................      17,685
             2009...................................      29,795
             2010...................................      20,105
             2011...................................      18,815
             2018...................................      46,811
             2019...................................         961
             2020...................................       1,480
             2021...................................       1,902
                                                      ----------
                                                      $  184,697
                                                      ==========
</Table>

     Included in the deferred tax assets at December 31, 2001 is $6.6 million,
less a valuation allowance of $2.0 million, for the Company's various state NOLs
which have carryforward periods of 5 to 20 years and expiration dates of 2002
and later.



                                       45
<PAGE>


14. FAIR VALUES OF FINANCIAL INSTRUMENTS

     Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments", requires disclosure of the fair value of
financial instruments. The following methods and assumptions were used by the
Company in estimating the fair value disclosures for its financial instruments.

     For cash and cash equivalents, accounts receivable and revolving bank
loans, the carrying amounts reported in the Consolidated Statements of Financial
Position approximate fair value. The fair values of the short-term deposits and
long-term insurance deposits and security deposits are based upon quoted market
prices at December 31, 2001 and 2000, where available. For the portion of
short-term deposits and long-term insurance deposits where no quoted market
price is available, the carrying amounts are believed to approximate fair value.
For the Laidlaw indebtedness and other long-term debt, the fair values are
estimated using discounted cash flow analysis, based upon the Company's
incremental borrowing rates for similar types of borrowing arrangements. The
fair values of the Senior Notes and the Convertible Debentures were based upon
quoted market prices at December 31, 2001 and 2000.

     The carrying amounts and fair values of the Company's financial instruments
are as follows (in thousands):

<Table>
<Caption>
                                                          DECEMBER 31, 2001               DECEMBER 31, 2000
                                                   ----------------------------    ----------------------------
                                                     CARRYING           FAIR          CARRYING         FAIR
                                                      AMOUNT           VALUE           AMOUNT          VALUE
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>

Other Current Assets
  Other Deposits ...............................   $        231    $        231    $        345    $        345
Investment in Equity Securities ................            947             947             692             692
Insurance and Security Deposits
  Insurance Deposits ...........................         22,241          22,241          17,294          17,294
  Security Deposits ............................          5,862           5,862           6,095           6,095
Long-Term Debt
  Laidlaw subordinated debt ....................        (35,036)        (30,930)        (33,604)        (29,646)
  11 1/2% Senior Notes .........................       (150,000)       (138,000)       (150,000)       (112,500)
  8 1/2% Convertible Subordinated Debentures ...         (5,613)         (2,948)         (5,674)         (2,865)
  Other Long-term Debt .........................        (31,917)        (35,678)        (21,540)        (21,945)
</Table>


15. LEASE COMMITMENTS

     The Company leases certain vehicles and terminals from various parties
pursuant to capital and operating lease agreements expiring at various dates
through 2033. The leases on most of the vehicles contain certain purchase
provisions or residual value guarantees and have terms of typically seven years.
Of those leases that contain residual value guarantees, the aggregate residual
value at lease expiration is $140.3 million, of which the Company has guaranteed
$87.6 million. To date, the Company has never incurred any liability as a result
of residual value guarantees.

     For the years ended December 31, 2001, 2000 and 1999, rental expenses for
all operating leases (net of sublease rental income of approximately $3.5
million, $3.5 million and $2.8 million, respectively) amounted to $61.5 million,
$71.0 million and $76.5 million, respectively. Rental expenses for bus operating
leases, excluding casual rents and other short term leases during peak periods,
amounted to $45.2 million, $42.0 million and $39.4 million in 2001, 2000 and
1999, respectively.


                                       46
<PAGE>


     At December 31, 2001, scheduled future minimum payments (excluding any
payment related to the residual value guarantee which may be due upon
termination of the lease) for the next five years ending December 31, under the
capital leases and non-cancelable operating leases are as follows (in
thousands):

<Table>
<Caption>
                                                                   CAPITAL          OPERATING
                                                                   LEASES             LEASES
                                                                  ---------        ----------
<S>                                                               <C>              <C>

2002...........................................................   $   5,903        $   65,365
2003...........................................................       8,045            69,235
2004...........................................................         927            64,154
2005...........................................................         927            50,573
2006...........................................................         727            27,826
Thereafter.....................................................       2,660            37,785
                                                                  ---------        ----------
        Total minimum lease payments...........................      19,189        $  314,938
                                                                                   ==========
    Amounts representing interest..............................       3,046
                                                                  ---------
        Present value of minimum lease payments................   $  16,143
                                                                  =========
</Table>

16. COMMITMENTS AND CONTINGENCIES

GOLDEN STATE INDICTMENT

     In December 2001, Gonzalez, Inc. d/b/a Golden State Transportation ("Golden
State") and 22 current and former employees and agents of Golden State were
indicted as part of a 42-count federal criminal proceeding. The case, filed
before the United States District Court for the District of Arizona, is styled
U.S. v. Gonzalez, Inc, et al., Case No. CR 01-1696-TUC-RCC. The indictment
alleges that the defendants were engaged in a conspiracy, spanning over a
two-year period, to transport and harbor illegal aliens within the United
States. As part of the indictment, the U.S. Government has sought a forfeiture
of substantially all of Golden State's assets and obtained a restraining order
restricting access to bank accounts and restraining certain other real property
and vehicles. The restraining order allows Golden State to continue to operate
its business in the ordinary course and the order has been modified to permit
the payment of certain normal course expenses.

     Golden State and the individuals have pleaded not guilty to the charges.
Golden State intends to vigorously defend the matter. No trial date has been set
for this case. Golden State is currently in the process of obtaining and
assessing the significant volume of evidence amassed by the Government. At this
early stage in the proceeding, the probable outcome of this case cannot be
predicted. Additionally, management is unable to make a reasonable estimate of
the liability that may result from the final resolution of the indictment.
Accordingly, no liability relating to this matter has been recorded in the
Company's Consolidated Financial Statements.

     Greyhound has a 51.4% ownership interest in Golden State and as such
includes Golden State's results of operations and financial condition in the
Company's Consolidated Financial Statements. For the year ended December 31,
2001, Golden State accounted for 3.3% of the Company's consolidated revenues and
5.5% of consolidated operating income. At December 31, 2001, the Company's
investment in Golden State totaled $7.9 million. In addition, the Company leases
to, or guarantees the leases of, 67 of Golden State's buses. As of the date of
this report these buses are subject to $12.4 million of third-party liens, which
is comparable to management's estimate of the fair market value of the buses.


                                       47
<PAGE>


INSURANCE COVERAGE

     The predecessor agency to the STB granted the Company authority to
self-insure its automobile liability exposure for interstate passenger service
up to a maximum level of $5.0 million per occurrence, which has been continued
by the DOT. To maintain self-insurance authority, the Company is required to
provide periodic financial information and claims reports, maintain a
satisfactory safety rating by the DOT, a tangible net worth of $10.0 million (as
of December 31, 2001, the Company's tangible net worth was $116.0 million) and a
$15.0 million trust fund (currently fully funded) to provide security for
payment of claims. The Company is required by the DOT, some states and some of
its insurance carriers to maintain collateral deposits or provide other security
pursuant to its insurance program. At December 31, 2001, the Company maintained
$22.2 million of collateral deposits including the above $15.0 million trust
fund and had issued $20.5 million of letters of credit in support of these
programs.

     Insurance coverage and risk management expense are key components of the
Company's cost structure. The loss of self-insurance authority from the DOT or a
decision by the Company's insurers to modify the Company's program
substantially, by either increasing cost, reducing availability or increasing
collateral, could have a material adverse effect on the Company's liquidity,
financial condition, and results of operations.

ENVIRONMENTAL MATTERS

     The Company may be liable for certain environmental liabilities and
clean-up costs in the various facilities presently or formerly owned or leased
by the Company. Based upon surveys conducted solely by Company personnel or its
experts, 30 active and 13 inactive locations have been identified as sites
requiring potential clean-up and/or remediation as of December 31, 2001.
Additionally, the Company is potentially liable with respect to five active and
seven inactive locations which the Environmental Protection Agency ("EPA") has
designated as Superfund sites. The Company, as well as other parties designated
by the EPA as potentially responsible parties, face exposure for costs related
to the clean-up of those sites. Based on the EPA's enforcement activities to
date, the Company believes its liability at these sites will not be material
because its involvement was as a de minimis generator of wastes disposed of at
the sites. In light of its minimal involvement, the Company has been negotiating
to be released from liability in return for the payment of nominal settlement
amounts.

     The Company has recorded a total environmental liability of $8.3 million at
December 31, 2001 of which approximately $1.4 million is indemnifiable by the
predecessor owner of the Company's domestic bus operations, now known as Viad
Corp. The environmental liability relates to sites identified for potential
clean-up and/or remediation and represents the present value of estimated cash
flows discounted at 8.0%. The Company expects the majority of this environmental
liability to be paid over the next five to ten years. As of the date of this
report, the Company is not aware of any additional sites to be identified, and
management believes that adequate accruals have been made related to all known
environmental matters.

NEW YORK PORT AUTHORITY

The Company operated out of its largest sales location, the Port Authority Bus
Terminal of New York (the "Port Authority"), on a month-to-month basis pursuant
to a license agreement which expired in 1994. The Company's fee was based upon a
fixed charge for dedicated space, a fixed charge for each departing bus and a
percentage of certain ticket sales. Because the majority of the other bus
operators utilizing the Port Authority are principally commuter or local transit
operators which are exempt from paying license fees on their sales, the Company
had paid a disproportionate share of the total fees received from bus operators
that use the Port Authority relative to the Company's share of bus departures,
passengers, bus gates or square footage utilized. The Company had been
negotiating with the Port Authority for several years to structure a
market-based fee for the renewal of the license agreement and, beginning in June
1999, without Port Authority concurrence, began paying a lower fixed fee in lieu
of a percentage of sales. The lower fee payment was based on the Company's
research of the local real estate market in Midtown Manhattan and transportation
facilities nationwide, both of which demonstrated that this fee reflected fair
market value. Nevertheless, because the Company did not yet have Port Authority
concurrence for the new fee structure, the Company continued to accrue for the
license fee based upon the 1994 agreement.



                                       48
<PAGE>


     In May 2001, the Port Authority and the Company reached an agreement in
principle related to fees for the periods June 1999 through March 31, 2001 (the
"arrearage"), as well as on the form of the ongoing license fees. In August
2001, the Company and the Port Authority executed the arrearage agreement. The
agreement on the arrearage calls for payment to the Port Authority of $12
million over a 10-year period, interest free. The terms of the agreement
required an initial lump sum payment of $1 million and equal monthly
installments of $91,667 thereafter. In the second quarter of 2001, the Company
recorded a reduction in operating rents of approximately $7.5 million which
represented the accrued rent outstanding to the Port Authority at March 31, 2001
less the present value, using a discount rate of 11%, of the $12 million payback
agreement. The present value of the payback agreement, less the current portion,
is classified as part of other liabilities while the current portion is
classified as part of rents payable on the Consolidated Statements of Financial
Position. Additionally, effective April 1, 2001, with Port Authority
concurrence, the Company began paying the monthly license fee based upon a flat
fee per gate utilized and bus departure. The license fee expense recorded by the
Company utilizing this new methodology is significantly lower than the fee as
calculated under the expired agreement. The Company and the Port Authority are
currently negotiating the final details of the license agreement.

POTENTIAL PENSION PLAN FUNDING REQUIREMENTS

     The Company maintains nine defined benefit pension plans, the most
significant of which (the "ATU Plan") covers approximately 14,500 current and
former employees, fewer than 1,200 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and over 85% of its
participants are over the age of 50. Under the terms of the Company's collective
bargaining agreement participants in the ATU Plan continue to accrue benefits as
long as no contributions are due from the Company. The ATU Plan actuary advised
the Company and the union that the decline in the stock market during 2001 had
made it likely that contributions to the ATU Plan would be required in calendar
year 2002. The Company and union met and agreed to freeze service and wage
accruals effective March 15, 2002. Before November 1, 2002, the ATU Plan actuary
will review the situation for 2003. If no contributions from the Company will be
required in 2003, the current freeze of accruals may be lifted on January 1,
2003. If it is determined that a contribution will be required, the union and
the Company will meet to negotiate a method of avoiding the contribution. If the
Company and the union are unable to agree upon a method to avoid a contribution
the freeze will continue for at least an additional year.

     For financial reporting and investment planning purposes, the Company
currently uses an actuarial mortality table that closely matches the actual
experience related to the existing participant population. For funding purposes,
legislation passed by the United States Congress mandates the use of a
prescribed actuarial mortality table and discount rates that differ from those
used by the Company for financial reporting and investment planning purposes.
Based upon the application of the actuarial mortality table, discount rates and
funding calculations prescribed by current regulations, and further assuming a
continuation of the freeze of wage and service accruals and that the ATU Plan
assets can obtain annual investment returns of 7.5%, estimated Company
contributions to the ATU Plan total $51 million over the next five years.
Lowering the assumed investment return on ATU plan assets to 5% results in
estimated contributions over the next five years of $84 million, while a 10%
return results in estimated contributions over the next five years of $26
million. However, no contributions are projected during the next two years under
either of the three scenarios discussed above. Nevertheless, there is no
assurance that the ATU Plan will be able to earn the assumed rate of return,
that new regulations may result in changes in the prescribed actuarial mortality
table and discount rates, or that there will be market driven changes in the
discount rates, which would result in the Company being required to make
contributions in the future that differ significantly from the estimates above.



                                       49
<PAGE>


OTHER LEGAL PROCEEDINGS

     In addition to the Golden State Indictment, the Company is a defendant in
various lawsuits arising in the ordinary course of business, primarily cases
involving personal injury and property damage claims and employment-related
claims. Although these lawsuits involve a variety of different facts and
theories of recovery, the majority arise from traffic accidents involving buses
operated by the Company. The vast majority of these claims are covered by
insurance for amounts in excess of the deductible portion of the policies.
Management believes that there are no proceedings either threatened or pending
against the Company relating to such personal injury, property damage and
employment-related claims that, if resolved against the Company, would
materially exceed the amounts recorded as estimated liabilities by the Company.


17. RELATED PARTY TRANSACTIONS

     Following the Merger, the Company had purchased its insurance through
Laidlaw subject to a $50,000 deductible for property damage claims and no
deductible for all other claims. Effective with the beginning of the Company's
new policy year, September 1, 2001, the Company purchased excess coverage for
automobile liability, general liability and workers' compensation insurance
through Laidlaw for claims which exceed $5.0 million and continued to purchase
from Laidlaw coverage for physical damage to Company property subject to a
$50,000 deductible. For the years ended December 31, 2001, 2000 and 1999, the
Company has recorded $33.3 million, $44.2 million and $31.7 million in insurance
expense under these programs, respectively, which the Company believes is
comparable to the cost under its previous and current third-party insurance
programs. Additionally, on December 31, 1999, the Company transferred liability
for all known and unknown claims, and all related insurance reserves, associated
with the period prior to March 16, 1999 to Laidlaw for aggregate consideration
of $24.0 million, which equaled the book value of the reserves.

     During the years ended December 31, 2001 and 2000, the Company received a
refund of $4.7 million and made cash payments of $5.8 million, respectively, to
Laidlaw for the Company's share of federal income taxes, based upon the
Company's separate taxable income or loss, incurred by Laidlaw on its U.S.
consolidated tax return.

     During 2000, the Company issued $33.3 million of subordinated debt to
Laidlaw in satisfaction of accounts payable due from the Company to Laidlaw.
Additionally, during the years ended December 31, 2001 and 2000 the Company
accrued interest on this note of $1.4 million and $0.3 million, respectively. At
December 31, 2001 and 2000, $35.0 million and $33.6 million, respectively was
outstanding on this note including accrued interest.

     Laidlaw provides certain management services to the Company including risk
management, income tax and treasury services. During the years ended December
31, 2001 and 2000, Laidlaw charged the Company $3.8 million and $2.3 million for
these services, respectively.

     Laidlaw has provided credit support in the form of corporate guarantees and
letters of credit for certain of the Company's operating leases. As of December
31, 2001, Laidlaw has guaranteed $163.4 million of future minimum lease payments
on buses under lease by the Company, and has provided $22.0 million in letters
of credit.

     The Company's SERP has been funded, through a rabbi trust, with a $3.0
million letter of credit issued by Laidlaw.

     Management of the Company is responsible for managing Greyhound Canada
Transportation Corp. and affiliated companies ("GCTC"), a sister company owned
by Laidlaw. GCTC's primary business consists of scheduled passenger service,
package express service and travel services in Canada. Management services
provided to GCTC include oversight of the accounting and finance, strategic
planning, real estate, telephone information center, information technology,
travel services, marketing and pricing, internal audit and maintenance
functions. During the year ended December 31, 2001, the Company charged GCTC
$0.5 million for these services.


                                       50
<PAGE>


     The Company makes available to Hotard Coaches, Inc. ("Hotard"), a sister
company engaged in the travel services business in the U.S., a revolving credit
line subject to a maximum availability of $3.0 million. Borrowings are available
at a rate equal to the prime rate plus 2.5%, and mature the earlier of October
23, 2002 or upon 30 days notice by the Company. The revolving credit line is
secured by liens on substantially all of the assets of Hotard. At December 31,
2001, outstanding borrowings were $0.7 million. Additionally, during the year
ended December 31, 2001, the Company received $0.1 million of interest income
pursuant to this revolving credit line.

     The Company provides 55 1982 to 1987 model buses, subject to intermediate
term operating leases, to Roesch Lines, a division of Laidlaw Transit Services,
Inc., a sister company owned by Laidlaw. Roesch Lines is primarily engaged in
providing charter services in the U.S. Additionally, the Company will purchase
charter services from Roesch Lines, principally for transport of cruise ship
passengers in connection with a "meet and greet" operation in Los Angeles.
During the year ended December 31, 2001, the Company received lease income of
$0.1 million and purchased $2.2 million of charter services from Roesch Lines.

     Included in accounts receivable on the Company's Consolidated Statements of
Financial Position at December 31, 2001, are amounts due from Laidlaw of $1.6
million, amounts due from GCTC of $0.5 million and $0.7 million due from Hotard
for outstanding borrowings under their revolving credit facility with the
Company.


18. QUARTERLY FINANCIAL DATA (UNAUDITED)

     Selected unaudited quarterly financial data for the years ended December
31, 2001 and 2000 are as follows (in thousands):

<Table>
<Caption>
                                       FIRST           SECOND          THIRD         FOURTH
  YEAR ENDED DECEMBER 31, 2001        QUARTER         QUARTER         QUARTER       QUARTER
  ----------------------------     ------------    ------------    ------------   ------------
<S>                                <C>             <C>             <C>            <C>

Operating revenues .............   $    228,697    $    264,938    $    289,930   $    238,855
Operating expenses .............        240,709         250,060         260,027        241,712
                                   ------------    ------------    ------------   ------------
Operating income (loss) ........        (12,012)         14,878          29,903         (2,857)
Interest expense ...............          7,312           7,651           7,011          6,989
Income tax provision (benefit) .         (8,440)          3,087          10,136         (5,875)
Minority interest ..............           (128)            154             553           (524)
                                   ------------    ------------    ------------   ------------
Net income (loss) ..............   $    (10,756)   $      3,986    $     12,203   $     (3,447)
                                   ============    ============    ============   ============

<Caption>

                                       FIRST          SECOND          THIRD          FOURTH
  YEAR ENDED DECEMBER 31, 2000        QUARTER        QUARTER         QUARTER        QUARTER
  ----------------------------     ------------    ------------    ------------   ------------
<S>                                <C>             <C>             <C>            <C>

Operating revenues .............   $    214,139    $    257,731    $    291,275   $    251,172
Operating expenses .............        223,575         241,005         262,016        243,921
                                   ------------    ------------    ------------   ------------
Operating income (loss) ........         (9,436)         16,726          29,259          7,251
Interest expense ...............          5,152           5,870           5,590          6,930
Income tax provision (benefit) .         (4,748)          3,255          10,243         (1,048)
Minority interest ..............            (52)           (111)              7            142
                                   ------------    ------------    ------------   ------------
Net income (loss) ..............   $     (9,788)   $      7,712    $     13,419   $      1,227
                                   ============    ============    ============   ============
</Table>




                                       51
<PAGE>


                                                                     SCHEDULE II

                   GREYHOUND LINES, INC. AND SUBSIDIARIES (a)
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                              ADDITIONS     ADDITIONS
                                              BALANCE AT     CHARGED TO     CHARGED TO                         BALANCE
                                               BEGINNING      COSTS AND       OTHER                             AT END
           CLASSIFICATION                      OF YEAR        EXPENSES       ACCOUNTS      DEDUCTIONS          OF YEAR
           --------------                    ------------   ------------   ------------   ------------       ------------
<S>                                          <C>            <C>            <C>            <C>                <C>

December 31, 1999:
    Allowance for Doubtful Accounts ......   $        198   $        510   $        224   $       (530)(b)   $        402
    Inventory Reserves ...................            205             21             --             --                226
    Accumulated Amortization of
       Intangible Assets .................         28,503          4,996             --         (1,674)(c)         31,825
    Claims Liability .....................         60,359         10,026             --        (63,072)(d)          7,313
                                             ------------   ------------   ------------   ------------       ------------
         Total Reserves and Allowances ...   $     89,265   $     15,553   $        224   $    (65,276)      $     39,766
                                             ============   ============   ============   ============       ============

December 31, 2000:
    Allowance for Doubtful Accounts ......   $        402   $        535   $        202   $       (741)(b)   $        398
    Inventory Reserves ...................            226             --             --           (197)(e)             29
    Accumulated Amortization of
       Intangible Assets .................         31,825          5,769             --            (23)(c)         37,571
    Claims Liability .....................          7,313            105          1,763           (887)(d)          8,294
                                             ------------   ------------   ------------   ------------       ------------
         Total Reserves and Allowances ...   $     39,766   $      6,409   $      1,965   $     (1,848)      $     46,292
                                             ============   ============   ============   ============       ============

December 31, 2001:
    Allowance for Doubtful Accounts ......   $        398   $      1,064   $        316   $       (863)(b)   $        915
    Inventory Reserves ...................             29            158             --            (10)(e)            177
    Accumulated Amortization of
       Intangible Assets .................         37,571          7,052             --         (3,212)(c)         41,411
    Claims Liability .....................          8,294         14,327             --         (1,071)(d)         21,550
                                             ------------   ------------   ------------   ------------       ------------
         Total Reserves and Allowances ...   $     46,292   $     22,601   $        316   $     (5,156)      $     64,053
                                             ============   ============   ============   ============       ============
</Table>

---------

(a)  This schedule should be read in conjunction with the Company's audited
     consolidated financial statements and related notes thereto.

(b)  Write-off of uncollectible receivables, net of recovery of receivables
     previously written-off.

(c)  Write-off or amortization of other assets and deferred costs.

(d)  Payments of settled claims and, in 1999, $24.0 million represents the
     payment to Laidlaw for liabilities assumed by Laidlaw.

(e)  Write-off of inventory shrinkage.



                                       52
<PAGE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.







                                       53
<PAGE>


                                    PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information included in the Laidlaw Inc. Form 6-K dated January 31,
2002 is incorporated herein by reference.


ITEM 11. EXECUTIVE COMPENSATION

     The information included in the Laidlaw Inc. Form 6-K dated January 31,
2002 is incorporated herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information included in the Laidlaw Inc. Form 6-K dated January 31,
2002 is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information included in the Laidlaw Inc. Form 6-K dated January 31,
2002 is incorporated herein by reference.








                                       54
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

          (a) CERTAIN DOCUMENTS FILED AS PART OF THE FORM 10-K

1. AND 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS SCHEDULES

     The following financial statements and financial statement schedule are set
forth in Item 8 of this report. Financial statement schedules not included in
this report have been omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto. Financial
statements for fifty percent or less owned companies accounted for by the equity
method have been omitted because, considered in the aggregate, they have not
been considered to constitute a significant subsidiary.

<Table>
<Caption>
                                                                                                    PAGE NO.
                                                                                                    --------
<S>                                                                                                <C>

     Management Report on Responsibility for Financial Reporting.................................      28
     Report of Independent Accountants...........................................................      29
     Consolidated Statements of Financial Position at December 31, 2001 and 2000.................      30
     Consolidated Statements of Operations for the Years ended December 31, 2001, 2000
       and 1999..................................................................................      31
     Consolidated Statements of Stockholder's Equity for the Years Ended December 31, 2001,
       2000 and 1999.............................................................................      32
     Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000
       and 1999..................................................................................      33
     Notes to Consolidated Financial Statements..................................................      34
     Schedule II - Valuation and Qualifying Accounts.............................................      52
</Table>

3. EXHIBITS

<Table>
<S>          <C>
     3.1      --Restated Certificate of Incorporation of Greyhound Lines, Inc.(9)
     3.2      --Bylaws of Greyhound Lines, Inc.(9)
     4.1      --Indenture governing the 8 1/2% Convertible Subordinated Debentures due March 31, 2007, including
                the form of 8 1/2% Convertible Subordinated Debentures due March 31, 2007.(1)
     4.2      --First Supplemental Indenture to the 8 1/2% Convertible Subordinated Debentures Indenture between
                the Registrant and Shawmut Bank Connecticut,  N.A., as Trustee.(2)
     4.3      --Second Supplemental Indenture to the 8 1/2% Convertible Subordinated Debentures Indenture between
                the Registrant and State Street Bank and Trust Company, as trustee.(9)
     4.4      --Indenture, dated April 16, 1997, by and among the Company, the Guarantors and PNC Bank, N.A., as
                Trustee.(3)
     4.5      --First Supplemental Indenture dated as of July 9, 1997 between the Registrant and PNC Bank, N.A.
                as Trustee.(6)
     4.6      --Second Supplemental Indenture dated as of August 25, 1997 between the Registrant and PNC Bank,
                N.A. as Trustee.(7)
     4.7      --Third Supplemental Indenture dated as of February 1, 1999, between the Registrant and Chase Manhattan
                Trust Company as Trustee.(10)
     4.8      --Fourth Supplemental Indenture dated as of May 14, 1999, between the Registrant and Chase Manhattan
                Trust Company as Trustee.(10)
     4.9      --Form of 11 1/2% Series A Senior Notes due 2007.(3)
     4.10     --Form of 11 1/2% Series B Senior Notes due 2007.(5)
     4.11     --Form of Guarantee of 11 1/2% Series A and B Senior Notes.(5)
     4.12     --Indenture dated April 16, 1997, by and between the Company and U.S. Trust of Texas, N.A., as
                Trustee.(4)
     10.1     --Greyhound Lines, Inc. Supplemental Executive Retirement Plan.(15)
     10.2     --First Amendment to Supplemental Executive Retirement Plan.(15)
</Table>


                                       55
<PAGE>



<Table>
<S>           <C>
     10.3     --Second Amendment to Supplemental Executive Retirement Plan.(9)
     10.4     --Supplemental Executive Retirement Plan Trust Agreement(9)
     10.5     --Second Amended Employment Agreement dated March 16, 1999, between Registrant and Craig R.
                Lentzsch.(9)
     10.6     --Second Amended Employment Agreement dated March 16, 1999, between Registrant and John Werner
                Haugsland.(9)
     10.7     --First Amendment to the Second Amended Executive Employment Agreement dated December 1999 between
                Registrant and John Warner Haugsland.(11)
     10.8     --Affiliated Companies Demand Loan Agreement dated March 16, 1999, between the Registrant and Laidlaw
                Transportation Inc.(11)
     10.9     --Tax Allocation Agreement dated June 1, 1982, between the Registrant and Laidlaw Transportation Inc.
                (11)
     10.10    --Loss Portfolio Transfer Agreement dated December 31, 1999, between the Registrant and Laidlaw
                Transportation Inc.(11)
     10.11    --Memorandum of Agreement, dated September 30, 1998, between the Registrant and the Amalgamated
                Transit Union National Local 1700.(8)
     10.12    --1998 Stock Option Plan for ATU Represented Drivers and Mechanics, dated July 22, 1998.(8)
     10.13    --Greyhound Lines, Inc. Change in Control Severance Pay Program.(8)
     10.14    --Form of Change in Control Agreement between the Company and certain officers of the Company.(8)
     10.15    --Loan and Security Agreement among Greyhound Lines, Inc., as Borrower, the Financial Institutions
                named as Lenders, and Foothill Capital Corporation as Agent dated October 24, 2000.(12)
     10.16    --Intercompany Agreement dated as of October 24, 2000, between Registrant and Laidlaw
                Transportation, Inc.(13)
     10.17    --Termination Agreement dated as of October 24, 2000, between Registrant and Laidlaw Transportation,
                Inc.(13)
     10.18    --Amendment Number One to Loan and Security Agreement among Greyhound Lines, Inc., as Borrower, the
                Financial Institutions named as Lenders, and Foothill Capital Corporation as Agent dated
                November 14, 2001(14)
     21       --Subsidiaries of the Registrant.(15)
</Table>

----------

(1)      Incorporated by reference from the Company's Registration Statement on
         Form S-1 (File No. 33-47908) regarding the Registrant's Common Stock
         and 10% Senior Notes Due 2001 held by the Contested Claims Pool Trust.

(2)      Incorporated herein by reference from the Registrant's Issuer Tender
         Offer Statement on Schedule 13E-4 (File No. 5-41800).

(3)      Incorporated by reference from the Company's Registration Statement on
         Form S-4 regarding the Company's 11 1/2% Series B Senior Notes due
         2007.

(4)      Incorporated by reference from the Company's Registration Statement on
         Form S-3 regarding the Company's 8 1/2% Convertible Exchangeable
         preferred Stock, Common Stock and 8 1/2% Convertible Subordinated
         Debentures due 2009.

(5)      Incorporated by reference from Amendment 1 to Form S-4 filed on June
         27, 1997.

(6)      Incorporated by reference from the Registrant's Quarterly Report on
         Form 10-Q for the quarter ended June 30, 1997.

(7)      Incorporated by reference from the Registrant's Quarterly Report on
         Form 10-Q for the quarter ended September 30, 1997.

(8)      Incorporated by reference from the Registrant's Quarterly Report on
         Form 10-Q for the quarter ended September 30, 1998.


                                       56
<PAGE>


(9)      Incorporated by reference from the Registrant's Annual Report on Form
         10-K for the year ended December 31, 1998.

(10)     Incorporated by reference from the Registrant's Quarterly Report on
         Form 10-Q for the quarter ended June 30, 1999.

(11)     Incorporated by reference from the Registrant's Annual Report on Form
         10-K for the year ended December 31, 1999.

(12)     Incorporated by reference from the Registrant's Current Report on Form
         8-K filed on October 27, 2000.

(13)     Incorporated by reference from the Registrant's Annual Report on Form
         10-K for the year ended December 31, 2000.

(14)     Incorporated by reference from the Registrant's Current Report on Form
         8-K filed on January 17, 2002.

(15)     Filed herewith.



(b) REPORTS ON FORM 8-K

     On January 17, 2002, the Company filed a current report on Form 8-K with
the Securities and Exchange Commission reporting Other Events and to report that
Greyhound Lines, Inc. had obtained a one-year extension of its $125 million
revolving credit facility to October 24, 2003. No financial statements were
included.






                                       57
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Dallas
and the State of Texas, on April 1, 2002.

                                     GREYHOUND LINES, INC.

                                     By: /s/ CRAIG R. LENTZSCH
                                         -------------------------------------
                                                    Craig R. Lentzsch
                                         President and Chief Executive Officer
                                              (Principal Executive Officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<Table>
<Caption>
              Signature                          Title                              Date
              ---------                          -----                              ----
<S>                                  <C>                                      <C>

     /s/  JOHN R. GRAINGER            Director                                  April 1, 2002
--------------------------------
       John R. Grainger


    /s/  CRAIG R. LENTZSCH            President and Chief                       April 1, 2002
--------------------------------      Executive Officer
       Craig R. Lentzsch              (Principal Executive Officer)



    /s/  JEFFREY W. SANDERS           Senior Vice President and                 April 1, 2002
--------------------------------      Chief Financial Officer
      Jeffrey W. Sanders              (Principal Financial Officer)




     /s/  CHERYL W. FARMER            Vice President and Controller             April 1, 2002
--------------------------------      (Principal Accounting Officer)
       Cheryl W. Farmer



CO-REGISTRANTS

ATLANTIC GREYHOUND LINES OF VIRGINIA, INC.

By:

     /s/  CRAIG R. LENTZSCH           Director, Chairman of the Board,          April 1, 2002
--------------------------------      President and Chief Executive Officer
        Craig R. Lentzsch             (Principal Executive Officer)


     /s/  JACK W. HAUGSLAND           Director                                  April 1, 2002
--------------------------------
        Jack W. Haugsland

     /s/  JEFFREY W. SANDERS          Senior Vice President and                 April 1, 2002
--------------------------------      Chief Financial Officer
       Jeffrey W. Sanders             (Principal Financial and Accounting Officer)

</Table>




                                       58
<PAGE>



<Table>
<S>                                     <C>                                     <C>
GLI HOLDING COMPANY

By:

    /s/  CRAIG R. LENTZSCH               Director, President and                   April 1, 2002
-----------------------------------      Chief Executive Officer
       Craig R. Lentzsch                 (Principal Executive Officer)


    /s/  JACK W. HAUGSLAND               Director                                  April 1, 2002
-----------------------------------
       Jack W. Haugsland

    /s/  JEFFREY W. SANDERS              Senior Vice President and                 April 1, 2002
-----------------------------------      Chief Financial Officer
      Jeffrey W. Sanders                 (Principal Financial and Accounting Officer)





GREYHOUND de MEXICO, S.A. de C.V.

By:

    /s/  CRAIG R. LENTZSCH               Director and President                    April 1, 2002
-----------------------------------      (Principal Executive Officer)
       Craig R. Lentzsch

    /s/  JACK W. HAUGSLAND               Director                                  April 1, 2002
-----------------------------------
       Jack W. Haugsland

    /s/  JEFFREY W. SANDERS              Director                                  April 1, 2002
-----------------------------------
      Jeffrey W. Sanders

    /s/  CHERYL W. FARMER                Examiner                                  April 1, 2002
-----------------------------------      (Principal Financial and Accounting
       Cheryl W. Farmer                  Officer)




SISTEMA INTERNACIONAL de TRANSPORTE de AUTOBUSES, INC.

By:

    /s/  JEFFREY W. SANDERS              Director, President, and                  April 1, 2002
-----------------------------------      Chief Executive Officer
      Jeffrey W. Sanders                 (Principal Executive Officer)


      /s/  ALFONSO PENEDO                Director                                  April 1, 2002
-----------------------------------
        Alfonso Penedo

     /s/  CHERYL W. FARMER               Senior Vice President and                 April 1, 2002
-----------------------------------
       Cheryl W. Farmer                  Chief Financial Officer
                                         (Principal Financial and Accounting Officer)
</Table>



                                       59
<PAGE>



<Table>
<S>                                      <C>                                       <C>
TEXAS, NEW MEXICO & OKLAHOMA COACHES, INC.

By:

    /s/  CRAIG R. LENTZSCH                Director and Chief                        April 1, 2002
-----------------------------------       Executive Officer
       Craig R. Lentzsch                  (Principal Executive Officer)

    /s/  JACK W. HAUGSLAND                Director                                  April 1, 2002
-----------------------------------
       Jack W. Haugsland

      /s/  GREG ALEXANDER                 Director                                  April 1, 2002
-----------------------------------
        Greg Alexander

   /s/  ROBERT D. GREENHILL               Director                                  April 1, 2002
-----------------------------------
      Robert D. Greenhill

    /s/  JEFFREY W. SANDERS               Senior Vice President and                 April 1, 2002
-----------------------------------       Chief Financial Officer
      Jeffrey W. Sanders                  (Principal Financial and Accounting Officer)




T.N.M. & O. TOURS, INC.

By:

     /s/  CRAIG R. LENTZSCH               Director and Chief                        April 1, 2002
------------------------------------      Executive Officer
        Craig R. Lentzsch                 (Principal Executive Officer)


     /s/  JACK W. HAUGSLAND               Director                                  April 1, 2002
------------------------------------
        Jack W. Haugsland

       /s/  GREG ALEXANDER                Director                                  April 1, 2002
------------------------------------
         Greg Alexander

    /s/  ROBERT D. GREENHILL              Director                                  April 1, 2002
------------------------------------
       Robert D. Greenhill

    /s/  RICHARD M. PORTWOOD              Director                                  April 1, 2002
------------------------------------
       Richard M. Portwood

     /s/  JEFFREY W. SANDERS              Senior Vice President and                 April 1, 2002
------------------------------------      Chief Financial Officer
       Jeffrey W. Sanders                 (Principal Financial and Accounting
                                          Officer)
</Table>



                                       60
<PAGE>


<Table>
<S>                                       <C>                                       <C>
VERMONT TRANSIT CO., INC.

By:

      /s/  CRAIG R. LENTZSCH               Director, President and                   April 1, 2002
-------------------------------------      Chief Executive Officer
         Craig R. Lentzsch                 (Principal Executive Officer)

      /s/  JACK W. HAUGSLAND               Director                                  April 1, 2002
-------------------------------------
         Jack W. Haugsland

        /s/  GREG ALEXANDER                Director                                  April 1, 2002
-------------------------------------
          Greg Alexander

      /s/  JEFFREY W. SANDERS              Senior Vice President and                 April 1, 2002
-------------------------------------      Chief Financial Officer
        Jeffrey W. Sanders                 (Principal Financial and Accounting Officer)
</Table>






                                       61
<PAGE>


                                INDEX TO EXHIBITS



<Table>
<Caption>
EXHIBIT
NO.        DESCRIPTION
-------    -----------
<S>        <C>

10.1       Greyhound Lines, Inc. Supplemental Executive Retirement Plan

10.2       First Amendment to Supplemental Executive Retirement Plan

21         Subsidiaries of the Registrant
</Table>






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