CAREY INTERNATIONAL INC, POS AM, 1998-03-09

CAREY INTERNATIONAL INC
POS AM, 1998-03-09
LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRANS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 9, 1998

REGISTRATION NO. 333-34897
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CAREY INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4119 52-1171965
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

4530 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
(202) 895-1200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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VINCENT A. WOLFINGTON
CAREY INTERNATIONAL, INC.
4530 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
(202) 895-1200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------
COPIES OF COMMUNICATIONS TO:

JAMES E. DAWSON, ESQUIRE
NUTTER, MCCLENNEN & FISH, LLP
ONE INTERNATIONAL PLACE
BOSTON, MA 02110
(617) 439-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
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CALCULATION OF REGISTRATION FEE

<TABLE>
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<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SHARE(/1/) AGGREGATE OFFERING PRICE(/1/) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value 1,500,000 shares $14.5625 $21,843,750.00 $6,619.32(2)
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</TABLE>

(1) Determined pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, based upon the average of the high and low prices per share of
Common Stock reported on The Nasdaq National Market on August 26, 1997.
(2) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>

PROSPECTUS

1,500,000 SHARES

[LOGO OF CAREY APPEARS HERE]

CAREY INTERNATIONAL, INC.
COMMON STOCK

-----------

This Prospectus relates to 1,500,000 shares of Common Stock, $.01 par value
per share (the "Common Stock"), of Carey International, Inc. (the "Company")
that may be offered and issued by the Company from time to time in connection
with acquisitions of other businesses or properties by the Company.

Carey intends to concentrate its acquisitions within the chauffeured vehicle
service industry. If the opportunity arises, however, Carey may attempt to make
acquisitions that are either complementary to its present operations or which
it considers advantageous even though they may be dissimilar to its present
activities. The consideration for any such acquisition may consist of shares of
Common Stock, cash, notes or other evidences of debt, assumptions of
liabilities or a combination thereof, as determined from time to time by
negotiations between Carey and the owners or controlling persons of businesses
or properties to be acquired.

The shares covered by this Prospectus may be issued in exchange for shares of
capital stock, partnership interests or other assets representing an interest,
direct or indirect, in other companies or other entities, in exchange for
assets used in or related to the business of such companies or entities, or
otherwise pursuant to the agreements providing for such acquisitions. The terms
of such acquisitions and of the issuance of shares of Common Stock under
acquisition agreements will generally be determined by direct negotiations with
the owners or controlling persons of the businesses or properties to be
acquired or, in the case of entities that are more widely held, through
exchange offers to stockholders or documents soliciting the approval of
statutory mergers, consolidations or sales of assets. It is anticipated that
the shares of Common Stock issued in any such acquisition will be valued at a
price reasonably related to the market value of the Common Stock either at the
time of agreement on the terms of an acquisition or at or about the time of
delivery of the shares.

It is not expected that underwriting discounts or commissions will be paid by
the Company in connection with issuances of shares of Common Stock under this
Prospectus. However, finders' fees or brokers' commissions may be paid from
time to time in connection with specific acquisitions, and such fees may be
paid through the issuance of shares of Common Stock covered by this Prospectus.
Any person receiving such a fee may be deemed to be an underwriter within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").

The Company's Common Stock is listed on The Nasdaq National Market under the
symbol "CARY." The closing market price of the Common Stock on The Nasdaq
National Market on February 27, 1998 was $18.00.

-----------

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER THE
SECTION "RISK FACTORS" BEGINNING ON PAGE 7.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS FEBRUARY 28, 1998

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH JURISDICTION.
<PAGE>

No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company or any of the Underwriters. This Prospectus
does not constitute an offer to sell or the solicitation of any offer to buy
any security other than the shares of Common Stock offered by this Prospectus,
nor does it constitute an offer to sell or a solicitation of any offer to buy
the shares of Common Stock by anyone in any jurisdiction in which such offer
or solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information contained herein is correct as of any time
subsequent to the date hereof.

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TABLE OF CONTENTS

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<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 7
Recent Acquisitions...................................................... 11
Price Range of Common Stock.............................................. 12
Dividend Policy.......................................................... 12
Selected Consolidated Financial Data..................................... 13
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 14
Business................................................................. 19
Management............................................................... 28
Principal Stockholders................................................... 34
Certain Transactions..................................................... 35
Description of Capital Stock............................................. 37
Shares Eligible for Future Sale.......................................... 39
Plan of Distribution..................................................... 40
Legal Matters............................................................ 41
Experts.................................................................. 41
Additional Information................................................... 41
Index to Financial Statements............................................ F-1
</TABLE>

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus.

THE COMPANY

Carey International, Inc. is one of the world's largest chauffeured vehicle
service companies, providing services through a worldwide network of owned and
operated companies, licensees and affiliates serving 420 cities in 65
countries. (Unless the context otherwise requires, "Carey" or the "Company"
refers to Carey International, Inc. and its subsidiaries.) The "Carey" brand
name has represented quality chauffeured vehicle service since the 1920s. The
Company owns and operates its service providers in New York, San Francisco, Los
Angeles, London, Washington D.C., Indianapolis, South Florida and Philadelphia.
In addition, the Company generates revenues from licensing the "Carey" name and
providing central reservation, billing and sales and marketing services to its
licensees. The Company's worldwide network also includes affiliates in
locations in which the Company has neither owned and operated companies nor
licensees. Over the past five years, the Company has invested significant
capital in developing its reservation, central billing and worldwide service
infrastructure. By leveraging its current infrastructure and position as a
market leader, the Company intends to consolidate the highly fragmented
chauffeured vehicle service industry through the acquisition of: (i) current
Carey licensees, (ii) additional companies in markets in which the Company
already owns and operates a chauffeured vehicle service company, and (iii)
companies in other strategic markets in North America, Europe and the Pacific
rim of Asia.

The Carey network utilizes chauffeured sedans, limousines, vans and minibuses
to provide services for airport pick-ups and drop-offs, inter-office transfers,
business and association meetings, conventions, roadshows, promotional tours,
special events, incentive travel and leisure travel. Businesses and business
travelers utilize the Company's services primarily as a management tool, to
achieve more efficient use of time and other resources.

Carey's worldwide network of chauffeured vehicle service companies allows it
to provide services with consistently high quality to its customers in
virtually every major city in the expanding global travel market. The network
is linked to over 300,000 reservation terminals in travel agencies, corporate
travel departments and government offices by the Carey International
Reservation System (the "CIRS"), the chauffeured vehicle service industry's
most extensive centralized global reservation system.

The Company estimates that the United States chauffeured vehicle service
industry generated revenues of approximately $3.9 billion in 1996, and has
undergone steady growth in recent years, with revenues increasing at a compound
annual growth rate of 10.9% between 1990 and 1996. The industry is highly
fragmented, with approximately 9,000 companies utilizing over 100,000 vehicles.
The Company believes that during 1996 no chauffeured vehicle service company
accounted for more than 2% of total United States industry revenues. The
Company also believes that similar fragmentation exists in the chauffeured
vehicle service industry outside the United States.

3
<PAGE>

The Company's objective is to increase its profitability and its market share
in the chauffeured vehicle service industry by implementing the following
growth strategies:

Expand Through Acquisitions. Carey believes that there are significant
opportunities to acquire additional chauffeured vehicle service companies
that would benefit from the capital and management resources that the
Company can provide. Carey intends to acquire current Carey licensees, as
well as additional chauffeured vehicle service companies both in markets in
which the Company already owns and operates such a business and in other
strategic regions in North America, Europe and the Pacific rim of Asia.
Carey believes it has a competitive advantage in acquiring licensees
because of a right of first refusal contained in the substantial majority
of its domestic license agreements. The Company believes that it has less
than a 10% market share in each of the markets in which it owns and
operates a chauffeured vehicle service company, and that there is
significant potential for it to expand its business in such markets through
acquisitions. As the Company acquires additional chauffeured vehicle
service companies, it anticipates that cost savings can be achieved through
the consolidation of certain administrative functions and the elimination
of redundant facilities, equipment and personnel.

Carey has successfully begun to implement its acquisition strategy. From
November 1991 through February 1998, the Company acquired 19 chauffeured
vehicle service companies, including, since December 1994, two of its
licensees (in Ft. Lauderdale/Miami and San Francisco) and ten additional
chauffeured vehicle service companies (two in each of Boca Raton, San
Francisco and London, and one in each of New York, Los Angeles,
Indianapolis, and Washington, D.C.). In June 1997, the Company acquired
Manhattan International Limousine Network Ltd. and an affiliated company
("Manhattan Limousine"), one of the largest chauffeured vehicle service
companies in the metropolitan New York area and the operator of a network
of approximately 300 affiliates worldwide. Manhattan Limousine generated
pro forma revenues of approximately $20.7 million representing
approximately 21.5% of the Company's fiscal 1997 revenues on a pro forma
basis. See "Pro Forma Consolidated Financial Statements."

Increase International Market Share. Approximately 11.5% of the Company's
revenue, net was derived from services performed outside the United States
during its fiscal year ended November 30, 1997. Of these international
revenues, approximately 72.0% was generated by the Company's owned and
operated business in London, approximately 27.2% was generated by the
Company's international licensees and the remainder was generated by the
Company's international affiliates. Carey believes that its network can
capture a significant portion of the growing international market for
chauffeured vehicle services by acquiring or licensing additional
chauffeured vehicle service companies and otherwise implementing the Carey
system outside the United States. The Company intends to increase its
international presence by intensifying its sales and marketing efforts,
strengthening its relationships with significant domestic and international
business travel arrangers, and capitalizing on the capacity of the CIRS to
operate on a global scale. By enhancing its international presence, the
Company also expects to increase its revenues from providing chauffeured
vehicle services to international travelers both visiting the United States
and travelling abroad.

Expand Licensee Network Worldwide. The Company will seek to expand its
worldwide network and generate additional revenues from license and
marketing fees by licensing additional chauffeured vehicle service
companies in smaller markets that do not justify a Company-owned presence.
Ultimately, as these less strategic markets grow in size and importance to
the Company, the licensees in such markets may become acquisition
candidates.

4
<PAGE>

increasing the profitability of the chauffeur and the Company. Carey's
independent operator program allows the Company to reduce its labor and
capital costs, convert fixed costs to variable costs and generate revenues
from fees paid by independent operators.

In 1979, the Company was organized as a Delaware corporation and commenced
operations by acquiring certain rights to the "Carey" name held by a
predecessor company. Predecessor companies operated chauffeured vehicle service
businesses under the "Carey" name since the 1920s. The Company's principal
executive offices are located at 4530 Wisconsin Avenue, N.W., Washington, D.C.
20016. Its telephone number at that location is (202) 895-1200. As used herein,
unless the context otherwise requires, "Carey" or the "Company" refers to Carey
International, Inc. and its subsidiaries.

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SUMMARY AND PRO FORMA CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data as of November 30, 1993, 1994, 1995,
1996, and 1997 and for each of the five years in the period ended November 1997
have been derived from the consolidated financial statements of the Company.
The selected consolidated financial data and the consolidated financial
statements of the Company give effect to the merger of Indy Connection
Limousine, Inc. and subsidiary ("Indy Connection") with and into the Company on
October 31, 1997. The merger was accounted for as a pooling-of-interests.

The selected consolidated financial data of the Company should be read in
conjunction with the Company's Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere in this document.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------- 1997
1993 1994 1995 1996 1997 PRO FORMA(3)
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(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenue, net.......... $33,651 $40,314 $48,969 $ 65,545 $ 86,378 $ 96,264
Cost of revenue....... 24,495 27,700 33,027 43,649 57,890 64,017
-------- ------- -------- --------- --------- ---------
Gross profit.......... 9,156 12,614 15,942 21,896 28,488 32,247
Selling, general and
administrative
expense.............. 9,336 11,043 14,081 16,727 20,112 23,539
-------- ------- -------- --------- --------- ---------
Operating income
(loss)............... (180) 1,571 1,861 5,169 8,376 8,708
Interest income
(expense) and other
income (expense)..... (1,367) (1,446) (1,492) (1,380) (690) 4
-------- ------- -------- --------- --------- ---------
Income (loss) before
provision for income
taxes................ (1,547) 125 369 3,789 7,686 8,712
Provision for income
taxes................ 10 163 271 294 3,163 3,585
-------- ------- -------- --------- --------- ---------
Net income (loss)..... $ (1,557) $ (38) $ 98 $ 3,495 $ 4,523 $ 5,127
======== ======= ======== ========= ========= =========
Pro forma net income
per share............ $ 0.90(1) $ 0.76(1) $ 0.65
========= ========= =========
Pro forma weighted
average shares
outstanding.......... 4,213,320(1) 6,188,010(1) 7,941,065
========= ========= =========
CONSOLIDATED BALANCE
SHEET DATA:
Working capital
(deficit)............ $ 903 $ 531 $ (1,948) $ (2,188) $ 4,999
Total assets.......... 30,028 29,494 38,729 43,967 85,394
Long-term debt and
capital leases, less
current maturities .. 12,827 12,276 14,502 12,039 4,132
Deferred revenue(2)... 4,330 4,484 4,726 6,181 13,396
Total stockholders'
equity............... $ 4,771 $ 4,218 $ 4,197 $ 7,573 $ 48,300
</TABLE>
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(1) Gives effect to the conversion of certain preferred stock and subordinated
debt into Common Stock and the elimination of associated interest expense
on the subordinated debt as a result of the Recapitalization (defined in
Note 17 to the Company's Consolidated Financial Statements).
(2) Represents the balance of the fees deferred in connection with independent
operator agreements less amounts previously recognized. Such fees are
recognized ratably over the terms of the agreements, which typically range
from 10 to 20 years. See the Notes to the Company's Consolidated Financial
Statements.
(3) Gives effect to the following events as if they occurred on December 1,
1996: (i) the acquisition of Manhattan Limousine (using statement of
operations data for Manhattan Limousine's six month ended March 31, 1997)
and the amortization of associated goodwill, (ii) the conversion of certain
preferred stock and subordinated debt into Common Stock, see Note 17 to the
Company's Consolidated Financial Statements, and the elimination of
interest expense associated with the subordinated debt, (iii) the issuance
of shares of Common Stock to (a) repay certain existing debt of the
Company, (b) pay the cash and note portions of the purchase price for
Manhattan Limousine, (c) repay certain debt assumed in connection with the
acquisition of Manhattan Limousine, (d) redeem certain preferred stock of
the Company and (e) pay the stock the stock portion of the purchase price
in connection with the acquisition of Manhattan Limousine, (iv) the
elimination of interest expense associated with debt repaid from the
proceeds of the IPO and (v) other adjustments as described in the Pro Forma
Consolidated Financial Statements and the notes thereto.

6
<PAGE>

RISK FACTORS

The following factors should be considered, together with the other
information in this Prospectus, in evaluating an investment in the Company.
This Prospectus contains certain forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from the results anticipated in these forward-looking statements as a result
of certain of the factors set forth in the following risk factors and
elsewhere in this Prospectus.

RISKS ASSOCIATED WITH ACQUISITION OF MANHATTAN LIMOUSINE

The acquisition of Manhattan Limousine was consummated simultaneously with
the Company's underwritten initial public offering of Common Stock in June
1997 (the "IPO"). Manhattan Limousine generated pro forma revenues of
approximately $20.7 million representing approximately 21.5% of the Company's
fiscal 1997 revenues on a pro forma basis. During fiscal 1997, approximately
41.2% of the Company's revenues on a pro forma basis were generated from
services provided within the New York City metropolitan area. The integration
of Manhattan Limousine, which is the Company's largest acquisition to date,
will place significant demands on the Company's management and infrastructure,
and there can be no assurance that Manhattan Limousine's business will be
successfully integrated with that of the Company, that the Company will be
able to realize operating efficiencies or eliminate redundant costs, or that
the combined business will be operated profitably. Further, there can be no
assurance that customers of Manhattan Limousine will continue to do business
with the Company. The failure of the Company in any of these respects could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business--Acquisition Strategy."

RISKS RELATED TO THE COMPANY'S ACQUISITION STRATEGY

The Company intends to grow primarily through the acquisition of additional
chauffeured vehicle service companies. Increased competition for acquisition
candidates may develop, in which event there may be fewer acquisition
opportunities available to the Company as well as higher acquisition costs for
the opportunities that are available. There can be no assurance that the
Company will be able to identify, acquire or profitably manage additional
businesses or successfully integrate any acquired businesses into the Company
without substantial costs, delays, or other operational or financial problems.
There also can be no assurance that the Company will be able to purchase its
licensees that operate in markets in which the Company does not own and
operate a chauffeured vehicle service company.

The success of any acquisition will depend upon the Company's ability to
introduce automation and management systems, to convert salaried chauffeurs
employed by the acquired business to independent operators and to integrate
the acquired business with the Company's existing operations. Customer
dissatisfaction or performance problems at a single acquired company could
have an adverse effect on the reputation of the Company and the Company's
sales and marketing initiatives. There can be no assurance that any businesses
acquired in the future will achieve anticipated revenues and earnings.
Further, acquisitions involve a number of special risks, including possible
adverse effects on the Company's operating results, diversion of management's
attention, failure to retain key personnel at an acquired company, risks
associated with unanticipated events or liabilities and amortization of
goodwill or other acquired intangible assets, some or all of which could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Acquisition Strategy."

RISKS RELATED TO ACQUISITION FINANCING

The Company may choose to finance future acquisitions by using shares of its
Common Stock for a portion or all of the consideration to be paid. In the
event that the Common Stock does not maintain a sufficient market value, or
potential acquisition candidates are otherwise unwilling to accept Common
Stock as part of the consideration for the sale of their businesses, the
Company might not be able to utilize Common Stock as

7
<PAGE>

consideration for acquisitions and would be required to utilize more of its
cash resources, if available, in order to maintain its acquisition program. If
the Company does not have sufficient cash resources, its growth could be
limited unless it is able to obtain additional capital through debt or equity
financings. There can be no assurance that such financing will be available if
and when needed or on terms acceptable to the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

RISKS ASSOCIATED WITH RAPID GROWTH

As a result of the continued implementation of the Company's acquisition
strategy and the expansion of the Company's licensee network, the Company may
experience rapid growth which could place additional demands on the Company's
administrative, operational and financial resources. Managing future growth
will depend on a number of factors, including the maintenance of the quality
of services the Company provides to its customers, and the recruitment,
motivation and retention of qualified chauffeurs and other personnel.
Sustaining growth will require enhancements to the Company's operational and
financial systems as well as additional management, operational and financial
resources. There can be no assurance that the Company will be able to manage
its expanding operations effectively or that it will be able to maintain or
accelerate its growth, and any failure to do so could have a material adverse
effect on the Company's business, financial condition and results of
operations.

SEASONALITY AND QUARTERLY FLUCTUATIONS

The Company believes that its future operating results may continue to be
subject to quarterly variations caused by such factors as seasonal business
travel, variable scheduling of special events and the timing of acquisitions
by the Company. The Company's least profitable quarter generally has been the
first quarter (ending February 28 or 29), and its most profitable quarter
generally has been the fourth quarter (ending November 30). The Company's
operating results may be subject to considerable fluctuations caused by
special events, such as business and trade association meetings and
conventions and sporting events with national or international participation,
which do not necessarily recur annually, may not be held at the same time of
year and may not always be located in a city in which the Company owns and
operates a chauffeured vehicle service company. In addition, adverse economic
conditions may impact the Company's operating results by reducing the overall
number of road shows and promotional tours. All of these factors can cause
significant fluctuations in quarterly results of operations. Accordingly,
results in any fiscal quarter may not be indicative of results of future
quarters. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Quarterly Results of Operations."

RISKS ASSOCIATED WITH LICENSEE OPERATIONS

The Company has 39 licensees serving 106 cities in the United States and 24
licensees serving 105 cities outside the United States. Although a component
of the Company's strategy is to increase the number of licensees, there can be
no assurance that the Company will be able to attract qualified licensees in
desired locations. The failure of the Company to attract new licensees or the
failure of the Company's licensees to operate successfully could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the failure of one or more of the
Company's licensees to maintain the Company's service standards and conform to
the Carey system could have a material adverse effect on the reputation of the
Carey network and the Company's business, financial condition and results of
operations.

In addition, the Company is subject to federal regulation and certain state
laws which govern the offer and sale of franchises. Most state franchise laws
impose substantive requirements on the franchise agreement, including
limitations on non-competition provisions and termination or non-renewal of a
franchise. Some states require that certain materials be registered before
franchises can be offered or sold in that state. Violations of federal
regulations and the state franchising laws could result in civil penalties
against the Company and civil

8
<PAGE>

and criminal penalties against the executive officers of the Company. While
the Company believes that it has operated in compliance with federal and state
franchise laws, no assurance can be given that the Company will not be
required to cease offering and selling licenses in certain states because of
future changes in franchise laws or the Company's failure or inability to
comply with existing franchise laws.

STATUS OF INDEPENDENT OPERATORS

The Company's ability to benefit from conversions of salaried chauffeurs to
independent operators will depend, in part, on the Company's continued ability
to classify independent operators as third party contractors rather than as
employees. The Company does not pay or withhold any federal or state
employment tax with respect to or on behalf of independent operators. The
Internal Revenue Service (the "IRS") previously challenged the Company's
independent operator policy at its owned and operated business in
Philadelphia, but in March 1997 agreed to settle the challenge without an
adjudication of a violation of IRS regulations. Also in March 1997, the IRS
approved guidelines that chauffeured vehicle service providers such as the
Company can follow in order to treat independent operators as third party
contractors rather than as employees. These guidelines distinguish a third
party contractor from an employee using several factors based upon whether or
not the individual, among other things, (i) invests cash in the venture, (ii)
has the potential to realize a profit or loss, (iii) can make his or her
service available to the public and (iv) is required to comply with company
policies regarding how and when to provide services. The Company believes that
its practices substantially conform to these guidelines, and that, as a
result, its independent operators will be treated as third party contractors.
If, however, the Company's practices are determined not to conform with the
guidelines, or if it is adjudicated that the Company is required to treat its
independent operators as employees, the Company could become responsible for
certain past and future employment taxes. There can be no assurance that, in
the event of such an adverse adjudication, there will not be a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Independent Operators."

INDEPENDENT OPERATOR FINANCING

An important component of the Company's business strategy for its owned and
operated companies involves the preferred use of independent operators instead
of salaried chauffeurs operating Company-owned vehicles. A chauffeur becomes
an independent operator by signing an agreement to pay a fee to the Company
ranging from $45,000 to $75,000. The payment of independent operator fees
historically has been financed by the Company, financing companies or banks.
Prior to September 1996, the Company usually sold to third parties the
independent operator notes initially financed by it. Since September 1996, the
Company has ceased selling such notes to third parties. Because the Company
now bears most of the risk relating to payment of these notes, significant
defaults in their payment could have a material adverse effect on the
Company's business, financial condition and results of operations. Each new
independent operator is required to own or obtain his or her vehicle. The cost
of a new vehicle ranges from $35,000 to $65,000, depending upon whether it is
a sedan or a limousine and the features included in the vehicle. The Company
generally does not finance vehicle purchases by its independent operators. As
a result, the ability of independent operators to obtain their own vehicles, a
requirement for conversions from salaried chauffeurs to independent operators,
will depend upon the availability of third party vehicle financing for
independent operators. The inability of independent operators to obtain
vehicle financing will adversely affect the Company's ability to utilize
independent operators, and would have a material adverse effect on the
Company's business, financial condition and results of operations. There can
be no assurance that such financing will be available if and when needed or on
terms acceptable to potential independent operators. See "Business--
Independent Operators."

FACTORS AFFECTING TRAVEL

The Company is subject to risks generally affecting levels of business
travel, including economic cycles, political changes, terrorist threats or
acts and technological advances. The Company cannot predict the likelihood of
occurrence of any such events. If the occurrence of any such event
significantly reduces domestic or international travel, there could be a
material adverse effect on the Company's business, financial condition and
results of operations.

9
<PAGE>

INSURANCE COVERAGE AND CLAIMS

The Company is exposed to claims for personal injury or death and property
damage as a result of automobile accidents involving chauffeured vehicles
operated by its employees and independent operators and by its licensees and
their drivers. The Company maintains, and the Company's independent operators
are required to maintain, levels of insurance which the Company believes to be
adequate. The Company's licensees are required to maintain adequate levels of
insurance and to name the Company as an additional insured on their insurance
policies. There can be no assurance, however, that the limits and the scope of
any such insurance coverage will be adequate. The cost of maintaining personal
injury, property damage and workers' compensation insurance is significant.
The Company and its independent operators and licensees could experience
higher insurance premiums as a result of adverse claims experiences, general
increases in premiums by insurance carriers or both. Significant increases in
such premiums could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Independent
Operators" and "Business--Insurance."

DEPENDENCE ON KEY PERSONNEL

While the Company has numerous senior managers with many years of experience
in the chauffeured vehicle service industry, the Company's success is
dependent on the efforts, abilities and leadership of its executive officers,
particularly, Vincent A. Wolfington, the Company's Chairman and Chief
Executive Officer, and Don R. Dailey, the Company's President. The Company
currently does not have employment agreements with any of its executive
officers. The loss of the services of one or more of such officers could have
a material adverse effect on the Company's business, financial condition and
results of operations.

COMPETITION

The chauffeured vehicle service industry is highly competitive and
fragmented with few significant national participants operating multi-city
reservation systems. Each local market usually contains numerous local
participants as well as a few companies offering regional and national
service. Chauffeured vehicle service companies compete primarily on the basis
of price, quality, scope of service and dependability. The Company also
competes with service providers offering alternative modes of transportation,
such as buses, jitney services, taxis, radio cars and rental cars. The Company
competes both for customers and for possible acquisitions. The Company expects
its business to become more competitive as existing competitors expand and
additional companies enter the market. Certain of the Company's existing
competitors have, and any new competitors that enter the industry may have,
access to significantly greater financial resources than the Company.
Competitive market conditions could have a material adverse affect on the
Company's business, financial condition and results of operations. See
"Business--Competition."

POSSIBLE FUTURE SALES OF SHARES

Sales of substantial amounts of Common Stock in the public market during or
after this offering, or the perception that such sales could occur, may
adversely affect prevailing market prices of the Common Stock and could impair
the future ability of the Company to raise capital through an offering of its
equity securities or to use such securities as consideration in acquisitions.
As of February 27, 1998, the Company had 7,680,691 shares outstanding. Of
these shares, 4,455,127 shares are freely tradeable without restriction under
the Securities Act, except for any such shares which may be beneficially owned
by an "affiliate" of the Company (as that term is defined in Rule 144). The
remaining 3,225,564 shares represent (i) shares issued pursuant to this
Prospectus to affiliates of companies acquired by the Company; or (ii) shares
issued prior to the completion of the Company's IPO or in connection with the
acquisition of Manhattan Limousine which are deemed to be "restricted
securities" under Rule 144. Unless the resale is registered under the
Securities Act, such restricted shares may not be sold in the open market only
in compliance with the applicable requirements of Rule 144. Except for shares
held by affiliates of the Company and the 228,571 shares issued in connection
with the acquisition of Manhattan Limousine, all of such restricted shares are
currently eligible for resale under Rule 144. See "Shares Eligible for Future
Sale."

10
<PAGE>

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation,
By-laws and Delaware law could, together or separately, discourage potential
acquisition proposals, delay or prevent a change in control of the Company and
limit the price that certain investors might be willing to pay in the future
for shares of the Common Stock. Those provisions, among other things, provide
for a classified Board of Directors, allow the Board of Directors to issue,
without further stockholder approval, up to 1,000,000 shares of preferred
stock with rights and privileges that could be senior to the Common Stock,
prohibit the stockholders from calling special meetings of stockholders,
restrict the ability of stockholders to nominate directors and submit
proposals to be considered at stockholders' meetings, impose a supermajority
voting requirement in connection with stockholders' amendments to the By-laws
and prohibit stockholders after this offering from acting by written consent
in lieu of a meeting. The Company also is subject to Section 203 of the
Delaware General Corporation Laws (the "DGCL") which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with any "interested stockholder" for a period
of three years following the date on which such stockholder became an
interested stockholder. See "Description of Capital Stock."

POSSIBLE VOLATILITY OF STOCK PRICE AND LIMITATIONS ON RESALE

There can be no assurance that an active public market for the Common Stock
will continue during or after this offering. From time to time during or after
this offering, there may be significant volatility in the market price for the
Common Stock. Quarterly operating results of the Company, changes in general
conditions in the economy or the chauffeured vehicle service industry, or
other developments affecting the Company, its licensees and affiliates or the
Company's competitors could cause the market price of the Common Stock to
fluctuate substantially. The equity markets have, on occasion, experienced
significant price and volume fluctuations that have affected the market prices
for many companies' securities and have been unrelated to the operating
performance of those companies. Any such fluctuations that occur during or
after this offering may adversely affect the prevailing market price of the
Common Stock.

Affiliates of companies acquired by Carey who receive Common Stock under
this Prospectus are subject for one year to the restrictions of Rule 145 under
the Securities Act, including the volume of sale limitations and manner of
sale requirements thereof. The requirements of Rule 145 may limit the ability
of such affiliates to resell Common Stock they may receive under this
Prospectus.

RECENT ACQUISITIONS

Effective October 31, 1997, the Company issued 721,783 shares of its common
stock in exchange for all the outstanding common stock of Indy Connection
based on a conversion ratio of 1.008 shares (the merger exchange ratio) of the
Company's common stock for each share of Indy Connection's common stock, for a
total value of approximately $12.0 million. The merger qualified as a tax-free
reorganization and has been accounted for as a pooling-of-interests.

11
<PAGE>

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on The Nasdaq National Market under the
symbol "CARY." The following table sets forth for each period indicated the
high and low sale prices for the Common Stock as reported by The Nasdaq
National Market.

<TABLE>
<CAPTION>
HIGH LOW
----- ----
<S> <C> <C>
May 28, 1997 through August 31, 1997 $15 7/8 $11
September 1, 1997 through November 30, 1997 18 13 1/2
December 1, 1997 through February 27, 1998 19 14
</TABLE>

On February 27, 1998, the last reported sale price of the Common Stock was
$18.00 and there were approximately 108 holders of record of Common Stock.

DIVIDEND POLICY

The Company intends to retain all earnings to finance the growth and
development of its business and does not anticipate paying cash dividends on
the Common Stock in the foreseeable future. Any future determination as to the
payment of dividends on the Common Stock will depend upon the Company's future
earnings, results of operations, capital requirements and financial condition
and any other factor the Board of Directors of the Company may consider. The
Company's agreements with its principal lenders prohibit dividend payments.

12
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected actual consolidated financial data as of November 30, 1993,
1994, 1995, 1996, and 1997 and for each of the five years in the period ended
November 1997 have been derived from the consolidated financial statements of
the Company. The selected consolidated financial data and the consolidated
financial statements of the Company give effect to the merger of Indy
Connection Limousine, Inc. and subsidiary ("Indy Connection") with and into
the Company on October 31, 1997. The transaction was accounted for as a
pooling-of-interests.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, NOVEMBER 30,
---------------------------------------------------- 1997
1993 1994 1995 1996 1997 PRO FORMA(3)
-------- -------- -------- --------- --------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue, net.......... $ 33,651 $ 40,314 $ 48,969 $ 65,545 $ 86,378 $ 96,264
Cost of revenue....... 24,495 27,700 33,027 43,649 57,890 64,017
-------- -------- -------- --------- --------- ---------
Gross profit.......... 9,156 12,614 15,942 21,896 28,488 32,247
Selling, general and
administrative
expense.............. 9,336 11,043 14,081 16,727 20,112 23,539
-------- -------- -------- --------- --------- ---------
Operating income
(loss)............... (180) 1,571 1,861 5,169 8,376 8,708
Interest income
(expense) and other
income (expense)..... (1,367) (1,446) (1,492) (1,380) (690) 4
-------- -------- -------- --------- --------- ---------
Income (loss) before
provision for income
taxes................ (1,547) 125 369 3,789 7,686 8,712
Provision for income
taxes................ 10 163 271 294 3,163 3,585
-------- -------- -------- --------- --------- ---------
Net income (loss)..... $ (1,557) $ (38) $ 98 $ 3,495 $ 4,523 $ 5,127
======== ======== ======== ========= ========= =========
Pro forma net income
per share............ $ 0.90(1) $ 0.76(1) $ 0.65
========= ========= =========
Pro forma weighted
average shares
outstanding.......... 4,213,320(1) 6,188,010(1) 7,941,065
========= ========= =========
CONSOLIDATED BALANCE
SHEET DATA:
Working capital
(deficit)............ $ 903 $ 531 $ (1,948) $ (2,188) $ 4,999
Total assets.......... 30,028 29,494 38,729 43,967 85,394
Long-term debt and
capital leases, less
current maturities... 12,827 12,276 14,502 12,039 4,132
Deferred revenue(2)... 4,330 4,484 4,726 6,181 13,396
Total stockholders'
equity............... $ 4,771 $ 4,218 $ 4,197 $ 7,573 $ 48,300
</TABLE>
- - - --------
(1) Gives effect to the conversion of certain preferred stock and subordinated
debt into Common Stock and the elimination of associated interest expense
on the subordinated debt as a result of the Recapitalization (defined in
Note 17 to the Company's Consolidated Financial Statements).
(2) Represents the balance of the fees deferred in connection with independent
operator agreements less amounts previously recognized. Such fees are
recognized ratably over the terms of the agreements, which typically range
from 10 to 20 years. See the Notes to the Company's Consolidated Financial
Statements.
(3) Gives effect to the following events as if they occurred on December 1,
1996: (i) the acquisition of Manhattan Limousine (using statement of
operations data for Manhattan Limousine's six month ended March 31, 1997)
and the amortization of associated goodwill, (ii) the conversion of
certain preferred stock and subordinated debt into Common Stock, see Note
17 to the Company's Consolidated Financial Statements, and the elimination
of interest expense associated with the subordinated debt, (iii) the
issuance of shares of Common Stock to (a) repay certain existing debt of
the Company, (b) pay the cash and note portions of the purchase price for
Manhattan Limousine, (c) repay certain debt assumed in connection with the
acquisition of Manhattan Limousine, (d) redeem certain preferred stock of
the Company and (e) pay the stock the stock portion of the purchase price
in connection with the acquisition of Manhattan Limousine, (iv) the
elimination of interest expense associated with debt repaid from the
proceeds of the IPO and (v) other adjustments as described in the Pro
Forma Consolidated Financial Statements and the notes thereto.

13
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes thereto appearing elsewhere in this
document. Unless otherwise indicated or the context otherwise requires, each
reference to a year is to the Company's fiscal year which ends on November 30
of such year.

OVERVIEW

The Company generates revenues primarily from chauffeured vehicle services
provided by (i) Carey's owned and operated businesses and (ii) Carey's
licensees and affiliates when services provided by such licensees and
affiliates are billed through the Company's central reservation and billing
system. In 1996 and 1997, approximately 76.1% and 81.2%, respectively, of the
Company's revenue, net was generated by chauffeured vehicle services provided
by the Company's owned and operated businesses, approximately 14.1% and 12.2%,
respectively, was generated by chauffeured vehicle services provided by the
Company's licensees and billed by the Company, and approximately 1.8% and
1.3%, respectively, was generated by chauffeured vehicle services provided by
the Company's affiliates and billed by the Company. Carey also generates
revenues from its licensees through fees (both initial and monthly) related to
(i) licensing the use of its name and service mark, (ii) its central
reservation and billing services and (iii) its marketing activities. In 1996
and 1997 approximately 3.0% and 2.6%, respectively, of the Company's revenue,
net was generated from its licensees through such fees. To a lesser extent,
the Company derives revenues from the payment of fees by independent
operators. The Company recognizes revenues from these fees ratably over the
terms of the independent operators' agreements with the Company, which
typically range from 10 to 20 years.

Cost of revenue primarily consists of amounts due to the Company's
independent operators. The amount due to independent operators is a percentage
(ranging from 60% to 67%) of the charges of services provided, net of
discounts and commissions. Cost of revenue also includes amounts due to the
Company's licensees and affiliates for chauffeured vehicle services provided
by them and billed by the Company. Such amounts generally include the charges
for service provided less a referral fee ranging from 15% to 25% of net
vehicle service revenue. Cost of revenue includes costs associated with owning
and maintaining the vehicles owned by the Company, telecommunications expense,
salaries and benefits for reservationists, marketing expenses for the benefit
of licensees, and commissions due to travel agents and credit card companies.

Selling, general and administrative expenses consist primarily of
compensation and related benefits for the Company's officers and
administrative personnel, marketing and promotional expenses for the Company's
owned and operated chauffeured vehicle service companies, and professional
fees, as well as amortization costs related to the intangibles recorded as a
result of the Company's acquisitions.

In addition to internal growth from the Company's sales and marketing
efforts, an important component in the Company's growth to date has been the
acquisition of its licensees and other chauffeured vehicle service companies.
From December 1994 through February 1998, Carey acquired 12 chauffeured
vehicle service companies. Eleven of these acquisitions were made for cash,
the issuance or assumption of notes, and/or issuance of Common Stock and were
accounted for using the purchase method of accounting. A substantial majority
of the purchase price paid by the Company in each such acquisition represented
goodwill, franchise rights (if a license was acquired) and/or intangibles. The
Company's October 1997 acquisition of Indy Connection was accounted for as a
pooling-of-interests.

The results of operations for the acquired companies accounted for by the
purchase method have been included in the Company's consolidated financial
statements from their respective dates of acquisition. Carey expects to
benefit from its acquisitions by consolidating general and administrative
functions, increasing operating efficiencies, and, in acquisitions where it
converts salaried chauffeurs to independent operators,

14
<PAGE>

eliminating the overhead and capital costs associated with employing salaried
chauffeurs, leasing garages, maintaining parts and fuel inventories, and
owning and operating vehicles. The Company generally realizes these benefits
within six to twelve months after an acquisition, depending upon whether the
acquisition is of a chauffeured vehicle service company in a location in which
the Company already operates, or of a licensee in a market where Carey has yet
to establish operations.

In June 1997 the Company completed an initial public offering of 3,335,000
shares of Common Stock (the "IPO").

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain financial
data for the Company expressed as a percentage of revenue, net.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenue, net.............................. 100.0% 100.0% 100.0%
Cost of revenue........................... 67.4 66.6 67.0
---------- ---------- ----------
Gross profit.............................. 32.6 33.4 33.0
Selling, general and administrative
expense.................................. 28.8 25.5 23.3
---------- ---------- ----------
Operating income.......................... 3.8 7.9 9.7
Interest income (expense) and other income
(expense)................................ (3.0) (2.1) (0.8)
---------- ---------- ----------
Income before provision for income taxes.. 0.8 5.8 8.9
Provision for income taxes................ 0.6 0.5 3.7
---------- ---------- ----------
Net income................................ 0.2% 5.3% 5.2%
========== ========== ==========
</TABLE>

YEAR ENDED NOVEMBER 30, 1997 COMPARED TO YEAR ENDED NOVEMBER 30, 1996

Revenue, Net. Revenue, net increased $20.8 million or 31.8% from $65.5
million in 1996 to $86.4 million in 1997. Of the increase, $8.8 million
resulted from expanded use of the Carey network, including an increase in
business from corporate travel customers and business travel arrangers. The
remaining $12.0 million of the increase was due to the revenues from companies
acquired by Carey, including Manhattan Limousine, which was acquired on June
2, 1997, and Commonwealth Limousine Services, Inc. ("Commonwealth") in Los
Angeles, which was acquired on October 1, 1997.

Cost of Revenue. Cost of revenue increased $14.2 million or 32.6% from $43.6
million in 1996 to $57.9 million in 1997. The increase was primarily
attributable to higher costs due to increased business levels and to cost of
revenue of acquired corporations, which was not included in 1996. Cost of
revenue increased slightly as a percentage of revenue, net from 66.6% in 1996
to 67.0% in 1997, primarily reflecting increases in telephone, chauffeur and
certain other costs as a percentage of revenue, net.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $3.4 million or 20.2% from
$16.7 million in 1996 to $20.1 million in 1997. The increase was largely due
to the costs of additional personnel, increased marketing expenses and
increased administrative expenses related to acquired operations and generally
in support of higher business levels. Selling, general and administrative
expenses decreased as a percentage of revenue, net from 25.5% in 1996 to 23.3%
in 1997 largely due to the fact that the Company's revenue, net has increased
more rapidly than its administrative costs.

Interest Expense. Interest expense decreased approximately $756,000 or 39.8%
from approximately $1.9 million in 1996 to approximately $1.1 million in 1997.
Interest expense decreased as a percentage of revenue, net from 2.9% in 1996
to 1.3% in 1997. The decrease resulted from both the use of proceeds from the
Company's IPO to repay outstanding debt and the conversion of subordinated and
certain other debt to Common Stock coincident with the IPO.

15
<PAGE>

Provision for Income Taxes. The provision for income taxes increased
approximately $2.9 million from approximately $294,000 in 1996 to
approximately $3.2 million in 1997. The increase primarily related to the
increase in pre-tax income of the Company from approximately $3.8 million in
the 1996 to $7.7 million in the 1997. In addition, the Company utilized the
benefit of net operating loss carryovers ("NOLs") in determining its provision
for income taxes in 1996, but such NOLs were not available to the Company in
1997.

Net Income. As a result of the foregoing, the Company's net income increased
approximately $1.0 million or 29.4% from approximately $3.5 million in 1996 to
approximately $4.5 million in 1997.

YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995

Revenue, Net. Revenue, net increased approximately $16.6 million or 33.8%
from $49.0 million in 1995 to $65.5 million in 1996. Of the increase,
approximately $10.2 million was contributed by existing operations as a result
of expanded use of the Carey network, including an increase in business from
corporate travel customers and business travel arrangers, and approximately
$6.4 million was due to revenues of companies which were acquired from
December 1994 through February 1996.

Cost of Revenue. Cost of revenue increased approximately $10.6 million or
32.2% from $33.0 million in 1995 to $43.6 million in 1996. The increase was
primarily attributable to higher costs due to increased business levels. Cost
of revenue decreased as a percentage of revenue, net from 67.4% in 1995 to
66.6% in 1996 as a result of spreading the fixed costs of the Company's
reservations infrastructure over a larger revenue base.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $2.6 million or 18.8% from
$14.1 million in 1995 to $16.7 million in 1996. The increase was largely due
to higher administrative costs associated with additional personnel, increased
marketing expenses, and higher amortization of intangibles as a result of the
acquisitions. Selling, general and administrative expenses decreased as a
percentage of revenue, net from 28.8% in 1995 to 25.5% in 1996 as a result of
an increase in revenue without a corresponding increase in administrative
costs.

Interest Expense. Interest expense was $1.9 million in 1995 and 1996,
respectively. Interest expense decreased as a percentage of revenue, net from
3.9% in 1995 to 2.9% in 1996.

Provision for Income Taxes. The provision for income taxes increased
approximately $24,000 from approximately $271,000 in 1995 to approximately
$294,000 in 1996. Prior to 1996, the Company recorded a valuation allowance
against its net deferred tax assets. This allowance was eliminated in 1996 in
accordance with generally accepted accounting principles and this reduced the
net provision for income taxes in 1996 by approximately $1.5 million. The
increase in the provision recordable in 1996, which was offset by the effect
of eliminating the valuation allowance against deferred tax assets, was
attributable to the Company's increased pretax profit level in 1996 which
exceeded the beneficial tax effect of net operating loss carryforwards of
prior years. The Company utilized the full amount of its remaining NOLs in
1996.

Net Income. As a result of the foregoing, the Company's net income increased
approximately $3.4 million to approximately $3.5 million in 1996 compared to a
net income of approximately $98,000 in 1995.

16
<PAGE>

QUARTERLY RESULTS

The following table presents unaudited quarterly financial information for
1995, 1996 and 1997. This information has been prepared by the Company on a
basis consistent with the Company's audited financial statements and includes
all adjustments (consisting only of normal recurring adjustments) which
management considers necessary for a fair presentation of the results for such
quarters.

<TABLE>
<CAPTION>
QUARTERLY RESULTS
------------------------------------------------------------------
$ %
-------------------------------- --------------------------------
(IN THOUSANDS)
OPERATING NET OPERATING NET
REVENUE, GROSS INCOME INCOME REVENUE, GROSS INCOME INCOME
NET PROFIT (LOSS) (LOSS) NET PROFIT (LOSS) (LOSS)
-------- ------ --------- ------ -------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997
February 28............ $15,595 $5,126 $ 912 $ 366 100.0% 32.9% 5.8% 2.3%
May 31................. 18,690 6,495 1,990 1,008 100.0 34.8 10.6 5.4
August 31.............. 22,932 7,574 2,022 1,180 100.0 33.0 8.8 5.1
November 30............ 29,161 9,293 3,452 1,969 100.0 31.9 11.8 6.8
1996
February 29............ 12,892 4,232 490 36 100.0 32.8 3.8 0.3
May 31................. 16,695 5,674 1,459 750 100.0 34.0 8.7 4.5
August 31.............. 16,073 5,472 1,343 681 100.0 34.0 8.4 4.2
November 30............ 19,885 6,518 1,877 2,028 100.0 32.8 9.4 10.2
1995
February 28............ 9,503 3,081 (42) (385) 100.0 32.4 (0.4) (4.1)
May 31................. 11,865 3,874 548 111 100.0 32.7 4.6 0.9
August 31.............. 11,686 3,610 (27) (538) 100.0 30.9 (0.2) (4.6)
November 30............ 15,916 5,377 1,382 910 100.0 33.8 8.7 5.7
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents increased $2.5 million from $2.9 million at
November 30, 1996 to $5.3 million at November 30, 1997. Operating activities
provided net cash of $3.4 million during 1997. The overall net increase in
cash and cash equivalents during 1997 primarily related to the cash proceeds
to the Company from its IPO and net cash provided by operations, offset by the
use of such cash to retire debt, acquire Manhattan Limousine and redeem
certain preferred shares of stock.

Cash used in investing activities increased by $8.0 million over 1996. Cash
of $1.7 million was used in 1996 to acquire operations in London, whereas $8.4
million of cash was used in 1997 to acquire Manhattan Limousine and
Commonwealth and to make additional payments of contingent consideration for
the London acquisition.

Cash provided by financing activities increased by $11.9 million over 1996,
primarily as a result of the net proceeds from the IPO, after using such
proceeds to retire debt and complete the Recapitalization.

In connection with the IPO, the Company issued a total of 3,335,000 shares
of Common Stock and received proceeds, net of underwriters' discounts and
commissions and offering costs, of $30.6 million. The Company utilized the net
proceeds from the IPO to repay principal on indebtedness of approximately $7.1
million and to fund the Recapitalization by repaying principal on subordinated
indebtedness of approximately $912,000 and

17
<PAGE>

redeeming preferred stock for $3.1 million. Additionally, the Company
completed its acquisition of Manhattan Limousine by paying $11.8 million to
the sellers of Manhattan Limousine and repaying $3.5 million of indebtedness
of Manhattan Limousine. The remaining net proceeds have been used for
acquisitions and other general corporate purposes, including working capital.

As part of the Recapitalization, a further $4.9 million of debt was
converted to Common Stock of the Company. At November 30, 1997, the Company
had borrowings of $3.8 million, approximately $997,000 of which is to be
repaid over the next 12 months.

On August 15, 1997, the Company entered into a senior credit facility with
three banks consisting of a secured revolving line of credit of $25.0 million
(the "Facility"). The Facility, which may be used for acquisitions and working
capital, is collateralized by the assets of the Company and its domestic
operating subsidiaries and by a pledge of the stock of its international
subsidiary. The Facility also provides availability for the issuance of
letters of credit. Loans made under the revolving line of credit bear interest
at the Company's option at either the bank's prime lending rate or 2.0% above
the LIBOR rate. Commitment fees equal to 0.375% per annum are payable on the
unused portion of the revolving line of credit. On the second anniversary of
the Facility, outstanding balances under the Facility will convert to a five-
year term loan, which will bear interest either at a fixed rate (subject to
availability) or at a variable LIBOR or prime-based rate with adjustments
determined based on the Company's earnings. The terms of the Facility (i)
prohibit the payment of dividends by the Company, (ii) with certain
exceptions, prevent the Company from incurring or assuming other indebtedness
that is not subordinated to borrowings under the Facility and (iii) require
the Company to comply with certain financial covenants.

While there can be no assurance, and depending on the methods of financing
and size of potential acquisitions, management believes that cash flow from
operations, the remaining net proceeds from the IPO and funds from the credit
Facility will be adequate to meet the Company's capital requirements for 1998.
While the Company historically has financed acquisitions primarily with cash,
it may seek to finance future acquisitions by using Common Stock for a portion
or all of the consideration to be paid.

The Company is in the process of upgrading the CIRS and certain other
computer systems. The upgrades are designed to provide enhanced customer
service and management information. These upgrades, which will continue
throughout 1998 and 1999, also are designed to provide such systems
functionality with respect to the "Year 2000" millenium change. The Company
does not anticipate that the cost of these upgrades will be material to its
liquidity, financial position and results of operations in any single future
year.

FACTORS TO BE CONSIDERED

The information set forth above contains forward-looking statements, which
involve risks and uncertainties. The Company's actual results could differ
materially from the results anticipated in these forward-looking statements.
Readers should refer to discussion under "Risk Factors" contained in the
Company's Registration Statement on Form S-1 (No. 333-22651) filed with the
Securities and Exchange Commission, which is incorporated herein by reference,
concerning certain factors which could cause the Company's actual results to
differ materially from the results anticipated in the forward-looking
statements contained herein.

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BUSINESS

Carey International, Inc. is one of the world's largest chauffeured vehicle
service companies, providing services through a worldwide network of owned and
operated companies, licensees and affiliates serving 420 cities in 65
countries. The "Carey" brand name has represented quality chauffeured vehicle
services since the 1920's. The Company owns and operates its service providers
in New York, San Francisco, Los Angeles, London, Washington D.C.,
Indianapolis, South Florida and Philadelphia. In addition, the Company
generates revenues from licensing the "Carey" name and providing central
reservation, billing and sales and marketing services to its licensees. The
Company's worldwide network also includes affiliates in locations in which the
Company has neither owned and operated companies nor licensees. Over the past
five years, the Company has invested significant capital in developing its
reservation, central billing and worldwide service infrastructure. By
leveraging its current infrastructure and position as a market leader, the
Company intends to consolidate the highly fragmented chauffeured vehicle
service industry through the acquisition of: (i) current Carey licensees, (ii)
additional companies in markets in which the Company already owns and operates
a chauffeured vehicle service company, and (iii) companies in other strategic
markets in North America and Europe. The Company also intends to add to its
global presence by establishing strategic alliances with companies in the
Pacific rim of Asia and in Latin America.

The Carey network utilizes chauffeured sedans, limousines, vans and
minibuses to provide services for airport pick-ups and drop-offs, inter-office
transfers, business and association meetings, conventions, road shows,
promotional tours, special events, incentive travel and leisure travel.
Businesses and business travelers utilize the Company's services primarily as
a management tool to achieve more efficient use of time and other resources.

Carey's worldwide network of chauffeured vehicle service companies allows it
to provide services with consistently high quality to its customers in
virtually every major city in the expanding global travel market. The network
is linked to over 300,000 reservation terminals in travel agencies, corporate
travel departments and government agencies by the CIRS, the chauffeured
vehicle service industry's most extensive centralized global reservation
system.

MARKET OVERVIEW

The Company estimates that the United States chauffeured vehicle service
industry generated revenues of approximately $3.9 billion in 1996, the latest
year for which statistics are available, and has undergone steady growth in
recent years, with revenues increasing at a compound annual growth rate of
10.9% between 1990 and 1996. The industry is highly fragmented, with
approximately 9,000 companies utilizing over 100,000 vehicles. The Company
believes that during 1997 no chauffeured vehicle service company accounted for
more than 2% of total United States industry revenues. The Company also
believes that similar fragmentation exists in the chauffeured vehicle service
industry outside the United States.

The chauffeured vehicle service industry serves businesses in virtually all
industrial and financial sectors of the economy. The Company believes that
business customers are becoming increasingly sophisticated in their use of
ground vehicle services and are demanding a broader array of "meet-and-greet"
and other services, as well as business amenities such as cellular phones.
Although there are other forms of transportation that compete with chauffeured
vehicles, such as buses, jitney services, taxis, radio cars and rental cars,
the Company believes that none of those forms of transportation provides the
quality, dependability and value-added services of chauffeur-driven vehicles.
The Company also believes that businesses place a premium on service providers
that are able to coordinate the travel itinerary of each member of a large
group over many locations with a single reservation and billing system.

BUSINESS STRATEGY

The Company's objective is to increase its profitability and its market
share in the chauffeured vehicle service industry by implementing the
following growth strategies:

Expand Through Acquisitions. The Company believes that there are
significant opportunities to acquire additional chauffeured vehicle service
companies that would benefit from the capital and

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<PAGE>

management resources that the Company can provide. Carey intends to acquire
current Carey licensees, as well as additional chauffeured vehicle service
companies both in markets in which the Company already owns and operates
such a company and in other strategic regions in North America and Europe.
Carey also intends to establish strategic alliances with companies in the
Pacific rim of Asia and in Latin America. Carey believes it has a
competitive advantage in acquiring licensees because of a right of first
refusal contained in the substantial majority of its domestic license
agreements. The Company has successfully begun to implement its acquisition
strategy, having acquired 19 chauffeured vehicle service companies from
November 1991 through February 1998.

Increase International Market Share. Approximately 11.5% of the Company's
revenue, net was derived from services performed outside the United States
during its fiscal year ended November 30, 1997. Of these international
revenues, approximately 72.0% was generated by the Company's owned and
operated business in London, approximately 27.2% was generated by the
Company's international licensees and the remainder was generated by the
Company's international affiliates. Carey believes that its network can
capture a significant portion of the growing international market for
chauffeured vehicle services by acquiring or licensing additional
chauffeured vehicle service companies and otherwise implementing the Carey
system outside the United States. The Company intends to increase its
international presence by intensifying its sales and marketing efforts,
strengthening its relationship with significant domestic and international
business travel arrangers, and capitalizing on the capacity of the CIRS to
operate on a global scale. By enhancing its international presence, the
Company also expects to increase its revenues from providing chauffeured
vehicle services to international travelers both visiting the United States
and traveling abroad.

Convert Salaried Chauffeurs to Independent Operators. The Company
believes that it can improve its profitability by continuing to convert
salaried chauffeurs to independent operators in certain businesses acquired
by Carey. The objective of Carey's independent operator strategy is to
instill in each chauffeur the sense of purpose, responsibility and
dedication characteristic of an independent business owner, thereby
increasing the profitability of the chauffeur and the Company. Carey's
independent operator program allows the Company to reduce its labor and
capital costs, convert fixed costs to variable costs and generate revenues
from fees paid by independent operators.

ACQUISITION STRATEGY

Carey believes that there are significant opportunities to acquire
additional chauffeured vehicle service companies as a result of: (i) the
highly fragmented and increasingly global nature of the industry, (ii)
industry participants' capital requirements and desire for liquidity, and
(iii) the pressures of increasing competition. The Company intends to continue
to pursue its acquisition program in order to strengthen its position in its
existing markets and to acquire operations or establish strategic alliances in
new markets.

Carey intends to pursue acquisitions that will allow the Company to own and
operate chauffeured vehicle service companies in new geographic markets. The
Company currently owns and operates chauffeured vehicle service companies in
seven of the largest United States travel markets and in London, the largest
European travel market, and will seek to acquire Carey licensees in other
significant travel markets in North America and Europe, and establish
strategic alliances with companies in the Pacific rim of Asia and in Latin
America. The Company believes that its ability to acquire its licensees will
be enhanced by a right of first refusal that is contained in a substantial
majority of its domestic license agreements and the limited terms of most of
its international license agreements. The Company's preference is to retain
key management, operating and sales personnel of an acquired company in a new
market in order to maintain continuity of operations and customer service.

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<PAGE>

The Company believes that it has a market share of less than 10% in each of
the markets in which it owns and operates a chauffeured vehicle service
company, and that there is significant potential for it to expand its business
in such markets through acquisitions. When justified by the size of an
existing market acquisition, the Company expects to retain key management and
sales personnel of the acquired company and to seek to improve that company's
profitability through implementation of the Company's operating strategies. In
most instances, acquired operations can be integrated into the Company's
existing operations in a market, resulting in the elimination of duplicative
overhead and operating costs.

The Company believes that there are significant advantages to consolidating
the chauffeured vehicle service industry. Carey believes it can increase
revenues of acquired companies by marketing the worldwide services of its
network to customers of such companies, and by increasing the productivity of
chauffeurs at the acquired companies through the implementation of training
and quality assurance programs. Moreover, Carey believes that cost savings can
be achieved following acquisitions through (i) the consolidation of certain
administrative functions and increased use of automation, (ii) the elimination
of redundant facilities, equipment and personnel, and (iii) the conversion of
salaried chauffeurs driving company-owned vehicles into independent operators
driving their own vehicles.

Carey has successfully begun its acquisition strategy, having acquired 19
chauffeured vehicle service companies since November 1991. The following table
lists the date of acquisition, location of each such chauffeured vehicle
service company and whether the acquired company was a licensee or affiliate
of Company or other chauffeured vehicle service company:

ACQUISITION HISTORY
NOVEMBER 1991--PRESENT

<TABLE>
<CAPTION>
DATE LOCATION ACQUIRED COMPANY
---- -------- ----------------
<S> <C> <C>
November 1991.................... Washington D.C. Other
September 1992................... Los Angeles, CA Other
August 1993...................... Wilmington, DE Licensee
September 1993................... West Palm Beach, FL Licensee
November 1993.................... New York, NY Other
June 1994........................ Washington, DC Other
June 1994........................ Los Angeles, CA Other
December 1994.................... Boca Raton, FL Other
January 1995..................... San Francisco, CA Licensee
April 1995....................... Washington, D.C. Other
April 1995....................... Ft. Lauderdale/Miami, FL Licensee
May 1995......................... San Francisco, CA Other
August 1995...................... San Francisco, CA Other
August 1995...................... Boca Raton, FL Other
February 1996.................... London, England Affiliate
June 1997........................ New York, NY Other
October 1997..................... Indianapolis, IN Affiliate
October 1997..................... Los Angeles, CA Affiliate
December 1997.................... London, England Other
</TABLE>

The Company has analyzed significant data on the chauffeured vehicle service
industry and individual businesses within that industry and believes that it
is well positioned to further implement its acquisition program. The Company
believes that management's lengthy tenure with the Company, extensive
experience in the chauffeured vehicle service industry and relationships with
acquisition candidates provide the Company with significant knowledge that
will assist the Company in its attempts to acquire licensees of the Company
and other chauffeured vehicle service companies. The Company regularly reviews
various strategic acquisition

21
<PAGE>

opportunities and periodically engages in discussions regarding such possible
acquisitions. As the result of this review process, negotiations and
acquisition agreements may occur from time to time if appropriate
opportunities arise.

The acquisition of Manhattan Limousine in June 1997 has solidified the
Company's presence in the New York metropolitan area and diversified its
customer base. The Company has benefitted from Manhattan Limousine's contracts
with many New York-based participants in the airline and hotel industries,
including airlines such as Virgin Atlantic Airways and Aer Lingus, and hotels
such as the Plaza Hotel and Mark Hotel. Typically these arrangements are
terminable by the airline or hotel upon 30 days' notice. While the Company has
begun to consolidate certain administrative operations of Manhattan Limousine
with its own to eliminate redundant facilities, equipment and personnel,
Manhattan Limousine otherwise will retain its separate identity until June
1998, if not later.

Manhattan Limousine historically provided services solely through
independent operators rather than salaried chauffeurs. See "Independent
Operators." As a result of the acquisition, Carey assumed Manhattan
Limousine's network of approximately 300 affiliates from which Manhattan
Limousine received fees for referred business. A significant majority of
Manhattan Limousine's affiliates are located in cities in which the Company
already has affiliates, and in some cities Manhattan Limousine and the Company
share common affiliates.

As consideration for future acquisitions, the Company intends to use various
combinations of shares of Common Stock, cash and notes. The Company has filed
a Resgistration Statement on Form S-4 under which it may issue up to 1,500,000
shares of Common Stock in connection with acquisition.

SERVICE PROVIDER NETWORK

Carey's international network of owned and operated chauffeured vehicle
service companies, licensees and affiliates, serving 420 cities in 65
countries, enables it to provide its customers chauffeured vehicles in
virtually every significant travel market throughout the world. Carey believes
that its network is the most extensive in the industry, and intends to expand
the network by adding qualified licensees and affiliates in locations
justifying new or expanded service. The Company believes that the trend toward
globalization is opening more cities for business and personal travel around
the world. The Company monitors and evaluates cities in which a demand for
chauffeured vehicle services may warrant a "Carey" presence.

The Company's network provides chauffeured vehicle services for airport
pickups and drop-offs, inter- office transfers, business and association
meetings, conventions, road shows, promotional tours, special events,
incentive travel and leisure travel. The Company also offers its clients
travel and tour planning services, "meet-and-greet" services, destination
management services for airport arrivals, group movement coordination
services, direct and central billing in U.S. dollars, and access to the
Company's 24-hour worldwide computerized reservation system, the CIRS.

The Company's fleet, primarily vehicles which are owned and operated by
independent operators in the owned and operated locations, contains four types
of vehicles: chauffeured sedans, limousines, vans and minibuses, some of which
can carry up to 30 persons. In addition, the Company subcontracts from time to
time for buses that can carry a greater number of passengers. The vehicles of
the Company's licensees and affiliates in larger markets are similar to the
Company's fleet, and in smaller markets generally consist of only chauffeured
sedans and limousines. All vehicles are driven by uniformed professional
chauffeurs, most of whom own the vehicles that they drive. Each such chauffeur
drives a clean, late model vehicle with amenities important to the business
traveler, such as cellular telephones and daily newspapers.

Owned and Operated Companies. The Company owns and operates chauffeured
vehicle service companies providing service to New York, San Francisco,
Indianapolis, Los Angeles, London, Washington, D.C., South Florida, Palm
Beach, Boca Raton, Miami and Philadelphia. Revenue, net provided by these
companies represented approximately 76.1% of the Company's revenue, net in
fiscal 1996 and 81.2% in fiscal 1997.

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<PAGE>

Licensees. The Company has 39 licensees serving 106 cities in the United
States and 24 licensees serving 105 cities outside the United States, all of
which operate under the Carey name. Revenue provided by the Company's
licensees represented approximately 17.1% and 14.7% of the Company's revenue,
net in fiscal 1996 and 1997, respectively.

The domestic license fee ranges from $15,000 to $75,000, depending upon the
size of the market. The sum of the continuing fees paid by the domestic
licensee varies, but annually is generally less than 10% of its revenues or,
in some cases, less than 10% of an excess above a specified base.
Substantially all candidates appointed as domestic licensees have been in
business for at least 10 years prior to the grant of a license. The term of a
domestic license agreement entered into prior to January 1, 1996 is perpetual
and subsequent to January 1, 1996 is 10 years.

International licensees historically have not paid annual license fees;
rather, they have paid a commission on business referred to them. The term of
an international license agreement usually is from year to year, although in a
few cases it is perpetual.

Under the domestic license agreement, the Company provides the licensee
with: (i) the right to use the "Carey" name, (ii) participation in the CIRS,
(iii) various consulting services, (iv) identification in various travel
directories, (v) access to bulk purchasing arrangements for automobiles, parts
and maintenance materials, and (vi) national sales and marketing services. In
the event of a proposed transfer of a license or a licensee, the Company has
the right to approve the transfer. In addition, for most license agreements
executed prior to January 1, 1996 and all license agreements executed on or
after January 1, 1996, Carey retains a right of first refusal by which it may
acquire any license or licensee upon the same terms as the license or licensee
is proposed to be sold.

Typically, a licensee candidate acts as an affiliate before being selected
as a licensee. Licensees operate according to strict service guidelines
specified by the Company and market the Carey name in conjunction with the
Company's overall marketing program. The Company conducts ongoing quality
assurance programs and annual audits of licensees to insure that the licensees
have met the high service standards set forth by the Company. The Company has
the right to terminate any license if the licensee fails to comply with such
standards.

Affiliates. The Company utilizes affiliates to provide services to its
clients in cities where the Company does not have Company-owned operations or
licensees. Affiliates are not licensed to use the Carey name and do not pay
license fees to the Company, but must meet the Company's quality standards in
order to receive referred business. Pursuant to oral agreements between the
Company and its affiliates, the Company is entitled to receive a commission of
15% of net vehicle revenues for all referred business. The Company's
affiliates are located in 121 cities in the United States and 67 cities
outside the United States. Revenue provided by the Company's affiliates
represented approximately 1.8% and 1.3% of the Company's revenue, net in
fiscal 1996 and 1997, respectively.

CAREY INTERNATIONAL RESERVATION SYSTEM (CIRS)

The hub of the Company's network of service providers is the CIRS, the Carey
International Reservation System. The CIRS is operated on a 24-hour basis by
Carey's central reservation department, which processes reservations through
the Company's proprietary computer system. The central reservation department
receives reservations through the Company's toll free "800" telephone number
(800-336-4646), by fax or telex, or through one of the six major airline
reservation systems, SABRE, APOLLO, WORLDSPAN, GALILEO, BABS and SITA. These
airline systems allow travel agencies, corporate travel departments and
government offices to access the CIRS through over 300,000 reservation
terminals worldwide. The Company charges a licensee or affiliate for each
reservation referred to the licensee or affiliate through the CIRS.

The CIRS can be accessed for up-to-date tariffs both in dollars and foreign
currency for 420 cities throughout the world. Through the CIRS, the Company's
reservation and customer service personnel have instant access to all rates,
services offered, types of vehicles available and special airport greeting
capabilities in each

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<PAGE>

individual city. Individual customer profiles are maintained including vehicle
and chauffeur preferences, frequent pick-up points, addresses and directions,
billing requirements and account status.

The CIRS is used to make arrangements for a broad range of business and
consumer applications such as transportation to and from airports, association
and industry meeting and functions, road shows, transportation related to
incentive travel, boards of directors meetings and sight seeing tours. Special
customer service facilities are available with direct phone lines, including a
special service desk, executive VIP desk, international tour desk, special
event desk and road show desk.

The CIRS utilizes client/server architecture and proprietary software
developed over a five-year period which allows constant input into a complex
international network linking more than 65 countries. A primary strength of
the CIRS is the reliability of its reporting and control systems which verify
all reservations for complete information, customer service requirements and
accounting authorizations. The CIRS also contains customers' invoicing
programs to allow central billing directly through the system for all services
used worldwide. In addition, the system's ability to track reservations allows
more accurate and detailed analyses for marketing purposes.

In 1992, the Company began leasing its reservation and operating systems to
its licensees. These systems create a basis for certain licensees to have
direct access to the CIRS and provide them with the ability to book local
reservations, dispatch vehicles and account for chauffeured vehicle services.

MARKETING, SALES AND CUSTOMER SERVICE

The Company believes that "Carey," a registered service mark, is a highly
recognized name in the chauffeured vehicle service and travel industries
worldwide. The Company intends to continue to expand recognition of the
"Carey" name through its marketing and promotional efforts. Carey has
developed an extensive marketing program directed at both the travel arranger
and the end user of chauffeured vehicle services. The program consists of
directory listings, advertising, direct mail, public relations, cooperative
promotional and joint marketing programs, attendance at and sponsorship of
travel-related conventions and workshops and direct selling. The direct sales
force serving the Company and its licensees currently consists of
approximately 20 professionals.

Carey is listed in approximately 95 travel directories which are used by
travel arrangers to obtain information on travel related services. Advertising
targeted at travel arrangers is placed in over 35 trade journals including
Business Travel Executive, Travel Weekly, Travel Trade and Business Travel
News. In addition, the Company advertises extensively in magazines and
newspapers, consumer association books, hotel room information books and the
Yellow Pages, and on radio and television in selected markets.

The Company's continuing direct mail program is targeted at both the travel
arrangers and the end users. The program distributes approximately two million
promotional pieces annually. Most major travel arrangers receive at least six
direct mail pieces per year which include announcements of new services, news
on service providers and reservation programs, the Carey Newsletter and
listings of rates. End users and arrangers receive promotional pieces on Carey
when they are billed for the Company's services.

The Company's marketing program seeks to build upon brand name acceptance,
customer loyalty, service know-how, technology and strategic market
relationship with other leaders in the travel and tourism industry, such as
airlines, travel agencies, credit card companies and central reservation
systems. The Company also is involved in promotional and cooperative
agreements with American Express Platinum Card and Gold Card, Diner's Club
"Club Chauffeur" program, British Airways, Air France and various cruise
lines.

The Company believes that the retention and expansion of existing business
is as important as new sales. Carey has established a base of loyal customers
in part by monitoring the standard of service through its quality assurance
and customer service programs. To assure that the Company continues to provide
consistently high

24
<PAGE>

quality and reliable service, Carey operates a five-part quality assurance
program. The Company's quality assurance program utilizes survey cards that
are sent to customers and travel arrangers. Approximately 90% of the quality
assurance cards returned to Carey during the twelve-month period ended
November 30, 1997 rated the Company's reservation services, chauffeurs and
vehicles as "excellent." Carey's quality assurance program includes
evaluations performed by an independent consultant to measure the quality of
chauffeur services, the appearance of chauffeurs and vehicles and the
availability of other amenities, such as cellular phones and daily newspapers.

INDEPENDENT OPERATORS

An important component of Carey's strategy involves the preferred use of
independent operators rather than of salaried chauffeurs operating Company-
owned vehicles. An independent operator takes responsibility for owning,
operating and maintaining his or her own vehicle. The Company believes that
acting as an independent operator creates incentives for the chauffeur to
become more productive, efficient and service-oriented, thereby increasing the
profitability of the chauffeur and the Company. The objective of the Company's
independent operator strategy is to instill in each chauffeur the sense of
responsibility and dedication characteristic of an independent business owner.

The use of independent operators allows the Company to reduce its labor and
capital costs, convert fixed costs to variable costs and generate revenues
from fees paid by independent operators. Because of the greater responsibility
borne by independent operators, the Company is able to allocate fewer
resources to oversee its vehicle operations. As a result, the Company can
focus to a greater extent on support services, business development,
administration, billing, quality assurance and sales and marketing.

Each independent operator enters into an agreement with the Company to
provide prompt and courteous service to the Company's customers with a
properly maintained, late model vehicle consistent with the Company's
standards. The cost of a new vehicle ranges from $35,000 to $65,000, depending
upon whether it is a sedan or a limousine and the features included in the
vehicle. Each new independent operator agrees to pay an initial fee to the
Company, acquire his or her vehicle and pay all of the maintenance and
operating expenses of the vehicle, including gasoline.

Prior to December 1996, the Company's typical agreement with an independent
operator had a term of 10 years and provided for a fee ranging from $30,000 to
$45,000 (depending on the local market) that was financed by the Company at an
annual interest rate of 9% to 12%. The notes evidencing such financing
generally were sold by the Company to third parties. Since December 1996, the
independent operator agreements entered into by the Company generally have
provided for, and the Company intends that future agreements will provide for,
a term of 15 years, fees of $45,000 to $75,000 and an interest rate of 15% per
year. Currently, the Company does not intend to continue its former practice
of selling to third parties notes evidencing independent operator financing.
To date, the Company has not incurred any material losses as a result of
defaults under such notes, and any potential future losses will be mitigated
from an accounting perspective because of the Company's policy of deferral of
revenue recognition in connection with independent operator fees.

The independent operator agreement provides that the Company will bill and
collect all revenues (as defined in the agreement) and remit to the
independent operator 60% to 67% of such revenues. In this arrangement, the
Company assumes the risk of collecting from each customer and generally pays
the independent operator his or her share regardless of whether the Company is
paid by the customer. An independent operator's failure to meet the high
standards of service associated with the Carey name constitutes a breach of
the agreement and gives rise to a right of the Company to terminate the
agreement.

Independent operators also generally require financing to purchase their
vehicles. Typically, independent operators have utilized banks, vehicle
financing companies or CLI Fleet, Inc. ("CLI Fleet"), a finance company that
specializes in providing financing to the chauffeured vehicle service
industry.

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<PAGE>

CUSTOMERS

The Company's customer list exceeds 75,000 individuals and organizations
that are dispersed across many different industries and geographic locations.
No client accounted for more than 5% of the Company's revenue, net in fiscal
1997. The Company's major clients include companies in the airline, travel and
related services, finance, manufacturing, pharmaceutical, insurance,
publishing, oil and gas exploration, entertainment, tobacco and food and
beverage industries.

COMPETITION

The chauffeured vehicle service industry is highly competitive and
fragmented, with few significant national participants operating a multi-city
reservation system. Each local market usually contains numerous local
participants as well as a few companies offering regional and national
service. Chauffeured vehicle service providers compete primarily on the basis
of price, quality, scope of service and dependability. The Company also
competes with service providers offering alternative modes of transportation,
such as buses, jitney services, taxis, radio cars and rental cars. The Company
believes that its high quality of service and dependability have allowed it to
compete effectively in its markets. Carey competes both for customers and for
possible acquisitions. The Company expects its business to become more
competitive as existing competitors expand and additional companies enter the
industry. Certain of the Company's existing competitors have, and any new
competitors that enter the industry may have, access to significantly greater
financial resources than the Company.

GOVERNMENT REGULATION

The Company's chauffeured vehicle service operations are subject to various
state and local regulations and, in many instances, require permits and
licenses from state and local authorities. In addition, the Company is
regulated by the Federal Highway Administration with respect to, among other
things, minimum vehicular insurance requirements. The Company believes that it
has all required permits and licenses to conduct its operations and that it is
in substantial compliance with applicable regulatory requirements relating to
its operations.

The Company is subject to federal and state laws, rules and regulations
governing the offer and sale of franchises. A number of states have enacted
laws that require detailed disclosure in the offer and sale of franchises
and/or the registration of the franchisor with state administrative agencies.
The Company is also subject to Federal Trade Commission and state regulations
relating to disclosure requirements in the sale of franchises. Certain states
have enacted, and others may enact, legislation governing certain aspects of
the franchise relationship and limiting the ability of the franchisor to
terminate or refuse to renew a franchise. The law applicable to franchise
sales and relationships is rapidly developing, and the Company is unable to
predict the effect on its franchise system of additional requirements or
restrictions that may be enacted or promulgated or of court decisions that may
be adverse to franchisors. Due to the scope of the Company's business and the
complexity of franchise regulation, compliance problems may be encountered
from time to time.

INSURANCE

The Company is exposed to claims for personal injury or death and property
damage as a result of automobile accidents involving chauffeured vehicles
operated by its employees and independent operators and by its licensees and
their drivers. The Company purchases automobile liability, automobile
collision and comprehensive damage, general liability, comprehensive property
damage, workers' compensation and other insurance coverages that management
considers adequate for the protection of the Company's assets and operations,
although there can be no assurance that the coverages and limits of such
policies will be adequate. The Company's standard license agreement requires
that its licensees purchase similar types of insurance and name the Company as
a named insured in such insurance policies. A successful claim against the
Company beyond the scope of its or its licensees' insurance coverage or in
excess of its or its licensees' limits could have a material adverse effect on
the Company's business, financial condition and results of operations.

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<PAGE>

FACILITIES

The Company owns facilities in Alexandria, Virginia and Long Island City,
New York used by owned and operated chauffeured vehicle service companies
providing services in the Washington, DC and New York metropolitan areas,
respectively. The Company leases its corporate headquarters in Washington, DC
and also leases seven administrative and/or operating facilities in
California, New York, Indiana, Pennsylvania, Florida and London. Management
believes that the Company's facilities are adequate for its present needs and
that suitable additional or replacement space will be available as required.

EMPLOYEES AND INDEPENDENT OPERATORS

As of November 30, 1997, the Company had 488 full-time employees (125 of
whom were chauffeurs) and 178 part-time employees (116 of whom were
chauffeurs). As of November 30, 1997, the Company also had agreements with 452
independent operators. The Company is not a party to any collective bargaining
agreement.

INTELLECTUAL PROPERTY

The Company is the registered owner of two United States service marks
covering the "Carey" name. The Company believes that customer and travel
arranger recognition of these marks has contributed to its success. The
Company is not affiliated with Carey Transportation, Inc., a company that
provides bus transportation services in the metropolitan New York City area.
Except for Carey Transportation, Inc., the Company believes it has the
exclusive right to use the "Carey" name in connection with transportation
services in all locations in which it either owns and operates a chauffeured
vehicle service company or maintains a licensee.

27
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information pertaining to the
directors and executive officers.

<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
---- --- ----------------
<S> <C> <C>
Vincent A. Wolfington.......... 57 Chairman of the Board and Chief Executive
Officer
Don R. Dailey.................. 60 President and Director
Guy C. Thomas.................. 59 Executive Vice President--Operations
David H. Haedicke.............. 51 Executive Vice President and Chief
Financial Officer
Richard A. Anderson, Jr........ 52 Senior Vice President
Sally A. Snead................. 38 Senior Vice President--Information Systems
John C. Wintle................. 51 Senior Vice President--Europe
Paul A. Sandt.................. 37 Vice President and Chief Accounting Officer
Devin J. Murphy................ 31 Senior Vice President and Chief Development
Officer
S. Terrell Mellen.............. 41 Senior Vice President--Sales and Marketing
Michael P. O'Callaghan......... 32 Senior Vice President and Director of
Acquisitions
Robert W. Cox.................. 60 Director
William R. Hambrecht........... 62 Director
David McL. Hillman............. 44 Director
Nicholas J. St. George......... 59 Director
</TABLE>

Set forth below is a description of the backgrounds of each of the directors
and executive officers and the director nominee of the Company.

Vincent A. Wolfington, a co-founder of the Company, has served as its
Chairman of the Board of Directors and Chief Executive Officer since 1979. For
over 25 years, Mr. Wolfington has been involved in the limousine industry and
directly associated with the Carey system of licensees and affiliates. Mr.
Wolfington has served as a consultant to the National Academy of Sciences
Transportation Research Board, President of the National Para-transit
Association and a member of the International Limousine Association. Mr.
Wolfington currently is a member of the Executive Committee of the World
Travel and Tourism Council.

Don R. Dailey has been President and a director of the Company, which he co-
founded, since 1979. Mr. Dailey has been directly involved in the limousine
business for over 30 years. Mr. Dailey serves on a number of boards and
committees related to the travel industry, including the National Business
Travel Association, the International Business Travel Associates, the
Association of Corporate Travel Executives, the National Limousine Association
and the International Limousine Association (as its past president and member
of its executive committee).

Guy C. Thomas has served as Executive Vice President--Operations of the
Company since 1987. Mr. Thomas has served on a number of boards and committees
related to the travel industry, including the National Business Travel
Association, the Greater Washington Area Passenger Traffic Association, the
American Society of Association Executives, Meeting Planners International,
the Association of Corporate Travel Executives, the National Limousine
Association and the International Taxicab and Livery Association.

David H. Haedicke has been an Executive Vice President and Chief Financial
Officer of the Company since October 1996. From August 1996 to October 1996,
he was Senior Vice President and Chief Financial Officer of Infotechnology,
Inc., Hadron, Inc. and Comtex Scientific Corporation, an affiliated group of
companies engaged in systems management and software development. From
September 1993 to May 1996, he was Chief Financial Officer of Walcoff &
Associates, Inc., a communications and information management firm. From June
1991 to September 1993, he was Chief Financial Officer and Vice President of
Xsirus, Inc., a high technology research and development company. Mr. Haedicke
also was a partner at Ernst & Young L.L.P. from 1985 to June 1991, and was an
employee at that firm from 1973 to 1985. Mr. Haedicke is a Certified Public
Accountant.

Richard A. Anderson, Jr. has served as a Senior Vice President of the
Company since December 1988. Mr. Anderson also was Chief Operating Officer of
the Company's New York subsidiary, Carey Limousine NY, Inc., from December
1988 until August 1997. Mr. Anderson is Chairman of the New York Taxi and
Limousine

28
<PAGE>

Commission's Limousine Advisory Board, a former board member of the
Association of Corporate Travel Executives, and a member of the National
Business Travel Association and Meeting Planners International.

Sally A. Snead has served as the Company's Senior Vice President--
Information Systems since June 1993. From January 1987 to June 1993, she was
Executive Vice President and General Manager of Carey Limousine L.A., Inc. She
is a member of Executive Women International, the National Business Travel
Association, the Association of Corporate Travel Executives and the National
Limousine Association.

John C. Wintle has served as the Company's Senior Vice President--Europe
since May 1996 and as Executive Vice President and Managing Director of Carey
U.K. Ltd., a subsidiary of the Company, since March 1996. From 1982 to
February 1996, Mr. Wintle served Savoy Hotel PLC ("Savoy") and its affiliates,
including Camelot Barthropp Ltd. ("Camelot"), in various capacities. From
March 1993 to February 1996, Mr. Wintle was Executive Vice Chairman of
Camelot, which was acquired by Carey U.K. Ltd. in February 1996. Previously,
from 1989 to 1993, Mr. Wintle was General Manager, Restaurant Division, of
several entities affiliated with Savoy. From 1982 to 1989, Mr. Wintle had been
Group Financial Controller at Savoy.

Paul A. Sandt has served as a Vice President and Chief Accounting Officer of
the Company since October 1994. From May 1992 through September 1994, Mr.
Sandt was a staff member with the Securities and Exchange Commission, and from
December 1990 through May 1992, he was Director of Finance of The Kline
Automotive Group. From 1984 through 1990, he was employed by Coopers & Lybrand
L.L.P. Mr. Sandt is a Certified Public Accountant.

Devin J. Murphy has served as a Vice President of the Company since May
1996, and became Senior Vice President and Chief Development Officer in April
1997. Mr. Murphy received a Master's Degree in Business Administration from
Duke University in May 1996. For the six years prior to the commencement of
his MBA program in September 1994, Mr. Murphy held various sales and marketing
positions at companies within the information technology industry. These
companies include Bay Networks, Inc., where Mr. Murphy was Marketing Manager
from January 1993 to August 1994, Motorola Inc., where he was Manager, Major
Accounts from February 1991 to January 1993, and Hewlett-Packard Co. Inc.,
where he was Territory Manager from 1988 to 1991.

S. Terrell Mellen has served as Senior Vice President--Sales and Marketing
of the Company since September 1997. From September 1994 until September 1997
Ms. Mellen was Executive Director of the Association of Corporate Travel
Executives (ACTE), a professional organization serving 1,800 members in
thirteen countries. From October 1988 until September 1994 Ms. Mellen was
Director of Marketing and Industry Relations for the Air Travel Card, a
corporate payment system issued by seven major US airlines. Prior to joining
Air Travel Card, Ms. Mellen held sales positions at Computer Associates
International and Piedmont Airlines.

Michael P. O'Callaghan has served as a Senior Vice President and Director of
Acquisitions of the Company since June 1997. From September 1995 through June
1996, Mr. O'Callaghan was an Associate Special Counsel to the United States
Senate Special Committee Investigation of Whitewater Development Corporation
and Other Related Matters, and from September 1992 through September 1995 he
was a staff attorney with the Enforcement Division of the United States
Securities and Exchange Commission. Mr. O'Callaghan received a Juris Doctor
Degree from Fordham University in May 1992.

Robert W. Cox has served as a director of the Company since 1995. From 1969
until his retirement in 1994, Mr. Cox was a partner in the New York and
Chicago offices of the law firm Baker & McKenzie. From 1984 to 1992, Mr. Cox
was Chairman of the Executive Committee and Managing Partner of the firm, and
from 1993 to 1994, Mr. Cox was Chairman of the Policy Committee. Mr. Cox
currently is a director of Hon Industries, Inc.

William R. Hambrecht has served as a director of the Company since 1995. Mr.
Hambrecht is Chairman of Hambrecht & Quist LLC, an investment banking firm
which he co-founded in 1968. Mr. Hambrecht also serves as a director of Adobe
Systems, Inc.

David McL. Hillman has served as a director of the Company since 1994. Mr.
Hillman is Executive Vice President of PNC Capital Corp. and Executive Vice
President and Director of PNC Equity Management Corp., which he co-founded in
1982. Mr. Hillman is a director of several privately-held companies in
connection with PNC Capital Corp.'s investments in such companies.

29
<PAGE>

Nicholas J. St. George has served as a director of the Company since June
1997. Mr. St. George has been President and Chief Executive Officer of Oakwood
Homes Corporation ("Oakwood"), a manufacturer and retailer of manufactured
homes, since February 1979. Mr. St. George serves as a director of Oakwood,
and also is a director of American Bankers Insurance Group, Inc. and Legg
Mason, Inc.

BOARD OF DIRECTORS

The Company's Board of Directors is divided into three classes with
staggered three-year terms. The initial term of Messrs. Hambrecht and Hillman
expire at the Company's 1998 annual meeting, the initial terms of Messrs. Cox
and St. George expire at the Company's 1999 annual meeting, and the initial
terms of Messrs. Wolfington and Dailey expire at the Company's 2000 annual
meeting. Successors to the directors whose terms expire at each annual meeting
are elected for three-year terms. A director holds office until the annual
meeting for the year in which his term expires and until his successor is
elected and qualified.

Executive Committee. The members of the Executive Committee of the Company's
Board of Directors are Messrs. Wolfington, Cox and Dailey. The Executive
Committee exercises all the powers of the Board of Directors between meetings
of the Board of Directors, except such powers that are reserved to the Board
of Directors by applicable law.

Audit Committee. The members of the Audit Committee of the Company's Board
of Directors are Messrs. Hillman and St. George. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans for and results of
the audit, approves professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
considers the range of audit and non-audit fees and reviews the adequacy of
the Company's internal accounting controls.

Compensation Committee. The members of the Compensation Committee of the
Company's Board of Directors are Messrs. Cox and St. George. The Compensation
Committee establishes a general compensation policy for the Company and
approves increases in directors' fees and salaries paid to officers and senior
employees of the Company. The Compensation Committee administers the Company's
equity incentive plans and determines, subject to the provisions of the
Company's plans, the directors, officers and employees of the Company eligible
to participate in any of the plans, the extent of such participation and terms
and conditions under which benefits may be vested, received or exercised.

DIRECTOR COMPENSATION

Members of the Board of Directors who also serve as officers of the Company
do not receive compensation for serving on the Board. Each other member of the
Board receives an annual retainer of $15,000 for serving on the Board, plus a
fee of $1,000 for each Board of Directors' meeting attended. In addition, such
directors receive an additional fee of $500 for each committee meeting
attended, except that only one fee is paid in the event that more than one
such meeting is held on a single day. All directors receive reimbursement of
reasonable expenses incurred in attending Board and committee meetings and
otherwise carrying out their duties.

The Company maintains the Stock Plan for Non-Employee Directors (the
"Directors' Plan"). A maximum of 100,000 shares of Common Stock may be
delivered upon the exercise of options granted under the Directors' Plan and
elections to receive shares in lieu of cash compensation. Only directors of
the Company who are not employees of the Company or any of its subsidiaries
(the "Non-Employee Directors") are eligible to participate in the Directors'
Plan. While grants of stock options under the Directors' Plan are automatic
and non-discretionary, all questions of interpretation of the Directors' Plan
are determined by the Board of Directors.

On the date of each annual meeting of stockholders, each Non-Employee
Director continuing in office will be granted an option pursuant to the
Directors' Plan covering 2,500 shares. Any newly elected Non-Employee Director
will be granted an option pursuant to the Directors' Plan covering 5,000
shares on the date of his or her election (whether such election occurs at an
annual meeting or otherwise). The option exercise price for all options
granted under the Directors' Plan is the closing price of a share of the
Common Stock as reported on the Nasdaq National Market on the date the option
is granted. All options granted under the Directors' Plan become fully
exercisable six months after the date of grant. Unless sooner terminated
following the death, disability or termination of service of a director,
options granted under the Directors' Plan will remain exercisable until the

30
<PAGE>

fifth anniversary of the date of grant. In addition, upon certain transactions
involving a change of control or the dissolution or liquidation of the
Company, all options held by Non-Employee Directors will terminate; provided,
however, that for a period of 20 days prior to the effective date of any such
transaction, dissolution or liquidation, all options outstanding under the
Directors' Plan that are not otherwise exercisable shall immediately vest and
become exercisable.

Under the Directors' Plan, a Non-Employee Director may elect to be paid all
or a portion of his or her annual retainer in shares of Common Stock. Any such
election must be made in writing at least 30 days prior to the date the annual
retainer would be paid by the Company. The number of shares to be delivered to
a Non-Employee Director upon such election is determined by dividing the
amount of the annual retainer to be received in shares of Common Stock by the
closing price of a share of Common Stock as reported on the Nasdaq National
Market on the date the annual retainer is to be paid.

The Board of Directors may at any time or times amend the Directors' Plan
for any purpose which at the time may be permitted by law.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table contains a summary of the compensation paid or accrued
during the fiscal year ended November 30, 1997 to the Chief Executive Officer
of the Company and the four other most highly compensated executive officers
(the "Named Executive Officers").

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------------------------------
LONG-TERM
COMPENSATION
NAME AND OTHER ANNUAL AWARDS--SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION UNDERLYING OPTIONS COMPENSATION
- - - ------------------ ---- -------- ------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington
...................... 1997 $231,620 $85,000 -- 100,000 $12,000 (1)
Chairman and Chief
Executive Officer 1996 231,620 20,000 -- -- 57,000 (1)
Don R. Dailey.......... 1997 205,001 70,000 -- 100,000 12,000 (2)
President and Director 1996 205,001 20,000 -- -- 57,000 (2)
David H. Haedicke...... 1997 135,000 55,000 -- 30,000 --
Executive Vice 1996 20,510 (3) 2,500 -- 25,800 --
President and Chief
Financial Officer
Guy C. Thomas.......... 1997 115,000 25,000 -- 15,000 9,900 (4)
Executive Vice
President--Operations 1996 115,000 10,000 $13,020 (5) -- 9,900
Richard A. Anderson.... 1997 91,000 18,950 11,200 (6) 10,000 8,219 (7)
Senior Vice President 1996 91,000 12,000 11,200 (6) -- 9,513
</TABLE>
- - - --------
(1) Includes the annual payment of premiums of $12,000 on a life insurance
policy for a beneficiary designated by Mr. Wolfington. As to 1996, also
includes $45,000 paid for providing personal guarantees on behalf of the
Company.
(2) Includes the annual payment of premiums of $12,000 on a life insurance
policy for a beneficiary designated by Mr. Dailey. As to 1996, also
includes $45,000 paid for providing personal guarantees on behalf of the
Company.
(3) Mr. Haedicke's 1996 salary reflects the fact that his employment with the
Company began in October 7, 1996.
(4) Represents premiums on a life insurance policy for a beneficiary
designated by Mr. Thomas.
(5) Includes a car allowance of $11,820.
(6) Includes a car allowance of $6,600 and a club membership of $4,600.
(7) Represents premiums on a life insurance policy for a beneficiary
designated by Mr. Anderson.

31
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information regarding options granted
during the fiscal year ended November 30, 1997 by the Company to each of the
Named Executive Officers:

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- - - ------------------------------------------------------------------------ -------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED YEAR ($/SHARE) DATE 5% 10%
- - - ---- ---------- --------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington... 100,000 19.8% $10.50 5/27/07 $660,339 $1,673,430
Don R. Dailey........... 100,000 19.8% $10.50 5/27/07 660,339 1,673,430
David H. Haedicke....... 30,000 5.9% $10.50 5/27/07 198,102 502,029
Guy C. Thomas........... 15,000 3.0% $10.50 5/27/07 99,051 251,014
Richard A. Anderson..... 10,000 2.0% $10.50 5/27/07 66,034 167,343
</TABLE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END STOCK OPTION
VALUES

There were no options exercised by any of the Named Executive Officers
during the fiscal year ended November 30, 1997. The following table indicates
the aggregate value of all unexercised options held by each Named Executive
Officer as of November 30, 1997.

<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT NOVEMBER 30, 1997 NOVEMBER 30, 1997 (1)
------------------------------ -------------------------
NUMBER OF NUMBER OF
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME SHARES SHARES VALUE VALUE
- - - ---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Vincent A. Wolfington 205,706 * $1,286,925 $ --
Don R. Dailey 205,706 * $1,286,925 $ --
David H. Haedicke 24,700 31,100 $ 180,895 $151,385
Guy C. Thomas 35,768 11,250 $ 303,551 $ 36,563
Richard A. Anderson 6,886 7,500 $ 48,038 $ 24,375
</TABLE>

(1) Value of unexercised in-the-money options based upon the closing price of
the Company's Common Stock on the Nasdaq National Market on November 28,
1997 (the last trading day prior to November 30, 1997).

EQUITY INCENTIVE PLANS

The Company currently maintains the 1987 Stock Option Plan (the "1987 Plan")
and the 1992 Stock Option Plan (the "1992 Plan"), both of which provide for
the award of incentive and non-statutory stock options by the Company. The
Company also maintains the 1997 Equity Incentive Plan (the "1997 Plan"), which
provides for the award of up to 650,000 shares of Common Stock in the form of
incentive stock options, non-statutory stock options, stock appreciation
rights, restricted stock, performance stock units and other stock units which
are valued by reference to the value of the Common Stock. The 1987 Plan, 1992
Plan and 1997 Plan are hereinafter referred to collectively as the "Equity
Plans."

As of February 27, 1998, options were outstanding to purchase an aggregate
of 939,336 shares of Common Stock under the Equity Plans, and an aggregate of
153,756 shares of Common Stock are authorized but have not yet been granted
under options pursuant to such plans (including 149,611 shares pursuant to the
1997 Plan).

32
<PAGE>

Officers, key employees, non-employee directors of and consultants to the
Company are eligible to participate in the Equity Plans. The Equity Plans are
administered by the Compensation Committee of the Board of Directors. Among
other things, the Compensation Committee determines, subject to the provisions
of said plans, who shall receive awards, the types of awards to be made, and
the terms and conditions of each award. Options that are intended to qualify
as incentive stock options under the Equity Plans may be exercisable for not
more than 10 years after the date the option is awarded and may not be granted
at an exercise price less than the fair market value of the shares of Common
Stock at the time the option is granted (and, in the case of stock options
granted to holders of more than 10% of the Common Stock, may not be granted at
an exercise price less than 110% of the fair market value of the shares of
Common Stock at the time the options are granted). The Compensation Committee
may at any time, including in connection with a change in control of the
Company, accelerate the exercisability of all or any portion of any option
issued under the Equity Plans.

The Compensation Committee may amend, modify or terminate any outstanding
award under the Company's Equity Plans with the participant's consent, except
consent shall not be required if the Compensation Committee determines that
such action will not materially and adversely affect the participant. The
Board may amend, suspend or terminate any of the Equity Plans, or any part of
such plans, at any time, except that no amendment may be made without
stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.

INDEMNIFICATION AND LIMITATION OF LIABILITIES OF OFFICERS AND DIRECTORS

As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation provides for the elimination, subject to certain
conditions, of the personal liability of directors of the Company for monetary
damages for breach of their fiduciary duties. The directors, however, remain
subject to equitable remedies even if their liability for monetary damages is
eliminated. The Company's Certificate of Incorporation also provides that the
Company shall indemnify its directors and officers. In addition, the Company
maintains an indemnification insurance policy covering all directors and
officers of the Company. In general, the Company's Certificate of
Incorporation and the indemnification insurance policy attempt to provide the
maximum protection permitted by Delaware law with respect to indemnification
of directors and officers.

Under the indemnification provisions of the Company's Certificate of
Incorporation and the indemnification insurance policy, the Company will pay
certain amounts incurred by a director or officer in connection with any civil
or criminal action or proceeding, and specifically including actions by or in
the name of the Company (derivative suits), where the individual's involvement
is by reason of the fact that he is or was a director or officer of the
Company. Such amounts include, to the maximum extent permitted by law,
attorney's fees, judgments, civil or criminal fines, settlement amounts, and
other expenses customarily incurred in connection with legal proceedings. A
director or officer will not receive indemnification if he is found not to
have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company.

33
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of February 27, 1998, certain information
with respect to the beneficial ownership of Common Stock for each beneficial
owner of more than 5% of the Company's Common Stock, each director of the
Company, each Named Executive Officer of the Company and all directors and
executive officers as a group. Except as indicated in the footnotes below, the
persons named in this table have sole investment and voting power with respect
to the shares beneficially owned by them.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED OWNED
- - - ---- ------------ -------
<S> <C> <C>
Vincent A. Wolfington................................... 355,989(1) 4.6%
Don R. Dailey........................................... 345,176(2) 4.5%
David H. Haedicke....................................... 24,700(3) *
Guy C. Thomas........................................... 98,550(4) 1.3%
Richard A. Andersen..................................... 15,486(5) *
Robert W. Cox........................................... 20,400(6) *
William R. Hambrecht.................................... 921,333(7) 12.0%
David McL. Hillman...................................... 624,044(8) 8.2%
Nicholas J. St. George.................................. 12,500 *
Kaufman Fund, Inc....................................... 850,000 11.1%
H&Q London Ventures..................................... 444,093 5.8%
One Bush St.
San Francisco, CA
PNC Capital Corp. ...................................... 616,544 8.1%
One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222
Yerac Associates, L.P. ................................. 516,018(9) 6.8%
45 Belden Place
San Francisco, CA 94104
All directors and executive officers as a group ........ 2,469,545(10) 32.2%
</TABLE>
- - - --------
* Less than 1%.
(1) Includes options to purchase 205,706 shares of Common Stock that currently
are exercisable. Also includes (i) 1,183 shares of Common Stock currently
held by a company controlled by Mr. Wolfington and (ii) 1,560 shares held
by a limited partnership which are attributable to Mr. Wolfington's wife
(780 shares) and one of his children (780 shares) and (iii) 450 held by
one of his children. Excludes shares held by Yerac Associates, L.P.
("Yerac"), a limited partnership of which Mr. Wolfington is a limited
partner, with respect to which shares Mr. Wolfington has no voting or
investment power. Mr. Wolfington's address is c/o Carey International,
Inc., 4530 Wisconsin Avenue, N.W., Washington, D.C. 20016.
(2) Includes options to purchase 205,706 shares of Common Stock that currently
are exercisable. Excludes shares held by Yerac Associates, L.P., a limited
partnership of which Mr. Dailey is a limited partner,with respect to which
shares Mr. Dailey has no voting or investment power. Mr. Dailey's address
is c/o Carey International, Inc., 4530 Wisconsin Avenue, N.W., Washington,
D.C. 20016.
(3) Represents options to purchase shares of Common Stock that currently are
exercisable.
(4) Includes options to purchase 35,768 shares of Common Stock that currently
are exercisable.
(5) Includes options to purchase 6,886 shares of Common Stock that currently
are exercisable.
(6) Represents options to purchase shares of Common Stock that currently are
exercisable.
(7) Includes options to purchase 7,500 shares of Common Stock that currently
are exercisable and also includes the following number of shares of Common
Stock held by the following venture capital funds, as to which Mr.
Hambrecht disclaims beneficial ownership: H:Q Venture Partners (171,063)
Venture Associates (BVI) Limited (4,134 shares); H&Q London Ventures
(444,093 shares); H&Q Ventures IV (175,197 shares); and Hamquist (10,727
shares). Also includes (i) 85,816 shares of Common Stock with respect to
which Mr. Hambrecht shares record and beneficial ownership with Hamco
Capital Corp. and (ii) 22,803 shares of Common Stock with respect to which
Mr. Hambrecht shares record and beneficial ownership with the Hambrecht
1980 Revocable Trust. See "Certain Transactions." Mr. Hambrecht's address
is c/o Hambrecht & Quist California, One Bush Street, San Francisco, CA
94104.
(8) Includes options to purchase 7,500 shares of Common Stock that currently
are exercisable; also includes 616,544 shares held by PNC Capital Corp, of
which Mr. Hillman is Executive Vice President. Mr. Hillman disclaims
beneficial ownership of the shares held by PNC Capital Corp.
(9) Includes shares of Common Stock issuable upon exercise of a warrant to
purchase 86,003 shares of Common Stock at a price of approximately $4.65
per share. The warrant is exercisable at any time until September 1, 2001.
(10) See Notes 1, 2, 3, 4, 5 and 6. Also includes 49,967 shares of Common
Stock issuable upon exercise of the vested portions of options held by
other executive officers of the Company.

34
<PAGE>

CERTAIN TRANSACTIONS

During 1993, for an aggregate purchase price of $850,000, the Company
acquired 85 shares of non-voting redeemable preferred stock of CLI Fleet, Inc.
("CLI Fleet") a privately-held finance company formed for the purpose of
financing the chauffeured vehicle service industry. As a holder of CLI Fleet
preferred stock, the Company is currently entitled to receive an annual
dividend of $500 per share. The Company waived the right to receive any
dividends accrued in respect of its preferred stock through April 30, 1996,
but during 1995 received referral fees totalling $100,000 from CLI Fleet. Also
during 1995, CLI Fleet redeemed 10 shares of preferred stock held by the
Company for an aggregate redemption price of $100,000. The remaining shares of
preferred stock are subject to mandatory redemption by redemption payments of
$100,000, $100,000 and $550,000 in May 1998, 1999 and 2000, respectively.
Under the terms of an agreement with CLI Fleet, commencing in April 1997, the
Company has an exclusive option to purchase all of the outstanding shares of
common stock of CLI Fleet at a purchase price equal to the greater of $187,500
or CLI Fleet's liquidating value as determined by an independent appraisal.

To date, CLI Fleet has provided financing to the Company's independent
operators, without recourse to the Company, for both initial fees due under
the Company's independent operator agreements and with respect to vehicles
purchased by independent operators. Each of the Company's owned and operated
chauffeured vehicle service companies has entered into a Finance & Service
Agreement with CLI Fleet, which provides that the Company will recommend and
refer independent operators to CLI Fleet for financing of vehicles. To date,
CLI Fleet also has purchased from the Company notes receivable due from
independent operators in exchange for cash or demand notes on a non-recourse
basis. The Company sold $378,733, $1,762,345 and $1,015,897 of independent
operator notes receivable to CLI Fleet for cash of $378,733, $1,290,899 and
$733,793 and demand promissory notes of $0, $471,446 and $282,104 in 1994,
1995 and 1996, respectively. These promissory notes are due on demand,
although monthly principal payments generally are received. These notes bear
interest at rates ranging from 5% to 7%. The Company generally no longer sells
notes receivables from independent operators to CLI Fleet, although CLI Fleet
continues to provide vehicle financing to the Company's independent operators.

In May 1996, the exercise price of a warrant issued to PNC was reduced from
$6.14 to $4.65 per share. In addition, in connection with the Recapitalization
(as defined in Note 17 in the Company's Consolidated Financial Statements),
Carey repaid approximately $912,000 of the $3.8 million in principal
outstanding on its subordinated note held by PNC and applied the balance of
the outstanding principal to pay the purchase price for 616,544 shares of
Common Stock issued to PNC upon exercise of the warrant held by it. David McL.
Hillman, a director of the Company, is Executive Vice President of PNC.

In May 1996, the exercise price of a warrant to purchase 86,003 shares of
Common Stock owned by Yerac was reduced from $6.14 to $4.65 per share. In
addition, in connection with the Recapitalization, Yerac converted the entire
outstanding balance of a $2.0 million subordinated note held by it into
approximately 430,000 shares of Common Stock. From the net proceeds of the
IPO, the Company repaid approximately $1.1 million of additional outstanding
indebtedness to Yerac. Messrs. Wolfington and Dailey are limited partners of
Yerac. See "Principal Stockholders."

In connection with the Recapitalization, the Company redeemed 22,000 shares
of Series A Preferred Stock held by entities affiliated with Hambrecht & Quist
California (collectively "H&Q") for an aggregate of $1.1 million in cash plus
44,974 shares of Common Stock. Also in connection with the Recapitalization,
H&Q received 900,089 shares of Common Stock as a result of the conversion of
5,500 shares of Series B Preferred Stock and 31,864 shares of Series G
Preferred Stock. William R. Hambrecht, a director of the Company, is a
director and chairman of Hambrecht & Quist California and Hamco Capital
Corporation, and a general partner of Hambrecht & Quist Venture Partners
which, in turn, is the general partner of H&Q London Ventures, H&Q Ventures
International C.V., and H&Q Ventures IV. Mr. Hambrecht also is a trustee of
The Hambrecht 1980 Revocable Trust. See "Principal Stockholders."

Vincent A. Wolfington, the Company's Chairman and Chief Executive Officer,
and Don R. Dailey, the Company's President, each personally guaranteed certain
indebtedness of the Company in the original principal amount of $4.5 million.
The outstanding balance of this indebtedness totalled approximately $3.7

35
<PAGE>

million as of February 28, 1997. The Company paid Messrs. Wolfington and
Dailey $45,000 each during 1996 as a fee for guaranteeing such indebtedness.
The Company used part of the net proceeds of the IPO to repay the entire
outstanding amount of such indebtedness, and following the repayment the
guarantees were terminated. In connection with the Recapitalization, Messrs.
Wolfington and Dailey received $20,250 and $13,650, respectively, and 7,569
shares and 5,123 shares of Common Stock, respectively, as a result of the
redemption of the shares of Series A Preferred Stock and the conversion of the
shares of Series G Preferred Stock beneficially owned by each of them.

36
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, $.01 par value per share, and 1,000,000 shares of Preferred
Stock, $.01 par value per share ("Preferred Stock"). The following summary
description of the Common Stock and the Preferred Stock is qualified by
reference to the Company's Amended and Restated Certificate of Incorporation
included as an exhibit to the Registration Statement of which this Prospectus
is a part.

COMMON STOCK

As of February 27, 1998, there were 7,680,691 shares of Common Stock
outstanding, and outstanding options and warrants to purchase an aggregate of
1,233,289 shares of Common Stock. Including the foregoing shares underlying
outstanding options, a total of 87,293 shares of Common Stock are reserved for
issuance under the 1987 Plan, 385,480 shares are reserved for issuance under
the 1992 Plan, 650,000 shares of Common Stock are reserved for issuance under
the 1997 Plan and 100,000 shares of Common Stock are reserved for issuance
under the Directors' Plan. Holders of Common Stock are entitled to one vote
for each share held of record on all matters to be submitted to a vote of the
stockholders, and do not have cumulative voting rights. Subject to preferences
that may be applicable to any outstanding shares of Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends, if any, as may
be declared from time to time by the Board of Directors of the Company out of
funds legally available therefor. The Company's agreements with its principal
lenders prohibit dividend payments. See "Dividend Policy." All outstanding
shares of Common Stock are fully paid and nonassessable and the holders
thereof have no preferences or conversion, exchange or pre-emptive rights. In
the event of any liquidation, dissolution or winding-up of the affairs of the
Company, holders of Common Stock will be entitled to share ratably in the
assets of the Company remaining after payment or provision for payment of all
of the Company's debts and obligations and liquidation payments to holders of
outstanding shares of Preferred Stock, if any.

PREFERRED STOCK

Currently, there are no shares of Preferred Stock of the Company issued and
outstanding. Preferred Stock may be issued in one or more series without
further stockholder authorization, and the Board of Directors is authorized to
fix and determine the terms, limitations and relative rights and preferences
of the Preferred Stock, to establish series of Preferred Stock and to fix and
determine the variations as among series. Preferred Stock, if issued, would
have priority over the Common Stock with respect to dividends and to other
distributions, including the distribution of assets upon liquidation, and may
be subject to repurchase or redemption by the Company. The Board of Directors,
without approval of the holders of the Common Stock, can issue Preferred Stock
with voting and conversion rights (including multiple voting rights) which
could adversely affect the rights of holders of Common Stock. In addition to
having a preference with respect to dividends or liquidation proceeds,
Preferred Stock, if issued, may be entitled to the allocation of capital gains
from the sale of the Company's assets. Although the Company has no present
plans to issue any shares of Preferred Stock, the issuance of shares of
Preferred Stock, or the issuance of rights to purchase such shares, may have
the effect of delaying, deferring or preventing a change in control of the
Company or an unsolicited acquisition proposal.

CLASSIFIED BOARD OF DIRECTORS

The Restated Certificate of Incorporation and By-laws of the Company provide
for the Board of Directors to be divided into three classes of directors, as
nearly equal in number as is reasonably possible, serving staggered terms so
that directors' initial terms will expire either at the 1998, 1999 or 2000
annual meeting of stockholders. Starting with the 1998 annual meeting of
stockholders, one class of directors will be elected each year for a three-
year term. See "Management."

The Company believes that a classified Board of Directors will help to
assure the continuity and stability of the Board of Directors and the
Company's business strategies and policies as determined by the Board of

37
<PAGE>

Directors, since a majority of the directors at any given time will have had
prior experience as directors of the Company. The Company believes that such
continuity and stability, in turn, will permit the Board of Directors to
represent more effectively the interests of its stockholders.

With a classified Board of Directors, at least two annual meetings of
stockholders, instead of one, generally will be required to effect a change in
the majority of the Board of Directors. As a result, a provision relating to a
classified Board of Directors may discourage proxy contests for the election
of directors or purchases of a substantial block of the Common Stock because
the provision could operate to prevent a rapid change in control of the Board
of Directors. The classification provision also could have the effect of
discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company. Under the DGCL, unless a corporation's
certificate of incorporation otherwise provides, a director on a classified
board may be removed by the stockholders of the corporation only for cause.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER PROPOSALS AND STOCKHOLDER
NOMINATIONS OF DIRECTORS

The By-laws establish an advance notice procedure with regard to the
nomination by the stockholders of the Company of candidates for election as
directors (the "Nomination Procedure") and with regard to other matters to be
brought by stockholders before a meeting of stockholders of the Company (the
"Business Procedure").

The Nomination Procedure requires that a stockholder give written notice to
the Secretary of the Company, delivered to or mailed and received at the
principal executive offices of the Company not less than 60 days nor more than
90 days prior to the meeting, in proper form, of a planned nomination for the
Board of Directors. Detailed requirements as to the form and timing of that
notice are specified in the By-laws. If the Chairman determines that a person
was not nominated in accordance with the Nomination Procedure, such person
will not be eligible for election as a director.

Under the Business Procedure, a stockholder seeking to have any business
conducted at any meeting must give written notice to the Secretary of the
Company, delivered to or mailed and received at the principal executive
offices of the Company not less than 60 days nor more than 90 days prior to
the meeting, in proper form, subject to the requirements of the proxy
solicitation rules under the Securities Exchange Act of 1934. Detailed
requirements as to the form and timing of that notice are specified in the By-
laws. If the Chairman determines that the other business was not properly
brought before such meeting in accordance with the Business Procedure, such
business will not be conducted at such meeting.

Although the By-laws do not give the Board of Directors any power to approve
or disapprove of stockholder nominations for the election of directors or of
any other business desired by stockholders to be conducted at an annual or any
other meeting, the By-laws (i) may have the effect of precluding nominations
for the election of directors or precluding the conduct of business at a
particular annual meeting if the proper procedures are not followed or (ii)
may discourage or deter a third party from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company, even if the conduct of such solicitation or such
attempt might be beneficial to the Company and its stockholders.

OTHER PROVISIONS

Special Meetings of the Stockholders of the Company. The Company's By-laws
provide that a special meeting of the stockholders of the Company only may be
called by the Chairman of the Board, or by order of the Board of Directors.
That provision prevents stockholders from calling a special meeting of
stockholders and potentially limits the stockholders' ability to offer
proposals to the annual meetings of stockholders, if no special meetings are
otherwise called by the Chairman or the Board.

Amendment of the By-laws. The Company's Restated Certificate of
Incorporation provides that the By-laws only may be amended by a vote of the
Board of Directors or by a vote of at least 75% of the outstanding shares of
the Company's stock entitled to vote in the election of directors.

38
<PAGE>

No Action by Written Consent. The Company's Restated Certificate of
Incorporation does not permit the Company's stockholders to act by written
consent. As a result, any action to be taken by the Company's stockholders
must be taken at a duly called meeting of the stockholders.

DELAWARE ANTI-TAKEOVER STATUTE

The Company is subject to Section 203 of the DGCL which, with certain
exceptions, prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with any "interested stockholder" for a period
of three years following the date that such stockholder became an interested
stockholder, unless: (a) prior to such date, the Board of Directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (b) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors and officers
and (ii) by employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (c) on or after such date,
the business combination is approved by the Board of Directors and authorized
at an annual or special meeting of stockholders by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. An "interested stockholder" is defined as any person
that is (y) the owner of 15% or more of the outstanding voting stock of the
corporation or (z) an affiliate or associate of the Company and was the owner
of 15% or more of the outstanding voting stock of the Company at any time
within the three-year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder.

SHARES ELIGIBLE FOR FUTURE SALE

As of February 27, 1998, the Company had 7,680,691 shares of Common Stock
outstanding. Of these shares, 4,455,127 shares are freely tradeable without
restriction under the Securities Act, except for any such shares which may be
beneficially owned by an "affiliate" of the Company (as that term is defined
in Rule 144). The remaining 3,225,564 shares represent (i) shares issued
pursuant to this Prospectus to affiliates of companies acquired by the
Company; or (ii) shares issued prior to the completion of the Company's IPO or
in connection with the acquisition of Manhattan Limousine which are deemed to
be "restricted securities" under Rule 144. Unless the resale is registered
under the Securities Act, such restricted shares may be sold in the open
market only in compliance with the applicable requirements of Rule 144. Except
for shares held by affiliates of the Company and the 228,571 shares issued in
connection with the acquisition of Manhattan Limousine, all of such restricted
shares are currently eligible for resale under Rule 144(k) described below.

Also as of February 27, 1998, if issued upon the exercise of outstanding
warrants, 263,953 shares of Common Stock also will constitute restricted
securities within the meaning of Rule 144 and will be eligible for sale in the
open market subject to the applicable requirements of Rule 144 discussed
below.

As of February 27, 1998 there were 969,336 shares of Common Stock issuable
upon the exercise of outstanding options under the Company's Equity Plans and
Directors' Plan and an additional 223,756 shares of Common Stock reserved for
future award or grant under such plans. The Company has filed a registration
statement on Form S-8 to register the issuance of shares under the Equity
Plans and Directors' Plan. Common Stock issued pursuant to such registration
statement upon exercise of outstanding vested options granted pursuant to the
Equity Plans and Directors' Plan, other than Common Stock issued to affiliates
of the Company, is available for immediate resale in the open market.

In general, under Rule 144, if a period of at least one year has elapsed
between the later of the date on which restricted securities were acquired
from the Company and the date on which they were acquired from an affiliate,
then the holder of such restricted securities (including an affiliate) is
entitled to sell that number of shares within any three-month period that does
not exceed the greater of (i) one percent of the then outstanding shares of
the Common Stock or (ii) the average weekly reported volume of trading of the
Common Stock during the four calendar weeks preceding such sales. Sales under
Rule 144 also are subject to certain requirements pertaining to the manner of
such sales, notices of such sales and the availability of current public
information

39
<PAGE>

concerning the Company. Any shares not constituting restricted securities sold
by affiliates must be sold in accordance with the foregoing volume limitations
and other requirements but without regard to the one year holding period.
Under Rule 144(k), if a period of at least two years has elapsed from the
later of the date on which restricted securities were acquired from the
Company and the date on which they were acquired from the affiliate, a holder
of such restricted securities who is not an affiliate at the time of the sale
and has not been an affiliate for at least three months prior to the sale
would be entitled to sell the shares immediately without regard to the volume
limitations and other conditions described above.

The holder of 228,571 shares of Common Stock issued in connection with the
acquisition of Manhattan Limousine will be entitled to certain demand and
piggy-back registration rights beginning June 2, 1998.

Sales of substantial amounts of Common Stock by existing stockholders could
have an adverse impact on the prevailing market price of the Common Stock. No
predictions can be made as to the effect, if any, that market sales of shares
by existing stockholders or the availability of such shares for future sale
will have on the market price of shares of Common Stock prevailing from time
to time.

PLAN OF DISTRIBUTION

This Prospectus relates to 1,500,000 shares of Common Stock that may be
offered and issued by the Company from time to time in connection with
acquisition of other businesses or properties by the Company.

Carey intends to concentrate its acquisitions within the chauffeured vehicle
service industry. If the opportunity arises, however, Carey may attempt to
make acquisitions that are either complementary to its present operations or
advantageous even though they may be dissimilar to its present activities. The
consideration for any such acquisition may consist of shares of Common Stock,
cash, notes or other evidences of debt, assumptions of liabilities or a
combination thereof, as determined from time to time by negotiations between
Carey and the owners or controlling persons of businesses or properties to be
acquired.

The shares covered by this Prospectus may be issued in exchange for shares
of capital stock, partnership interests or other assets representing an
interest, direct or indirect, in other companies or other entities, in
exchange for assets used in or related to the business of such companies or
entities, or otherwise pursuant to the agreements providing for such
acquisitions. The terms of such acquisitions and of the issuance of shares of
Common Stock under acquisition agreements will generally be determined by
direct negotiations with the owners or controlling persons of the business or
properties to be acquired or, in the case of entities that are more widely
held, through exchange offers to stockholders or documents soliciting the
approval of statutory mergers, consolidations or sales of assets. It is
anticipated that the shares of Common Stock issued in any such acquisition
will be valued at a price reasonably related to the market value of the Common
Stock either at the time of agreement on the terms of an acquisition or at or
about the time of delivery of the shares.

It is not expected that underwriting discounts or commissions will be paid
by the Company in connection with issuances of shares of Common Stock under
this Prospectus. However, finders' fees or brokers' commissions may be paid
from time to time in connection with specific acquisitions, and such fees may
be paid through the issuance of shares of Common Stock covered by this
Prospectus. Any person receiving such a fee may be deemed to an underwriter
within the meaning of the Securities Act.

40
<PAGE>

LEGAL MATTERS

The validity of the shares offered will be passed upon for the Company by
Nutter, McClennen & Fish, LLP, Boston, Massachusetts.

EXPERTS

The consolidated financial statements of the Company as of November 30, 1996
and 1997 and for each of the three years in the period ended November 30, 1997
included in this Prospectus have been included herein in reliance on the
reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

The combined financial statements of Manhattan Limousine as of September 30,
1996 and for the year ended September 30, 1996 included in this Prospectus
have been included herein in reliance on the report, which includes an
explanatory paragraph relating to the restatement of such financial
statements, of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement") under the Securities Act and the rules and regulations promulgated
thereunder, with respect to the Common Stock offered hereby. This Prospectus
omits certain information contained in the Registration Statement, and
reference is made to the Registration Statement and the exhibits and schedules
thereto for further information with respect to the Company and the Common
Stock offered hereby. Statements contained in this Prospectus concerning the
provisions or contents of any contract, agreement or any other document
referred to herein are not necessarily complete with respect to each such
contract, agreement or document filed as an exhibit to the Registration
Statement, reference is made to such exhibit for a more complete description
of the matters involved, and each such statement shall be deemed qualified by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1204, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the Registration Statement or any part thereof may be obtained from
such office, upon payment of the fees prescribed by the Commission. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that submit electronic filings to the Commission.

The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files periodic reports and other
information with the Commission. For further information with respect to the
Company, reference hereby is made to such reports and other information which
can be inspected and copied at the public reference facilities maintained by
the Commission referenced above.

The Company's Common Stock is quoted on The Nasdaq National Market under the
trading symbol "CARY." Reports, proxy statements and other information about
the Company also may be inspected at the offices of The Nasdaq Stock Market,
Inc., 1735 K Street, N.W., Washington, DC 20006.

41
<PAGE>

INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CAREY INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENT
Pro Forma Statement of Operations for year ended November 30, 1997........ F-3
Notes to Pro Forma Consolidated Financial Statement....................... F-4
CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
Report of Independent Accountants......................................... F-5
Balance Sheets as of November 30, 1996 and 1997........................... F-6
Statements of Operations for the years ended November 30, 1995, 1996 and
1997..................................................................... F-7
Statements of Changes in Stockholders' Equity for the years ended November
30, 1995, 1996
and 1997................................................................. F-8
Statements of Cash Flows for the years ended November 30, 1995, 1996 and
1997..................................................................... F-9
Notes to Consolidated Financial Statements................................ F-10
MANHATTAN INTERNATIONAL LIMOUSINE NETWORK, LTD. AND AFFILIATE
Combined Financial Statements
Report of the Independent Accountants..................................... F-28
Balance Sheets as of September 30, 1996 and April 30, 1997 (unaudited).... F-29
Statements of Operations for the year ended September 30, 1996 and the
seven months ended
April 30, 1997 (unaudited)............................................... F-30
Statements of Cash Flows for the year ended September 30, 1996 and the
seven months ended
April 30, 1997 (unaudited)............................................... F-31
Notes to Combined Financial Statements.................................... F-32
</TABLE>

F-1
<PAGE>

PRO FORMA CONSOLIDATED FINANCIAL STATEMENT

BASIS OF PRESENTATION

The Pro Forma Consolidated Statement of Operations for the year ended
November 30, 1997 is based on the consolidated financial statements of Carey
International, Inc. and subsidiaries (the "Company") and Manhattan
International Limousine Network Ltd. and Affiliate ("Manhattan Limousine").
The Pro Forma Consolidated Statement of Operations for the year ended November
30, 1997 has been prepared assuming the acquisition of Manhattan Limousine
occurred on December 1, 1996. For purposes of the Pro Forma Consolidated
Statement of Operations for the year ended November 30, 1997, Manhattan
Limousine's Statement of Operations for the six months ended March 31, 1997
has been combined with the Consolidated Statement of Operations of the Company
for the year ended November 30, 1997. The Pro Forma Consolidated Statements of
Operations also reflect the issuance of shares of Common Stock (net of
underwriting discounts) required to: (i) repay certain existing debt of the
Company, (ii) pay the cash and note portions of the purchase price for
Manhattan Limousine, (iii) repay certain debt assumed in connection with the
acquisition of Manhattan Limousine, and (iv) redeem certain preferred stock of
the Company. The Pro Forma Consolidated Statement of Operations also reflects
the issuance of an aggregate of 3,335,000 shares of Common Stock in connection
with (i) the acquisition of Manhattan Limousine, (ii) the issuance of shares
of Common Stock as part of the Recapitalization and (iii) the conversion of
certain debt into Common Stock upon the closing of the initial public
offering. All of the aforementioned shares are assumed to have been issued,
the debt repaid or converted and the preferred stock redeemed at the beginning
of the period presented, and thus interest expense attributable to such debt
has been eliminated.

The Pro Forma Consolidated Statement of Operations does not purport to
represent what the Company's actual results of operations would have been had
the acquisition occurred as of such date, or to project the Company's results
of operations for any period or date, nor does it give effect to any matters
other than those described in the notes thereto. The Pro Forma Consolidated
Financial Statements should be read in conjunction with the other financial
statements and notes thereto included elsewhere in this Prospectus.

F-2
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED NOVEMBER 30, 1997
-------------------------------------------------------------------------------------------
ACTUAL
-----------------------
MANHATTAN ACQUISITION RECAPITALIZATION OTHER
COMPANY LIMOUSINE ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
----------- ---------- ----------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ $86,378,313 $9,885,506 $ -- $ -- $ -- $96,263,819
Cost of revenue......... 57,890,393 6,126,205 -- -- -- 64,016,598
----------- ---------- --------- -------- -------- -----------
Gross profit.......... 28,487,920 3,759,301 -- -- -- 32,247,221
Selling, general and
administrative
expense................ 20,111,590 3,010,144 (46,865)(1) -- 75,000 (6) 23,539,702
389,833 (2)
----------- ---------- --------- -------- -------- -----------
Operating income...... 8,376,330 749,157 (342,968) -- (75,000) 8,707,519
Other income (expense)
Interest expense...... (1,141,946) (457,017) (37,310)(3) 250,000(5) 939,267 (6) (447,006)
Interest and other
income............... 451,388 16,500 (16,500)(4) -- -- 451,388
----------- ---------- --------- -------- -------- -----------
Income before provision
for income taxes....... 7,685,772 $ 308,640 $(396,778) $250,000 $864,267 8,711,901
========== ========= ======== ========
Provision for income
taxes.................. 3,162,282 3,585,098 (7)
----------- -----------
Net income ............. $ 4,523,490 $ 5,126,803
=========== ===========
Pro forma net income per
common share........... $ 0.65 (8)
===========
Pro forma weighted
average shares
outstanding............ 7,941,065 (8)
===========
</TABLE>

The accompanying notes are an integral part of these pro forma consolidated
financial statements.

F-3
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENT

To date, all of the Company's acquisitions have been accounted for under the
purchase method of accounting with the results of the acquired companies
included in the Company's statement of operations beginning on the date of the
acquisition, except for Indy Connection which has been accounted for under the
pooling-of-interests method.

(1) Gives effect to the elimination from the Combined Statement of Operations
of Manhattan Limousine of a one-time charge related to advances to a non-
combined affiliate of Manhattan Limousine which were approximately $7,000
for the year ended November 30, 1997 and redundant administrative and
other costs immediately identifiable at the time of the acquisition
(relating to salary and benefits of a stockholder of Manhattan Limousine
and members of his family which will not be incurred by the Company) of
approximately $40,000 for the year ended November 30, 1997.

(2) Gives effect to the amortization of approximately $340,000 for the year
ended November 30, 1997 of goodwill recognized with respect to the
acquisition of Manhattan Limousine and $50,000 for the year ended November
30, 1997 of consulting fees to be paid pursuant to a consulting agreement
entered into in connection with the acquisition of Manhattan Limousine.
Goodwill will be amortized over a 30-year period.

(3) Gives effect to an increase in interest associated with the promissory
notes in the aggregate amount of $4.8 million used to acquire Manhattan
Limousine and the interest on the increase of $520,000 in Manhattan
Limousine's mortgage note in January 1997, both of which were repaid out
of the proceeds of the IPO (see (6) below). Also gives effect to a
decrease in interest expense associated with the debt retained by a
stockholder of Manhattan Limousine.

(4) Gives effect to the elimination of interest income related to a note
receivable retained by a stockholder of Manhattan Limousine.

(5) Reflects the elimination of approximately $250,000 for the year ended
November 30, 1997 of interest on certain debt converted into Common Stock.

(6) Reflects directors' and officers' insurance costs the Company anticipates
to incur in connection with being a public registrant and the elimination
of approximately $939,000 for the year ended November 30, 1997 of interest
on certain current and long-term debt repaid from the proceeds of the IPO
or converted into Common Stock.

(7) Reflects the estimated provision for income taxes at an assumed rate of
41.1% for the year ended November 30, 1997 after giving consideration to
nondeductible goodwill expense.

(8) Pro forma net income per share was computed by dividing the pro forma net
income for the year ended November 30, 1997 by the pro forma weighted
average number of shares outstanding for the year. Pro forma weighted
average shares outstanding include common shares and common share
equivalents. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 83, the common equivalent shares issued by
the Company during the 12 months preceding the effective date of the
Registration Statement relating to the Company's IPO, using the treasury
stock method and the public offering price of $10.50 per share, have been
included in the calculation of pro forma net income per share. All share
numbers give effect to the reverse stock split of one-for-2.3255 that was
part of the Recapitalization.

(9) The Pro Forma Consolidated Statement of Operations for the year ended
November 30, 1997 weighted average shares includes approximately 489,000
shares of common stock issued for cash at the beginning of June 1997 for
approximately $4,775,000. Had the Company invested the funds received from
the issuance of common stock in investments yielding a 6.0% return, the
Company would have recognized an additional $143,000 of pre-tax income.
The Company has not included any such adjustment within the Pro Forma
Statements of Operations.

F-4
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Carey International, Inc.

We have audited the accompanying consolidated balance sheets of Carey
International, Inc. and Subsidiaries as of November 30, 1996 and 1997, and the
related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended
November 30, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Carey
International Inc. and Subsidiaries as of November 30, 1996 and 1997, and the
results of their operations and their cash flows for each of the three years
in the period ended November 30, 1997, in conformity with generally accepted
accounting principles.

Coopers & Lybrand L.L.P.

Washington, D.C.
January 30, 1998

F-5
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
NOVEMBER 30,
------------------------
1996 1997
----------- -----------
<S> <C> <C>
A S S E T S
Cash and cash equivalents........................................ $ 2,867,711 $ 5,333,402
Accounts receivable, net of allowance for doubtful accounts of
$535,000 in 1996 and $639,000 in 1997........................... 10,542,331 15,932,426
Notes receivable from contracts, current portion................. 402,751 670,266
Prepaid expenses and other current assets........................ 2,061,738 1,435,176
----------- -----------
Total current assets......................................... 15,874,531 23,371,270
Fixed assets, net of accumulated depreciation of $4,687,000 in
1996 and $5,116,000 in 1997..................................... 5,790,391 9,278,319
Notes receivable from contracts, excluding current portion....... 769,201 8,164,337
Franchise rights, net of accumulated amortization of $1,729,000
in 1996 and $1,965,000 in 1997.................................. 5,348,264 5,112,348
Trade name, trademark and contract rights, net of accumulated
amortization of $973,000 in 1996 and $1,164,000 in 1997......... 6,685,135 6,493,693
Goodwill and other intangible assets, net of accumulated
amortization of $840,000 in 1996 and $1,500,000 in 1997......... 7,285,933 30,991,450
Deferred tax assets.............................................. 949,962 501,545
Deposits and other assets........................................ 1,263,525 1,481,252
----------- -----------
Total assets................................................. $43,966,942 $85,394,214
=========== ===========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current portion of notes payable................................. $ 5,858,249 $ 996,575
Current portion of capital leases................................ 199,224 321,965
Current portion of subordinated notes payable.................... 440,000 --
Accounts payable and accrued expenses............................ 11,564,963 17,054,081
----------- -----------
Total current liabilities.................................... 18,062,436 18,372,621
Notes payable, excluding current portion......................... 6,035,964 2,792,022
Capital leases, excluding current portion........................ 663,030 1,339,666
Subordinated notes payable, excluding current portion............ 5,340,000 --
Deferred rent and other long-term liabilities.................... 111,281 1,193,577
Deferred revenue................................................. 6,181,147 13,396,104
Commitments and contingencies
Stockholders' equity:
Preferred stock................................................ 1,115,400 --
Class A common stock, $.01 par value; authorized 314,000
shares, none issued and outstanding........................... -- --
Common stock, $0.01 par value; authorized 20,000,000 shares;
issued and outstanding 1,377,556 shares in 1996 and 7,630,007
in 1997....................................................... 13,776 76,300
Additional paid-in capital..................................... 7,841,371 45,173,336
Retained earnings (accumulated deficit)........................ (1,397,463) 3,050,588
----------- -----------
Total stockholders' equity................................... 7,573,084 48,300,224
----------- -----------
Total liabilities and stockholders' equity................... $43,966,942 $85,394,214
=========== ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenue, net........................... $48,969,395 $65,544,942 $86,378,313
Cost of revenue........................ 33,027,209 43,649,178 57,890,393
----------- ----------- -----------
Gross profit......................... 15,942,186 21,895,764 28,487,920
Selling, general and administrative
expense............................... 14,081,152 16,726,610 20,111,590
----------- ----------- -----------
Operating income..................... 1,861,034 5,169,154 8,376,330
Other income (expense):
Interest expense..................... (1,910,966) (1,898,231) (1,141,946)
Interest income...................... 262,647 162,711 231,384
Gain on sales of fixed assets........ 156,005 355,754 220,004
----------- ----------- -----------
Income before provision for income
taxes................................. 368,720 3,789,388 7,685,772
Provision for income taxes............. 270,599 294,421 3,162,282
----------- ----------- -----------
Net income............................. $ 98,121 $ 3,494,967 $ 4,523,490
=========== =========== ===========
Pro forma net income per common share.. $ 0.90 $ 0.76
=========== ===========
Pro forma weighted average common
shares outstanding.................... 4,213,320 6,188,010
=========== ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-7
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SERIES A SERIES B SERIES E SERIES F SERIES G CAREY INDIANA
PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED
STOCK STOCK STOCK STOCK STOCK STOCK
--------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at November 30,
1994................... $ 420,700 $ 95,800 $186,250 $100,000 $498,900 $ 80,000
Issuance of common
stock.................. -- -- -- -- -- --
Accretion of redeemable
preferred stock........ -- -- 4,375 -- -- --
Redemption of preferred
stock.................. -- -- (62,500) -- -- (40,000)
Payment of preferred
stock dividends........ -- -- (30,625) -- -- --
Payment of common stock
dividends.............. -- -- -- -- -- --
Net income.............. -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Balance at November 30,
1995................... 420,700 95,800 97,500 100,000 498,900 40,000
Redemption of preferred
stock.................. -- -- (97,500) -- -- (40,000)
Issuance of stock....... -- -- -- -- -- --
Payment of preferred
stock dividends........ -- -- -- -- -- --
Payment of common stock
dividends.............. -- -- -- -- -- --
Cumulative effect of
currency translation... -- -- -- -- -- --
Net income.............. -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Balance at November 30,
1996................... 420,700 95,800 -- 100,000 498,900 --
Issuance of common stock
and redemption of
preferred stock under
Recapitalization Plan.. (420,700) (95,800) -- (100,000) (498,900) --
Issuance of common stock
in initial public
offering............... -- -- -- -- -- --
Issuance of common stock
in purchases of
chauffeured vehicle
companies.............. -- -- -- -- -- --
Issuance of common stock
under option plans..... -- -- -- -- -- --
Conversion of debt for
common stock........... -- -- -- -- -- --
Payment of common stock
dividends.............. -- -- -- -- -- --
Cumulative effect of
currency translation... -- -- -- -- -- --
Net income.............. -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Balance at November 30,
1997................... $ -- $ -- $ -- $ -- $ -- $ --
========= ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
RETAINED
COMMON STOCK ADDITIONAL EARNINGS TOTAL
----------------- PAID-IN (ACCUMULATED STOCKHOLDERS'
SHARES $ CAPITAL DEFICIT) EQUITY
--------- ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at November 30,
1994................... 1,325,032 $13,250 $ 7,791,552 $(4,968,229) $ 4,218,223
Issuance of common
stock.................. 32,682 327 34,393 -- 34,720
Accretion of redeemable
preferred stock........ -- -- (4,375) -- --
Redemption of preferred
stock.................. -- -- -- -- (102,500)
Payment of preferred
stock dividends........ -- -- -- -- (30,625)
Payment of common stock
dividends.............. -- -- -- (20,901) (20,901)
Net income.............. -- -- -- 98,121 98,121
--------- ------- ----------- ----------- -----------
Balance at November 30,
1995................... 1,357,714 13,577 7,821,570 (4,891,009) 4,197,038
Redemption of preferred
stock.................. -- -- -- -- (137,500)
Issuance of stock....... 19,842 199 19,801 -- 20,000
Payment of preferred
stock dividends........ -- -- -- (900) (900)
Payment of common stock
dividends.............. -- -- -- (42,057) (42,057)
Cumulative effect of
currency translation... -- -- -- 41,536 41,536
Net income.............. -- -- -- 3,494,967 3,494,967
--------- ------- ----------- ----------- -----------
Balance at November 30,
1996................... 1,377,556 13,776 7,841,371 (1,397,463) 7,573,084
Issuance of common stock
and redemption of
preferred stock under
Recapitalization Plan.. 2,560,071 25,601 2,853,841 -- 1,764,042
Issuance of common stock
in initial public
offering............... 3,335,000 33,350 30,580,511 -- 30,613,861
Issuance of common stock
in purchases of
chauffeured vehicle
companies.............. 292,066 2,920 3,397,080 -- 3,400,000
Issuance of common stock
under option plans..... 17,207 172 53,514 -- 53,686
Conversion of debt for
common stock........... 48,107 481 447,019 -- 447,500
Payment of common stock
dividends.............. -- -- -- (101,857) (101,857)
Cumulative effect of
currency translation... -- -- -- 26,418 26,418
Net income.............. -- -- -- 4,523,490 4,523,490
--------- ------- ----------- ----------- -----------
Balance at November 30,
1997................... 7,630,007 76,300 $45,173,336 $ 3,050,588 $48,300,224
========= ======= =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-8
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------------------------
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $ 98,121 $ 3,494,967 $ 4,523,490
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization of
fixed assets........................ 2,087,370 2,095,439 2,039,968
Amortization of intangible assets.... 714,199 1,064,255 1,313,456
Gain on sales of fixed assets........ (156,005) (355,754) (220,004)
Provision (benefit) for deferred
income taxes........................ 102,000 (1,346,557) 799,650
Change in deferred revenue........... 237,306 1,455,013 565,997
Change in operating assets and
liabilities:
Accounts receivable................. (2,601,429) (545,421) (5,234,779)
Notes receivable from contracts..... 11,000 (1,052,838) (1,063,192)
Prepaid expenses, deposits and other
assets............................. (189,180) (665,084) (912,875)
Accounts payable and accrued
expenses........................... 3,306,393 2,021,101 542,789
Deferred rent and other long-term
liabilities........................ 87,490 (36,914) 1,082,296
----------- ----------- ------------
Net cash provided by operating
activities........................ 3,697,265 6,128,207 3,436,796
----------- ----------- ------------
Cash flows from investing activities:
Proceeds from sale of fixed assets.... 1,639,766 1,788,380 1,486,780
Purchases of fixed assets............. (2,768,982) (3,091,353) (2,740,603)
Software development costs............ (203,529) -- (1,348,814)
Redemption of investment in
affiliate............................ 100,000 -- --
Acquisitions of chauffeured vehicle
service companies.................... (3,949,393) (1,730,232) (8,396,017)
----------- ----------- ------------
Net cash used in investing
activities........................ (5,182,138) (3,033,205) (10,998,654)
----------- ----------- ------------
Cash flow from financing activities:
Proceeds from sale of notes receivable
from independent operators........... 1,493,399 733,793 --
Principal payments under capital lease
obligations.......................... (436,169) (297,549) (237,359)
Preferred stock dividends............. (30,625) (900) --
Payment of notes payable.............. (4,496,659) (5,976,357) (19,164,223)
Proceeds from notes payable........... 5,141,022 3,857,568 2,704,162
Issuance of common stock.............. 34,720 20,000 30,842,778
Payments under Recapitalization Plan.. -- -- (4,015,952)
Common stock dividends................ (20,901) (42,057) (101,857)
Redemption of preferred stock......... (102,500) (137,500) --
----------- ----------- ------------
Net cash provided by (used in)
financing activities.............. 1,582,287 (1,843,002) 10,027,549
----------- ----------- ------------
Net increase in cash and cash
equivalents........................... 97,414 1,252,000 2,465,691
Cash and cash equivalents at beginning
of year............................... 1,518,297 1,615,711 2,867,711
----------- ----------- ------------
Cash and cash equivalents at end of
year.................................. $ 1,615,711 $ 2,867,711 $ 5,333,402
=========== =========== ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-9
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND AND ORGANIZATION

General

Carey International, Inc. (the Company) is one of the world's largest
chauffeured vehicle service companies, providing services through a worldwide
network of owned and operated companies, licensees and affiliates serving 420
cities in 65 countries. The Company owns and operates service providers in the
form of wholly--owned subsidiaries in: New York (Carey Limousine NY, Inc. and
Manhattan International Limousine Network, Ltd.), San Francisco (Carey
Limousine SF, Inc.), Los Angeles (Carey Limousine L.A., Inc.), London (Carey
UK Limited), Indianapolis (Carey Limousine Indiana, Inc., See Note 2),
Washington, DC (Carey Limousine DC, Inc.), South Florida (Carey Limousine
Florida, Inc.) and Philadelphia (Carey Limousine Corporation, Inc.). In
addition, the Company generates revenues from licensing the "Carey" name, and
from providing central reservations, billing, sales and marketing services to
its licensees. The Company's worldwide network also included affiliates in
locations in which the Company has neither owned and operated locations nor
licensees. The Company provides central reservations and billing services to
such affiliates.

Acquisitions

The Company is engaged in a program of acquiring chauffeured vehicle service
businesses. Such acquisitions include unrelated chauffeured vehicle service
businesses, some of which may be in cities in which the Company has owned and
operated service providers, licensees operating under the Carey name and
trademark, and affiliates of the Company. In 1995, these acquisitions included
chauffeur vehicle service companies operating in Washington, DC, South Florida
and San Francisco. In 1996, the Company acquired a chauffeured vehicle service
company in London, England. In 1997, the Company acquired chauffeured vehicle
service companies in New York, Los Angeles and Indianapolis.

Reverse Stock Split

In connection with the Company's initial public offering ("IPO") completed
June 2, 1997, the Company's Board of Directors authorized a one for 2.3255
reverse stock split of the outstanding shares of the Company's common stock.
All references to common stock, options, warrants and per share data have been
restated to give effect to the reverse stock split. On February 25, 1997, the
Board of Directors also authorized a Recapitalization Plan the
("Recapitalization"), which is more fully described in Note 17.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements of Carey International, Inc. and
subsidiaries have been prepared to give retroactive effect to the merger of
Indy Connection Limousines, Inc. and subsidiary (Indy Connection) with and
into Carey International, Inc. and subsidiaries on October 31, 1997 (See Note
13). The consolidated financial statements include the financial statements of
the Company and its subsidiaries. All significant intercompany balances and
transactions have been eliminated.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that 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 those estimates.

Cash and cash equivalents

The Company considers all short-term investments with original maturities of
three months or less to be cash equivalents.

F-10
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Notes receivable from contracts

An important component of the Company's operating strategy involves the
preferred use of non-employee independent operators chauffeuring their own
vehicles rather than employee chauffeurs operating Company-owned vehicles.

Each independent operator enters into an agreement with the Company to
provide prompt and courteous service to the Company's customers with a
properly maintained, late model vehicle which he or she owns and for which he
or she pays all of the maintenance and operating expenses, including gasoline.
The Company, under the independent operator agreement, agrees to bill and
collect all revenues and remit to the independent operator 60% to 67% of
revenues, as defined in the agreement. Each new operator agrees to pay a one-
time fee generally ranging from $30,000 to $75,000 to the Company under the
terms of the independent operator agreement (See "Revenue recognition").

The Company typically receives a promissory note from the independent
operator as payment for the one-time fee under the terms of the Standard
Independent Operator Agreement (see Note 4) and records the note in notes
receivable from contracts. Prior to September 1996, the notes evidencing such
financing generally were sold on a non-recourse basis by the Company to third
party finance companies (see Note 11) in exchange for cash and promissory
notes. Since September 1996, the Company has ceased selling notes to third
parties. Such promissory notes due from finance companies also have been
recorded in notes receivable from contracts in the consolidated balance
sheets.

Concentration of credit risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash
equivalents, accounts receivable and notes receivable from contracts. The
Company maintains its cash and cash equivalents with various financial
institutions. In order to limit exposure to any one institution, the Company's
cash equivalents are composed mainly of overnight repurchase agreements
collateralized by U.S. Government securities. Accounts receivable are
generally diversified due to the large number of entities comprising the
Company's customer base and their dispersion across many different industries.
The Company performs ongoing credit evaluations of its customers, and may
require credit card documentation or prepayment of selected transactions.
Notes receivable from contracts are supported by the underlying base of
revenue serviced by each respective independent operator (see Notes 4 and 11).
The Company performs ongoing evaluations of each independent operator's
productivity and payment capacity and has utilized third-party financing to
reduce credit exposure.

Fixed assets

Furniture, equipment, vehicles and leasehold improvements are stated at
cost. Equipment under capital leases is stated at the lower of the present
value of minimum lease payments or the fair market value at the inception of
the lease. Depreciation on furniture, equipment, vehicles and leasehold
improvements is calculated on the straight-line method over the estimated
useful lives of the assets, generally three to five years. The buildings owned
by the Company are depreciated over 40 years on a straight-line basis. Sales
and retirements of fixed assets are recorded by removing the cost and
accumulated depreciation from the accounts. Gains or losses on sales and
retirements of property are reflected in results of operations.

The Company capitalizes software development costs relating to a
computerized system which includes applications for reservations, dispatch,
billing and accounting functions. Amortization of these costs occurs over
their estimated economic life of 60 months and commences upon the installation
of the software.

F-11
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Intangible assets

Effective September 1, 1991, the Company acquired the Carey name and
trademark and the contract rights to all royalty fee payments by various Carey
licensees for a purchase price of $7 million. These assets are being amortized
over 40 years.

The Company has acquired chauffeured vehicle service companies, all of which
have been accounted for as purchases, except for Indy Connection which has
been accounted for as a pooling-of-interests. For each business acquired which
is a licensee of the Company, the excess of cost over the fair market value of
the net assets acquired is allocated to franchise rights in the balance sheet.
With respect to acquired businesses which are not licensees of the Company,
the excess of cost over the net assets acquired is allocated to goodwill.
Goodwill and franchise rights are amortized over 30 years using the straight-
line method. Such amortization is included in selling, general and
administrative expense in the statement of operations. The Company evaluates
the recoverability of its intangible assets at least annually based on
estimated undiscounted cash flows over the lesser of the remaining
amortization periods or calculated lives, giving consideration to revenue
expected to be realized. This determination is based on an evaluation of such
factors as the occurrence of a significant change in the environment in which
the business operates or the expected future net cash flows (undiscounted and
without interest). There have been no adjustments to the carrying value of
intangible assets resulting from this evaluation.

Revenue recognition

Chauffeured vehicle services--The Company's principal source of revenue is
from chauffeured vehicle services provided by its operating subsidiaries. Such
revenue, net of discounts, is recorded when such services are provided. The
Company, through the Carey International Reservation System ("CIRS"), has a
central reservation system capable of booking reservations on behalf of its
licensees and affiliates. Under most circumstances, central reservations are
billed by the Company to the customer when the Company receives a service
invoice from the licensee or affiliate that provided the service. At such
time, the Company also records the gross revenue for the transaction.

Fees from licensees--The Company charges an initial license fee under its
domestic license agreement and records the fee as revenue on signing of the
agreement. The Company also charges its domestic licensees monthly franchise
and marketing fees equal to stated percentages of monthly revenues, as defined
in the licensing agreement. Monthly fees to domestic licensees are generally
less than 10% of the licensee's monthly revenues. The Company records such
fees as revenues as they are charged to the licensees.

International licensees and the Company's domestic and international
affiliates historically have not paid fees to the Company, but have instead
given a discount on business referred to them through CIRS. Such discounts
reduce the amount of service invoices to the Company from such licensees and
affiliates for services provided to customers whose reservations have been
booked and invoiced centrally by the Company.

Independent operator fees--The Company enters into contracts with
independent operators ("Standard Independent Operator Agreements") to provide
chauffeured vehicle services exclusively to the Company's customers. When
independent operator agreements are executed, the Company defers revenue equal
to the amount of the one--time fees and recognizes the fees as revenue over
the terms of the contracts or over 20 years for perpetual contracts. Upon
termination of an independent operator agreement, the remaining deferred
revenue associated with the specific contract, less any amounts due from the
independent operator deemed uncollectible, is recognized as revenue.

F-12
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Income taxes

The provision for income taxes includes income taxes currently payable and
the change during the year in the net deferred tax liabilities or assets.
Deferred income tax liabilities and assets are determined based on the
differences between the financial statement and tax bases of liabilities and
assets using enacted tax rates in effect for the year in which the differences
are expected to reverse. A valuation allowance is provided to reduce the net
deferred tax asset, if any, to a level which, more likely than not, will be
realized.

Pro forma net income per common share

Consistent with Staff Accounting Bulletin IB-2, the Company has recalculated
historical weighted average common shares outstanding and net income per
common share to give effect to the Recapitalization (see Note 17). The
recalculated pro forma net income per common share is determined by (i)
adjusting net income available to common shareholders to reflect the
elimination in interest expense, net of taxes, resulting from the conversion
of $4,867,546 of subordinated debt into common stock and (ii) increasing the
weighted average common shares outstanding by the number of common shares
resulting from the conversion of such debt, as well as the partial conversion
of the Series A Preferred Stock.

Stock-based Compensation

In October 1995, the Financial Accounting Standards Boards issued Statement
of Financial Accounting Standards No. 123 ("SFAS 123") Accounting for Stock-
Based Compensation, which is effective for the Company's financial statements
for the fiscal year ended November 30, 1997. SFAS 123 allows companies to
either account for stock-based compensation under the fair value method of
SFAS 123 or under the provisions of Accounting Principles Board Option No. 25
("APB 25"), Accounting for Stock Issued to Employees. The Company has
continued to apply the provisions of APB 25 and has provided pro forma
disclosure in the notes to the financial statements. (See Note 15)

Foreign operations

The consolidated financial statements include foreign assets, liabilities
and revenues of $5.0 million, $3.6 million and $7.2 million, respectively, as
of November 30, 1997. The consolidated financial statements include foreign
assets, liabilities and revenues of $3.7 million, $2.7 million and $4.6
million, respectively, as of November 30, 1996. The net effects of foreign
currency transactions reflected in operations were immaterial. Assets and
liabilities of the Company's foreign operations are translated into United
States dollars using exchange rates in effect at the balance sheet date and
results of operations items are translated using the average exchange rate
prevailing throughout the period.

Reclassifications

Certain accounts in 1995 and 1996 have been reclassified to conform with the
1997 presentation.

3. FEES FROM LICENSEES

The total of all domestic license fees, franchises fees and marketing fees
earned in each of 1995, 1996 and 1997 was $1,228,472, $2,180,540 and
$2,479,503, respectively. Amounts due from licensees of $143,041 and $130,215
at November 30, 1996 and 1997, respectively, are included in accounts
receivable in the consolidated balance sheets of the Company.

4. TRANSACTIONS WITH INDEPENDENT OPERATORS

The Company recorded approximately $1,130,000, $2,371,000 and $1,815,000 in
1995, 1996 and 1997, respectively, as deferred revenue relating to fees from
new agreements with independents operators. Amounts of

F-13
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

deferred revenue recognized as revenues in 1995, 1996 and 1997 amounted to
approximately $889,000, $936,000 and $923,000, respectively.

Notes receivable from contracts include approximately $917,000 and
$8,605,000 at November 30, 1996 and 1997, respectively, for amounts due from
independent operators and approximately $255,000 and $229,000 at November 30,
1996 and 1997, respectively, for amounts due from a related party financing
company (see Note 11).

In the normal course of business, the Company's independent operators are
responsible for financing their own vehicles through third parties. From time
to time, the Company has arranged lease and purchase financing for certain
vehicles and has in turn leased back such vehicles to independent operators on
terms and conditions similar to those under which the Company is obligated
(see Note 5).

5. FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1996 1997
---------- -----------
<S> <C> <C>
Vehicles............................................. $5,026,897 $ 5,586,060
Equipment............................................ 2,303,348 3,039,845
Software development costs........................... 1,448,593 2,658,257
Furniture............................................ 749,840 1,057,644
Leasehold improvements............................... 419,232 469,999
Land and building.................................... 529,634 1,582,406
---------- -----------
10,477,544 14,394,211
Less accumulated depreciation and amortization....... 4,687,153 5,115,892
---------- -----------
Net fixed assets..................................... $5,790,391 $ 9,278,319
========== ===========
</TABLE>

The Company is obligated under various vehicle and equipment capital leases.
Vehicles and equipment under capital leases included in fixed assets are as
follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1996 1997
---------- -----------
<S> <C> <C>
Equipment............................................ $1,048,633 $ 731,720
Vehicles............................................. 621,420 1,449,687
---------- -----------
1,670,053 2,181,407
Less accumulated amortization........................ 561,871 505,091
---------- -----------
$1,108,182 $ 1,676,316
========== ===========
</TABLE>

F-14
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------
1996 1997
---------- ----------
<S> <C> <C>
Senior credit facility with three banks, dated August
15, 1997, consisting of a secured revolving line of
credit of $25.0 million (the Facility). The Facility,
which may be used for acquisitions and working capital,
is collateralized by the assets of the Company and its
domestic operating subsidiaries and by a pledge of the
stock of its international subsidiary. The Facility
also provides availability for the issuance of letters
of credit. Loans made under the revolving line bear
interest at the Company's option at either the bank's
prime lending rate (8.5% at November 30, 1997) or 2%
above the LIBOR rate. Commitment fees equal to 0.375%
per annum are payable on the unused portion of the
revolving line of credit. On the second anniversary of
the Facility, outstanding balances under the Facility
will convert to a five-year term loan, which will bear
interest either at a fixed rate (subject to
availability) or at a variable LIBOR or prime-based
rate with adjustments determined based on the Company's
earnings............................................... $ -- $1,322,053
Bank revolving credit/term loan dated April 13, 1995,
modified December 1, 1996. Collateralized by accounts
receivable of the Company and the pledge of common
stock of the Company's U.S. subsidiaries. Interest only
was payable until June 30, 1996; beginning July 1,
1996, quarterly principal payments required in an
amount sufficient to amortize the outstanding balance
over a four-year period. Interest payable monthly at a
floating rate based on the Wall Street Journal prime
plus 1.25%. This loan was guaranteed by the Chairman of
the Board and the President of the Company............. 3,937,500 --
Note payable dated September 1, 1991, at an annual rate
of interest of 7.74%, collateralized by the assets of
Carey Licensing, Inc. Pursuant to an agreement with the
lender effective November 30, 1996, principal payments
of $220,000 were due quarterly from December 31, 1996
through December 31, 1997 and a final principal payment
of $240,000 due March 1, 1998.......................... 1,340,000 --
Bank line of credit of $1,000,000, dated October 17,
1994, collateralized by accounts receivable of Carey NY
and assignment of license agreement between the Company
and Carey NY; due April 30, 1997. Interest was payable
monthly at a variable interest rate of .75% above the
bank's prime rate...................................... 990,000 --
Various installment notes payable, with interest rates
ranging from 8.75% to 14.5%, collateralized by certain
vehicles and equipment of the Company's subsidiaries;
principal and interest are payable monthly over 36-
month terms............................................ 555,834 287,641
Notes payable to bank, dated March 26, 1996, at the
prime rate (8.0% at November 30, 1997) plus 1.0% per
annum and matures on January 31, 1998. The notes are
collateralized by substantially all Carey Limousine In-
diana, Inc.'s assets. Under the terms of the agreement,
Carey Limousine Indiana, Inc. is subject to various
general covenants...................................... 497,582 928,174
</TABLE>

F-15
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------
1996 1997
----------- -----------
<S> <C> <C>
Discretionary credit agreement with a bank that allows
the Company to purchase revenue earning vehicles un-
der installment notes. Separate notes are required
for each vehicle purchase with a maximum term of
thirty-six months. These notes bear interest at rates
ranging from 8.9% to 11.0% The notes were collateral-
ized by Indy Connection's accounts receivable, inven-
tory and equipment and were subject to various re-
strictive covenants. The agreement was subsequently
renegotiated at similar terms........................ 411,402 --
Two notes payable to bank, with interest at a fixed
rate of 9.25% and 48 and 84 month terms, respective-
ly. The notes require monthly principal and interest
payments of $4,413. The notes are collateralized by
vehicles. The agreement subjects Carey Limousine In-
diana, Inc. to various general covenants ........... 363,705 429,911
Installment notes payable to sellers under acquisition
agreements dated various dates from September 30,
1993 to September 8, 1995. Interest rates range from
7.5% to 8.5% Interest is generally payable monthly.
Principal is payable in varying installments......... 1,422,240 406,873
Notes payable to banks, with various dates, payable in
monthly installments. Interest rates were determined
on the banks' prime rate of interest................. 853,770 --
Note payable to bank, dated October 17, 1994, collat-
eralized by accounts receivable and fixed assets of
Carey NY. Principal and interest payments of $2,848
were payable monthly. Interest rate was fixed at
9.25%................................................ 149,001 --
Bank lines of credit of $950,000, dated February 26,
1996, collateralized by accounts receivable of Carey
Licensing, Inc. and Carey FLA; due March 31, 1997.
Interest was payable monthly at 1% above the Wall
Street Journal's "Prime Rate"........................ 950,000 --
Note payable to bank, dated May 10, 1996, collateral-
ized by the land and building held by Carey DC;
monthly payments of $3,863 of principal and interest
are due through April 10, 2001 and a balloon payment
of $375,468 on May 10, 2001. Interest fixed at
8.75%................................................ 423,179 413,945
----------- -----------
Total notes payable................................... 11,894,213 3,788,597
Less current installments............................. 5,858,249 996,575
----------- -----------
Long-term portion..................................... $ 6,035,964 $ 2,792,022
=========== ===========
</TABLE>

F-16
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------
1996 1997
----------- ----
<S> <C> <C>
Subordinated convertible note, dated September 1, 1991, with
the principal of $2,000,000 was due on August 30, 2000; in-
terest payable quarterly at a fixed rate of 7.74%. After Sep-
tember 1, 1992, this debt is convertible into shares of com-
mon stock of the Company at the discretion of the holder at a
conversion price of $6.14. A warrant for the purchase of
86,003 shares of common stock of the Company was issued in
connection with the note. The warrant is exercisable immedi-
ately, expires at the earlier of the third anniversary of an
initial public offering or November 30, 2001, and has an ex-
ercise price of $4.65 per share and remains outstanding. The
note contains certain antidilutive provisions which lower its
conversion price in the event dilutive securities are subse-
quently issued by the Company at prices below the note's con-
version price. The warrant has not been exercised. The terms
of the agreement have been modified as part of the "Recapi-
talization" (see Notes 15 and 17)............................ $ 2,000,000 $--
Subordinated note dated July 30, 1992, interest only payable
quarterly until September 30, 1995. The interest rate was
fixed at 12%. Principal of $220,000 was paid on September 30,
1995. Pursuant to an agreement with the lender effective No-
vember 30, 1996, principal payments of $220,000 are due from
June 30, 1997 until December 31, 1997; an installment of
principal of $880,000 is due March 31, 1998; and a final pay-
ment of principal of $2,240,000 is due June 30, 1998. A war-
rant for the purchase of 616,544 shares of Class A common
stock or common stock was issued in connection with the note
and was exercised as part of the Recapitalization. The terms
of the agreement have been modified as part of the "Recapi-
talization" (see Note 17).................................... 3,780,000 --
----------- ----
Total subordinated notes payable.............................. 5,780,000 --
Less current installments..................................... 440,000 --
----------- ----
Subordinated notes payable, excluding current installments.... $ 5,340,000 $--
=========== ====
</TABLE>

Future annual principal payments on all notes payable at November 30, 1997
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING NOVEMBER 30:
------------------------
<S> <C>
1998............................................................ $ 996,575
1999............................................................ 622,986
2000............................................................ 522,795
2001............................................................ 855,679
2002............................................................ 303,253
2003 and thereafter............................................. 487,309
----------
$3,788,597
==========
</TABLE>

Certain loan agreements contain restrictive covenants which include
financial ratios related to working capital, debt service coverage, debt to
net worth and maintenance of a minimum tangible net worth, and submission of
audited financial statements, prepared in accordance with generally accepted
accounting principles. Additionally, these covenants restrict the Company's
capital expenditures and prohibit the payment of dividends on the Company's
common and preferred stock, except for the Series E preferred stock and Indy
Connection preferred stock.

The carrying value of notes payable approximates the current value of the
notes payable at November 30, 1997. Interest paid during the years ended
November 30, 1995, 1996, and 1997 was approximately $1,878,000, $1,883,000 and
$1,274,000, respectively.

F-17
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. LEASES

The Company has several noncancelable operating leases, primarily for office
space and equipment, that expire over the next five years. Certain of the
Company's facilities are under operating leases which provide for rent
adjustments based on increases of defined indexes, such as the Consumer Price
Index. These agreements also typically include renewal options.

Future minimum lease payments under noncancelable operating leases and the
present value of future minimum capital lease payments as of November 30, 1997
are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING NOVEMBER 30 LEASES LEASES
- - - ----------------------- ---------- ----------
<S> <C> <C>
1998.................................................... $ 483,421 $1,336,517
1999.................................................... 609,284 1,004,736
2000.................................................... 822,155 695,832
2001.................................................... 149,889 422,114
Thereafter.............................................. 271 33,844
---------- ----------
Total minimum lease payments............................ 2,065,020 $3,493,043
==========
Less estimated executory costs.......................... 32,003
----------
2,033,017
Less amount representing interest (at rates ranging from
9% to 12%)............................................. 371,386
----------
Present value of net minimum capital lease payments..... 1,661,631
Less current portion of obligations under capital
leases................................................. 321,965
----------
Obligations under capital leases, excluding current por-
tion................................................... $1,339,666
==========
</TABLE>

During the years ended November 30, 1995, 1996 and 1997 the Company
recognized $508,724, $252,355 and $278,218, respectively, of sublease rental
revenue under vehicle sublease arrangements with independent operators and
others.

During the years ended November 30, 1995, 1996 and 1997, the Company entered
into capital lease obligations of $346,666, $810,993 and $875,187,
respectively, related to the acquisition of vehicles and equipment.

Total rental expense for operating leases in 1995, 1996 and 1997 was
$1,362,518, $2,250,335 and $2,103,037, respectively.

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Included in accounts payable and accrued expenses are the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------
1996 1997
----------- -----------
<S> <C> <C>
Trade accounts payable................................. $ 5,385,328 $ 9,547,571
Accrued expenses and other liabilities................. 4,895,495 6,974,808
Gratuities payable..................................... 458,801 531,702
Accrued offering costs................................. 825,339 --
----------- -----------
$11,564,963 $17,054,081
=========== ===========
</TABLE>

F-18
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. INCOME TAXES

The provision for income taxes is composed of the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------------------
1995 1996 1997
-------- ----------- ----------
<S> <C> <C> <C>
Federal:
Current................................... $139,401 $ 1,368,311 $1,967,356
Deferred.................................. 87,000 (1,197,799) 794,593
-------- ----------- ----------
226,401 170,512 2,761,949
-------- ----------- ----------
State and local:
Current................................... 29,198 128,296 253,896
Deferred.................................. 15,000 (148,758) 5,057
-------- ----------- ----------
44,198 (20,462) 258,953
-------- ----------- ----------
Foreign
Current................................... -- 144,371 141,380
-------- ----------- ----------
Total income tax provision.................. $270,599 $ 294,421 $3,162,282
======== =========== ==========
</TABLE>

The Company's tax provision for the years ended November 30, 1995, 1996 and
1997, respectively, differs from the statutory rate for federal income taxes
as a result of the tax effect of the following factors:

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Statutory rate.................................. 34.0% 34.0% 34.0%
State income tax, net of federal benefit........ 7.2 (1.5) 3.4
Goodwill amortization........................... 6.0 .6 1.0
Non-deductible life insurance................... 10.9 .3 .4
Meals and entertainment expenses................ 16.9 1.1 .6
Valuation allowance............................. (13.0) (27.6) --
Other........................................... 11.4 .9 1.7
-------- -------- -------
73.4% 7.8% 41.1%
======== ======== =======
</TABLE>

F-19
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The source and tax effects of temporary differences are composed of the
following:

<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------
1996 1997
----------- ----------
<S> <C> <C>
Allowances for bad debts............................ $ 176,000 $ 208,000
Acquired net operating losses....................... -- 1,500,000
Capital loss carryforward........................... 74,000 74,000
Deferred revenue.................................... 2,040,000 2,360,000
Deferred state taxes and other...................... 558,000 259,000
----------- ----------
Gross deferred tax assets........................... 2,848,000 4,401,000
Valuation allowance................................. (74,000) (1,574,000)
----------- ----------
2,774,000 2,827,000
----------- ----------
Amortization of intangible assets................... (1,350,000) (1,600,000)
Software development costs.......................... (53,000) (493,000)
Other............................................... (109,000) (24,000)
----------- ----------
Gross deferred tax liabilities...................... (1,512,000) (2,117,000)
----------- ----------
Net deferred tax assets............................. $ 1,262,000 $ 710,000
=========== ==========
</TABLE>

A valuation allowance was provided in 1995 to reduce the net deferred tax
asset to $0. In the fourth quarter of 1996, the Company concluded that it was
more likely than not that substantially all of the deferred tax assets would
be realized and reduced the valuation allowance by $1,499,000.

In 1997, the Company acquired net operating loss carryforwards on which a
full valuation allowance has been provided. As the Company utilizes these net
operating loss carryforwards, the benefit will be offset against acquired
goodwill. In 1997, the Company utilized $115,000 of the acquired net operating
loss carryforwards.

Income taxes paid during the years ended November 30, 1995, 1996 and 1997
amounted to approximately $187,000, $616,000, and $2,021,000, respectively.

F-20
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. PREFERRED STOCK

The Company had the following series of preferred stock:

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------
1996 1997
---------- -----
<S> <C> <C>
Series A, par value $10.00, authorized 43,000 shares,
issued and outstanding 42,070 shares, at November 30,
1996 (none at November 30, 1997) (liquidation preference
of $4,207,000, redeemable at option of the Company). Non-
cumulative dividend of $7.00 per annum when declared by
the Board of Directors................................... $ 420,700 $ --
Series B, par value $10.00, authorized 10,000 shares,
issued and outstanding 9,580 shares, at November 30, 1996
(none at November 30, 1997) (liquidation preference of
$958,000). Non-cumulative dividend of $5.00 per annum
when declared by the Board of Directors.................. 95,800 --
Series F, par value $10.00, authorized 10,000 shares,
issued and outstanding 10,000 shares, at November 30,
1996 (none at November 30, 1997) (liquidation preference
of $1,000,000). Non-cumulative dividend of $5.00 per
annum when declared by the Board of Directors............ 100,000 --
Series G, par value $10.00, authorized 110,000 shares,
issued and outstanding 49,890 shares, at November 30,
1996 (none at November 30, 1997) (liquidation preference
of $4,989,900). Non-cumulative dividend of $5.00 per
annum when declared by the Board of Directors............ 498,900 --
---------- -----
$1,115,400 $ --
========== =====
</TABLE>

See Note 17 for discussion of the Recapitalization, pursuant to which all of
the preferred stock was redeemed or converted into common stock.

11. RELATED-PARTY TRANSACTIONS

The Company has invested $750,000 in non-voting redeemable preferred stock
of a privately-held finance company formed for the purpose of providing
financing to the chauffeured vehicle service industry. This entity provides
financing to the Company's independent operators, without recourse to the
Company, for both automobiles and amounts due under independent operator
agreements. The Company sold $1,762,345 and $1,015,897 of independent operator
notes receivable to this related-party finance company for cash of $1,290,899
and $733,793 and demand promissory notes of $471,446 and $282,104 in 1995 and
1996, respectively. The unpaid balances of the promissory notes were $255,664
and $229,329 at November 30, 1996 and 1997, respectively, and are included in
notes receivable from contracts. These promissory notes are due on demand and,
generally, monthly principal payments are received by the Company. These notes
generally bear interest at rates of 7% to 10%.

It is not practicable to estimate the fair value of a preferred stock
investment in a privately-held company. As a result; the Company's investment
in the privately-held finance company noted above is carried at its original
cost (less redemptions) of $750,000. At April 30, 1997, the total assets
reported by the privately-held company were $10,075,613 and stockholders'
equity was $1,244,857, revenues were $1,442,344 and net income was $136,409.

F-21
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Pursuant to a stock ownership agreement between the common stockholders of
the related party finance company and the Company, the Company has an option
to purchase all of the outstanding common stock of the affiliate at $12,500
per common share or market value, if higher. The option is not exercisable
until April 15, 1998.

12. COMMITMENTS AND CONTINGENCIES

The Company, certain of the Company's subsidiaries and certain officers and
directors of the Company were named in a civil action filed on May 16, 1996 in
the United States District Court for the Eastern District of Pennsylvania
entitled "Felix v. Carey International, Inc., et al." The Company has reached
a final settlement with the plaintiff and plaintiff's counsel. The settlement
did not have a material effect on the Company's business, financial condition,
results of operations or cash flows.

13. ACQUISITIONS

Effective October 31, 1997, in connection with a merger, the Company issued
721,783 shares of its common stock in exchange for all the outstanding common
stock of Indy Connection based on a conversion ratio of 1.008 shares (the
merger exchange ratio) of the Company's common stock for each share of Indy
Connection common stock, for a total value of approximately $12.0 million. The
merger qualified as a tax-free reorganization and has been accounted for as a
pooling-of-interests. Accordingly, the Company's consolidated financial
statements have been restated for all periods prior to the business
combination to include the combined financial results of Carey International,
Inc. and Indy Connection (See Note 2).

Revenue, net and net income (loss) for the individual companies reported
prior to the merger are as follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenue, net:
Carey International, Inc............... $43,483,947 $59,505,698 $79,477,393
Indy Connection........................ 5,485,448 6,080,105 6,969,779
Elimination............................ -- (40,861) (68,859)
----------- ----------- -----------
Total................................ $48,969,395 $65,544,942 $86,378,313
=========== =========== ===========
Net income (loss):
Carey International, Inc............... $ (195,195) $ 2,816,104 $ 3,567,053
Indy Connection........................ 293,316 678,863 956,437
----------- ----------- -----------
Total................................ $ 98,121 $ 3,494,967 $ 4,523,490
=========== =========== ===========
</TABLE>

Conforming the accounting practices of the Company and Indy Connection
resulted in no adjustments to net income (loss) or stockholders' equity.

The Company estimates that transaction costs associated with the merger will
be approximately $200,000. All fees and transaction expenses related to the
merger and the restructuring of the combined companies will be expensed as
required under the pooling-of-interests accounting method.

In October 1997, the Company acquired the stock of Commonwealth Limousine
Services, Ltd. ("Commonwealth"). The Company is in the process of combining
Commonwealth's operations with the existing Los Angeles operations.

F-22
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In March 1997, the Company entered into an agreement to purchase the stock
of Manhattan International Limousine Network Ltd. and an affiliated company
(collectively, "Manhattan Limousine"). Manhattan Limousine is one of the
largest providers of chauffeured vehicle services in the New York metropolitan
area. The Company consummated the acquisition at the time of the IPO.

In February 1996, the Company acquired certain assets and liabilities of a
chauffeured vehicle service company in London, England. Additional contingent
consideration of up to $1,000,000 may be payable with respect to each of the
two years ending February 28, 1998 based on the level of revenues referred to
the acquired company by the seller. In addition, the Company is required to
pay a standard commission to the seller of the acquired chauffeured vehicle
service company for business referral, which is expensed as incurred.

In April 1995, the Company acquired certain assets and liabilities of a
chauffeured vehicle service company in the Washington, DC area and combined
the acquired operations with those of Carey DC.

In January 1995, the Company acquired certain assets and liabilities of the
Carey licensee in San Francisco, California (Carey SF). Subsequently, the
Company acquired the business of two additional chauffeured service companies
(in May and August 1995) and combined the acquired operations with those of
Carey SF.

All acquisitions have been accounted for as purchases (except for the
pooling as described above). The net assets acquired and results of operations
have been included in the financial statements as of and from, respectively,
the effective dates of the acquisitions. The total consideration was allocated
to the assets acquired based upon their estimated fair values with any
remaining considerations allocated to either franchise rights or goodwill, as
follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------------------
1995 1996 1997
---------- ---------- -----------
<S> <C> <C> <C>
NET ASSETS PURCHASED
Receivables and other assets............... $ -- $ 632,554 $ 324,964
Notes from contracts..................... -- -- 6,599,459
Fixed assets............................. 1,703,521 928,377 1,800,441
Franchise rights......................... 1,527,402 89,243 --
Goodwill................................. 5,013,731 447,269 24,480,299
Accounts payable and accrued expenses.... -- (367,211) (5,796,692)
Deferred revenue......................... -- -- (6,648,960)
---------- ---------- -----------
Fair value of assets acquired............ $8,244,654 $1,730,232 $20,759,511
========== ========== ===========
CONSIDERATION:
Cash (exclusive of $223,695 and $274,855
cash acquired in 1996 and 1997
respectively)........................... $3,949,393 $1,730,232 $ 8,396,017
Capital leases assumed related to vehicle
acquisitions............................ 346,666 -- 161,549
Notes assumed related to vehicle
acquisitions............................ 895,571 -- 3,061,945
Uncollateralized promissory notes issued
to sellers.............................. 3,053,024 -- 5,740,000
Common stock............................. -- -- 3,400,000
---------- ---------- -----------
Total consideration.................... $8,244,654 $1,730,232 $20,759,511
========== ========== ===========
</TABLE>

Certain of these acquisitions require the payment of contingent
consideration based on percentages of annual net revenue of the acquired
entities over a defined future period. The Company paid $315,773, $291,755 and
$610,872 for the years ended November 30, 1995, 1996 and 1997, respectively,
as contingent consideration which is reflected in the table above.

F-23
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Of the total uncollateralized promissory notes issued to sellers in 1995,
two notes totaling $303,000 were subject to reduction based upon the results
of the acquired entities (see Note 6). The two notes were repaid in 1996 for
approximately $211,000 and the difference of approximately $92,000 reduced
recorded goodwill.

The unaudited pro forma summary consolidated results of operations assuming
the acquisitions accounted for as purchases had occurred for the purposes of
the 1996 summary at the beginning of fiscal 1996, and for the purposes of the
1997 summary at the beginning of fiscal 1997, are as follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------------
1996 1997
------------ ------------
<S> <C> <C>
Revenue, net................................... $ 66,483,000 $ 97,870,000
Cost of revenue................................ (44,515,000) (64,927,000)
Other expense, net............................. (18,320,000) (24,825,000)
Provision for income taxes..................... (235,000) (3,348,000)
------------ ------------
Net income..................................... $ 3,413,000 $ 4,770,000
============ ============
Pro forma net income per common share.......... $ 1.30 $ 0.82
============ ============
Pro forma weighted average common shares
outstanding................................... 3,417,739 5,807,988
============ ============
</TABLE>

14. 401 (K) PLAN

The Company sponsors a defined contribution plan established pursuant to
Section 401 (k) of the Internal Revenue Code for the benefit of employees of
the Company. The Company made $0, $0, and $60,162 in contributions in 1995,
1996 and 1997, respectively.

15. STOCK OPTION PLANS

On December 1, 1987, the Company established a Stock Option Plan (the "1987
Plan") that included all officers and key employees of the Company, non-
employee directors of the Company, and certain persons retained by the Company
as consultants. In accordance with the 1987 Plan, the Company's Board of
Directors may, from time to time, determine the persons to whom the stock
options are to be granted, the number of shares under option, the option price
and the manner in which payment of the option price shall be made. The 1987
Plan provides for the options to be exercised 25% each year beginning after
the year following the grant. The options are exercisable for a period of ten
years after grant date. The total number of shares authorized to be issued
under the 1987 Plan is 195,656.

On July 28, 1992, the Company established a Stock Option Plan (the "1992
Plan") that included all officers and key employees of the Company, non-
employee directors of the Company, and certain persons retained by the Company
as consultants. In accordance with the 1992 Plan, the Company's Board of
Directors may, from time to time, determine the persons to whom the stock
options are to be granted, the number of shares under option, the option
price, the time or times during the exercise period at which each such option
shall become exercisable, and the manner in which payment of the option price
shall be made. The options are exercisable for a period of ten years after
grant date. The total number of shares authorized to be issued under the 1992
plan is 388,647.

On February 25, 1997, the Company established a Stock Option Plan (the "1997
Plan") that included all officers and key employees of the Company, non-
employee directors, and certain persons retained by the Company as
consultants. In accordance with the 1997 Plan, the Company's Board of
Directors may, from time to time, determine the persons to whom the stock
options are to be granted, the number of shares under option, the option
price, the time or times during the exercise period at which each such option
shall become exercisable,

F-24
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

and the manner in which payment of the option price shall be made. The options
are exercisable for a period of ten years after grant date. The total number
of shares authorized to be issued under the 1997 Plan is 650,000.

On February 25, 1997, the Board of Directors, subject to stockholder
approval, adopted the Stock Plan for Non-Employee Directors (the "Directors'
Plan"). A total of 100,000 shares of common stock of the Company are reserved
for issuance under the Directors' Plan. Options to purchase at the IPO price a
total of 30,000 shares of common stock were granted under the Directors' Plan,
such grants to be effective upon and vest six months from execution of an
underwriting agreement in connection with the IPO.

Stock activity under the 1987 Plan, the 1992 Plan and the 1997 Plan is as
follows:

<TABLE>
<CAPTION>
1987 PLAN 1992 PLAN 1997 PLAN/DIRECTORS' PLAN
--------------------- --------------------- --------------------------
OPTION PRICE OPTION PRICE OPTION PRICE
SHARES PER SHARE SHARES PER SHARE SHARES PER SHARE
------- ------------ ------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 1,
1994................... 64,502 $ 1.44 383,247 $ 4.65
Granted................. -- -- 21,673 4.65
Exercised............... (32,681) 1.44 -- --
Forfeited............... (860) 1.44 (60,985) 4.65
------- ----------- ------- ------
Balance, November 30,
1995................... 30,961 1.44 343,935 4.65
Granted................. 38,701 4.65 43,578 4.65
Forfeited............... -- -- (3,011) 4.65
------- ----------- ------- ------
Balance, November 30,
1996................... 69,662 1.44-4.65 384,502 4.65
Granted................. -- -- -- -- 505,389 $ 10.50-15.75
Exercised............... (12,042) 1.44 (3,167) 4.65 -- --
------- ----------- ------- ------ ---------- ---------------
Balance, November 30,
1997................... 57,620 $ 1.44-4.65 381,335 $ 4.65 505,389 $ 10.50-15.75
======= =========== ======= ====== ========== ===============
Vested and exercisable
at November 30, 1997... 40,421 $1.44-$4.65 335,530 $ 4.65 200,000 $ 10.50
======= =========== ======= ====== ========== ===============
</TABLE>

Information with respect to stock options outstanding at November 30, 1997
is as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------
WEIGHTED
AVERAGE
NUMBER REMAINING
PRICE OF OPTIONS CONTRACTUAL LIFE
<S> <C> <C>
----------------------------------------------------------------
$ 1.44 18,919 0.1
$ 4.65 420,036 5.7
$10.50 431,500 9.5
$14.00 15,000 9.6
$15.00 50,000 9.8
$15.75 8,889 9.8
----------------------------------------------------------------
944,344 7.6
================================================================

</TABLE>

F-25
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
YEAR OF OPTION OF EXERCISE
EXPIRATION OPTIONS PRICE PRICE RANGE
-------------- ------- -------- --------------
<S> <C> <C> <C>
1998....................................... 18,920 $ 1.44 $ 1.44
2002....................................... 270,503 $ 4.65 $ 4.65
2003....................................... 33,541 $ 4.65 $ 4.65
2004....................................... 12,685 $ 4.65 $ 4.65
2005....................................... 21,672 $ 4.65 $ 4.65
2006....................................... 81,634 $ 4.65 $ 4.65
2007....................................... 505,389 $11.14 $10.50--$15.75
------- ------ --------------
All Years.................................. 944,344 $ 8.06 $ 1.44--$15.75
======= ====== ==============
</TABLE>

In May of 1996, the options granted under the 1992 Plan and a warrant to
purchase 86,003 shares of common stock (see Note 6) were repriced to $4.65.
The options and warrant were repriced at the determined fair market value as
of the date of repricing (see Note 18).

The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its plans. Accordingly, no compensation cost has been
recognized for its fixed stock option plans. Had compensation costs for the
Company's stock-based compensation plans been determined based on the fair
value at the grant dates for awards in 1996 and 1997 under those plans
consistent with the recognition method of FASB Statement No. 123, the
Company's net income and income per share would have been reduced to the pro
forma amounts presented below:

<TABLE>
<CAPTION>
1996 1997
------- -------
(DOLLARS IN
THOUSANDS,
EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Net income....................................... As reported $ 3,495 $ 4,523
Pro forma 3,482 4,320
Net income per share............................. As reported $ 0.90 $ 0.76
Pro forma 0.89 0.72
</TABLE>

The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Expected life (years).......................................... 6 6
Interest rate.................................................. 6.63% 6.66%
Volatility..................................................... 40.0 40.0
Dividend yield................................................. 0.00% 0.00%
Weighted average fair value.................................... $2.31 $5.56
</TABLE>

16. NET INCOME PER COMMON SHARE

<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------------
1995 1996 1997
--------- ---------- ----------
<S> <C> <C> <C>
Net income available to common
shareholders............................. $ 93,746 $3,494,097 $4,523,490
========= ========== ==========
Weighted average common shares
outstanding.............................. 3,089,895 3,125,673 5,639,879
========= ========== ==========
Net income per common share............... $ 0.03 $ 1.12 $ 0.80
========= ========== ==========
</TABLE>

F-26
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Common equivalent shares are included in the per share calculations where
the effect of their inclusion would be dilutive. Common equivalent shares
consist of common shares issuable upon (a) conversion of Series B, F and G
preferred stock and (b) the assumed exercise of outstanding stock options and
warrants. Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 83, the common equivalent shares issued by the Company
during the twelve months preceding the anticipated effective date of the
Registration Statement relating to the Company's initial public offering,
using the treasury stock method and an assumed public offering price of $11.00
per share, have been included in the calculation of net income per common
share.

Net income available to common shareholders is the net income for the fiscal
year less accretion of dividends on the preferred stock of $4,375, $900 and $0
for 1995, 1996 and 1997, respectively.

In February 1997, the Financial Accounting Standards Boards issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128). FAS
128 simplifies the existing earnings per share (EPS) computations under
Accounting Principles Board Opinion No. 15, "Earnings Per Share," revises
disclosure requirements, and increases the comparability of EPS data on an
international basis. In simplifying the EPS computations, the presentation of
primary EPS is replaced with basic EPS, with the principal difference being
that common stock equivalents are not considered in computing basic EPS. In
addition, FAS 128 requires dual presentation of basic and diluted EPS. FAS 128
is effective for financial statements issued for periods ending after December
15, 1997. The Company's pro forma basic EPS under FAS 128 would have been
$1.00 and dilutive EPS under FAS 128 would not differ significantly from the
reported pro forma net income per share.

17. RECAPITALIZATION PLAN

On February 25, 1997, pursuant to an agreement reached in May 1996, the
Board of Directors authorized a recapitalization plan ("Recapitalization"),
which was implemented at the time of the IPO. Under the Recapitalization, the
$2,000,000 subordinated convertible note dated September 1, 1991 and the
$3,780,000 subordinated note dated July 30, 1992 were converted or exchanged
for 1,046,559 shares of common stock and payment of $912,452. The Series A
preferred stock was converted into 86,003 shares of common stock and redeemed
in part for $2,103,500. All of the Series F preferred stock and 3,000 shares
of Series G preferred stock was redeemed for an aggregate of $1,000,000. The
remaining preferred stock was converted into 1,427,509 shares of common stock.
As a result of the Recapitalization, preferred stock which had a liquidation
preference of $11,154,900 and subordinated debt with a principal amount of
$5,780,000 was converted in part into 2,560,071 shares of common stock and
repaid or redeemed in part for $4,015,952 in cash. All of the cash amounts
were paid out of the proceeds of the IPO.

F-27
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders
Manhattan International Limousine Network Ltd. and Affliliate

We have audited the accompanying combined balance sheet of Manhattan
International Limousine Network Ltd. and Affliliate (collectively, the
"Company") as of September 30, 1996, and the related combined statements of
operations and retained earnings (accumulated deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Manhattan
International Limousine Network Ltd. and Affliliate as of September 30, 1996,
and the combined results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.

As discussed in Note 10 to the combined financial statements, the
accompanying combined balance sheet as of September 30, 1996, and the related
combined statement of operations and retained earnings (accumulated deficit)
and cash flows for the year then ended have been restated.

COOPERS & LYBRAND L.L.P.

Washington, D.C.
March 1, 1997, except
for Note 10 as to which
the date is April 22, 1997

F-28
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, APRIL 30,
1996 1997
------------- -----------
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents........................... $ 130,494 $ 77,275
Accounts receivable, net of allowances for doubtful
accounts of $181,000 and $194,000, respectively.... 2,466,134 1,781,923
Receivables from independent operators, current por-
tion............................................... 271,086 368,335
Prepaid expenses and other current assets........... 51,499 51,499
----------- -----------
Total current assets............................. 2,919,213 2,279,032
Fixed assets, net................................... 805,724 644,264
Receivables from independent operators, less current
portion............................................ 7,375,219 7,638,554
Other assets........................................ 1,221,885 1,282,872
----------- -----------
Total assets........................................ $12,322,041 $11,844,722
=========== ===========
<CAPTION>
LIABILITIES
<S> <C> <C>
Current portion of notes payable.................... $ 1,232,457 $ 1,958,293
Accounts payable, trade............................. 1,520,295 1,526,330
Accounts payable, independent operators............. 1,738,072 1,809,248
Accrued expenses.................................... 529,761 456,233
Other current liabilities........................... 240,059 232,002
----------- -----------
Total current liabilities........................ 5,260,644 5,982,106
Notes payable, less current portion................. 4,523,171 3,266,567
Other liabilities................................... 862,875 783,491
Deferred revenue.................................... 6,801,965 6,940,762
Commitments and contingencies
<CAPTION>
STOCKHOLDERS' DEFICIENCY
<S> <C> <C>
MILN common stock, $1 par value, 200 shares autho-
rized, 100 shares issued and outstanding........... 100 100
ILN common stock, $1 par value, 200 shares autho-
rized, 200 shares issued and outstanding........... 1,000 1,000
MILN additional paid-in capital..................... 176,940 176,940
<CAPTION>
Retained earnings (accumulated deficit):
<S> <C> <C>
MILN.............................................. (5,439,073) (5,477,392)
ILN............................................... 134,419 171,148
----------- -----------
Total stockholders' deficiency................... (5,126,614) (5,128,204)
----------- -----------
Total liabilities and stockholders' deficiency... $12,322,041 $11,844,722
=========== ===========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-29
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

COMBINED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
FOR THE SEVEN
FOR THE YEAR ENDED MONTHS ENDED
SEPTEMBER 30, APRIL 30,
1996 1997
------------------ -------------
(UNAUDITED)
<S> <C> <C>
Revenues:
Service revenues, net....................... $17,218,728 $10,819,794
Interest from independent operator financ-
ing........................................ 1,219,819 690,700
----------- -----------
Total revenues.............................. 18,438,547 11,510,494
Cost of revenues.............................. 11,040,017 7,011,225
----------- -----------
Gross profit................................ 7,398,530 4,499,269
Selling, general and administrative expenses.. 5,821,899 3,536,845
----------- -----------
Operating income............................ 1,576,631 962,424
Interest expense.............................. (881,854) (575,937)
Interest income............................... 66,000 16,500
----------- -----------
Income before provision for income taxes.... 760,777 402,987
Provision for income taxes.................... 55,014 37,839
----------- -----------
Net income.................................. 705,763 365,148
Accumulated deficit, beginning of period...... (5,907,417) (5,304,654)
Distribution to S corporation stockholder..... (103,000) (366,738)
----------- -----------
Accumulated deficit, end of period............ ($5,304,654) ($5,306,244)
=========== ===========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-30
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE SEVEN
FOR THE YEAR ENDED MONTHS ENDED
SEPTEMBER 30, 1996 APRIL 30, 1997
------------------ --------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income.................................. $705,763 $ 365,148
Adjustments necessary to reconcile net
income
to net cash provided by operating
activities:
Depreciation and amortization.............. 258,439 164,823
Change in deferred revenue................. (279,625) 138,797
Changes in operating assets and
liabilities:
Accounts receivable....................... (377,793) 684,211
Receivables from independent operators.... 139,363 (360,584)
Other assets.............................. (103,240) (60,987)
Accounts payable and accrued expenses..... (152,519) (67,493)
Accounts payable, independent operators... 293,731 71,176
Other liabilities......................... (193,582) (87,441)
-------- ---------
Net cash provided by operating
activities.............................. 290,537 847,650
-------- ---------
Cash flows from investing activities:
Purchases of fixed assets................... (256,248) (3,363)
-------- ---------
Net cash used in investing activities.... (256,248) (3,363)
-------- ---------
Cash flows from financing activities:
Proceeds from advances from officer of com-
pany....................................... -- 224,093
Net borrowings (payments) on line of
credit..................................... 261,802 (595,361)
Proceeds from borrowings under notes
payable.................................... 310,000 800,000
Principal payments on notes payable......... (412,643) (959,500)
Distribution to S corporation stockholder... (103,000) (366,738)
-------- ---------
Net cash provided by (used in) financing
activities.............................. 56,159 (897,506)
-------- ---------
Net change in cash and cash equivalents...... 90,448 (53,219)
Cash and cash equivalents, beginning of
period...................................... 40,046 130,494
-------- ---------
Cash and cash equivalents, end of period..... $130,494 $ 77,275
======== =========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-31
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS

1. BACKGROUND AND ORGANIZATION

Manhattan International Limousine Network Ltd. and its wholly-owned
subsidiary (collectively, "MILN") are engaged primarily in the business of
providing chauffeured vehicle services in New York City and the surrounding
areas, and providing reservation and billing services to both individual and
corporate customers worldwide through an affiliation with a network of
independent chauffeured vehicle service companies. International Limousine
Network Ltd. ("ILN") is an affiliated company (the "Affiliate") engaged in
sales and marketing activities exclusively on behalf of MILN.

The accompanying financial statements combine the accounts of MILN and ILN
because such entities are under common control. All intercompany transactions
have been eliminated. The combined entities are referred to herein as the
"Company."

ILN operates on a calendar year. As a result, the accompanying financial
statements as of and for the year ended September 30, 1996 include the effects
of combining the financial statements of ILN as of and for the year ended
December 31, 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all short-term investments with original maturities of
three months or less to be cash equivalents.

Receivables from Independent Operators and Accounts Payable, Independent
Operators

The Company enters into agreements with independent operators (franchisees)
under which the independent operator contracts to provide chauffeured vehicle
services exclusively to the Company's customers over the contract period. Upon
signing the agreement, the Company is entitled to receive a one-time fee from
the independent operator.

The Company generally receives a minimal down payment from the independent
operator together with a promissory note (see Note 3) and records the note as
a receivable from the independent operator, but does not recognize revenue at
that time. (See Revenue Recognition.) In addition, the Company collects all
billings for services rendered by the independent operator and has the right
to withhold and remit, from the independent operator's earnings, all payments
due to the Company and certain third parties for, among other things, note
payments, two-way radio charges and lease obligations on vehicles, on a
monthly basis. The Company is then obligated to remit the balance of the
independent operator's earnings on a monthly basis. The unpaid balance due to
independent operators at the end of a given period is reflected as accounts
payable, independent operators in the accompanying balance sheet.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk include cash and cash equivalents, accounts
receivable and receivables from independent operators. The Company maintains
its cash and cash equivalents with various financial institutions. Accounts
receivable are generally diversified due to the large number of entities
comprising the Company's customer base and their dispersion across many
different industries. The Company performs ongoing credit evaluations of its
customers, and may require credit card documentation or prepayment of certain
transactions. Receivables from independent operators are supported by the
underlying base of revenues serviced by each respective independent operator.
The Company performs ongoing evaluations of the productivity and payment
capacity of each independent operator in order to manage its credit risk.

F-32
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Fixed Assets

Fixed assets are stated at cost. Depreciation on furniture, equipment,
vehicles and leasehold improvements is calculated on the declining balance
method over the estimated useful lives of the assets or the leaseholds,
generally three to five years. Buildings and improvements are depreciated on
the straight line method over 20 years. Sales and retirements of fixed assets
are recorded by removing the cost and accumulated depreciation from the
accounts. Gains and losses on sales of property are reflected in the results
of operations.

Intangible Assets

The Company owns Federal Communications Commission licenses to three radio
frequencies which it uses in the dispatch of vehicles used in its business.
The licenses have been fully amortized in prior years.

Use of Estimates

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

Revenue Recognition

Service revenues include fees derived from chauffeured vehicle services
provided by the Company's independent operators. Revenue is recorded for
chauffeured vehicle services when those services are provided.

When the Company enters into an agreement with an independent operator, the
Company defers revenue equal to the amount of the contract and recognizes
those fees over the term of the contract, typically 20 years. Amortization of
deferred revenue is also included in independent operator service revenues in
the accompanying combined statements of operations. Upon termination of an
agreement, the remaining deferred revenue associated with the contract, less
any amounts due from the independent operators deemed uncollectible, is
recognized as revenue immediately.

As described above, the Company typically provides extended financing terms
to its independent operators for payment of the independent operator fee.
Interest income is recognized as earned over the term of the loan agreement
with the independent operator.

The Company provides reservation services to its customers for service in
other locations through its affiliation with a network of independent service
companies. Revenue related to services provided by a member of the network is
recognized as chauffeured vehicle service revenue when a gross service bill is
received from the member. The corresponding liability to the member, reduced
by the Company's discount, is recorded as a cost of revenue by the Company at
such time.

Income Taxes

For MILN, the provision for income taxes includes income taxes currently
payable and the change during the year in the net deferred tax assets or
liabilities. Deferred income tax assets and liabilities are determined based
on the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is provided to
reduce the net deferred tax asset, if any, to a level which, more likely than
not, will be realized.

F-33
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

ILN has elected to be treated as an "S corporation" under provisions of the
Internal Revenue Code. As such, the income tax effects of ILN's operations are
borne directly by the stockholder, and no provision for ILN income taxes is
recorded in the accompanying financial statements.

Unaudited Interim Financial Statements

The combined financial statements as of and for the seven-month period ended
April 30, 1997 are unaudited. In the opinion of management, those unaudited
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present the financial statements on a
basis substantially consistent with the annual audited financial statements
contained herein. All disclosures herein related to April 30, 1997 and for the
seven-month period ended April 30, 1997 are unaudited.

3. TRANSACTIONS WITH INDEPENDENT OPERATORS

At the time the Company enters into an agreement with an independent
operator, the Company is entitled to receive a one-time fee. Those fees are
typically financed by the Company over 20 years at an interest rate of 15.75%
per annum. Independent operator fees are recognized as revenue ratably over
the terms of the agreements. In the opinion of management, the carrying value
of the loans approximates their fair value. Revenue recognized from
independent operator fees was $514,632 and $288,787 for the year ended
September 30, 1996 and for the seven-month period ended April 30, 1997,
respectively.

The Company's independent operators are responsible for financing their own
vehicles through third parties. Under programs the Company has established
with several automotive leasing organizations, the Company guarantees lease
payments until the independent operator has made twelve monthly lease
payments. As of September 30, 1996, the Company's independent operators had
aggregate lease obligations of $2,203,158 under these programs.

4. FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, APRIL 30,
1996 1997
------------- ----------
<S> <C> <C>
Land................................................ $ 62,569 $ 62,569
Buildings and improvements.......................... 676,730 677,557
Furniture, fixtures and equipment................... 3,086,224 3,088,760
Vehicles............................................ 344,170 344,170
---------- ----------
4,169,693 4,173,056
Less accumulated depreciation....................... 3,363,969 3,528,792
---------- ----------
Net fixed assets.................................... $ 805,724 $ 644,264
========== ==========
</TABLE>

Depreciation expense was $258,439 and $164,823 for the year ended September
30, 1996 and for the seven-month period ended April 30, 1997, respectively.

F-34
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

5. NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, APRIL 30,
1996 1997
------------- ----------
<S> <C> <C>
Line of credit of up to $2,000,000 under agreement dated
December 27, 1994, collateralized by substantially all of
the Company's assets; availability up to 80% of eligible
accounts receivable at any date; interest payable monthly
at prime plus 6%. In addition to interest obligations,
agreement requires payment of annual facility fee equal
to 1% of total line, as well as monthly and quarterly
administration fees. The agreement terminates on December
27, 1997, after which it is automatically renewable
unless terminated by either party as of any anniversary
date, with 60 days prior written notice. Certain
stockholders of the Company are guarantors on the
Company's behalf......................................... $1,864,967 $1,269,606

First mortgage note on headquarters premises dated April
12, 1989, original principal of $1,200,000, subject to
fixed monthly installments of principal, and interest at
a rate of 14.75%......................................... 310,000 --

First mortgage note on headquarters premises dated January
17, 1997, original principal of $800,000, interest at 10.75%
for the first year, after which rate becomes variable at
prime plus 2.5%. Interest and principal payments due
monthly based on 15-year amortization, with balloon
payment due on fifth anniversary......................... -- 770,000

Various installment notes payable with interest rates
ranging from 10.75% to 14.75%, and collateralized by
certain independent operator agreements and receivables
from independent operators of the Company. Principal and
interest payments are due monthly over 60-month terms.... 3,228,364 2,719,650

Advances from officer of the company..................... -- 224,093
Notes payable, collateralized by certain equipment,
principal and interest due monthly over terms of 24-39
months................................................... 352,297 241,511
---------- ----------
5,755,628 5,224,860
Less current portion 1,232,457 1,958,293
---------- ----------
Notes payable, less current portion $4,523,171 $3,266,567
========== ==========
</TABLE>

In the opinion of management, the carrying amount of the notes payable
approximates their fair value. Aggregate principal payments under the Company's
note payable arrangements as of September 30, 1996 are due as follows:

<TABLE>
<S> <C>
1997.............................. $1,232,457
1998.............................. 2,747,898
1999.............................. 542,673
2000.............................. 588,368
2001.............................. 175,732
Thereafter........................ 468,500
----------
Total............................. $5,755,628
==========
</TABLE>

F-35
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

6. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE SEVEN
ENDED MONTHS ENDED
SEPTEMBER 30, APRIL 30,
1996 1997
------------- --------------
<S> <C> <C>
Federal--Current................................ $ 15,845 $ --
State and local--Current........................ 39,169 37,839
--------- ---------
Total income tax provision...................... $ 55,014 $ 37,839
========= =========
</TABLE>

The Company's effective income tax rates differed from the applicable
Federal statutory rate due to the following:

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED FOR THE SEVEN
SEPTEMBER 30, MONTHS ENDED
1996 APRIL 30, 1997
------------- --------------
<S> <C> <C>
Federal statutory rate......................... 34% 34%
State and local income taxes................... 13 13
Effect of income of S corporation.............. (9) (54)
Effect of changes in deferred tax asset valua-
tion allowance................................ (43) 2
Other, primarily nondeductible travel and en-
tertainment................................... 12 14
--- ---
Effective income tax rate...................... 7% 9%
=== ===
</TABLE>

As of September 30, 1996, for federal income tax purposes, the Company had
net operating loss (NOL) carryforwards of $1,959,595 available to offset
future taxable income, which expire from 2004 to 2010.

The source and tax effects of temporary differences are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, APRIL 30,
1996 1997
------------- -----------
<S> <C> <C>
NOL carryforwards.................................. $ 914,574 $ 916,694
Revenue recognition of independent operator fees... 857,606 773,517
Other.............................................. -- 116,138
Valuation allowance................................ (1,772,180) (1,806,349)
----------- -----------
Net deferred tax asset (liability)................. $ -- $ --
=========== ===========
</TABLE>

Income taxes paid amounted to $14,505 and $0 for the year ended September
30, 1996 and for the seven-month period ended April 30, 1997, respectively.

F-36
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

7. RELATED PARTY TRANSACTIONS

Included in other noncurrent liabilities are loans from officers of the
Company with remaining principal balances of $358,444 as of September 30,
1996. The loans have interest rates of 12.5% and are payable in equal
installments of principal and interest over terms of 15 years. Aggregate
principal payments under the loans were due as follows as of September 30,
1996:

<TABLE>
<S> <C>
1997.............................. $ 77,786
1998.............................. 10,781
1999.............................. 12,209
2000.............................. 13,825
2001.............................. 15,656
Thereafter........................ 228,187
--------
Total............................. $358,444
========
</TABLE>

During the year ended September 30, 1996 and the seven-month period ended
April 30, 1997, the Company took one-time charges related to advances to a
non-combined affiliate of approximately $218,000 and $7,000, respectively,
which are included in selling, general and administrative expenses.

8. CONTINGENCIES

The Company is involved in various legal actions which arise in the normal
course of business. Management of the Company does not believe the ultimate
resolution of these actions will have a material effect on the financial
position, results of operations or cash flows of the Company.

9. MAJOR CUSTOMER

The Company has one customer which accounted for approximately 18.0% of
service revenues for the year and seven-month periods ended September 30, 1996
and April 30, 1997, respectively.

10. RESTATEMENTS

The Company enters into agreements with independent operators under which
the independent operator contracts to provide chauffeured vehicle services
exclusively to the Company's customers over a contract period. Upon signing
the contract, the Company is entitled to receive a one-time fee from the
independent operator. Previously, the Company recognized the one-time fee as
revenue upon signing of the agreement. In accordance with Opinion No. 20 of
the Accounting Principles Board, "Accounting Changes", the financial
statements have been retroactively restated to report such fees as deferred
revenue which are recognized as revenue over the terms of the contracts (see
Note 2). The effects of such restatements were to increase results of
operations and stockholders' equity by $5,996 for the year ended September 30,
1996. The Company uses a network of independent service companies to provide
chauffeured vehicle services to its customers. Certain previously unrecognized
costs related to these services have been retroactively recorded. The effects
of such restatements were to decrease results of operations by $301,984 for
the year ended September 30, 1996, and to increase stockholders' deficiency by
$432,671 as of September 30, 1996.

11. SUBSEQUENT EVENT

On June 2, 1997, the stockholders of MILN and ILN sold their stock to Carey
International, Inc., a company providing chauffeured vehicle services.

F-37
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Carey International, Inc.

In connection with our audits of the consolidated financial statements of
Carey International, Inc. and Subsidiaries as of November 30, 1996 and 1997,
and for each of the three years in the period ended November 30, 1997, which
financial statements are included in the Prospectus, we have also audited the
consolidated financial statement schedule listed in Item 16(b) of Part II of
the Registration Statement herein.

In our opinion, this consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information required
to be included therein.

Coopers & Lybrand L.L.P.

Washington, D.C.
January 30, 1998

1
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is a Delaware corporation. Reference is made to Section 145 of
the DGCL, as amended, which provides that a corporation may indemnify any
person who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his or her conduct was
unlawful. Section 145 further provides that a corporation similarly may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite an adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper. The Company's Restated Certificate of
Incorporation further provides that the Company shall indemnify its directors
and officers to the full extent permitted by the law of the State of Delaware.

The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
exculpation from liability is not permitted under the DGCL as in effect at the
time such liability is determined.

The Certificate of Incorporation also provides that each person who was or
is made a party to, or is involved in, any action, suit, proceeding or claim
by reason of the fact that he or she is or was a director, officer or employee
of the Registrant (or is or was serving at the request of the Registrant as a
director, officer, trustee employee or agent of any other enterprise including
service with respect to employee benefit plans) shall be indemnified and held
harmless by the Registrant, to the full extent permitted by Delaware law, as
in effect from time to time, against all expenses (including attorneys' fees
and expenses), judgments, fines, penalties and amounts to be paid in
settlement incurred by such person in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim.

The rights to indemnification and the payment of expenses provided by the
Certificate of Incorporation do not apply to any action, suit, proceeding or
claim initiated by or on behalf of a person otherwise entitled to the benefit
of such provisions. Any person seeking indemnification under the Certificate
of Incorporation shall be deemed to have met the standard of conduct required
for such indemnification unless the contrary shall be established. Any repeal
or modification of such indemnification provisions shall not adversely affect
any right or protection of a director or officer with respect to any conduct
of such director or officer occurring prior to such repeal or modification.

The Company maintains an indemnification insurance policy covering all
directors and officers of the Company and its subsidiaries.

II-1
<PAGE>

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- ----------
<C> <S> <C>
*2.1 Stock Purchase Agreement dated as of March 1, 1997,
by and among Carey International, Inc., Alfred J.
Hemlock and Lupe C. Hemlock
*2.2 Agreement and Plan of Merger dated as of March 1,
1997, by and among Carey International, Inc.,
Manhattan International Limousine Network Ltd., MLC
Acquisition Corporation and Michael Hemlock
*2.3 Form of Stockholder Action by Written Consent Adopted
in Connection with the Recapitalization
++2.4 Amended and Restated Agreement of Plan of Merger made
as of October 10, 1997 by and amoung Carey
International, Inc., Carey Limousine Indiana, Inc.,
Indy Connection Limousines, Inc., Transit Tours,
Inc., K.D. & Associates Professional Corporation,
Craig Del Fabro and Kim Del Fabro
*3.1 Form of Amended and Restated Certificate of
Incorporation of the Company
*3.2 Amended and Restated Bylaws of the Company
*4.1 Specimen Stock Certificate
*4.2 Form of Warrants
*4.3 Carey International, Inc. Common Stock Purchase
Warrant dated September 1, 1991, issued to Yerac
Associates, L.P.
*4.4 Form of Registration Rights Agreement between Carey
International, Inc. and Michael Hemlock
**5 Opinion of Nutter, McClennen & Fish, LLP
10.1 1997 Equity Incentive Plan
*10.2 1992 Stock Option Plan
*10.3 1987 Stock Option Plan
*10.4 Stock Plan for Non-Employee Directors
*10.5 Lease dated July 5, 1989 for 4530 Wisconsin Avenue,
Washington, D.C., between Carey International, Inc.
and 4530 Wisconsin Associates, as lessor, including
Addendum, Exhibit B and Exhibit C; and Second
Amendment to Lease dated August 6, 1993, including
Exhibit A
*10.6 Form of Escrow Agreement by and among Michael
Hemlock, Alfred J. Hemlock, Lupe C. Hemlock and a
bank to be named
*10.7 Current form of Standard Master License Agreement
*10.8 Current form of Standard International License
Agreement
*10.9 Form of Promissory Notes in connection with
Acquisition of Manhattan Limousine
*10.10 Current form of Standard Independent Operator
Agreement
**10.11 Form of Revolving Credit and Term Loan Agreement by
and among Carey International, Inc., certain of its
direct and indirect wholly-owned subsidiaries, and
Fleet Bank, N.A., Banco Popular de Puerto Rico and
George Mason Bank
+11 Statements Regarding Computation of Per Share
Earnings
*21 Subsidiaries of the Registrant
+23.1 Consent of Coopers & Lybrand L.L.P.
+23.2 Consent of Coopers & Lybrand L.L.P.
**23.7 Consent of Nutter, McClennen & Fish, LLP (contained
in Exhibit 5)
**24 Power of Attorney (contained in the signature page to
this Registration Statement)
</TABLE>
- - - --------
* Incorporated by reference to the Company's Registration Statement on Form S-1
(File No. 333-22651).
**Previously filed.
+ Filed herewith.
++Incorporated by reference to the Company's Current Report on Form 8-K dated
October 31, 1997.

II-2
<PAGE>

(B) FINANCIAL STATEMENT SCHEDULE:

The following Financial Statement Schedule is filed as part of this
Registration Statement.

Report of Independent Accountants

Schedule VIII--Valuation and Qualifying Accounts

ITEM 22. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.

(5) That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.

(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WASHINGTON, THE
DISTRICT OF COLUMBIA, ON THE 6TH DAY OF MARCH 1998.

Carey International, Inc.

/s/ David H. Haedicke
By: _________________________________
DAVID H. HAEDICKE
CHIEF FINANCIAL OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Vincent A. Wolfington* Chairman of the March 6, 1998
- - - ------------------------------------- Board and Chief
VINCENT A. WOLFINGTON Executive Officer

/s/ Don R. Dailey* President and March 6, 1998
- - - ------------------------------------- Director
DON R. DAILEY

/s/ David H. Haedicke Chief Financial March 6, 1998
- - - ------------------------------------- Officer
DAVID H. HAEDICKE

/s/ Paul A. Sandt* Principal Accounting March 6, 1998
- - - ------------------------------------- Officer
PAUL A. SANDT

/s/ David McL. Hillman* Director March 6, 1998
- - - -------------------------------------
DAVID MCL. HILLMAN

Director March 6, 1998
- - - -------------------------------------
WILLIAM R. HAMBRECHT

/s/ Robert W. Cox* Director March 6, 1998
- - - -------------------------------------
ROBERT W. COX

/s/ Nicholas J. St. George* Director March 6, 1998
_____________________________________

NICHOLAS J. ST. GEORGE
/s/ David H. Haedicke
By: _________________________________
DAVID H. HAEDICKE
ATTORNEY-IN-FACT

* Powers of Attorney have been filed with this Registration Statement.

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S> <C>
*2.1 Stock Purchase Agreement dated as of March 1, 1997, by and
among Carey International, Inc., Alfred J. Hemlock and Lupe
C. Hemlock
*2.2 Agreement and Plan of Merger dated as of March 1, 1997, by
and among Carey International, Inc., Manhattan International
Limousine Network Ltd., MLC Acquisition Corporation and
Michael Hemlock
*2.3 Form of Stockholder Action by Written Consent Adopted in
Connection with the Recapitalization
++2.4 Amended and Restated Agreement of Plan of Merger made as of
October 10, 1997 by and among Carey International, Inc.,
Carey Limousine Indiana, Inc., Indy Connection Limousines,
Inc., Transit Tours, Inc., K.D. & Associates Professional
Corporation, Craig Del Fabro and Kim Del Fabro.
*3.1 Form of Amended and Restated Certificate of Incorporation of
the Company
*3.2 Amended and Restated Bylaws of the Company
*4.1 Specimen Stock Certificate
*4.2 Form of Warrants
*4.3 Carey International, Inc. Common Stock Purchase Warrant
dated September 1, 1991, issued to Yerac Associates, L.P.
*4.4 Form of Registration Rights Agreement between Carey
International, Inc. and Michael Hemlock
**5 Opinion of Nutter, McClennen & Fish, LLP
*10.1 1997 Equity Incentive Plan
*10.2 1992 Stock Option Plan
*10.3 1987 Stock Option Plan
*10.4 Stock Plan for Non-Employee Directors
*10.5 Lease dated July 5, 1989 for 4530 Wisconsin Avenue,
Washington, D.C., between Carey International, Inc. and 4530
Wisconsin Associates, as lessor, including Addendum, Exhibit
B and Exhibit C; and Second Amendment to Lease dated
August 6, 1993, including Exhibit A
*10.6 Form of Escrow Agreement by and among Michael Hemlock,
Alfred J. Hemlock, Lupe C. Hemlock and a bank to be named
*10.7 Current Form of Standard Master License Agreement
*10.8 Form of Standard International License Agreement
*10.9 Form of Promissory Notes in connection with Acquisition of
Manhattan Limousine
*10.10 Current Form of Standard Independent Operator Agreement
**10.11 Form of Revolving Credit and Term Loan Agreement by and
among Carey International, Inc., certain of its direct and
indirect wholly-owned subsidiaries, and Fleet Bank, N.A,
Banco Popular de Puerto Rico and George Mason Bank
+11 Statements Regarding Computation of Per Share Earnings
*21 Subsidiaries of the Registrant
+23.1 Consent of Coopers & Lybrand L.L.P.
+23.2 Consent of Coopers & Lybrand L.L.P.
**23.7 Consent of Nutter, McClennen & Fish, LLP (contained in
Exhibit 5)
**24 Power of Attorney (contained in the signature page to this
Registration Statement)
</TABLE>
- - - --------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 333-22651).
** Previously filed.
+ Filed herewith.
++Incorporated by reference to the Company's Current Report on Form 8-K dated
October 31, 1997.

<PAGE>

EXHIBIT 11

STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS

HISTORICAL EARNINGS PER SHARE

<TABLE>
<CAPTION>
November 30, November 30, November 30,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net income available to common
shareholders:
Net income................................................. $ 98,121 $3,494,967 $4,523,490
Preferred stock dividends.................................. (4,375) (900) -
---------- ---------- ----------
Net income available to common
shareholders........................................... $ 93,746 $3,494,067 $4,523,490
========== ========== ==========
Common Stock and Common Stock Equivalents:
Weighted average shares outstanding........................ 1,332,879 1,359,073 4,506,108
Convertible Securities:
Series B Preferred Stock............................... 663,761 663,761 334,609
Series F Preferred Stock............................... 135,025 135,025 68,067
Series G Preferred Stock............................... 673,638 673,638 339,588
Options (calculated on Treasury Method) 1987
Plan................................................... 11,790 21,374 16,939
Options and warrants issued within one year of
the offering (calculated on Treasury Method):
Vested options repriced or granted..................... 207,020 207,020 292,862
Warrants repriced...................................... 65,782 65,782 81,706
---------- ---------- ----------
272,802 272,802 374,568
---------- ---------- ----------
Total common stock and common stock
equivalents...................................... 3,089,895 3,125,673 5,639,879
========== ========== ==========

Earnings per common share.......................................... $ 0.03 $ 1.12 $ 0.80
========== ========== ==========
</TABLE>
11.1
<PAGE>

EXHIBIT 11

STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS (CONTINUED)

PRO FORMA EARNINGS PER SHARE
TO GIVE EFFECT TO THE RECAPITALIZATION
(Presented on the face of the November 30, 1996
and 1997 Statements of Operations)

November 30, November 30,
1996 1997
------------ ------------
<S> <C> <C>
Pro forma net income:

Net income........................................................................... $ 3,494,967 $ 4,523,490

Add back interest (tax effected) on debt included in Recapitalization:

$2,867,546 subordinated note (12.0%) converted to stock in
Recapitalization.................................................................. 206,464 103,232

$2,000,000 subordinated note (7.74%) converted to stock in
Recapitalization.................................................................. 92,879 46,440
------------ ------------
Pro forma net income................................................................. $ 3,794,310 $ 4,673,162
============ ============
Common Stock and Common Stock Equivalents:

Historical weighted average shares outstanding....................................... 3,125,673 5,639,879

Add back:

Less common stock equivalents included in historical earnings per share:

Series B Preferred Stock......................................................... (663,761) (334,609)

Series F Preferred Stock......................................................... (135,025) (68,067)

Series G Preferred Stock......................................................... (673,638) (339,588)

Add effect of Recapitalization:

Series A Preferred Stock......................................................... 86,003 43,355

Series B Preferred Stock......................................................... 663,761 334,609

Series F & G Preferred Stock..................................................... 763,748 385,013

Shares for $2,867,546 of subordinated debt....................................... 616,544 310,806

Shares for $2,000,000 of subordinated debt....................................... 430,015 216,612
------------ ------------
Total pro forma common stock and common stock equivalents............................ 4,213,320 6,188,010
============ ============
Pro forma earnings per common share...................................................... $ 0.90 $ 0.76
============ ============
</TABLE>
11.2
<PAGE>

STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS (CONTINUED)

PRO FORMA EARNINGS PER SHARE
TO GIVE EFFECT TO THE RECAPITALIZATION AND THE OFFERING
(Presented on the face of the Pro Forma Statement of Operations)

<TABLE>
<CAPTION>
November 30,
1997
------------
<S> <C>
Pro forma net income................................. $ 5,126,803
============

Common Stock and Common Stock Equivalents:

Weighted average shares outstanding
of the Company................................. 4,506,108
------------

Adjustments to reflect share activity to
have occurred at the beginning of
the year:

Shares used to convert subordinated debt:
Shares for $2,867,546 of subordinated debt....... 310,806
Shares for $2,000,000 of subordinated debt....... 216,775
Shares used to convert preferred stock:
Series A Preferred Stock....................... 43,355
Series B Preferred Stock....................... 334,608
Series F Preferred Stock....................... 385,013
------------

Adjustment for shares
issued in connection
with Recapitalization....... 1,290,557
------------

Adjustment for shares issued in acquisition of
Manhattan Limousine............................ 115,225
------------
Adjustment for shares issued in
conversion of debt............................. 24,251
------------
Adjustment for shares issued in
connection with the IPO:
Shares to pay off debt in connection with the
offering..................................... 408,220
Shares used to provide cash for purchase of
Manhattan Limousine.......................... 350,601
Shares used to pay off debt from acquisition
of Manhattan Limousine....................... 235,389
Shares used to pay off debt assumed in
Manhattan Limousine acquisition.............. 186,111
Shares used to pay off debt and redeem
preferred stock as part of Recapitalization.. 199,433
Shares issued for cash......................... 250,602
------------
Shares used in offering....... 1,630,356
------------
Total weighted average shares outstanding............ 7,566,497
------------
Common stock equivalents
(calculated on Treasury Method):
Vested Options outstanding......................... 292,862
Warrants outstanding............................... 81,706
------------
Common stock equivalents...... 374,568
------------

Total common stock and common stock equivalents...... 7,941,065
============

Pro forma earnings per common share.................. $ 0.65
============
</TABLE>

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4 of
our report dated January 30, 1998, on our audits of the consolidated financial
statements and financial statement schedule of Carey International, Inc. and
subsidiaries as of November 30, 1997 and 1996, and for each year in the three
year period ended November 30, 1997. We also consent to the reference to
our firm under the caption "Experts."

/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.

Washington, D.C.
March 5, 1998

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4 of our
report dated March 1, 1997, except for Note 10, as to which the date is April
22, 1997, on our audit of the combined financial statements of Manhattan
International Limousine Network, Ltd. and Affiliate as of September 30, 1996,
and for the year then ended, which includes as explanatory paragraph relating to
a restatement for a change in the revenue recognition method and to record
previously unrecorded costs related to services provided by independent service
companies. We also consent to the reference to our firm under the caption
"Experts".

/s/ Coopers & Lybrand L.L.P.
-----------------------------
COOPERS & LYBRAND LLP

Washington, D.C.
March 5, 1998