Coach USA, Inc. Announces Record Fourth Quarter Results; Earnings Rise 53% On 49% Revenue Increase.

HOUSTON--(BUSINESS WIRE)--March 1, 1999--Coach USA, Inc., (NYSE: CUI), the leading provider of motorcoach, airport shuttle and taxi services in North America, today announced record results for the quarter ended December 31, 1998.

Revenues increased 49% to $224.0 million for the quarter ended December 31, 1998 from $150.4 million for 1997. Fourth quarter 1998 net income, before extraordinary items, increased 53% to $14.7 million compared to $9.7 million, on a pro forma basis for the similar period in 1997. Diluted earnings per share, before extraordinary items, rose to $0.56 for the period ended December 31, 1998 compared to $0.43, on a pro forma basis for the corresponding 1997 period.

For the year ended December 31, 1998, revenues increased 48% to $803.6 million compared with $542.8 million for 1997. Net income, before extraordinary items, for 1998 increased 52% to $54.4 million from $35.7 million, on a pro forma basis, in 1997. Diluted earnings per share rose to $2.14 in 1998 compared with $1.61, on a pro forma basis in 1997.

Increased revenues for the quarter resulted from continued strong internal growth combined with the effect of acquisitions made by the Company during 1998. Profitability increased at a higher rate than revenues as a result of implementation of the Company's operational and financial synergies.

"Coach USA produced strong growth in both the fourth quarter and full year through healthy internal growth and accretive acquisitions," commented Larry King, Chairman and CEO. "In 1999, we expect to continue our internal growth programs, expanding our presence in the privatization and outsourcing area, further developing the `Express Shuttle USA' airport shuttle service brand, focusing on new or increased casino service and addressing continued improvements in our charter and tour operations.

"Currently, revenues from privatization and outsourcing activities represent 20% of our total revenue base. During 1998 alone, we added over $100 million in new long-term contracts, as municipalities privatized transit activities and corporations and other organizations outsourced non-core transportation operations. Examples of some of the new contracts in 1998 include employee shuttles for mining operations in Elko, Nevada, an employee shuttle at Newark airport, a transportation contract with the New York State Department of Corrections, and airport customer shuttles for three key rental car companies in Providence, Rhode Island. Several contracts already in place were expanded, such as the LADOT transit work in Los Angeles. Under one of our newest contracts, which began in 1999, Coach USA manages express bus service to residents of San Juan, Puerto Rico. In many cases, we are able to leverage off of existing facilities to service contracts, increasing our ability to be both competitive and profitable. Our expertise and reputation in this area is growing and we expect to add a variety of new contracts in 1999.

"The 'Express Shuttle USA' airport shuttle service, launched in Houston and Las Vegas in 1998, has emerged as another source of incremental revenue available to us through our existing infrastructure," continued Mr. King. "This service has proven itself to be a cost-effective alternative for budget-minded travelers getting to and from airports. Under this service, our vans pick up and drop off passengers at hotels and other key destinations at a fraction of the cost of other types of airport service, while helping passengers avoid airport parking congestion. We currently operate in 10 key cities and plan on developing `Express Shuttle USA' into a national brand.

"Casino-related business has continued to increase, and we expect additional growth in 1999. An example of new growth opportunities is in Biloxi, Mississippi, where last week we completed a small acquisition. The Biloxi area is experiencing heightened popularity as a casino destination with 11 hotel/casinos currently in operation and the Beau Rivage, an 1800-room luxury hotel/casino scheduled to open later this month. Our new presence in Biloxi will provide a platform for other types of services in the future.

"Charter and tour remains the largest component of our business and an area where continued improvements are planned. We are developing operating strategies to more effectively manage our equipment as well as marketing strategies to increase our customer base and manage yields."

Mr. King concluded, "We look forward to implementing these growth strategies in 1999 while exploring appropriate external opportunities through our acquisition program. Our strong balance sheet and substantial credit facilities will enable us to continue to pursue attractive prospects."

Coach USA is the leading provider of motorcoach, airport shuttle and taxi services in North America. Through over 120 cities in 32 states, provinces and territories, Coach USA's services include motorcoach charters, sightseeing and tours, contract services for municipalities and corporations, commuter transportation, airport shuttles and taxis.

Note: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of Coach USA, Inc. and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements.

Important factors that could cause actual results to differ include, among others, risks associated with acquisitions, fluctuations in operating results because of acquisitions and variations in stock prices, changes in government regulations, competition, risks of operations, growth of the newly acquired businesses and other risks detailed in the Company's reports filed with the Securities and Exchange Commission. -0-

                            COACH USA, INC.
                         Statements of Income
     For the three months and year ended December 31, 1998 & 1997
               (Unaudited - In thousands except for EPS)


                            Three Months Ended         Year Ended
                          12/31/98    12/31/97(1) 12/31/98    12/31/97(1)
                                    (Pro Forma)             (Pro Forma)
Revenue                  $ 224,011   $ 150,437   $ 803,563   $ 542,790

Operating Expenses         163,529     110,031     582,917     398,945
 Gross Profit               60,482      40,406     220,646     143,845

S, G & A Expenses           23,106      15,812      86,531      58,470
Amortization                 2,461       1,180       8,046       3,559
Merger costs - poolings (2)      0         929           0       1,847
 Operating Income           34,915      22,485     126,069      79,969

Interest and Other Expenses 10,757       7,562      36,906      23,106

Income Before Income Taxes  24,158      14,923      89,163      56,863
Provision for Income Taxes   9,422       6,191      34,774      23,028

Income before
 extraordinary items        14,736       8,732      54,389      33,835

Extraordinary items
 (net of income taxes)         (94)       (326)       (631)       (929)

Net Income               $  14,642   $   8,406   $  53,758   $  32,906

Weighted Avg. Shares
 -  Basic                   25,402      21,708      24,137      21,412
Weighted Avg. Shares
 -  Diluted                 27,474      23,514      26,250      22,954

 EPS - Basic:
EPS                       $   0.58   $    0.39   $    2.23   $    1.54
EPS (before
 extraordinary items)     $   0.58   $    0.40   $    2.25   $    1.58
EPS (before
 extraordinary items)(2)  $   0.58   $    0.45   $    2.25   $    1.67

 EPS - Diluted :
EPS                       $   0.55   $    0.37   $    2.12   $    1.48
EPS (before
 extraordinary items)     $   0.56   $    0.39   $    2.14   $    1.53
EPS (before
 extraordinary items)(2)  $   0.56   $    0.43   $    2.14   $    1.61

Depreciation              $ 13,227   $   9,086   $  46,668   $  31,505
Amortization              $  2,461   $   1,180   $   8,046   $   3,559
EBITDA                    $ 50,603   $  33,680   $ 180,783   $ 116,880

Note 1: Prior to the acquisitions, the pooled companies were managed

as independent private companies. In conjunction with the

acquisitions, certain stockholders of the pooled companies agreed

to reductions in salaries and benefits and entered into

employment agreements. Accordingly, the income statements for the

three months and year ended December 31, 1997, include a pro

forma adjustment to present compensation at the level the

stockholders agreed to receive subsequent to the acquisitions. In

addition, pro forma adjustments have been made to present the

incremental provision for income taxes as if all entities had

been subject to federal and state income taxes throughout the

periods.

Note 2: The above pro forma net income for the three months and year

ended December 31, 1997 includes non-recurring acquisition costs

associated with certain poolings-of-interest transactions.

Excluding these costs, pro forma net income before extraordinary

items would have been $9,661 and $35,682 for the three months and

year ended December 31, 1997, respectively.