Coach USA, Inc. Reports 46% Increase in Net Income On 34% Revenue Growth.

HOUSTON--(BUSINESS WIRE)--May 3, 1999--

Acquires $20 Million in Revenues

Announces Intent to Offer Subordinated Notes

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 March 31, 1999.

Revenues increased 34% to $201.6 million for the first quarter of 1999 from $150.0 million in the first quarter of 1998. Net income, before the cumulative change in accounting principle described below, increased 46% to $3.6 million, or $.14 per share for the first quarter of 1999, compared to $2.4 million of net income before extraordinary items, or $.11 per share, in the first quarter of 1998.

The Company also announced that it completed the acquisition of several motorcoach and taxi operations with combined annual revenues of approximately $20 million. The companies acquired include: Van Galder Bus Co. of Janesville, Wisconsin; Yellow Cab of Biloxi, Mississippi; and several taxi operations in San Antonio, Texas, notably Yellow Cab and Checker Cab.

Larry King, Chairman and CEO, commented, "We started 1999 on a positive note with strong top-line growth, both from 1998 acquisitions and internal growth. Once again, profit growth exceeded revenue growth as we implemented operational and financial synergies into acquired companies.

"During the quarter, we were active on several fronts that will benefit us as the year progresses. As examples, we began operating a significant privatization contract in San Juan, Puerto Rico, launched increased service to the growing casino market of the Mississippi Gulf Coast and recently acquired several taxi operations in San Antonio, Texas, which dramatically increase our presence in a key convention and tourist market. Our acquisition team continues to be very active as we look to add well-managed companies to Coach USA.

"In the privatization and outsourcing area, we have been awarded new contracts so far in 1999 totaling over $11 million in annualized revenues. The most significant is a contract to provide employee and passenger shuttle service at the Philadelphia International Airport with annualized revenues of over $4 million."

Separately, in an effort to improve its financial flexibility and provide further resources for its acquisition program, the Company announced today that it intends to offer $150 million to $200 million of subordinated notes. The Company has not yet signed a definitive agreement with an underwriter but is in discussions with several parties and may announce a firm commitment within the next few weeks. Proceeds from the debt offering would be used to reduce indebtedness under the Company's senior credit facilities and for general corporate purposes, including acquisitions.

Additionally, the Company reported that it expects to realize incremental advertising revenues in 1999 from its bus-wrapping program of $1.7 million to $2.3 million, or $.04 to $.05 per share net income effect. This program involves utilizing the Company's motorcoaches as sources of additional revenue by selling space to advertisers, particularly in areas with dense populations and high visibility of the Company's motorcoaches.

Mr. King commented, "We continue to work diligently with Transportation Displays, Inc., our advertising sales firm, to further develop our bus-wrapping program. So far, we are experiencing success in larger markets, particularly the Northeast, and believe that advertisers will be pleased with the program's visibility. Based on current commitments from advertisers, we are comfortable with the stated contribution for the current year, which represents a sizable increase from our 1998 activity in this area. As advertisers recognize the effectiveness of the program, we will be in a better position to assess the program's anticipated revenue contribution in the year 2000."

Commenting on the recent announcement of Bob Womack as the Company's new Senior Vice President and CFO, Mr. King added, "I am very excited about Bob joining our senior management team. As previously announced, he brings significant financial and operational experience to Coach USA that will be invaluable in supporting our growth. The addition of Bob, combined with that of Bill Cole four months ago as head of our marketing and sales efforts, fills out a solid, experienced management team supporting our operations."

During the first quarter of 1999, the Company adopted the American Institute of Certified Public Accountants Statement of Position No. 98-5, "Reporting on the Costs of Start-up Activities" ("SOP 98-5"), which is effective for fiscal years beginning after December 15, 1998. Under SOP 98-5 the Company is required to write off any unamortized start-up costs as a cumulative change in accounting principle and expense all future start-up costs as they are incurred. A non-cash charge related to unamortized start-up costs totaling $5.2 million, net of income taxes, or $.20 per share, is reflected in the Company's first quarter 1999 income statement as the cumulative effect of a change in accounting principle.

Coach USA is the leading provider of motorcoach, airport shuttle and taxi services in North America. Through over 120 cities in 33 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.
            Condensed, Consolidated Statements of Income
          For the three months ended March 31, 1999 & 1998
              (Unaudited - in thousands except for EPS)

                                         Three Months Ended
                               3/31/99    %          3/31/98    %

Revenues                     $ 201,599  100.0%     $149,983   100.0%

Operating Expenses             155,946   77.4%      117,980    78.7%
   Gross Profit                 45,653   22.6%       32,003    21.3%

S,G,&A Expenses                 26,038   12.9%       18,814    12.5%
Amortization                     2,687    1.3%        1,439     1.0%
   Operating Income             16,928    8.4%       11,750     7.8%

Interest Expense                10,990    5.5%        7,745     5.2%

Income Before Income Taxes       5,938    2.9%        4,005     2.7%
Provision for Income Taxes       2,375    1.2%        1,562     1.0%

Income before extraordinary
    items and cumulative
    effect of change in
    accounting principle         3,563    1.8%        2,443     1.6%

Extraordinary items
    (net of income taxes)            -                  (88)
Cumulative effect of change in
    accounting principle
    (net of income taxes)       (5,152)                   -

Net income (Loss)             $ (1,589)             $ 2,355

Weighted Average Shares
  - Basic                       25,421               22,024
Weighted Average Shares
  - Diluted                     25,754               22,623

   EPS - Basic:
EPS                           $  (0.06)             $   0.11
EPS (before extraordinary
  items and cumulative effect
  of change in accounting
  principle)                  $   0.14              $   0.11

   EPS - Diluted:
EPS                           $  (0.06)             $   0.10
EPS (before extraordinary
  items and cumulative
  effect of change in
  accounting principle)       $   0.14              $   0.11

Depreciation                  $ 13,872              $  9,678
Amortization                     2,687                 1,439
EBITDA                        $ 33,487   16.6%      $ 22,867   15.2%