UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

þ      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

GREYHOUND LINES, INC.

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

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

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 þ NO o

     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. þ

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES o NO þ

     Aggregate market value of Common Stock held by non-affiliates of the registrant on June 30, 2004 was $0.

     As of March 15, 2005, 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.
(2)	The registrant meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and is therefore filing this form in a reduced disclosure format.

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:

As of December 31, 2004, 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.

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GREYHOUND LINES, INC. AND SUBSIDIARIES

INDEX TO FORM 10-K

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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 beliefs, expectations, intentions, projections or strategies for the future of Greyhound Lines, Inc. and subsidiaries (the “Company”), 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 Company’s ability to meet the requirements of the Americans with Disabilities Act in October, 2006; the effect of future Government regulations; potential pension plan funding requirements; changing credit markets; the Company’s ability to achieve its forecasted results; disruptions to the Company’s operations as a result of forced relocations of terminals or garages or loss of use of terminals or garages due to condemnation or lease terminations; 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.

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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, offering scheduled passenger service to more than 2,200 destinations with a fleet of approximately 2,700 buses and approximately 1,400 sales locations. The Company also provides package express service, travel services and, in some terminals, food service. For the year ended December 31, 2004, the Company generated total operating revenues of $956.7 million.

     The Company serves a diverse customer base, consisting primarily of low to middle income passengers from a wide variety of ethnic backgrounds. 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.

     In 1999, the Company became a wholly-owned subsidiary of Laidlaw Inc.

     On June 28, 2001, Laidlaw Inc. and certain of its affiliates filed voluntary petitions for reorganization under the U.S. Bankruptcy Code and the Canada Companies’ Creditors Arrangement Act. Neither Greyhound, nor any of its subsidiaries were included in, or made party to, these reorganization filings and proceedings.

     In June 2003, Laidlaw Inc. emerged from the court-supervised reorganization process and completed an internal corporate restructuring, in which Laidlaw International, Inc., a Delaware corporation, acquired all of the assets of Laidlaw Inc., a Canadian corporation. Laidlaw International, Inc. and its predecessor Laidlaw Inc. are referred to as “Laidlaw.”

Markets

     Passengers. While the Company’s major passenger markets are large metropolitan areas, its business is geographically fragmented, with the 1,200 largest origin/destination city pairs producing approximately 50% of 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 one to three days before the day of departure.

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     Package Express. The Company’s package express service targets commercial shippers and delivery companies that require rapid delivery of small parcels, typically between 100 and 500 miles. The Company’s product offerings include standard delivery, which is the traditional low-value, terminal-to-terminal delivery product, as well as priority and same day delivery, which are the premium priced products typically delivered door to door. The Company satisfies the door-to-terminal/terminal-to-door 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, optical, 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 for shipments less than 500 miles with most shipments arriving 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 in two metropolitan markets: Minneapolis, MN and Chicago, IL.

     Food Service. The Company’s food service division gives passengers the ability to purchase food, gifts and logo merchandise in over 50 terminal 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 KFC and Pizza Hut.

     Travel Services. The Company offers charter and tour services (“travel services”) principally for group travel to and from specific events, such as concerts, sporting events, casinos and conventions. Generally the passenger business provides the bus and driver resources for these travel services on an “as available” basis, such that resources are often only available in off-peak periods, generally weekdays outside of the peak summer and holiday periods. However, the Company has also established dedicated bus and driver resources for travel services operations in certain cities so that the operations in these cities are not completely dependent on resource availability from the passenger business and are, accordingly, able to offer travel services on the weekends and in the summer. Additionally the Company operates “meet and greet” services for cruise lines at four 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 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, the internet, and targeted print media. 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.

Operations

     The Company utilizes approximately 120 company-operated bus terminals and approximately 1,300 agency-operated terminals and/or sales agencies. Maintenance garages are maintained at 25 strategic locations and are supplemented by company and third party-operated service islands and fueling points. The Company currently has approximately 3,800 drivers based in approximately 100 different locations across the country. In the Greyhound Lines unit, drivers report to either driver supervisors or city managers who are organized into nine districts reporting to district managers of field operations. The nine districts are grouped into East and West regions, which are each headed by a general manager to whom the district managers report. 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 and drivers 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.

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     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 centers, customer service, point of sale, payroll and finance functions. As of December 31, 2004, the Company’s automated fare and schedule quotation and ticketing system, called TRIPS, was in use at 464 locations.

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 some 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 within three days of the day of travel. The Company’s everyday low pricing strategy usually 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 fares offered by the Company. However, the Company also utilizes advance purchase discount programs in order to attract the price sensitive customer. Price, destination choices, service 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 and small local bus companies that cater to particular ethnic groups. In the Northeast travel corridors, low-cost Asian carriers offering extremely low fares have continued to grow. These carriers generally have curbside operations, loading passengers on the city streets, and operate high frequencies between major cities such as Boston, New York, Philadelphia and Washington. Price, frequency of service, and convenient scheduling are the current strategies of the Company to meet this competition.

     Competition by U.S.-based bus and van operators for the market represented by Spanish speaking customers in the U.S. is growing. Barriers to entry into the regular-route cross-border bus market between the U.S. and Mexico have been reduced under the North American Free Trade Agreement (“NAFTA”), although entry into either market is still regulated by the respective U.S. and Mexican regulatory authorities. The U.S. Department of Transportation (“DOT”) has 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. Although the DOT could commence the process for allowing Mexican-domiciled companies to perform cross-border services into the United States, DOT has not yet taken formal action to allow such cross-border services. Once such action occurs, the Company could experience significant new competition on routes, to, from and across Mexican border points. 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 ventures or ticket selling arrangements with Mexico-based bus carriers. The Company has established a separate operating subsidiary that, through these ventures, provides through-bus service at most major gateways between the United States and Mexico. Additionally, in some of its terminals Greyhound Lines sells tickets for travel in Mexico on Mexico-based carriers’ tickets and Mexico-based carriers sell tickets for travel in the U.S. on Greyhound Lines in certain of their terminals in Mexico.

     Package Express. The Company faces intense competition in its package express service from local courier services and overnight express and ground carriers. The Company continues to develop programs to meet this competition and further develop 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 500 miles at a substantially lower price than those charged by other delivery services.

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     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.

     Travel Services. Charter services are provided by several thousand local operators as well as a few regional 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 in order to meet the customers’ demands.

Operating Environment

     The Company’s business is affected by changes in economic conditions, consumer preferences and spending patterns, medical and wage inflation, demographic trends, consumer perceptions of transportation safety, costs of safety, security and environmental measures, road congestion and the weather. Following the September 11, 2001 terrorist attacks the Company increased its spending for safety and security in the bus terminals. Additionally, it is possible that the Transportation Security Administration (“TSA”) could mandate security procedures that exceed the level currently provided by the Company further increasing costs. Past terrorist acts and incidents on buses, or perceptions about future attacks have and could continue to adversely affect the demand for the Company’s services.

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, 2005, the Company employed approximately 9,700 workers, consisting of approximately 3,100 terminal employees, 3,800 drivers, 900 supervisory personnel, 700 mechanics, 400 telephone information agents, and 800 clerical workers. Of the total workforce, approximately 7,900 are full-time employees and approximately 1,800 are part-time employees.

     At March 1, 2005, approximately 45% of the Company’s employees were represented by collective bargaining agreements. The Amalgamated Transit Union (the “ATU”) represents approximately 3,700 of the Company’s employees, including drivers, about half of the Company’s mechanics and terminal workers in three locations. The largest ATU agreement (“ATU 1700”) covers the drivers and maintenance employees and expires on January 31, 2007.

     The International Association of Machinists and Aerospace Workers (the “IAM”) represents approximately 300 of the Company’s employees, including the remaining mechanics. The IAM agreements expire on September 30, 2007. The Company also has bargaining agreements with the International Brotherhood of Teamsters, which represent approximately 100 employees at three terminal locations and the United Transportation Union, which represents approximately 200 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.

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Government Regulation

     The Federal Motor Carrier Safety Adminstration. 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’s Federal Motor Carrier Safety Administration (“FMCSA”). Failure to maintain a satisfactory safety rating, designate agents for service of process or to meet minimum insurance requirements, after notice and opportunity to remedy, may result in the FMCSA’s ordering the suspension or revocation of the Company’s authority to render transportation services. FMCSA 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 FMCSA or, pursuant to cooperative arrangements with the FMCSA, by state police or officials, to determine whether the Company’s drivers, buses and records are in compliance with the FMCSA’s regulations. The Company, from time to time, has been cited by the FMCSA or state authorities for non-compliance with regulations but, nevertheless, has retained a satisfactory safety rating. The Company has also been authorized by the FMCSA to partially self-insure its bodily injury and property damage liability. See “Insurance Coverage.” The FMCSA 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 interstate 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 the DOT. The regulations require that 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 that existing buses be retrofitted with lift equipment, nor do the regulations require the purchase of accessible used buses. Currently the added cost of a built-in lift device in a new bus is approximately $40,000 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. At December 31, 2004, approximately 19% of the Company’s fleet used in fixed route operations was wheelchair lift-equipped. The Company currently plans to meet the October 2006 requirement through a combination of retrofitting existing buses, purchasing new wheel chair lift equipped buses and reducing the size of the fleet in conjunction with the implementation of its long-range strategic plan.

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     Following the September 11, 2001 terrorist attacks the Company increased its spending for safety and security in the bus terminals. Limited government assistance, in the form of grants, is being offered to the bus industry. In August 2003, the Company received a grant of approximately $10.1 million from the TSA for the period ending March 17, 2005. The grant provides reimbursement for incremental spending on safety and security–related initiatives such as: increased passenger screening in the bus terminals, bomb detection devices, installation of protective shields in the driver compartment of buses and installation of “on-board” communication devices. In September 2004, the Company received an additional grant of approximately $2.3 million for the period through September 30, 2005 for onboard communications and terminal security upgrades. Although the Company has received these two grants, there can be no assurance that additional grants will be extended in the future.

Insurance Coverage

     The Company maintains comprehensive automobile liability, general liability, worker’s compensation and property insurance to insure its assets and operations. Prior to September 2001, the Company purchased its insurance from Laidlaw with coverage subject to a $50,000 deductible for property damage claims and no deductible for auto liability, workers’ compensation or general liability claims. Between September 1, 2001 and August 31, 2003, the Company began purchasing coverage from third-party insurers for claims up to $5.0 million subject to a $3.0 million per occurrence deductible or self insured retention for automobile liability and a $1.0 million per occurrence deductible or self insured retention for workers’ compensation and general liability. Effective September 1, 2003, the coverage for all claims is subject to a $3.0 million per occurrence deductible or self insured retention. 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 also continues to purchase from Laidlaw coverage for physical damage to Company property and business interruption subject to a $100,000 per occurrence deductible.

     The FMCSA has authorized the Company to self-insure its automobile liability exposure for interstate passenger service up to $3.0 million per occurrence. To maintain self-insurance authority, the Company is required to provide periodic financial information and claims reports, maintain a satisfactory safety rating by the FMCSA, a tangible net worth of $10.0 million and a trust fund, initially set at $15 million, to provide security for payment of claims. At December 31, 2002, and continuing to date, the Company’s tangible net worth has fallen below the minimum required by the FMCSA to maintain self-insurance authority. The FMCSA granted waivers of the tangible net worth requirement through December 31, 2005, and, as a condition of the waivers, the Company has been required to increase the self-insurance trust fund to the greater of $17.7 million or 110% of the estimated unpaid liability for self-insured claims.

     Insurance coverage and related administrative expenses are key components of the Company’s cost structure. Additionally, the Company is required by the FMCSA, some states and some of its insurance carriers to maintain collateral deposits or provide other security pursuant to its insurance program. At December 31, 2004, the Company maintained $50.4 million of collateral deposits (including $37.3 million in the FMCSA trust fund) and had issued $53.7 million of letters of credit in support of these programs. See Note 8 to the Consolidated Financial Statements. The loss or further modification of self-insurance authority from the FMCSA 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.

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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, 28 active and 21 inactive locations have been identified as sites requiring potential clean up and/or remediation as of December 31, 2004. Additionally, the Company is potentially liable with respect to five active and seven inactive locations which the 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 $4.6 million at December 31, 2004 of which approximately $0.7 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 a rate commensurate with the interest rate on monetary assets that are essentially risk free and have a maturity comparable to the underlying liabilities. 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.

Code of Ethics

     The Company has adopted a written code of ethics, “Code of Business Conduct and Ethics” which is applicable to all employees of the Company, including the Company’s Chief Executive Officer, principal financial officer, principal accounting officer and controller (or persons performing similar functions) (collectively, the “Financial Officers”). In accordance with the rules and regulations of the Securities and Exchange Commission, a copy of the Code of Business Conduct and Ethics is publicly available on the website of the Company’s parent company, Laidlaw, at www.laidlaw.com. The Company intends to disclose any amendments to or waivers from the code of ethics applicable to any Financial Officer of the Company on Laidlaw’s website at www.laidlaw.com. The Company will provide, at no cost, a copy of the Code of Business Conduct and Ethics upon request in writing to P.O. Box 660362, Dallas, Texas 75266-0362, Attention: Investor Relations. The information on the Laidlaw website is not incorporated into, and is not part of, this report.

ITEM 2. PROPERTIES

Land and Buildings

     At December 31, 2004, the Company used 521 parcels of real property in its operations, of which it owned 160 properties and leased 361 properties. Of those properties, 385 are bus terminals, 30 are maintenance facilities, 26 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 and in select locations in Canada and Mexico. Where practical, the Company attempts to locate its terminals in state or federally funded intermodal facilities. The Company currently operates in approximately 110 of such facilities.

     The Company believes, in general, that the current makeup of its properties is adequate for its operations. However, the Company must occasionally relocate its facilities, permanently or temporarily, when it sells a parcel, when leases are not renewed or are terminated, or when owned or leased properties are taken through eminent domain proceedings by government authorities. The Company is also subject to local zoning restrictions that can limit the Company’s ability to expand a location or relocate to a new facility. In the case of publicly funded facilities, the relocation can be affected by funding availability and site selection and urban planning considerations. 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 expand, or which are condemned, or for which leases are not renewed or are otherwise terminated.

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     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. Although the Company has reached agreement with the Port Authority on the terms of new long-term lease and license agreements and expects to operate out of its existing space in the Port Authority for the foreseeable future, because the Port Authority has not yet executed new long-term agreements, the Port Authority could terminate its agreements with the Company upon 30-day notice at any time. If the Port Authority were to require the Company to relocate, such relocation could result in an increase in the costs to operate out of the Port Authority and potentially impact ticket and food service revenues.

Fleet Composition and Bus Acquisitions

     During 2004, the Company took delivery of 38 new and used buses, and retired 96 buses, resulting in a fleet of 2,748 buses at December 31, 2004, of which the Company owned 1,247 buses and leased an additional 1,501 buses. Because of the declines in bus miles over the last several years, the Company believes it currently has approximately 150 excess buses in its fleet and will be disposing of these buses in the ordinary course of business during the next year. The average age of the Company’s bus fleet, excluding the excess buses increased to 7.7 years at December 31, 2004, compared to 7.2 years at December 31, 2003 and 6.6 years at December 31, 2002. Although the Company believes the current fleet age is adequate for its operations, the Company’s experience indicates that older buses are less reliable and more costly to operate than newer buses. Additionally, older buses with older engines are generally less fuel-efficient than newer buses and, because older buses require maintenance on a more frequent basis, an older fleet results in an increase in the number of buses required to operate the business.

     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 60 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 for 40 foot and larger coaches from MCI pursuant to the agreement.

ITEM 3. LEGAL PROCEEDINGS

     On September 20, 2004, Greyhound responded to proceedings brought in Georgia state court seeking to enforce a default garnishment judgment on funds in a Greyhound bank account. This action stemmed from an October 1995 default judgment in the amount of approximately $7 million (the “1995 Judgment”) against Gary Jones, a former consultant to Greyhound. More than four years later, in October 2000, the plaintiff who obtained the 1995 Judgment (the “Plaintiff”) began garnishment proceedings against Greyhound in Georgia state court seeking to recover amounts owed to Gary Jones, who then allegedly owed the Plaintiff the amount of approximately $11 million based on the 1995 Judgment plus post-judgment interest. On May 2, 2001, a default judgement for $11 million was entered by the Georgia state court against Greyhound. On March 10, 2005, Greyhound settled this matter for an immaterial amount and has reflected the cost of the settlement as a component of non-operating income in its Consolidated Statements of Operations for the year ended December 31, 2004.

     The Company is also 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.

     For information relating to certain environmental matters relating to the Company, see “Item 1. Business — Environmental Matters.”

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     All of the Company’s outstanding common stock is held by a subsidiary of Laidlaw 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, 2004, under the most restrictive of the agreements, no dividends could be paid by the Company.

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

Business Overview

     Greyhound is the only nationwide provider of scheduled intercity bus transportation services in the United States. The Company operates as one business segment with the primary business consisting of scheduled passenger service, package express service and food service at certain terminals. At December 31, 2004, the Company’s operations included a nationwide network of terminal and maintenance facilities utilizing a fleet of approximately 2,700 buses. At December 31, 2004, the Company used a network of approximately 1,400 sales locations, offering the customer the ability to travel to more than 2,200 destinations in North America.

     The Company’s business is seasonal in nature and generally follows 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 operating cash flows are also seasonal with a disproportionate amount of the Company’s annual operating cash flows being generated during the peak travel periods. 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 the fiscal quarter, may also affect the Company’s quarterly results of operations.

     The following discussion and analysis presents factors which affected the Company’s consolidated results of operations for the year ended December 31, 2004 and the Company’s consolidated financial position at December 31, 2004. The following information should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

2004 Overview

     During 2004, the Company began implementing its long-range strategic plan in the passenger business and continued to stabilize the business through its initiatives to enhance yield, reduce marginally profitable bus miles and reduce operating and general and administrative costs. These initiatives resulted in a 6.8% increase in revenue per mile and a $3.7 million increase in operating income. The improvement in operating income occurred despite a decline in revenue of approximately $18.8 million or 1.9% and an increase in fuel price, causing a cost increase of $14.8 million compared to the prior year.

     In August 2004, the Company implemented the first phase of its long-range strategy for the passenger business. In general, the strategy is to more efficiently serve areas where customer demand is greatest through a smaller, simpler network of routes that is short-and medium-haul focused, but that can still provide affordable service to long-haul passengers. The initial implementation occurred in the Northwest region of the United States, roughly between Chicago and Seattle, and involved the elimination of approximately 10 million annual bus miles, 260 sales locations and modifications of other routes to provide a better service pattern for customers. The implementation of the strategy in the Northwest resulted in improved revenue per mile in the region and, accordingly, an improvement in the estimated operating income from the region.

     The Company will complete the implementation of the second phase of its strategy in early April 2005 in the Southwest region of the U.S., defined as the states of California, Nevada, Arizona, New Mexico, Texas, Oklahoma, Louisiana and Arkansas. In this region, the Company will eliminate approximately 23 million annual bus miles, 174 sales locations and approximately 575 jobs. Because most of the locations being eliminated are agent-owned locations and many of the eliminated jobs are not eligible for severance pay, the Company expects to record an insignificant charge during the first quarter of 2005 for severance, real estate lease terminations and other implementation costs. The Company will continue to implement the strategy in phases and expects to be complete in eighteen months to two years.

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     During 2004, the Company entered into new collective bargaining agreements with its two principal labor unions. In March 2004, the Company entered into a new three-year agreement with the Amalgamated Transit Union, Local 1700, that covers all of the Company’s drivers and half of its mechanics. In October 2004, the Company entered into new three-year agreements with the International Association of Mechanics and Aerospace Workers union that covers the remaining mechanics. As a result of these new three-year agreements, the Company should have a stable labor environment for the next several years. Additionally, during the year, the Company extended its Revolving Credit Facility for two years to October 2006.

     In summary, management continued its focus on making improvements to further stabilize the Company in the short-term, implemented the first phase of its long-range strategy and completed the planning for implementation of the second phase of its strategy. The Company will continue this dual focus as substantial needs for capital expenditures and debt service requirements mandate that the Company continue to significantly improve operations and financial results.

Results of Operations

     The following table sets forth the Company’s results of operations as a percentage of total operating revenues for 2004, 2003 and 2002:

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     The following table sets forth certain key operating data used by management in assessing the Company’s performance for 2004, 2003 and 2002. Certain statistics have been adjusted and restated from those previously published to provide consistent comparisons.

Year ended December 31, 2004 Compared to Year ended December 31, 2003

     Operating Revenues. Total operating revenues decreased $18.8 million, down 1.9% for the year ended December 31, 2004 compared to the same period in 2003.

     Passenger services revenues decreased $19.2 million, or 2.3%, in 2004 compared to 2003 as the decline in passenger miles of 8.4% was only partially offset by an increase in yield of 6.6%. The passenger miles decline was the result of a 3.2% decline in passengers and a 5.2% decline in average trip length, indicating that short- and medium-haul trips continue to grow in proportion to total trips. Accordingly, revenue declined in part because the Company continued to use price increases and schedule frequency reductions to dampen the demand for low yielding, long-haul travel and, in addition, the implementation of its long-term strategy in the Northwest resulted in a slight decline in revenue. Management also believes that the soft economy combined with higher fuel and health care costs reduced discretionary income in the Company’s passenger demographics, also contributing to the revenue decline. Even though revenue declined, the Company aggressively managed bus miles such that load was flat compared to prior year and, coupled with increased yield, produced improved revenue per mile of approximately 6.8%.

     Package express revenues decreased $0.5 million, down 1.3% in 2004 compared to 2003. The Company continues 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. Partially offsetting the loss in standard product was a price increase on oversize packages and customer baggage. Additionally, the Company continues to focus on its same day delivery market niche through selling a guaranteed same day or early next morning service.

     Food services revenues decreased $2.4 million, down 6.0% for the year ended December 31, 2004 compared to the same period in 2003. The Company attributes the decline in food services revenues primarily to the decrease in passenger traffic, particularly in the long-haul markets.

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     Other operating revenues, consisting primarily of revenue from travel services, in-terminal sales and other services, increased $3.3 million, up 5.0% in 2004 compared to 2003. The increase is primarily due to increases in transportation services provided to cruise lines partially offset by declines in in-terminal sales and the expiration of transit contracts.

     Operating Expenses. Total operating expenses decreased $22.5 million, down 2.3% for the year ended December 31, 2004 compared to the same period in 2003.

     Maintenance costs decreased $5.1 million, or 4.8% in 2004 compared to 2003. On a per mile basis, maintenance costs increased 3.2% due in part, to a higher average fleet age, inflationary wage rate increases for mechanics and increased material costs as a result of fewer bus engines and transmissions under warranty. Additionally, regular service bus miles were down significantly, 8.2% for the year ended December 31, 2004, and as a result, the fixed cost component of maintenance, principally real estate and related costs as well as supervision, increased on a per mile basis.

     Transportation expenses, which consist primarily of fuel costs and driver wages, decreased $10.5 million, or 4.3% for the year ended December 31, 2004 compared to the same period in 2003, as the effects of operating fewer bus miles were partially offset by increases in fuel. During 2004, the average cost per gallon of fuel increased to $1.24 from $0.91 in 2003 resulting in increased costs of $14.8 million. Partially offsetting the increase in fuel costs, driver hiring and training costs were $2.5 million lower in 2004 due to decreases in the number of drivers hired. On a per-mile basis, excluding the effects of fuel price changes and driver hiring costs, transportation expenses decreased by 1.5% for the year ended December 31, 2004, due to continued focus on operational improvements and cost reduction initiatives.

     Agents’ commissions and station costs decreased $8.5 million, down 4.8% in 2004 compared to 2003. The decrease is primarily due to lower commissions, terminal and call center wages and communications costs as a result of lower passenger volumes and lower rates for long distance communication as a result of a new contract.

     Marketing, advertising and traffic expenses decreased $0.6 million, or 2.4%, in 2004 compared to 2003. The decrease is a result of a change in the method, type and timing of advertising and also a result of more focused customer and brand research as compared to prior years.

     Insurance and safety costs increased $2.3 million, up 3.2% in 2004 compared to 2003. On a cost per mile basis insurance costs increased 12.1%. The increase is principally due to adverse development on prior year claims, an increase in the number of severe accidents, an increase in the cost of excess insurance coverage and continued medical and wage inflation.

     General and administrative expenses increased $3.4 million, up 2.7% for the year ended December 31, 2004 compared to the same period in 2003. During the year higher pension and incentive costs ($11.6 million, representing a 9% increase in general and administrative costs) more than offset decreased wages and other costs due to lower business volumes ($8.2 million, representing a 7% decrease in total general and administrative costs).

     Depreciation and amortization increased $5.2 million, or 9.4% for the year ended December 31, 2004 compared to the same period in 2003. The increase is primarily due to a decrease in the estimated average useful life and salvage value of certain older buses. Additionally, during 2004 the Company revised its estimated life of buses from 18 to 15 years.

     Operating taxes and licenses expense decreased $4.0 million, or 6.7% in 2004 compared to 2003. The decrease is principally due to decreased fuel taxes and payroll taxes as a result of a decline in miles operated and reductions in the workforce.

     Operating rents decreased $3.9 million, down 4.9%, for the year ended December 31, 2004 compared to 2003. The decrease is principally due to expirations of bus operating leases that occurred in the first half of 2004.

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     Food services cost of goods sold decreased $1.6 million, or 6.1% in 2004 compared to 2003 primarily due to the decrease in food services revenues related to the decline in the number of passengers.

     Other operating expenses increased $0.9 million, up 15.0% for the year ended December 31, 2004 compared to the same period in 2003. The increase is principally because a software write-off and net losses on asset sales were greater than severance paid and gains on asset sales during the prior year.

     Non-operating income consists of a distribution of $3.4 million from the U.S. Bankruptcy Court in Brownsville, Texas representing residual claims payments that went unclaimed by or were undeliverable to creditors and, therefore, reverted to Greyhound as provided for in the Company’s 1990 plan of reorganization. This recovery is partially offset by costs related to the settlement of a legal matter.

     Interest expense was essentially flat for the year ended December 31, 2004 compared to the same period in 2003.

     Income tax expense increased $0.3 million, up 116.6%, for the year ended December 31, 2004 compared to the same period in 2003. The tax expense represents state tax expense related to its subsidiaries that operate in separate return states.

     Minority interests for the year ended December 31, 2004, reflects the minority partners share of current year income in the Company’s Hispanic ventures. The ventures were slightly less profitable in the current year as compared to the prior year.

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.

     Insurance Reserves. The Company is self-insured up to certain limits for costs associated with workers’ compensation claims, vehicle accidents and general business liabilities. Reserves are established for estimates of the loss that Greyhound will ultimately incur on claims that have been reported but not paid and claims that have been incurred but not reported. These reserves are based upon actuarial valuations that are prepared periodically by outside actuaries. The actuarial valuations consider a number of factors, including historical claim payment patterns and changes in case reserves, the assumed rate of increase in healthcare costs and property damage repairs, ultimate court awards and the discount rate. Historical experience and recent trends in the historical experience are the most significant factors in the determination of the reserves. Management believes that the use of actuarial methods to account for these reserves provides a consistent and effective way to measure these highly subjective accruals. However, given the magnitude of the claims involved and the length of time until the ultimate cost is known, the use of any estimation technique in this area is inherently sensitive. Accordingly, the amount of recorded reserves could differ from the Company’s ultimate costs 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.

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     Valuation of Long-lived Assets. The Company’s long-lived assets include property and equipment (principally buses and real estate), investments in affiliates, goodwill and other intangible assets (principally software). At December 31, 2004, the Company’s Consolidated Statements of Financial Position reflects $339.4 million of net property and equipment and $35.7 million in investments in affiliates, goodwill and other net intangible assets, accounting for over 69% of the Company’s total assets. Long-lived assets are assessed for impairment at least annually or 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, and significant negative industry or economic trends. A potential for impairment exists on property and equipment and other intangible assets when the assets have been identified and undiscounted cash flows estimated to be generated by those assets are less than their carrying amount. A potential for impairment exists on investments in affiliates and goodwill when the fair value of the investee or reporting unit is less than their carrying amount. If a potential impairment exists, the assets are written down to the lower of cost or fair value. Estimates of fair value represent our best estimate based on industry trends and reference to market rates and transactions. The determination of fair value can be highly subjective, especially for assets that are not actively traded or when market-based prices are not available.

     In assessing the recoverability of the Company’s long-lived assets the Company must make assumptions regarding estimated future cash flows and other factors to determine whether impairment exists. Cash flow estimates are based on historical results adjusted to reflect our best estimate of future market and operating conditions. If these estimates or their related assumptions change in the future, or if actual results are materially different than those previously estimated, the Company may be required to record impairment charges for these assets not previously recorded.

     As part of the Company’s long-range strategy of implementing a simplified network of routes in the passenger business, the Company anticipates a reduction in bus miles and resulting reduction in the number of buses required to support the business. As a result, during the next eighteen months, the Company may identify groups of older-model buses to be removed from active service and held for sale. In anticipation of these actions, the Company has reduced the average useful life of its older model buses, thereby accelerating the depreciation on these older units. However, there can be no assurances that based on the timing, the actual number of units to be disposed of, and the state of the used bus market at the time of sale that the Company will realize its book value on these assets.

     Pension. The Company’s obligation and expense for pension benefits are determined using actuarial methods that are 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. The Company determines the discount rate based upon yields available on quality long-term corporate bonds (generally by reference to the Moody’s Aa bond index and similar U.S. bond indices). For the year ended December 31, 2004, the Company assumed a 5.75% discount rate. A 25 basis point increase or decrease in last year’s discount rate would have increased or decreased the Company’s annual pension expense by approximately $0.2 million.

     The expected return on plan assets is based on plan-specific historical long-term portfolio performance, asset allocations and investment strategies and the views of the plans’ investment advisors. The assumptions and factors that the Company uses may differ materially from the actual return on the Company’s plan assets. For the year ended December 31, 2004, the Company assumed a 7.57% long-term rate of return on plan assets. A 25 basis point increase or decrease in the long-term rate of return would have increased or decreased the Company’s annual pension expense by approximately $1.4 million.

     The rate of increase in future compensation levels is based primarily on labor contracts currently in effect with employees under collective bargaining agreements and expected future pay rate increases for other employees. In addition, the Company’s actuarial consultants also use factors to estimate such items as retirement age and mortality rates, which are primarily based upon historical plan experience. 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.

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     Accounting for Income Taxes. The Consolidated Statements of Financial Position reflects net deferred tax assets as of December 31, 2004 of $186.8 million, resulting from operating losses and other deductible temporary differences that will reduce taxable income in future periods. Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all or a portion of net deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including expected reversals of significant deductible temporary differences, a company’s recent financial performance, the market environment in which a company operates and the length of operating loss carryforward periods. Furthermore, the weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. Therefore, current pretax losses and the reasonable likelihood of significant near-term reversals of deductible temporary differences carry more weight than forecasted future pretax profits. As a result of book losses incurred in 2002, 2003 and 2004, as well as the significant pension funding required and made by the agreement with the Pension Benefit Guaranty Corporation (“PBGC”) (which gives rise to tax deductions when made), the Company concluded that it was appropriate to establish and maintain a full valuation allowance for its net deferred tax assets. Additionally, the Company expects to continue to provide a full valuation allowance on future tax benefits until it can achieve an appropriate level of pretax profitability that demonstrates its ability to utilize existing operating loss carryforwards.

New Accounting Pronouncements

     There are no recent accounting pronouncements that would have a material effect on the Company’s results or financial position if they were presently applicable.

Liquidity and Capital Resources

     The Company requires significant cash flows to finance capital expenditures, including bus acquisitions, and to meet its debt service and other continuing obligations. As of December 31, 2004, the Company had $203.2 million of outstanding debt, implicit debt equivalent of $223.9 million for off-balance sheet bus operating leases and $61.5 million of outstanding letters of credit (which principally support recorded claims liabilities). Additionally, as of December 31, 2004, the Company had availability of $43.1 million under its revolving credit facility and cash and cash equivalents of $35.9 million. The Company’s principal sources of liquidity are expected to be cash flow from operations (which is net of cash charges for interest expense and lease payments under the Company’s bus operating leases), proceeds from operating lease or other equipment financing for new bus purchases and borrowings under the revolving credit facility. The Company, however, has no right to access the revolving credit facility for borrowings or letters of credit if an event of default exists or an event, which with notice or passage of time or both would give rise to an event of default, has occurred. See Note 12 to the Consolidated Financial Statements. Management assesses the Company’s liquidity in terms of its ability to generate cash to fund operations, finance the purchase of buses and debt servicing. Generally new term financing (including bus operating lease financing) must be obtained to support the Company’s annual capital expenditure needs. If new bus financing cannot be obtained in the future, the Company would have to reduce capital expenditures, resulting in an increase in fleet age and costs to operate the fleet.

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     Net cash provided by operating activities was $39.5 million, $38.8 million and $98.1 million for the