TEAM RENTAL GROUP INC, 424B1, 1996-07-03

TEAM RENTAL GROUP INC
424B1, 1996-07-03
AUTO RENTAL & LEASING (NO DRIVERS)

Previous: WIDECOM GROUP INC, 8-K, 1996-07-03

Next: CAPITAL ONE MASTER TRUST, 8-K, 1996-07-03

Filed pursuant to Rule 424(b)(1)
File No. 333-4507

4,000,000 Shares

[TEAM RENTAL GROUP, INC. LOGO]

Team Rental Group, Inc.
Class A Common Stock
($.01 par value)

---------------------

Of the shares of Class A Common Stock of Team Rental Group, Inc. (the
"Company" or "TEAM") offered hereby (the "Offering"), 3,221,007 shares are
being sold by the Company and 778,993 shares are being sold by the Selling
Stockholders named herein under "Principal and Selling Stockholders" (the
"Selling Stockholders"). The Company will not receive any proceeds from the
sale of shares by the Selling Stockholders. The Class A Common Stock is listed
on The Nasdaq Stock Market's National Market under the symbol "TBUD." On July
2, 1996, the last reported sale price of the Class A Common Stock on the
Nasdaq National Market was $12.375 per share.

The Company has two classes of Common Stock, the Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), and the Class B Common
Stock, par value $.01 per share (the "Class B Common Stock"). Holders of the
Class A Common Stock are entitled to one vote per share and holders of the
Class B Common Stock are entitled to ten votes per share.

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE CLASS A COMMON STOCK, SEE "RISK FACTORS" BEGINNING
ON PAGE 9 HEREIN.

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.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDERS
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Per Share .. $13.00 $.72 $12.28 $12.28
Total(2) .... $52,000,000 $2,880,000 $39,553,966 $9,566,034
</TABLE>

- ------------

(1) Before deduction of expenses payable by the Company estimated at
$635,000.

(2) The Company has granted the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase a maximum of 600,000
additional shares of Class A Common Stock to cover over-allotments of
shares. If the option is exercised in full, the total Price to Public
will be $59,800,000, Underwriting Discounts and Commissions will be
$3,312,000 and Proceeds to Company will be $46,921,966. See
"Underwriting."

----------------

The shares are offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that the Class A Common
Stock will be ready for delivery on or about July 9, 1996, against payment in
immediately available funds.

CS First Boston
The Chicago Corporation
McDonald & Company
Securities, Inc.

The date of this Prospectus is July 2, 1996.

<PAGE>

[MAP AND PHOTOS TO BE ADDED]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS AND THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE CLASS A COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."

DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING IN
THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE CLASS A COMMON STOCK PURSUANT TO EXEMPTIONS FROM
RULES 10b-6, 10b-7 AND 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial
statements and notes thereto appearing elsewhere in this Prospectus. Unless
the context otherwise requires, references to the "Company" or "TEAM" in this
Prospectus include Team Rental Group, Inc. and its operating subsidiaries and
predecessors. The information set forth herein assumes no exercise of the
Underwriters' over-allotment option. "Common Stock," as used herein, refers
collectively and without distinction to the Class A Common Stock and the Class
B Common Stock.

THE COMPANY

Team Rental Group, Inc. is the largest Budget Rent a Car ("Budget")
franchisee worldwide and is one of the largest independent retailers of late
model automobiles in the United States. In 1994, TEAM embarked on a strategy
to significantly expand its Budget franchise base and to develop a branded
retail car sales operation within its Budget franchise territories. This
strategy both leverages management's experience and creates certain operating
efficiencies between these complementary businesses. Through its 159 vehicle
rental locations, TEAM had pro forma 1995 revenue of $202.9 million, and the
Company operates nine retail car sales facilities with monthly sales revenue
of $10.7 million for May 1996. The Company estimates it will purchase
approximately 40,000 vehicles over the next twelve months, consisting of new
automobiles and trucks for its Budget rental operations, late model
automobiles for its retail car sales operations and new passenger vans for its
van pooling operations.

STRATEGY

Since its initial public offering in August 1994, the Company has pursued
an aggressive growth strategy in both its vehicle rental and retail car sales
operations. TEAM has added nine Budget franchise territories with 136 current
locations to the four territories that it operated at the time of its initial
public offering, thereby enhancing the economies of scale in its operations,
balancing its geographic scope and reducing seasonal fluctuations.
Concurrently, the Company has developed or acquired its first nine retail car
sales facilities--all within its Budget territories.

The Company's strategy is to increase its revenues and improve its
profitability by:

o Significantly expanding its retail car sales operations;

o Acquiring additional Budget franchises; and

o Enhancing the scale and performance of its Budget Franchise Group.

Significantly Expand Retail Car Sales Operations. In recent years, there
has been increasing demand for low mileage, late model cars and several
companies have begun retailing such cars on a national or regional basis under
a single trade name. The Company's senior executive officers have significant
experience in acquiring and selling low mileage, late model cars and the
Company believes it will be able to obtain efficiencies by operating retail
car sales facilities in conjunction with certain of its Budget rental
facilities. The Company will seek to significantly expand its retail car sales
operations by adding facilities in (i) its seven existing car sales markets,
(ii) the Budget territories where it does not currently have retail car sales
operations and (iii) markets beyond its franchise territories.

Acquire Additional Budget Franchises. TEAM will seek to increase its
revenues and profitability through additional opportunistic acquisitions of
Budget franchise territories, and believes that desirable acquisition
candidates will continue to exist within the Budget System. While the Company
would consider the acquisition of franchise territories in most regions of the
United States, there may be greater opportunities to achieve additional
operating efficiencies by acquiring franchise territories contiguous to its
existing territories. The Company believes that both TEAM and Budget have
benefited from the improved results achieved by the franchises acquired by the
Company.

Enhance the Scale and Performance of its Budget Franchise Group. The
Company believes it will be able to enhance the profitability of its existing
Budget franchises and any additional Budget franchises

<PAGE>

that it may acquire by reducing the cost of operating those franchises and
increasing the rental revenues realized. The Company believes it will be able
to reduce costs through achieving further economies of scale, optimizing fleet
mix and utilization, and implementing standard cost management practices in
its newly acquired territories. The most significant elements of achieving
revenue growth include utilizing yield management models to optimize pricing,
adding additional locations in its existing and newly acquired franchise
territories (particularly by adding non-airport locations) and placing an
increased emphasis on the sale of ancillary products and services.

GROWTH HISTORY

The following tables chronologically detail TEAM's acquisitions of Budget
franchises and the openings of its retail car sales facilities:

VEHICLE RENTAL--BUDGET FRANCHISE ACQUISITIONS

<TABLE>
<CAPTION>
1995
LOCATIONS AT FLEET SIZE AT REVENUES
FRANCHISE TERRITORY DATE ACQUIRED MAY 31, 1996 MAY 31, 1996 (MILLIONS)
- -------------------------- --------------- -------------- --------------- ----------
<S> <C> <C> <C> <C>
Owned prior to August 1994
San Diego ................. April 1987 12 1,610 $ 18.6
Albany .................... August 1991 3 237 2.5
Rochester ................. November 1991 3 217 2.5
Richmond .................. December 1991 5 415 3.6
-------------- --------------- ----------
Total for franchises owned prior to initial
public offering ........................... 23 2,479 27.2
-------------- --------------- ----------
Acquired since August 1994
Philadelphia .............. August 1994 22 2,019 21.0
Pittsburgh ................ August 1994 14 1,070 13.0
Cincinnati ................ August 1994 8 880 8.0
Fort Wayne ................ November 1994 3 187 1.7
Charlotte ................. January 1995 6 565 6.5
Dayton .................... January 1995 6 452 5.2
Hartford .................. March 1995 13 928 9.6
Los Angeles(1) ............ October 1995 41 5,355 63.4(2)
Phoenix ................... February 1996 23 2,953 47.3(2)
-------------- --------------- ----------
Total for franchises acquired since initial
public offering ........................... 136 14,409 175.7
-------------- --------------- ----------
Total ...................................... 159 16,888 $202.9
============== =============== ==========
</TABLE>
- ------------
(1) Excludes the vehicle rental operations at Los Angeles International
Airport.
(2) Includes operations prior to their date of acquisition by the Company.
See the Unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1995 included under "Pro Forma Consolidated
Financial Statements."

RETAIL CAR SALES--FACILITIES OPENED

<TABLE>
<CAPTION>
MAY 1996 SALES
DATE MAY 1996 REVENUE
METROPOLITAN AREA ACQUIRED/OPENED VEHICLES SOLD (THOUSANDS)
- ----------------- --------------- --------------- ---------------
<S> <C> <C> <C>
San Diego--East . November 1994 61 $ 982
Dayton--North ... January 1995 34 518
San Diego--West . April 1995 100 1,843
Philadelphia ..... May 1995 91 1,712
Charlotte ........ September 1995 90 1,468
Richmond ......... October 1995 92 1,497
Ontario .......... October 1995 35 688
Cincinnati ....... April 1996 47 726
Dayton--South ... April 1996 80 1,305
--------------- ---------------
Total ............................ 630 $10,739
=============== ===============
</TABLE>

In February 1996, the Company also acquired VPSI, Inc. ("Van Pool"), which
operates commuter van pooling services in 21 markets. Van Pool had a fleet of
approximately 3,250 vehicles at May 31, 1996.

<PAGE>

-----------------

Sanford Miller (Chairman and Chief Executive Officer), John P. Kennedy
(President and Chief Operating Officer) and Jeffrey D. Congdon (Chief
Financial Officer and Secretary) (collectively, the "Principal Executive
Officers") have a combined 74 years of experience in the vehicle rental
business and have acquired and operated 54 Budget franchises over the past 15
years. In addition, Messrs. Miller and Congdon have a combined 25 years of
experience operating retail car sales facilities. The Principal Executive
Officers will remain the controlling stockholders of the Company after
consummation of the Offering.

The principal executive offices of the Company are located at 125 Basin
Street, Suite 210, Daytona Beach, Florida 32114, and its telephone number at
that location is (904) 238-7035.

THE OFFERING

<TABLE>
<CAPTION>
<S> <C>
Class A Common Stock offered by:
The Company ........................................... 3,221,007 shares
Selling Stockholders .................................. 778,993 shares
----------
4,000,000 shares
----------
Common Stock to be outstanding after the Offering(1) ... 8,714,183 shares of Class A Common Stock
1,936,600 shares of Class B Common Stock
----------
10,650,783 shares of Common Stock
==========
Use of Proceeds to the Company ......................... The proceeds to the Company from the Offering
will be used to reduce outstanding
indebtedness. The Company will not receive any proceeds
from the sale of shares by the Selling Stockholders.
Nasdaq National Market symbol .......................... TBUD
</TABLE>

- ------------

(1) Does not include 785,000 shares of the Class A Common Stock reserved
for issuance under the Company's stock option plans, of which options
to purchase 467,600 shares have been granted, and 362,500 shares of the
Class A Common Stock reserved for issuance upon exercise of outstanding
stock purchase warrants. See "Management--Benefit Plans" and
"Description of Capital Stock-- Warrants."

<PAGE>

SUMMARY FINANCIAL DATA

Historical Data. The 1994 data include results of operations for the
Company's Philadelphia and Pittsburgh, Pennsylvania, Cincinnati, Ohio and Ft.
Wayne, Indiana operations from their respective acquisition dates. The 1995
data include results of operations for the Company's Hartford, Connecticut and
Los Angeles, California operations from their respective acquisition dates.
The data for the three months ended March 31, 1995 include results of
operations for the Company's Hartford, Connecticut operation from its
acquisition date. The data for the three months ended March 31, 1996 include
results of operations for the Company's Phoenix, Arizona operation and for Van
Pool from their respective acquisition dates. Each of the foregoing
acquisitions was accounted for using the purchase method of accounting. The
data for 1993 include the separate capital structures of corporations that
were acquired in August 1994 and are presented on a combined basis as
companies under common control and, therefore, do not provide a meaningful
basis for presentation of earnings per share data.

Pro Forma Data. The following tables also set forth certain unaudited pro
forma consolidated financial and operating data for the Company (i) for the
year ended December 31, 1995, giving effect to the following transactions as
if they had occurred on January 1, 1995: (a) the acquisition of the Los
Angeles, California Budget franchise (the "Los Angeles Acquisition"), which
was effective on October 1, 1995 and (b) the acquisition of the Phoenix,
Arizona Budget franchise (the "Phoenix Acquisition"), which was completed on
February 27, 1996 (the Los Angeles Acquisition and the Phoenix Acquisition are
referred to collectively as the "Acquisitions"), and (ii) for the three months
ended March 31, 1996, giving effect to the Phoenix Acquisition as if it had
occurred on January 1, 1995.

Pro Forma, As Adjusted Data. The unaudited pro forma consolidated
statements of operations, as adjusted, include adjustments for the
Acquisitions, as described above, and adjustments for the sale of 3,221,007
shares of the Class A Common Stock offered by the Company hereby with
estimated net proceeds of $38.9 million, as described under "Use of Proceeds,"
and the repayment of certain of the Company's outstanding indebtedness from
the proceeds of the Offering. The unaudited pro forma consolidated statement
of operations data, as adjusted, for the year ended December 31, 1995 and the
three months ended March 31, 1996, give effect to such transactions as if they
had occurred on January 1, 1995.

<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
PRO PRO FORMA,
FORMA AS ADJUSTED
HISTORICAL (UNAUDITED) (UNAUDITED)
-------------------------------- ----------- -------------
1993 1994 1995 1995 1995
--------- --------- ---------- ----------- -------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AND BUDGET RENTAL
DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues:
Vehicle rental revenues ..... $22,321 $38,642 $107,067 $203,525 $203,525
Retail car sales revenues ... -- -- 42,662 42,662 42,662
--------- --------- ---------- ----------- -------------
Total operating revenues ... 22,321 38,642 149,729 246,187 246,187
Vehicle depreciation expense 4,358 7,382 27,476 59,392 59,392
Operating income ............. 2,450 4,196 14,180 19,328 19,328
Vehicle interest expense ..... 2,462 3,909 13,874 26,842 26,300
Non-vehicle interest
expense ..................... 401 531 632 3,502 913
Income (loss) from continuing
operations before income
taxes ....................... 610 426 1,022 (9,641) (6,510)
Net income (loss) ............ 428 250 337 (5,784) (3,906)
Weighted average common
shares outstanding (000s) .. -- 3,704 6,369 7,430 10,651
Earnings (loss) per common
share ....................... -- $0.07 $0.05 $(0.78) $(0.37)
OPERATING DATA:
Adjusted EBITDA(1) ........... $1,392 $1,632 $3,854 $(1,227) $4,524
BUDGET RENTAL DATA:
Locations in operation at
period end ................. 19 63 133 157 --
Number of useable vehicles
at period end(2) ........... 2,006 5,044 11,144 14,956 --
Rental transactions(3) ..... 163,000 276,000 689,000 1,276,000 --
Daily dollar average(4) .... $34.01 $37.32 $41.26 $38.75 --
Vehicle utilization(5) ..... 77.2% 80.6% 80.0% 81.4% --
Average monthly revenue per
unit(6) ..................... $791 $909 $1,007 $946 --
RETAIL CAR SALES DATA:
Locations in operation at
period end ................. -- -- 7 7 --
Average monthly vehicles
sold ....................... -- -- 351 351 --
Average monthly sales --
revenue .................... -- -- $4,883 $4,883
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
-----------------------------------------------
PRO FORMA,
PRO AS
HISTORICAL FORMA ADJUSTED
---------------------- --------- ------------
1995 1996 1996 1996
----------- --------- --------- ------------

<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues:
Vehicle rental revenues ..... $17,354 $44,697 $52,911 $52,911
Retail car sales revenues ... 4,916 21,097 21,097 21,097
----------- --------- --------- ------------
Total operating revenues ... 22,270 65,794 74,008 74,008
Vehicle depreciation expense 5,126 11,804 13,983 13,983
Operating income ............. 372 7,254 7,749 7,749
Vehicle interest expense ..... 2,616 5,621 6,612 6,486
Non-vehicle interest
expense ..................... 67 254 473 --
Income (loss) from continuing
operations before income
taxes ....................... (1,911) 2,128 1,413 2,012
Net income (loss) ............ (1,146) 1,277 848 1,207
Weighted average common
shares outstanding (000s) .. 6,037 7,256 7,430 10,651
Earnings (loss) per common
share ....................... $(0.19) $0.18 $0.11 $0.11
OPERATING DATA:
Adjusted EBITDA(1) .......... . $(1,447) $3,432 $3,233 $3,359
BUDGET RENTAL DATA:
Locations in operation at
period end ................. 94 159 159 --
Number of useable vehicles
at period end(2) ........... 7,076 17,265 17,265 --
Rental transactions(3) ..... 120,700 237,700 279,000 --
Daily dollar average(4) .... $39.67 $40.87 $41.13 --
Vehicle utilization(5) ..... 77.8% 84.2% 83.0% --
Average monthly revenue per
unit(6) ..................... $926 $1,030 $1,022 --
RETAIL CAR SALES DATA:
Locations in operation at
period end ................. 2 7 7 --
Average monthly vehicles
sold ....................... 99 411 411 --
Average monthly sales
revenue .................... $1,632 $6,476 $6,476 --
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
(UNAUDITED)
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Revenue earning vehicles, net $314,591 $314,591
Retail car sales inventory .. 13,832 13,832
Total assets ................. 478,677 478,677
Fleet financing facilities .. 145,682 145,682
Other vehicle obligations ... 207,039 201,104
Notes payable ................ 47,508 14,508
Total debt ................... 400,968 362,033
Common stock warrant ......... 2,000 2,000
Stockholders' equity ......... 43,596 82,531
</TABLE>

<PAGE>

- ------------

(1) Adjusted EBITDA consists of income before provision for income taxes
plus (a) non-vehicle depreciation and amortization expenses and (b)
non-vehicle interest expense. Adjusted EBITDA is not presented as an
alternative measure of operating results or cash flows from operations
(as determined in accordance with generally accepted accounting
principles), but is presented because it is a widely accepted financial
indicator of a company's ability to service unsecured debt.

(2) Vehicles available for rental.

(3) Rounded to the nearest thousand.

(4) Rental revenue divided by number of days that vehicles were actually
rented.

(5) Number of days vehicles were actually rented divided by number of days
vehicles were available for rent.

(6) Average monthly revenue divided by average monthly fleet.

<PAGE>

RISK FACTORS

Prospective investors should consider carefully the following factors in
addition to other information included in this Prospectus before purchasing
any of the shares of Class A Common Stock.

RISKS INHERENT IN GROWTH STRATEGY

The Company's growth strategy has placed and will continue to place
significant demands on the Company's resources. Since completing its initial
public offering in August 1994, the Company has increased its rental
operations from four Budget franchise territories with 19 locations to
thirteen territories with 159 locations, and increased the size of its fleet
from 2,715 vehicles to 16,888 vehicles. Certain of the franchises acquired by
the Company had either been unprofitable or had inconsistent profitability
prior to their acquisition by the Company, and the Company may acquire
under-performing franchises in the future. The inability of the Company to
improve the profitability of such acquired franchises or to successfully
integrate acquired franchises into its operations could have an adverse effect
on the Company's results of operations.

Since November 1994, the Company has developed or acquired its first nine
retail car sales facilities, which constitutes a new line of business for the
Company, and the Company plans to expand this line of business significantly.
The Company's retail car sales facilities have a limited operating history.
The successful growth of the Company's retail car sales operation will depend
on a number of factors, including the identification of suitable locations,
the negotiation of leases for those locations on acceptable terms, the hiring,
training and retention of skilled managers for each facility, implementation
of standard operating practices, site construction or refurbishment and
development of additional sources of cars for resale. A number of these
factors will be beyond the Company's control. As a result, there can be no
assurance that the Company will be able to continue to develop or acquire new
retail car sales facilities.

COMPETITION

The vehicle rental industry is characterized by intense competition,
particularly with respect to price and service. In any geographic market, the
Company may encounter competition from national, regional and local vehicle
rental companies. The Company's main competitors are The Hertz Corporation
("Hertz"), Avis, Inc. ("Avis"), Alamo Rent a Car Inc. ("Alamo"), National Car
Rental System, Inc. ("National"), Dollar Rent a Car Systems, Inc. ("Dollar")
and Enterprise Rent a Car ("Enterprise"). There have been occasions when the
major vehicle rental companies have been adversely affected by industry-wide
price cutting, and the Company has on such occasions lowered its prices in
response. The Company is generally not able to unilaterally raise its prices
or to maintain its prices in times of industry price cutting. See
"Business--Competition."

The retail car sales industry is characterized by intense competition,
consisting primarily of local new car dealerships selling new and late-model
cars. The Company believes that competition for the customer seeking to
purchase a late model car is based primarily on price and selection, while a
customer originally intending to purchase a new car may select a late-model
car based on perceived value. In addition to local dealerships, the Company
may face competition from retailers that compete on the basis of large
inventory size, no-haggle pricing and after-sale service.

REQUIREMENTS FOR CAPITAL; EFFECT OF CHANGES IN INTEREST RATES

The vehicle rental business is capital intensive and the Company has sought
to reduce the cost of financing its fleet of vehicles by arranging more
advantageous asset-backed note financings. Since its initial public offering
in August 1994, the Company has financed its rental vehicles primarily through
asset-backed note facilities and traditional bank credit facilities. The
Company currently has two asset-backed note facilities in place to provide
financing for rental vehicles eligible for repurchase by specified automobile
manufacturers at fixed prices on designated dates pursuant to such
manufacturers' vehicle repurchase programs ("Program Vehicles"). Subsequent to
the completion of the Offering, the Company intends to enter into an
additional asset-backed note facility (the "Third Fleet Financing Facility"
and together with the Company's two existing asset-backed facilities, the
"Fleet Financing

<PAGE>

Facilities") in order to provide financing for additional vehicles, which may
include rental vehicles that are not subject to manufacturers' repurchase
program. In May 1996, the Company entered into a Revolving Credit Facility in
order to provide additional financing for approximately 5,600 Program Vehicles
(the "Revolving Credit Facility"). In aggregate, the Fleet Financing
Facilities are expected to provide financing for approximately 19,000
vehicles, which the Company believes is sufficient, together with vehicles
financed under other vehicle obligations, to meet its base fleet requirements
as of May 31, 1996.

The Company anticipates that amounts available under the Fleet Financing
Facilities and the Revolving Credit Facility and under working capital lines
and lines of credit being paid down from the net proceeds of the Offering,
together with amounts provided by its traditional financing sources, will be
sufficient to meet its financing needs for the foreseeable future. Certain
events, such as a material increase in damage to vehicles, could reduce the
value of the collateral securing the Fleet Financing Facilities and cause the
acceleration of the repayment of a portion of the principal of the Fleet
Financing Facilities. The Company has financed its retail car sales inventory
with $25.7 million of short term secured lines of credit. The failure to
obtain sufficient fleet financing or car sales inventory financing on
satisfactory terms would materially adversely affect the Company's operations.

The Company had $401.0 million of indebtedness outstanding at March 31,
1996, substantially all of which bears interest at a floating rate based on
either 30-day LIBOR or the prime rate of interest. Accordingly, any increase
in prevailing interest rates would result in an increase in interest expense
incurred by the Company, which could have an adverse effect on the Company's
results of operations. Certain of the agreements under which the Company has
borrowings outstanding include significant covenants that, among other things,
restrict the ability of the Company to incur additional indebtedness, repay or
refinance other indebtedness or amend other debt instruments, pay dividends,
create liens on assets, engage in mergers or consolidations or acquire other
businesses and otherwise restrict corporate activities. In addition, the
Company is required to comply with specified financial tests and ratios. The
Company is currently in compliance with the restrictions and covenants
contained in its debt agreements, however, its ability to continue to comply
could be affected by events beyond its control, including prevailing economic
and industry conditions.

There can be no assurance that the sources of financing utilized by the
Company or alternative financing will remain or become available to the
Company or on terms acceptable to the Company. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

POTENTIAL CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS

At March 31, 1996, approximately 85% of the vehicles in the Company's
rental car fleet were Program Vehicles. The availability of Program Vehicles
limits the Company's risk of a decline in residual value at the time of
disposition and enables the Company to fix its depreciation expense in
advance. Vehicle depreciation is the largest cost factor in the Company's
vehicle rental operations. The Company believes that manufacturers' repurchase
programs enable the manufacturers to stimulate fleet sales in times of weak
consumer demand for new automobiles. In response to strong U.S. consumer
demand for passenger vehicles in 1993 and 1994, the major U.S. automobile
manufacturers reduced the number of vehicles subject to repurchase programs
and the financial incentives associated with these programs. U.S. consumer
demand for passenger vehicles began to weaken during the second quarter of
1995, and this weakness has continued to date in 1996. In response to these
market conditions, there was an increase in the availability of repurchase
programs with respect to 1996 model year vehicles, particularly repurchase
programs for imported vehicles and these programs are expected to continue for
1997 model year vehicles. However, the Company could be adversly effected if
automobile manufacturers reduce the availability of Program Vehicles or
related incentives.

The Company could be at a competitive disadvantage if U.S. automobile
manufacturers selectively restrict eligibility to participate in their
repurchase programs. Over the past decade, U.S. automobile manufacturers have
acquired direct or indirect equity stakes in most of the major car rental
systems. General Motors Corporation ("GM") has an equity interest in Avis;
Ford Motor Company ("Ford") owns Hertz and has an equity interest in Budget
Rent a Car Corporation ("BRAC"); and Chrysler Corporation

<PAGE>

("Chrysler") has equity interests in Dollar and Thrifty Rent-A-Car Systems,
Inc. ("Thrifty"). For the 1996 model year, the Company purchased substantially
all of its vehicles pursuant to programs sponsored by Ford (including its
affiliate Mazda Motor of America, Inc. ("Mazda")) and Chrysler. Any effort by
GM or Chrysler to restrict eligibility to participate in repurchase programs
to rental systems within their corporate families could adversely affect the
Company's ability to compete with those of its competitors that have continued
access to such programs. Similarly, any effort by Ford or Mazda to restrict
the eligibility of Budget franchise operations (as opposed to Budget
operations owned by BRAC) to participate in their repurchase programs could
have a material adverse effect on the Company's competitive position. The
Company is not aware of any plans by the manufacturers to selectively restrict
its eligibility to participate in their repurchase programs.

FRANCHISEE STATUS; DEPENDENCE ON BUDGET SYSTEM

The Company's subsidiaries that operate its vehicle rental business are
franchisees of BRAC or, in the case of (i) its Los Angeles and San Diego
operations, sub-franchisees of Budget Rent a Car of Southern California
("SoCal"), and (ii) its Los Angeles truck rental operations, the
sub-franchisee of an unaffiliated third party. Significant matters relating to
the Company's growth and operational strategies must be coordinated with, and
approved by, the Company's franchisors. Each of the Company's franchise
agreements provides that the franchisor has the right to terminate the
franchise granted thereunder if the Company is in violation of the terms of
such franchise agreement or the Budget operating manual. Any such termination
could have a material adverse effect on the Company. Pursuant to each
franchise agreement, the Company must meet certain guidelines relating to the
number of rental offices in a franchised territory, the number of vehicles
maintained for rental and the amount of advertising and promotion
expenditures. See "Business--Franchise Agreements" and "Certain Transactions."

Due to the nature of franchising and the Company's franchise agreements,
the success of the Company is, to a large extent, dependent upon the overall
success of Budget's worldwide system (the "Budget System"), including the
performance of other Budget franchisees. In particular, the Company relies on
BRAC for national promotion, advertising and marketing programs and the BRAC
computerized reservation system. The Company believes that BRAC has depended
in the past on the financial support of Ford and may in the future continue to
rely on such support. Thus, any material adverse change in the financial
condition, management or marketing efforts of BRAC or the Budget System,
including any material reduction of Ford's financial support of BRAC, could
have an adverse effect on the Company's results of operations and financial
condition. In addition, as a sub-franchisee in Los Angeles and San Diego, the
Company is dependent, in part, on the financial condition and performance of
the primary licensees under the underlying Budget franchise agreements with
BRAC. See "Business-- Vehicle Rental Operations--The Budget System."

Pursuant to its standard franchise agreements, BRAC generally has a right
of first refusal with respect to the sale or transfer of Budget franchises
and, even if it does not exercise such right, must consent to the transfer of
a Budget franchise. The consent of BRAC is generally required for the sale,
assignment or transfer of 33.3% or more of the equity ownership or voting
control of a Budget franchisee, and BRAC has the right to approve any transfer
of shares by Messrs. Miller, Kennedy and Congdon that would reduce the
combined voting power of the shares of Common Stock which they own to less
than 50.1%. See "Principal and Selling Stockholders." Messrs. Miller and
Congdon, the Company's Chief Executive Officer and Chief Financial Officer,
respectively, are currently bound by an agreement with BRAC that limits their
ability to acquire additional Budget franchises outside of Southern California
prior to May 14, 1999 without the consent of BRAC. Although BRAC has consented
to the Company's previous acquisitions, there can be no assurance that BRAC
will decline to exercise its right of first refusal or will consent to
additional acquisitions by the Company in the future.

SEASONALITY

The Company's third quarter, during the peak summer travel months, has
historically been the strongest quarter of the year. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the Company's annual performance. The Company has

<PAGE>

sought to reduce this seasonal effect by acquiring franchise territories that
are winter travel destinations, and the Company believes that its recent
acquisitions of the Los Angeles and the Phoenix operations have reduced and
will continue to reduce these seasonal effects. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Seasonality."

REGULATION OF LOSS DAMAGE WAIVERS

A traditional revenue source for the vehicle rental industry has been the
sale of loss damage waivers, by which rental companies agree to relieve a
customer from financial responsibility arising from vehicle damage incurred
during the rental period. Approximately 6% of the Company's rental revenue
during 1995 was generated by the sale of loss damage waivers. The U.S. House
of Representatives has from time to time considered legislation that would
regulate the conditions under which loss damage waivers may be sold by vehicle
rental companies. House Bill H.R. 175, introduced in January 1995, seeks to
prohibit the imposition of liability on renters for loss of, or damage to,
rented vehicles, except in certain circumstances, and would prohibit the sale
of loss damage waivers. In addition, New York State has enacted legislation
which eliminated the right of vehicle rental companies to offer for sale loss
damage waivers, and California has capped the rates which can be charged for
this protection at $9.00 per day. To date, 21 states have enacted legislation
which requires disclosure to each customer at the time of rental that damage
to the rented vehicle may be covered by the customer's personal automobile
insurance. Adoption of national or additional state legislation affecting or
limiting the sale of loss damage waivers could result in the loss of this
revenue source.

ENVIRONMENTAL RISKS INHERENT IN ON-SITE PETROLEUM STORAGE

Twenty-nine of the Company's facilities contain tanks for the storage of
petroleum products, such as gasoline, diesel fuel and waste oils. At 27 of the
Company's locations, one or more of these tanks are located underground. The
Company maintains an environmental compliance program that includes the
implementation of required technical and operational procedures designed to
minimize the potential for leaks and spills, maintenance of records and the
regular testing of tank systems for tightness. However, there can be no
assurance that these tank systems will at all times remain free from leaks or
that the use of these tanks will not result in spills. Any leak or spill,
depending on such factors as the material involved, quantity and environmental
setting, could result in interruptions to the Company's operations and
expenditures that could have a material adverse effect on the Company's
results of operations and financial condition.

There can be no assurance that future environmental legislation and
regulations will not require material expenditures by the Company or
otherwise have a material adverse effect on the Company's operations. See
"Business--Regulation and Environmental Matters."

RISK OF NON-RENEWAL OF AIRPORT CONCESSIONS

The Company conducts rental operations at 29 airports, with each of these
operations conducted pursuant to a concession agreement granted by the local
airport authority. In general, these concession agreements are subject to
competitive bidding at the time of renewal. The terms of the Company's airport
concession agreements are varied and include month-to-month terms at certain
locations and fixed terms of various durations at other locations. The Company
is at risk of losing its ability to operate at an airport if it is not a
successful bidder at the time its concession agreement is subject to renewal.

DEPENDENCE ON PRINCIPAL EXECUTIVE OFFICERS

The Company's existing operations and continued future development are
dependent in part on the active participation of the Company's Principal
Executive Officers. The loss of the services of one or more of these
individuals could have a material adverse effect on the Company. See
"Management."

SHARES ELIGIBLE FOR FUTURE SALE

A substantial number of shares of Class A Common Stock currently
outstanding, or issuable upon exercise of stock options and stock purchase
warrants or upon conversion of convertible securities, are or

<PAGE>

will become eligible for future sale in the public market at prescribed times
pursuant to applicable regulations and registration rights of certain security
holders. The Company's executive officers and directors and the Selling
Stockholders have agreed that for a period of 90 days after the date of this
Prospectus, and the Company has agreed that for a period of 180 days after the
date of this Prospectus, they will not sell or otherwise dispose of any shares
of Common Stock without the prior written consent of CS First Boston
Corporation. Significant sales of the Class A Common Stock in the public
market following the Offering could adversely affect prevailing market prices.
See "Shares Eligible for Future Sale."

VOTING CONTROL BY PRINCIPAL EXECUTIVE OFFICERS

The Company has two classes of Common Stock: Class A Common Stock, which is
entitled to one vote per share, and Class B Common Stock, which is entitled to
ten votes per share. The Principal Executive Officers own all of the
outstanding shares of Class B Common Stock, which, following the Offering,
will represent approximately 69.1% of the combined voting power of both
classes of Common Stock. As a result, the Principal Executive Officers will
continue to be able to elect all of the Company's Board of Directors, thereby
ensuring that members elected by them will continue to direct the business,
policies and management of the Company. See "Principal and Selling
Stockholders."

POTENTIAL ANTI-TAKEOVER EFFECTS OF CHARTER AND BYLAW PROVISIONS; POSSIBLE
ISSUANCES OF PREFERRED STOCK

Certain provisions of Delaware law, the Company's Amended and Restated
Certificate of Incorporation (in particular, the voting rights of the Class B
Common Stock) and the Company's Bylaws could delay or impede the removal of
incumbent directors and could make it more difficult for a third party to
acquire, or could discourage a third party from attempting to acquire, control
of the Company. Such provisions could limit the price that certain investors
might be willing to pay in the future for shares of the Class A Common Stock.
In addition, shares of preferred stock may be issued by the Board of Directors
without stockholder approval on such terms and conditions, and having such
rights, privileges and preferences, as the Board of Directors may determine.
The rights of the holders of the Class A Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred stock
that may be issued in the future. The Company has no current plans to issue
any shares of preferred stock. See "Description of Capital Stock--Preferred
Stock" and "Description of Capital Stock--Section 203."

<PAGE>

THE COMPANY

Team Rental Group, Inc. is the largest Budget franchisee worldwide and is
one of the largest independent retailers of late model automobiles in the
United States. In 1994, TEAM embarked on a strategy to significantly expand
its Budget franchise base and to develop a branded retail car sales operation
within its Budget franchise territories. This strategy both leverages
management's experience and creates certain operating efficiencies between
these complementary businesses. Through its 159 vehicle rental locations, TEAM
had pro forma 1995 revenue of $202.9 million, and the Company operates nine
retail car sales facilities with monthly sales revenue of $10.7 million for
May 1996. The Company estimates it will purchase approximately 40,000 vehicles
over the next twelve months, consisting of new automobiles and trucks for its
Budget rental operations, late model automobiles for its retail car sales
operations and new passenger vans for its van pooling operations.

The following chart illustrates the functional organization of the Company
and the operating territories of each business.

############################################################################

GRAPHIC OMITTED
IGT: "TEAM"

############################################################################

VEHICLE RENTAL DIVISION RETAIL CAR SALES DIVISION
----------------------- -------------------------

BUDGET FRANCHISE GROUP VAN POOL GROUP RETAIL CAR SALES
(159 LOCATIONS) (21 MARKETS) GROUP
Atlanta (9 FACILITIES)
Albany (3) Austin Charlotte
Charlotte (6) Boston Cincinnati
Cincinnati (8) Chicago Dayton--North
Dayton (6) Cincinnati Dayton--South
Fort Wayne (3) Dallas/Ft. Worth Ontario
Hartford (13) Danbury Philadelphia
Los Angeles (41) Detroit Richmond
Philadelphia (22) Honolulu San Diego--East
Phoenix (23) Houston San Diego--West
Pittsburgh (14) Los Angeles
Richmond (5) Melbourne
Rochester (3) Newark
San Diego (12) New Orleans
Orlando
Pittsburgh
Richmond
San Francisco
St. Paul
Tampa
Washington, DC

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $38.9 million (approximately $46.3 million if the Underwriters'
over-allotment option is exercised in full). The Company will not receive any
proceeds from the sale of shares by the Selling Stockholders.

The Company intends to use the net proceeds from the Offering to repay
outstanding indebtedness as follows: (i) approximately $17.0 million will be
used to repay amounts under a note payable to NationsBank, National
Association (South), $7.0 million of which was incurred to finance the Phoenix
Acquisition and $10.0 million of which was incurred to repay borrowings
incurred in connection with the Los Angeles Acquisition, which indebtedness
matures July 30, 1996 and bears interest at an annual rate of prime plus 3.0%
(currently 11.25%), (ii) approximately $13.0 million will be used to repay
amounts outstanding under a working capital line with NBD Bank, N.A., which is
due in November 1996 and bears interest at an annual rate of LIBOR plus 1.85%
(currently approximately 7.7%), (iii) approximately $3.0 million will be used
to repay amounts due under a note payable to Spectrum Investment that was
assumed in connection with the Los Angeles Acquisition, which matures in
August 1999 and bears interest at an annual rate of 8.0%, and (iv)
approximately $5.9 million will be used to repay amounts outstanding under a
line of credit with World Omni Financial Corp. which are due during the period
from July 1996 to October 1996 and bear interest at an annual rate of prime
plus 0.25% (currently 8.50%). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Certain Transactions." Any net proceeds from the exercise of
the Underwriters' over-allotment option will be used for general corporate
purposes.

PRICE RANGE OF COMMON STOCK

The Class A Common Stock is listed on the Nasdaq National Market under the
symbol "TBUD." The following table sets forth the high and low sale prices per
share for the Class A Common Stock as reported to the Company by the Nasdaq
National Market for the periods indicated:

<TABLE>
<CAPTION>
HIGH LOW
-------- -------
<S> <C> <C>
1994
Third Quarter (commencing August 18, 1994) $12.50 $ 9.31
Fourth Quarter ............................. 11.50 9.00
1995
First Quarter .............................. 9.75 8.00
Second Quarter ............................. 9.00 7.25
Third Quarter .............................. 11.38 6.50
Fourth Quarter ............................. 10.75 8.13
1996
First Quarter .............................. 10.50 8.25
Second Quarter ............................. 17.50 9.25
Third Quarter (through July 2, 1996) ...... 14.25 12.38

</TABLE>

On July 2, 1996, the last sale price of the Class A Common Stock as
reported on the Nasdaq National Market was $12.38 per share. As of July 1,
1996, there were approximately 77 holders of record of the Class A Common
Stock.

DIVIDEND POLICY

The Company has never declared or paid dividends on its Common Stock, and
anticipates that all earnings will be retained for use in its business. The
declaration and payment of any future dividends is at the discretion of the
Board of Directors of the Company. However, the Company is party to a number
of loan agreements which restrict its ability to pay cash dividends.

<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1996 (i) on an actual basis and (ii) as adjusted to give effect to
sale of the shares of the Class A Common Stock offered by the Company hereby
and the application of the net proceeds therefrom. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
(UNAUDITED)
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Fleet Financing Facilities:
First Fleet Financing Facility ..................................... $105,682 $105,682
Second Fleet Financing Facility .................................... 40,000 40,000
Other vehicle obligations ........................................... 207,039 201,104
Notes payable ....................................................... 47,508 14,508
Capital lease obligations ........................................... 739 739
---------- -------------
Total debt ......................................................... 400,968 362,033
---------- -------------
Common stock warrant ................................................. 2,000 2,000
---------- -------------
Stockholders' equity:
Class A Common Stock, $.01 par value, one vote per share, 17,500,000 shares
authorized; 5,529,843 shares issued and 5,493,176 shares outstanding;
8,750,850 shares issued and 8,714,183 shares outstanding
(pro forma, as adjusted)(1) ........................................ 54 87
Class B Common Stock, $.01 par value, ten votes per share, 2,500,000
shares authorized, 1,936,600 shares issued and outstanding ........ 20 20
Additional paid-in capital ........................................... 44,709 83,611
Accumulated deficit .................................................. (857) (857)
Treasury stock (at cost) ............................................. (330) (330)
---------- -------------
Total stockholders' equity ........................................ 43,596 82,531
---------- -------------
Total capitalization .............................................. $446,564 $446,564
========== =============
</TABLE>

- ------------

(1) Does not include 785,000 shares of the Class A Common Stock reserved
for issuance under the Company's stock option plans (of which options
to purchase 467,600 shares have been granted) and 362,500 shares of the
Class A Common Stock reserved for issuance under outstanding warrants.
See "Management--Benefit Plans" and "Description of Capital
Stock--Warrants."

<PAGE>

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated statements of operations for
the year ended December 31, 1995 give effect to the following transactions as
if they had occurred on January 1, 1995: (i) the Los Angeles Acquisition,
which was effective on October 1, 1995, and the Phoenix Acquisition, which was
completed on February 27, 1996 and, (ii) the Offering and the repayment of
certain of the Company's outstanding indebtedness from the proceeds thereof.
The following unaudited pro forma consolidated statements of operations for
the three months ended March 31, 1996 give effect to the following
transactions as if they occurred on January 1, 1995: (i) the Phoenix
Acquisition and (ii) the Offering and the repayment of certain of the
Company's outstanding indebtedness from the proceeds thereof. The Acquisitions
have been accounted for using the purchase method of accounting.

These unaudited pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if the
transactions referred to above had been in effect on the dates indicated or
the results that may be obtained in the future. These statements are qualified
in their entirety by, and should be read in conjunction with, the audited
financial statements of the Company, BRAC-OPCO, Inc. (Los Angeles), and
Arizona Rent-A-Car Systems, Inc. (Phoenix) and the notes thereto included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Unaudited pro forma earnings (loss) per common share data, as adjusted, are
calculated using 10,650,783 shares of Common Stock outstanding subsequent to
the sale of the Class A Common Stock offered hereby.

<PAGE>

UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
HISTORICAL(A) LOS ANGELES(B) PHOENIX(C) ACQUISITIONS
------------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Operating revenues ............. $149,729 $49,121 $47,337 --
Operating expenses:
Cost of retail car sales ..... 38,021 -- -- --
Direct vehicle and operating . 13,704 4,949 10,770 $2,084 (1)
Depreciation-vehicles ......... 27,476 18,123 13,888 (95)(2)
Depreciation-non-vehicle ..... 1,341 545 1,362
Advertising, promotion and
selling ...................... 11,826 3,988 4,189 (165)(3)
Facilities .................... 11,121 4,885 4,257 (326)(4)
Personnel ..................... 24,515 10,209 9,486 (1,927)(5)
General and administrative ... 6,686 1,539 2,744 --
Amortization .................. 859 251 11 543 (6)
------------- -------------- ---------- --------------
Total operating expenses .... 135,549 44,489 46,707 114
------------- -------------- ---------- --------------
Operating income ............... 14,180 4,632 630 (114)
Other (income) and expense:
Vehicle interest .............. 13,874 7,587 5,381 --
Other interest ................ 632 640 138 2,092 (7)
Interest income ............... (1,348) (27) -- --
------------- -------------- ---------- --------------
Total other expense, net .... 13,158 8,200 5,519 2,092
------------- -------------- ---------- --------------
Income (loss) before income
taxes, cumulative effect of
accounting change and loss
from discontinued operations . 1,022 (3,568) (4,889) (2,206)
Provision (benefit) for income
taxes ......................... 685 -- (1,880) (2,662)(10)
------------- -------------- ---------- --------------
Income (loss) before
cumulative effect of
accounting change and loss
from discontinued operations
(d) ........................... $337 $(3,568) $(3,009) $456
============= ============== ========== ==============
Weighted average common shares
outstanding ................... 6,369 -- -- 1,061
============= ============== ========== ==============
Earnings (loss) per common
share ......................... $0.05 -- -- --
============= ============== ========== ==============
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA FOR
THE
PRO FORMA FOR ACQUISITIONS
THE ADJUSTMENTS FOR AND THE
ACQUISITIONS THE OFFERING OFFERING
-------------- ---------------- --------------
<S> <C> <C> <C>
Operating revenues ............. $ 246,187 -- $ 246,187
Operating expenses:
Cost of retail car sales ..... 38,021 -- 38,021
Direct vehicle and operating . 31,507 -- 31,507
Depreciation-vehicles ......... 59,392 -- 59,392
Depreciation-non-vehicle ..... 3,248 -- 3,248
Advertising, promotion and
selling ...................... 19,838 -- 19,838
Facilities .................... 19,937 -- 19,937
Personnel ..................... 42,283 -- 42,283
General and administrative ... 10,969 -- 10,969
Amortization .................. 1,664 -- 1,664
-------------- ---------------- --------------
Total operating expenses .... 226,859 -- 226,859
-------------- ---------------- --------------
Operating income ............... 19,328 -- 19,328
Other (income) and expense:
Vehicle interest .............. 26,842 $(542)(8) 26,300
Other interest ................ 3,502 (2,589)(9) 913
Interest income ............... (1,375) -- (1,375)
-------------- ---------------- --------------
Total other expense, net .... 28,969 (3,131) 25,838
-------------- ---------------- --------------
Income (loss) before income
taxes, cumulative effect of
accounting change and loss
from discontinued operations . (9,641) 3,131 (6,510)
Provision (benefit) for income
taxes ......................... (3,857) 1,253(10) (2,604)
-------------- ---------------- --------------
Income (loss) before
cumulative effect of
accounting change and loss
from discontinued operations
(d) ........................... $(5,784) $1,878 $(3,906)
============== ================ ==============
Weighted average common shares
outstanding ................... 7,430 3,221 10,651
============== ================ ==============
Earnings (loss) per common
share ....................... .. $(0.78) -- $(0.37)
============== ================ ==============
</TABLE>

- ------------

(a) Includes results of operations of the Los Angeles Budget franchise from
October 1, 1995.

(b) Reflects operations of the Los Angeles Budget franchise for the period
from January 1, 1995 through September 30, 1995.

(c) Reflects operations of the Phoenix Budget franchise for the period from
March 1, 1995 through February 29, 1996. Prior to the Phoenix
Acquisition, the fiscal year of the Phoenix Budget franchise ended on
the last day of February.

(d) Accounting change and loss from discontinued operations were incurred
by the Phoenix Budget franchise prior to its acquisition by the
Company.

See Notes to Unaudited Pro Forma Consolidated Statements of Operations.

<PAGE>

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995

(1)To reflect the addition of royalty payments to SoCal, the former owner
of the Los Angeles Budget franchise (representing 5% of concessionable
revenues), which was a condition of the purchase.

(2)To reflect a reduction in the fleet depreciation expense for cars
allocated to the managers of the Los Angeles Budget franchise.

(3)To reflect a reduction in credit card merchant processing fees based
on the utilization of the Company's current credit card rate.

(4)To reflect the elimination of a write-off on assets not acquired by
the Company.

(5)To reflect (a) a $865,045 reduction in wages, bonuses and benefits
resulting from a reduction in the number of employees for the acquired
operations, (b) a $742,000 reduction relating to salaries previously
paid to officers of the acquired operations terminated concurrent with
the acquisitions, (c) a $267,000 reduction relating to termination
charges relating to medical benefits and (d) a $53,000 reduction
resulting from the elimination of retirement plans.

(6)To reflect (a) a $187,000 increase in franchise rights amortization
expense related to the Los Angeles Acquisition and (b) a $356,000
increase in franchise rights amortization expense relating to the
Phoenix Acquisition, in each case based on a full year amortization
period.

(7)To reflect additional interest expense that would have been incurred
on borrowings of $20.2 million to effect the Acquisitions.

(8)To reflect the elimination of interest expense on vehicle debt to be
paid with proceeds of the Offering.

(9)To reflect the elimination of interest expense on non-vehicle debt to
be paid with the proceeds of the Offering.

(10)To adjust income taxes for an effective tax rate of 40%.

<PAGE>

UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ADJUSTMENTS FOR
THE PHOENIX
HISTORICAL(A) PHOENIX(B) ACQUISITION
------------- ---------- ---------------
<S> <C> <C> <C>
Operating revenues ............. $65,794 $8,214 --
Operating expenses:
Cost of retail car sales ..... 17,840 -- --
Direct vehicle and operating . 5,959 1,479 --
Depreciation-vehicles ......... 11,804 2,179 --
Depreciation-non-vehicle ..... 536 229 --
Advertising, promotion and
selling ...................... 4,600 915 --
Facilities .................... 4,328 838 --
Personnel ..................... 10,689 1,912 $(337)(1)
General and administrative ... 2,270 436 --
Amortization .................. 514 8 60 (2)
------------- ---------- ---------------
Total operating expenses .... 58,540 7,996 (277)
------------- ---------- ---------------
Operating income ............... 7,254 218 277
Other (income) and expense:
Vehicle interest .............. 5,621 991 --
Other interest ................ 254 2 217 (3)
Interest income ............... (749) -- --
------------- ---------- ---------------
Total other expense, net .... 5,126 993 217
------------- ---------- ---------------
Income (loss) before income
taxes, cumulative effect of
accounting change and loss
from discontinued operations . 2,128 (775) 60
Provision (benefit) for income
taxes ......................... 851 (310) 24
------------- ---------- ---------------
Income (loss) before cumulative
effect of accounting change
and loss from discontinued
operations .................... $1,277 $ (465) $36
============= ========== ===============
Weighted average common shares
outstanding ................... 7,256 -- 174
============= ========== ===============
Earnings per common share ..... $0.18 -- --
============= ========== ===============
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA FOR
PRO FORMA FOR THE PHOENIX
THE PHOENIX ADJUSTMENTS FOR ACQUISITION AND
ACQUISITION THE OFFERING THE OFFERING
------------- ---------------- ---------------
<S> <C> <C> <C>
Operating revenues ............. $74,008 -- $74,008
Operating expenses:
Cost of retail car sales ..... 17,840 -- 17,840
Direct vehicle and operating . 7,438 -- 7,438
Depreciation-vehicles ......... 13,983 -- 13,983
Depreciation-non-vehicle ..... 765 -- 765
Advertising, promotion and
selling ...................... 5,515 -- 5,515
Facilities .................... 5,166 -- 5,166
Personnel ..................... 12,264 -- 12,264
General and administrative ... 2,706 -- 2,706
Amortization .................. 582 -- 582
------------- ---------------- ---------------
Total operating expenses .... 66,259 -- 66,259
------------- ---------------- ---------------
Operating income ............... 7,749 -- 7,749
Other (income) and expense:
Vehicle interest .............. 6,612 $(126)(4) 6,486
Other interest ................ 473 (473)(5) --
Interest income ............... (749) (749)
------------- ---------------- ---------------
Total other expense, net .... 6,336 (599) 5,737
------------- ---------------- ---------------
Income (loss) before income
taxes, cumulative effect of
accounting change and loss
from discontinued operations . 1,413 599 2,012
Provision (benefit) for income
taxes ......................... 565 240 805
------------- ---------------- ---------------
Income (loss) before cumulative
effect of accounting change
and loss from discontinued
operations .................... $848 $359 $1,207
============= ================ ===============
Weighted average common shares
outstanding ................... 7,430 3,221 10,651
============= ================ ===============
Earnings per common share ..... $0.11 -- $0.11
============= ================ ===============
</TABLE>

- ------------

(a) Includes results of operations of the Phoenix Budget franchise from
March 1, 1996.

(b) Reflects operations of the Phoenix Budget franchise for the period from
January 1, 1996 through February 29, 1996.

See Notes to Unaudited Pro Forma Consolidated Statements of Operations.

<PAGE>

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996

(1) To reflect (a) a $312,000 reduction relating to salaries and bonuses
previously paid to officers of the Phoenix Budget franchise and (b) a
$25,000 reduction resulting from the elimination of a retirement plan.

(2) To reflect an increase in franchise rights amortization expense.

(3) To reflect additional interest expense that would have been incurred
on borrowings of $15.0 million to effect the Phoenix Acquisition.

(4) To reflect the elimination of interest expense on vehicle debt to be
paid with the proceeds of the Offering.

(5) To reflect the elimination of interest expense on non-vehicle debt to
be paid with the proceeds of the Offering.

<PAGE>

SELECTED FINANCIAL DATA

The following table sets forth selected consolidated statement of
operations data and selected consolidated balance sheet data of the Company
for the five years ended December 31, 1995. Such data were derived from the
audited consolidated financial statements of the Company. The audited
consolidated financial statements and notes thereto of the Company for each of
the three years in the period ended December 31, 1995 are included elsewhere
in this Prospectus. The following table also sets forth selected consolidated
statement of operations data of the Company for the three months ended March
31, 1995 and March 31, 1996 and selected consolidated balance sheet data of
the Company as of March 31, 1996. Such data were derived from the unaudited
consolidated financial statements of the Company included elsewhere in this
Prospectus, which unaudited consolidated financial statements, in the opinion
of the Company's management, include all adjustments (consisting of only
normal recurring adjustments) necessary for a fair presentation of the
financial position and results of operations for such periods. The results of
operations for the three months ended March 31, 1996 are not necessarily
indicative of results that may be expected for the entire year. The selected
consolidated financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto of the
Company included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1991 1992 1993 1994 1995
---------- --------- --------- --------- ----------
(STATEMENT OF OPERATIONS DATA IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues:
Vehicle rental revenues .................... $15,105 $21,968 $22,321 $38,642 $107,067
Retail car sales revenues .................. -- -- -- -- 42,662
---------- --------- --------- --------- ----------
Total operating revenues ................. 15,105 21,968 22,321 38,642 149,729
Operating costs and expenses:
Direct vehicle and operating ............... 3,903 5,989 5,452 9,439 13,704
Depreciation--vehicles ..................... 1,939 2,832 4,358 7,382 27,476
Depreciation--non-vehicles ................. 227 212 229 446 1,341
Cost of car sales .......................... -- -- -- -- 38,021
Advertising, promotion and selling ........ 1,066 1,477 1,658 3,090 11,826
Facilities ................................. 2,020 2,662 2,695 4,398 11,121
Personnel .................................. 3,741 4,292 4,537 7,947 24,515
General and administrative expenses ....... 935 736 790 1,515 6,686
Amortization of franchise rights ........... 170 151 152 229 859
---------- --------- --------- --------- ----------
Total operating costs and expenses ...... 14,001 18,351 19,871 34,446 135,549
Operating income ........................... 1,104 3,617 2,450 4,196 14,180
Other (income) expense:
Vehicle interest expense .................. 1,867 2,440 2,462 3,909 13,874
Non-vehicle interest expense (income), net 503 619 401 (139) (716)
Nonrecurring income ....................... -- -- (1,023) -- --
---------- --------- --------- --------- ----------
Income (loss) before provision for income
taxes ..................................... (1,266) 558 610 426 1,022
Net income (loss) .......................... $(1,266) $ 558 $ 428 $ 250 $ 337
========== ========= ========= ========= ==========
Weighted average common shares outstanding -- -- -- 3,704 6,369
Earnings (loss) per common share ........... -- -- -- $ 0.07 $ 0.05
========== ========= ========= ========= ==========
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
---------------------
1995 1996
---------- ---------

<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues:
Vehicle rental revenues .................... $17,354 $44,697
Retail car sales revenues .................. 4,916 21,097
---------- ---------
Total operating revenues ................. 22,270 65,794
Operating costs and expenses:
Direct vehicle and operating ............... 2,625 5,959
Depreciation--vehicles ..................... 5,126 11,804
Depreciation--non-vehicles ................. 285 536
Cost of car sales .......................... 4,258 17,840
Advertising, promotion and selling ........ 2,036 4,600
Facilities ................................. 2,076 4,328
Personnel .................................. 4,494 10,689
General and administrative expenses ....... 886 2,270
Amortization of franchise rights ........... 112 514
---------- ---------
Total operating costs and expenses ...... 21,898 58,540
Operating income ........................... 372 7,254
Other (income) expense:
Vehicle interest expense .................. 2,616 5,621
Non-vehicle interest expense (income), net (333) (495)
Nonrecurring income ....................... -- --
---------- ---------
Income (loss) before provision for income
taxes ..................................... (1,911) 2,128
Net income (loss) .......................... $(1,146) $ 1,277
========== =========
Weighted average common shares outstanding 6,037 7,256
Earnings (loss) per common share ........... $ (0.19) $ 0.18
========== =========
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Adjusted EBITDA(1) (in thousands) ............. $1,392 $1,632 $3,854 $(1,447) $3,432
VEHICLE RENTAL DATA:
Locations in operation at period end ........ 19 63 133 94 159
Number of useable vehicles at period end(2) . 2,006 5,044 11,144 7,076 17,265
Rental transactions(3) ....................... 163,000 276,000 689,000 120,700 237,700
Daily dollar average(4) ...................... $34.01 $37.32 $41.26 $39.67 $40.89
Vehicle utilization(5) ....................... 77.2% 80.6% 80.0% 77.8% 84.2%
Average monthly revenue per unit(6) ......... $791 $909 1,007 $926 $1,030
RETAIL CAR SALES DATA:
Locations in operation at period end ........ -- -- 7 2 7
Average monthly vehicles sold ................ -- -- 351 99 411
Average monthly sales revenue (in thousands) -- -- $4,883 $1,632 $6,476
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------------------
1991 1992 1993 1994
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Revenue earning vehicles, net $26,870 $23,343 $23,577 $ 97,127
Retail car sales inventory ... -- -- -- 943
Total assets .................. 36,800 32,027 33,325 162,991
Fleet financing facilities ... -- -- -- 105,682
Other vehicle obligations .... 28,380 23,890 23,857 18,097
Notes payable ................. 5,924 3,795 1,824 2,785
Total debt .................... 34,531 27,880 28,533 127,187
Redeemable preferred stock ... -- 2,747 2,747 --
Common stock warrant .......... -- -- -- 2,000
Stockholders' equity (deficit) (1,737) (1,344) (1,251) 26,748
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
AS OF
MARCH 31,
1996
----------
1995 (UNAUDITED)
----------

<S> <C> <C>
BALANCE SHEET DATA:
Revenue earning vehicles, net $219,927 $314,591
Retail car sales inventory ... 8,938 13,832
Total assets .................. 386,323 478,677
Fleet financing facilities ... 145,682 145,682
Other vehicle obligations .... 149,965 207,039
Notes payable ................. 22,586 47,508
Total debt .................... 319,017 400,968
Redeemable preferred stock ... -- --
Common stock warrant .......... 2,000 2,000
Stockholders' equity (deficit) 39,592 43,596
</TABLE>

- ------------

(2) Vehicles available for rental.

(3) Rounded to the nearest thousand.

(4) Rental revenue divided by number of days that vehicles were actually
rented.

(5) Number of days vehicles were actually rented divided by number of days
vehicles were available for rent.

(6) Average monthly revenue divided by average monthly fleet.

<PAGE>

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

GENERAL

Team Rental Group, Inc. is the largest Budget Rent a Car franchisee
worldwide and is one of the largest independent retailers of late model
automobiles in the United States. In 1994, TEAM embarked on a strategy to
significantly expand its Budget franchise base and to develop a branded retail
car sales operation within its Budget franchise territories. This strategy
both leverages management's experience and creates certain operating
efficiencies between these complementary businesses. Through its 159 vehicle
rental locations, TEAM had pro forma 1995 revenues of $202.9 million, and the
Company operates nine retail car sales facilities with monthly sales revenue
of $10.7 million for May 1996. The Company estimates it will purchase
approximately 40,000 vehicles over the next twelve months, consisting of new
automobiles and trucks for its Budget rental operations, late model
automobiles for its retail car sales operations and new passenger vans for its
van pooling operations.

The results of operations for 1993 reported herein reflect the consolidated
accounts of the San Diego, California, Richmond, Virginia and Albany and
Rochester, New York Budget franchises (collectively, the "1993 Operations"),
which had been operated as separate businesses, but were affiliated through
common ownership and control. The 1994 results of operations reported herein
include the 1993 Operations and the acquired operations of the Pittsburgh and
Philadelphia, Pennsylvania, Cincinnati, Ohio and Fort Wayne, Indiana Budget
franchises from their respective acquisition dates through December 31, 1994.
The 1995 results of operations reported herein include the consolidated
operations of the entities comprising the Company at December 31, 1994 and the
acquired operations of the Dayton, Ohio, Charlotte, North Carolina, Hartford,
Connecticut, and Los Angeles, California Budget franchises from their
respective acquisition dates through December 31, 1995. Results of operations
for the three months ended March 31, 1995 reported herein include the acquired
operations of the Budget franchises for Dayton, Ohio, Charlotte, North
Carolina and Hartford, Connecticut from their respective acquisition dates
through March 31, 1995. Results of operations for the three months ended March
31, 1996 reported herein include the acquired operations of the Budget
franchise for Phoenix, Arizona and of Van Pool from their respective
acquisition dates through March 31, 1996.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage of
operating revenues represented by certain items in the Company's consolidated
statements of operations.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Vehicle rental revenues .................... 100% 100% 71.5%
Retail car sales revenues .................. -- -- 28.5
------- ------- -------
Total operating revenues ................. 100 100 100
Direct vehicle and operating expenses ..... 24.5 24.4 9.2
Cost of car sales .......................... -- -- 25.4
Vehicle depreciation expense ............... 19.5 19.1 18.4
Non-vehicle depreciation expense ........... 1.0 1.2 0.9
Advertising, promotion and selling ........ 7.4 8.0 7.9
Facilities ................................. 12.1 11.4 7.4
Personnel .................................. 20.3 20.6 16.3
General and administrative expenses ....... 3.6 3.9 4.5
Amortization of franchise rights ........... 0.7 0.6 0.5
------- ------- -------
Operating income ........................... 10.9 10.8 9.5
Vehicle interest expense ................... 11.0 10.1 9.3
Non-vehicle interest expense (income), net 1.8 (0.4) (0.5)
Nonrecurring income ........................ (4.6) -- --
------- ------- -------
Income (loss) before income taxes .......... 2.7 1.1 0.7
Provision (benefit) for income taxes ...... 0.8 0.5 0.5
------- ------- -------
Net income (loss) .......................... 1.9% 0.6% 0.2%
======= ======= =======
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------
1995 1996
-------- -------
<S> <C> <C>
Vehicle rental revenues .................... 78.0% 67.9%
Retail car sales revenues .................. 22.0 32.1
-------- -------
Total operating revenues ................. 100 100
Direct vehicle and operating expenses ..... 11.8 9.1
Cost of car sales .......................... 19.1 27.1
Vehicle depreciation expense ............... 23.0 17.9
Non-vehicle depreciation expense ........... 1.3 0.8
Advertising, promotion and selling ........ 9.1 7.0
Facilities ................................. 9.3 6.6
Personnel .................................. 20.2 16.3
General and administrative expenses ....... 4.0 3.4
Amortization of franchise rights ........... 0.5 0.8
-------- -------
Operating income ........................... 1.7 11.0
Vehicle interest expense ................... 11.7 8.5
Non-vehicle interest expense (income), net 1.5 (0.7)
Nonrecurring income ........................ -- --
-------- -------
Income (loss) before income taxes .......... (8.5) 3.2
Provision (benefit) for income taxes ...... (3.4) 1.3
-------- -------
Net income (loss) .......................... (5.1)% 1.9%
======== =======
</TABLE>

<PAGE>

Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1995.

General Operating Results. Net income of $0.18 per share for the first
quarter of 1996 represented a $0.37 per share increase from the net loss of
$0.19 per share experienced in the first quarter of 1995. Income before income
taxes increased $4.0 million from a $1.9 million loss in the first quarter of
1995 to $2.1 million of income in the first quarter of 1996. This increase was
due to the Company's February 1996 acquisitions of the Budget franchise for
Phoenix and of Van Pool and the October 1995 acquisition of the Budget
franchise for Los Angeles, which contributed combined pre-tax income of $2.8
million, and decreased vehicle depreciation of $1.2 million resulting from
incentives received from car manufacturers. Operating income increased to $7.3
million in the first three months of 1996 as compared to $0.4 million in the
corresponding period of 1995. The increase in operating income was somewhat
offset by an increase in interest expense of $2.8 million, or 125%, due
primarily to an increase in the vehicle fleet resulting from the acquisitions
of the Phoenix and Los Angeles Budget franchises and Van Pool, and an increase
in the provision for income taxes of $1.6 million due to the enhanced
profitability of the Company in 1996.

Operating Revenues. Vehicle rental revenues increased $27.3 million, or
158%, to $44.7 million in the first three months of 1996 as compared to $17.4
million in the corresponding period of 1995. The increase in rental revenues
is due primarily to the increase in the size of the Company from operating 85
rental locations in eight franchise areas at March 31, 1995 to operating 157
locations in 13 franchise territories at March 31, 1996 and to the acquisition
of Van Pool in February 1996. This increased size resulted in an increase in
the number of rental revenue days from approximately 438,000 in the first
quarter of 1995 to approximately 955,000 in the first quarter of 1996. The
daily average rental rate increased 3.1% from $39.67 in the first quarter of
1995 to $40.89 for the first quarter of 1996. The average rental term
increased from 3.63 days in the first three months of 1995 to 4.02 days in the
comparable period of 1996. Vehicle rental revenues also increased in the first
quarter of 1996 due to the inclusion of $5.7 million of revenues earned by Van
Pool since its acquisition. Revenues from the Company's retail car sales
operations increased $16.2 million from $4.9 million in 1995 to $21.1 million
in 1996, due to the expansion of the Company's retail car sales facilities
from two locations at March 31, 1995 to seven locations at March 31, 1996.

Operating Expenses. Operating expenses increased approximately $36.6
million, or 167%, to $58.5 million for the three months ended March 31, 1996
as compared to $21.9 million for the same period in 1995. The growth of the
Company's vehicle rental operations through the acquisitions discussed above
and the addition of six additional retail car sales facilities were the
principal causes of all of the increases to the Company's operating expenses.
Vehicle depreciation increased approximately $6.7 million, or 130%, due to an
increase in fleet of 6,300 vehicles which increased vehicle depreciation by
approximately $7.9 million, before a reduction in vehicle depreciation of
approximately $1.2 million resulting from incentives received from car
manufacturers. Personnel costs increased approximately 138% in the first
quarter of 1996 as compared to the corresponding period of 1995 due to an
increase of approximately 900 employees since March 31, 1995. Advertising
expenses increased from $2.0 million to $4.3 million due to the increase in
the size of the vehicle rental operations and due to the growth of the retail
car sales operations from two markets at March 31, 1995 to six markets at
March 31, 1996. The retail car sales business typically incurs greater
advertising expense than the car rental business. Facilities expense increased
$2.3 million, or 108%, due to the addition of 72 locations since March 31,
1995. Other operating expense increases were due to the increased volume of
vehicle rental business resulting from the 1995 and 1996 acquisitions. Cost of
car sales increased $13.6 million from $4.2 million at March 31, 1995 to $17.8
million at March 31, 1996 due to an increase in the number of car sales
facilities from two to seven during that period.

Other Income and Expense. Vehicle interest expense, net, increased
approximately $3.0 million in the first quarter of 1996 due to the increase in
the average size of the Company's rental fleet in the first quarter of 1996
compared to the same period in 1995. The Company's cost of funds decreased
approximately 0.6% per annum in the first quarter of 1996 as compared to the
first quarter of 1995, due primarily to the decrease in LIBOR, upon which most
of the Company's debt is based. Other interest income, net of interest
expense, increased from approximately $333,000 in the first quarter of 1995 to
$495,000 in 1996 due primarily to increased interest income earned on
restricted cash during the first

<PAGE>

quarter of 1996. This was partially offset by an increase in interest expense
due to an increase in the Company's borrowings under its working capital
facilities from $7.0 million at March 31, 1995 to $20.0 million at March 31,
1996, due primarily to borrowings to fund the Los Angeles Acquisition and the
Phoenix Acquisition.

Provision for Income Taxes. The provision for income taxes increased $1.6
million from a $765,000 benefit for the first quarter of 1995 to a provision
of $851,000 for the first quarter of 1996. The $1.6 million change represents
a 40% tax provision resulting from the enhanced profitability of the Company.

Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994.

General Operating Results. Net income for 1995 increased $87,000, or 34.8%,
to $337,000 from $250,000 in 1994. Income before income taxes more than
doubled to $1.0 million in 1995 from $426,000 in 1994. The increase in pre-tax
income was due to an increase in operating income of $10.0 million resulting
from the growth of the Company's retail car sales operations from one facility
at December 31, 1994 to seven facilities at December 31, 1995 and the
acquisition of four additional Budget vehicle rental operations, which was
offset by increases in interest expense of $9.4 million, due primarily to the
increased size of the fleet throughout 1995 as a result of the acquisitions
occurring between August 1994 and October 1995, described above. The provision
for income taxes increased from $176,000 in 1994 to $685,000 in 1995 due to
the enhanced profitability of the Company, nondeductible amortization expense,
and state income taxes.

Operating Revenues. Operating revenues increased 287% for the year ended
December 31, 1995 to $149.7 million from $38.6 million in the prior year. This
increase was primarily due to the acquisitions discussed above and to an
increased volume of vehicle rental business in 1995, resulting in an increase
in the number of rental revenue days to 2,590,000 in 1995 from 1,027,000 in
1994. The daily average rental rate increased 11% from $37.32 in 1994 to
$41.26 in 1995; the average rental term experienced a slight decrease from
3.82 days in 1994 to 3.76 days in 1995.

Operating Expenses. Operating expenses increased approximately $101.1
million, or 294%, for the year ended December 31, 1995 as compared to 1994.
This increase was due in large measure to the growth of the Company's retail
car sales operations, which included $38.0 million of cost of sales for which
there was no significant comparable expense in 1994, as well as to increases
resulting from the increase in fleet and personnel due to the four
acquisitions occurring during 1995. Direct vehicle and operating expense
increased $4.3 million or 45.2% to $13.7 million from $9.4 million, due to the
increase in the size of the fleet from 5,044 vehicles at December 31, 1994 to
11,144 vehicles at December 31, 1995. The increased costs for vehicle
maintenance recorded to direct vehicle and operating expenses were partially
offset by a decrease in the number of leased vehicles during the period, as
expenses for owned vehicles are charged to both vehicle depreciation and
interest expense, whereas leased vehicles are charged to direct vehicle and
operating expense. Vehicle depreciation expense increased $20.1 million or
272% to $27.5 million due to an increase in fleet size of 121% to 11,144
vehicles at December 31, 1995. Personnel expenses increased 208% to $24.5
million due to the 226% increase in the employee base from 525 employees at
December 31, 1994 to 1,709 employees at December 31, 1995. The number of
locations from which the Company rented vehicles increased from 63 locations
at December 31, 1994 to 133 locations at December 31, 1995.

Other Income and Expense. Other expense-net increased approximately $9.4
million, or 249%, in 1995 due primarily to interest expense on the increased
vehicle fleet operated by the Company in 1995. Vehicle interest increased
$10.0 million due to the increased size of the vehicle fleet throughout 1995.
This increase was offset by an increase in interest income earned on cash
restricted for acquiring vehicles under the Fleet Financing Facilities of $0.7
million.

Provision for Income Taxes. The provision for income taxes increased 289%
to $685,000 in 1995 from $176,000 in 1994. The Company's effective tax rate
increased from 41.3% in 1994 to 67.0% in 1995. The increase in the tax
provision was due to the enhanced profitability of the Company in 1995,
certain amortization expense that was not deductible for income taxes
purposes, and state income taxes.

<PAGE>

Year Ended December 31, 1994 Compared to the Year Ended December 31, 1993.

General Operating Results. Income before income taxes increased to $426,000
in 1994 from a loss of $413,000, exclusive of the $1.0 million in nonrecurring
income from a vehicle manufacturer in 1993. The 1994 acquisitions and the
Company's strategy to reduce financing costs through the First Fleet Financing
Facility (defined below) had a favorable impact on income before income taxes
for the year ended December 31, 1994. Operating income for 1994 increased $1.7
million due to the 1994 acquisitions. Interest expense, net of interest
income, increased in 1994 by $907,000 due to the larger fleet relative to
1993. This increase was offset in part by lower effective interest rates from
the First Fleet Financing Facility.

Operating Revenues. Operating revenues increased 73.1% for the year ended
December 31, 1994 to $38.6 million from $22.3 million in the prior year. These
increases were primarily due to the acquisitions in August and November 1994
discussed above and an increased volume of rental business in 1994, resulting
in an increase in the number of rental revenue days to 1,027,000 in 1994 from
656,000 in 1993. The daily average rental rate increased from $34.02 in 1993
to $35.01 in 1994, which was partially offset by a decrease in the average
rental term from 4.02 days in 1993 to 3.82 days in 1994.

Operating Expenses. Operating expenses increased approximately $14.6
million, or 73.3%, for the year ended December 31, 1994 as compared to 1993.
This increase was primarily due to the 1994 acquisitions. Direct vehicle and
operating expense increased $4.0 million or 73.1% to $9.4 million from $5.5
million due to an increase in the volume of business from the 1994
acquisitions and an increase in the number of leased vehicles during the year.
Expenses for owned vehicles are charged to both vehicle depreciation and
interest expense, whereas leased vehicles are charged to direct vehicle and
operating expense. Vehicle depreciation expense increased $3.0 million or
69.4% to $7.4 million due to an increase in fleet size of 151.4% from 2,006
vehicles at December 31, 1993 to 5,044 vehicles at December 31, 1994.
Personnel expenses increased 75.2% to $7.9 million due to the 232% increase in
rental car locations from 19 locations at December 31, 1993 to 63 locations at
December 31, 1994.

Other Income and Expense. Other expense-net increased approximately $1.9
million for the year ended December 31, 1994 due to the absence of $1.0
million of nonrecurring income in 1994 as discussed above and the additional
fleet financing costs from the increased number of vehicles in the fleet. The
increases were offset in part by the decreased interest costs under the First
Fleet Financing Facility and the repayment in August 1994 of all notes
outstanding to certain related parties. The interest savings under the First
Fleet Financing Facility resulted in increased vehicle interest costs, net of
interest income on restricted cash, of only 31.6% in 1994 as compared to 1993,
significantly less than the 69.4% increase in vehicle depreciation expense
that resulted from the same fleet acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's operations have been funded by cash provided
from operating activities and by financing provided under asset-backed notes
issued under the First and Second Fleet Financing Facilities and by banks,
automobile manufacturers' captive finance companies and leasing companies. The
Company intends to continue to fund its operations through these sources and
other similar sources and from the proceeds of the Offering.

Fleet Financing Facilities. At March 31, 1996, amounts outstanding under
the Fleet Financing Facilities were comprised of $105.7 million of
asset-backed notes issued by the Company's special purpose finance subsidiary,
TFFC, in August 1994 (the "First Fleet Financing Facility") and $40.0 million
of asset-backed notes assumed by the Company in connection with the Los
Angeles Acquisition in October 1995 (the "Second Fleet Financing Facility").
These facilities have been utilized to finance Program Vehicles. Proceeds from
these facilities that are temporarily unutilized for vehicle financing are
maintained in restricted cash accounts with the trustee and are not available
for other purposes. The notes issued under these facilities are collateralized
by the financed vehicles and the restricted cash accounts, with the vehicles
being leased to the Company's operating subsidiaries.

The First Fleet Financing Facility is comprised of senior notes requiring
monthly interest payments at an annual rate of average LIBOR, as defined, plus
0.75% (6.2% at March 31, 1996). Monthly principal

<PAGE>

payments of $16,667,000 commence in June 1999 with the last payment due in
November 1999. The subordinated notes included in the First Fleet Financing
Facility require monthly interest payments at an annual rate of average LIBOR,
as defined, plus 1.30% (6.7% at March 31, 1996) and are payable in full in
December 1999.

The Second Fleet Financing Facility is comprised of senior notes requiring
monthly interest payments at an annual rate of average LIBOR, as defined, plus
0.60% (6.0% at March 31, 1996). Monthly principal payments of $4,812,000
commence in November 1997 with the last payment due in June 1998. The
subordinated notes included in the Second Fleet Financing Facility require
monthly interest payments at an annual rate of average LIBOR, as defined, plus
1.0% per annum (6.4% at March 31, 1996) and are payable in full in July 1998.

Subsequent to the completion of the Offering, TFFC expects to enter into
the Third Fleet Financing Facility. The Third Fleet Financing Facility is
expected to consist of up to approximately $160 million of asset-backed notes.
The net proceeds of the Third Fleet Financing Facility would be used to repay
outstanding vehicle obligations and to fund future fleet purchases.

Vehicle Obligations. Vehicle obligations consist of outstanding lines of
credit to purchase rental vehicles and retail car sales inventory. At March
31, 1996, amounts outstanding under these lines of credit consisted of $193.4
million for rental vehicles and $13.6 million for retail car sales inventory,
with maturity dates ranging from June 1996 to June 1997. Vehicle obligations
are collateralized by rental vehicles financed under these credit facilities
and proceeds from the sale, lease or rental of vehicles and retail car sales
inventory.

Vehicle obligations relating to the rental fleet are generally amortized
over 5 to 15 months with monthly principal payments ranging from 2% to 3% of
the capitalized vehicle cost. When rental vehicles are sold, the related
unpaid obligation is due. Interest payments for rental fleet facilities are
due monthly at annual interest rates ranging from 6.80% to 15.25% at March 31,
1996. Management expects vehicle obligations will generally be repaid within
one year with proceeds received from either the repurchase of the vehicles by
the manufacturers in accordance with the terms of the manufacturers' rental
fleet programs or from the sale of the vehicles.

In May 1996, Team Fleet Services Corporation ("TFSC"), a wholly owned
subsidiary of the Company, entered into a Revolving Credit Agreement with
NationsBank, National Association (South), as Agent (the "Agent") for the
lenders party thereto, providing for up to $100.0 million financing for the
acquisition of Program Vehicles (the "Revolving Credit Facility"). The
Revolving Credit Facility provides for funding in two tranches. The first
tranche, in the amount of $15.0 million, was funded on June 5, 1996 and the
remaining $85.0 million became available June 21, 1996. The Revolving Credit
Facility is guaranteed by the Company and certain of its subsidiaries and
secured by the Program Vehicles acquired with the proceeds of loans under the
facility. The interest rates of loans under the Revolving Credit Facility are,
at the option of TFSC and up to certain amounts, based on the Agent's prime
rate, LIBOR or the negotiable certificates of deposit rate.

Monthly payments of interest only on obligations relating to retail car
sales inventory are required at the prime rate (8.25% at March 31, 1996).
Retail car sales inventory obligations are paid when the inventory is sold but
in no event later than 120 days after the date of purchase.

Working Capital Facilities. At March 31, 1996, the Company utilized working
capital facilities of $20.0 million for the purchase of retail car sales
inventory and other working capital requirements, which require monthly
interest payments on the outstanding balance at LIBOR plus 1.85% (7.2% at
March 31, 1996). The amount utilized under these facilities had increased to
$30.0 million at April 30, 1996, with the additional $10.0 million utilized to
repay other outstanding notes (as described below). An outstanding facility of
$17.0 million is due on July 30, 1996; the remaining balance expires November
1996. The facilities are collateralized by accounts receivable, inventory,
equipment, general intangibles, investments and all other personal property of
the Company and guarantees of certain of the Company's subsidiaries. Under the
terms of one of the agreements, the Company is required to pay commitment fees
quarterly equal to 0.125% per annum on the maximum amount of credit available
under the credit facility and an

<PAGE>

annual agent fee of $50,000 as long as the facility has an outstanding
balance. The agreements are subject to certain covenants, the most restrictive
of which requires the Company to maintain certain financial ratios and minimum
tangible net worth and prohibits the payment of cash dividends. At March 31,
1996, the Company was not in compliance with certain covenants under these
facilities. In April 1996, certain covenants were amended and the Company is
in compliance with the amended terms of the agreements.

Other Notes Payable. Other notes payable at March 31, 1996 consisted
primarily of a $3.0 million secured promissory note that bears interest at 8%
per annum payable in annual installments of $750,000, due August 1999,
collateralized by personal guarantees from the previous owners of the Los
Angeles operations; a $0.6 million business credit note due November 1996
bearing interest at prime (8.25% at March 31, 1996) collateralized by real
property and secured by personal guarantees of certain stockholders of the
Company; a $0.7 million collateralized promissory note that bears interest at
8% per annum, payable in monthly installments of $7,000 plus interest, due
September 2010, collateralized by real property and personal guarantees of
certain stockholders of the Company; a $2.0 million mortgage note bearing
interest at 9.10% per annum, payable in monthly installments ranging from
$5,400 to $7,800 plus interest, due September 2000 with an option to extend to
September 2005, collateralized by real property; and a $0.6 million mortgage
note bearing interest at 7.5% per annum, payable in monthly installments of
$8,300 plus interest, due June 1998, collateralized by real property.

INFLATION

The increased acquisition cost of vehicles is the primary inflationary
factor affecting the Company's operations. Many of the Company's other
operating expenses are inflation sensitive, with increases in inflation
generally resulting in increased costs of operations. The effect of
inflation-driven cost increases on the Company's overall operating costs is
not expected to be greater for the Company than for its competitors.

SEASONALITY

Generally, in the vehicle rental industry, revenues decrease in the winter
months (with the exception of resort destinations) due to the overall decrease
in business and leisure travel during this season. The Company increases the
size of its fleet and work force in the spring and summer to accommodate
increased rental activity during these periods and decreases its fleet and
work force in the fall and winter. However, many of the Company's operating
expenses such as rent, insurance and administrative personnel are fixed and
cannot be reduced during the fall and winter. The Company has sought to reduce
this seasonal effect by acquiring franchise territories that are winter travel
destinations, and the Company believes that its acquisitions of the Los
Angeles operation in October 1995 and the Phoenix operation in February 1996
have reduced and will continue to reduce these seasonal characteristics. The
retail car sales business is subject to seasonal effects, with lower sales
during the winter months.

QUARTERLY RESULTS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Vehicle rental revenue ............ $5,525 $5,854 $11,634 $15,457
Vehicle sales revenue ............. -- -- -- 172
Operating income .................. 268 599 1,341 1,988
Income (loss) before income taxes (282) 55 268 385
Net income (loss) ................. (282) 55 268 209
Earnings (loss) per common share . (0.11) 0.02 0.06 0.04
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, 1995
THREE
------------------------------------------ MONTHS
FIRST SECOND THIRD FOURTH ENDED
QUARTER QUARTER QUARTER QUARTER MARCH 31, 1996
--------- --------- --------- --------- ------------------

<S> <C> <C> <C> <C> <C>
Vehicle rental revenue ............ $17,354 $23,788 $29,677 $36,248 $44,697
Vehicle sales revenue ............. 4,916 8,534 12,706 16,506 21,097
Operating income .................. 372 4,034 8,402 1,372 7,254
Income (loss) before income taxes (1,911) 1,241 4,788 (3,096) 2,128
Net income (loss) ................. (1,146) 743 3,981 (3,241) 1,277
Earnings (loss) per common share . (0.19) 0.12 0.65 (0.42) 0.18
</TABLE>
29

<PAGE>

BUSINESS

Team Rental Group, Inc. is the largest Budget franchisee worldwide and is
one of the largest independent retailers of late model automobiles in the
United States. In 1994, TEAM embarked on a strategy to significantly expand
its Budget franchise base and to develop a branded retail car sales operation
within its Budget franchise territories. This strategy both leverages
management's experience and creates certain operating efficiencies between
these complementary businesses. Through its 159 vehicle rental locations, TEAM
had pro forma 1995 revenues of $202.9 million, and the Company operates nine
retail car sales facilities with monthly sales revenue of $10.7 million for
May 1996. The Company estimates it will purchase approximately 40,000 vehicles
over the next twelve months, consisting of new automobiles and trucks for its
Budget rental operations, late model automobiles for its retail car sales
operations and new passenger vans for its van pooling operations.

The following tables chronologically detail TEAM's acquisitions of Budget
franchises and the openings of its retail car sales facilities:

VEHICLE RENTAL -- BUDGET FRANCHISE ACQUISITIONS

<TABLE>
<CAPTION>
1995
LOCATIONS AT FLEET SIZE AT REVENUES
FRANCHISE TERRITORY DATE ACQUIRED MAY 31, 1996 MAY 31, 1996 (MILLIONS)
- -------------------------- --------------- -------------- --------------- ----------
<S> <C> <C> <C> <C>
Owned prior to August 1994
San Diego ................. April 1987 12 1,610 $ 18.6
Albany .................... August 1991 3 237 2.5
Rochester ................. November 1991 3 217 2.5
Richmond .................. December 1991 5 415 3.6
-------------- --------------- ----------
Total for franchises owned prior to
initial public offering .................. 23 2,479 27.2
-------------- --------------- ----------
Acquired since August 1994
Philadelphia .............. August 1994 22 2,019 21.0
Pittsburgh ................ August 1994 14 1,070 13.0
Cincinnati ................ August 1994 8 880 8.0
Fort Wayne ................ November 1994 3 187 1.7
Charlotte ................. January 1995 6 565 6.5
Dayton .................... January 1995 6 452 5.2
Hartford .................. March 1995 13 928 9.6
Los Angeles(1) ............ October 1995 41 5,355 63.4(2)
Phoenix ................... February 1996 23 2,953 47.3(2)
-------------- --------------- ----------
Total for franchises acquired since
initial public offering .................. 136 14,409 175.7
-------------- --------------- ----------
Total ...................................... 159 16,888 $202.9
============== =============== ==========
</TABLE>

- ------------

(1) Excludes the vehicle rental operations at Los Angeles International
Airport.

(2) Includes operations prior to their date of acquisition by the Company.
See the Unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1995 included under "Pro Forma Consolidated
Financial Statements."

<PAGE>

RETAIL CAR SALES -- FACILITIES OPENED

<TABLE>
<CAPTION>
MAY 1996 SALES
DATE MAY 1996 REVENUE
METROPOLITAN AREA ACQUIRED/OPENED VEHICLES SOLD (THOUSANDS)
- ----------------- --------------- --------------- ---------------
<S> <C> <C> <C>
San Diego--East . November 1994 61 $ 982
Dayton--North ... January 1995 34 518
San Diego--West . April 1995 100 1,843
Philadelphia ..... May 1995 91 1,712
Charlotte ........ September 1995 90 1,468
Richmond ......... October 1995 92 1,497
Ontario .......... October 1995 35 688
Cincinnati ....... April 1996 47 726
Dayton--South ... April 1996 80 1,305
--------------- ---------------
Total ............. 630 $10,739
=============== ===============
</TABLE>

STRATEGY

The Company's strategy is to increase its revenues and improve its
profitability by:

o Significantly expanding its retail car sales operations;

o Acquiring additional Budget franchises; and

o Enhancing the scale and performance of its Budget Franchise Group.

Significantly Expand Retail Car Sales Operations

The increased cost of new cars and the improved reliability of low-mileage,
late model cars have contributed to greater market demand for late model cars
in recent years. Notwithstanding this growth, the retail car sales market
remains highly fragmented, with most late model cars being sold through the
used car operations of local or regional new car dealerships. The Company
believes that the market for late model cars is currently undergoing
significant changes, with the emergence of companies retailing late model cars
on a national or regional basis and utilizing nationally or regionally
recognized tradenames. Such entities source cars on a nationwide basis and
provide customers with a large selection of attractively priced, late model
cars.

The Company believes that operating retail car sales facilities in its
Budget franchise territories and using the Budget tradename presents it with a
significant growth opportunity. The Company's senior executive officers have
significant experience in acquiring and selling low-mileage, late model cars,
and the Company believes that the Budget tradename is of significant value in
its targeted consumer market. The Company believes that it will be able to
obtain efficiencies by operating retail car sales facilities in conjunction
with certain of its Budget rental facilities, including the sharing of service
facilities and administrative offices. The Company also believes that
operating retail car sales facilities complements certain aspects of its
vehicle rental business, particularly by providing a channel through which it
will be able to sell its vehicles not subject to manufacturers' repurchase
programs directly into the retail market at the end of the rental cycle. By
developing this channel, the Company believes that it will be less dependent
on the availability of Program Vehicles.

Since November 1994, the Company has developed or acquired its first nine
retail car sales facilities, and the Company will seek to continue to improve
the operating performance of each of those facilities. Rather than pursuing a
"superstore" strategy, the Company expects to have multiple sales facilities
in each of its markets and to add facilities within its franchise territories.
This approach will provide more convenient locations for customers, while
allowing the Company to achieve certain operating efficiencies and to benefit
from marketing and advertising programs conducted for its vehicle rental
business. The Company also expects to add facilities in markets where it does
not currently have vehicle rental operations.

<PAGE>

Acquire Additional Budget Franchises

Since the formation of the Company, the acquisition of Budget franchises
has been an important component of the Company's growth strategy. The Company
believes that through the franchise acquisitions completed since its initial
public offering, it has achieved a sufficient critical mass to realize
operating efficiencies, provided better geographic balance and reduced
seasonal fluctuations in its operating performance. The Company will seek to
increase its revenues and profitability through additional opportunistic
acquisitions and believes that desirable acquisition candidates will continue
to exist within the Budget System. Individual franchise owners may seek to
diversify their financial investment or to retire from active management,
particularly as they encounter greater cost pressures as well as other
competitive pressures in their operations. While the Company would consider
the acquisition of franchise territories in most regions of the United States,
there may be greater opportunities to achieve additional operating
efficiencies by acquiring franchise territories adjacent to or near its
existing territories. For example, the Company may be able to achieve better
fleet utilization in the operation of contiguous franchise territories.

Prior to being acquired by TEAM, a number of the Company's franchises had
either been unprofitable or experienced inconsistent profitability. It is in
the best interests of BRAC for its franchises to be operated profitably and in
a manner that will result in increased franchise fees to BRAC. The transfer of
any Budget franchise requires the prior approval of BRAC, and BRAC may itself
acquire franchise operations and convert them to wholly-owned operations. See
"Risk Factors--Risks Inherent in Growth Strategy." The Company believes that
it has been successful in acquiring and operating these "turn around"
franchises and that both the Company and BRAC have benefited from the improved
results achieved by the franchises acquired by the Company.

Enhance the Scale and Performance of its Budget Franchise Group

The Company believes that it will be able to enhance the profitability of
its current Budget franchises and any additional Budget franchises that it may
acquire by reducing the costs of operating those franchises and increasing the
rental revenues realized in those operations.

Cost Reduction Strategies

o Achieve Economies of Scale. The Company believes that by increasing the
scope of its vehicle rental operations, it has significantly improved its
fleet purchasing flexibility and lowered the cost of financing and insuring
its fleet. Through centralizing certain corporate functions, such as credit
card and warranty processing, the Company is also able to reduce the costs of
operating its Budget franchises. The Company believes that the benefits of
such measures are particularly significant following the acquisition of
franchises that have been underperforming prior to their acquisition by the
Company, although certain economies of scale may be extended to any operation
that the Company acquires.

o Optimize Fleet Mix and Utilization. The Company believes that it has been
able to reduce the cost of its rental operations by extending its fleet
management practices to newly-acquired franchise territories. The Company
believes that it will continue to improve its fleet utilization and per unit
cost versus yield. In addition, the Company believes it has improved the
timing and processing of its fleet deliveries and dispositions, reduced fleet
downtime and improved fleet make/model composition to better match customer
demand.

o Implement Cost Management Practices. The Company seeks to implement
standard cost management practices in each of its franchised territories.
Historically, following the acquisition of a territory, the Company has
successfully reduced overall personnel cost, lowered vehicle maintenance and
damage repair costs and increased the effectiveness of its servicing
procedures.

Revenue Growth Strategies

o Optimize Yield Management. TEAM utilizes various yield management models
designed to optimize pricing based upon such factors as office location, fleet
availability by car category and forecast demand patterns. These models also
enable TEAM to better optimize fleet utilization by tracking demand patterns
and allowing local managers to shift fleet inventory accordingly.

<PAGE>

o Add New Locations. In 1995, on a pro forma basis, approximately half of
the Company's vehicle rental revenues were generated at airport locations and
approximately half at non-airport locations. The Company believes that it will
be able to improve its performance by adding additional locations in its
existing and newly-acquired franchise territories (particularly by adding
non-airport locations), and that additional revenues may be generated with
relatively small increases in administrative overhead. Non-airport locations
are particularly attractive to the Company, as such locations typically have
less intense rate competition and fewer corporate customers utilizing
negotiated rate structures and are typically less affected by economic
downturns.

o Increase the Sale of Ancillary Products/Truck Revenues. The Company seeks
to increase vehicle rental revenues in its Budget franchise territories
through the sale of ancillary products and services, including loss damage
waivers, other insurance products and gasoline purchase options. The Company
intends to continue to market more diverse car products at additional
locations. The Company believes that it can also increase its revenues in
local markets by placing an increased emphasis on truck rentals, which also
include rentals of miscellaneous moving equipment and sales of moving
supplies.

VEHICLE RENTAL OPERATIONS

The Budget System

General. The Budget System consists of over 3,200 BRAC-owned and franchised
locations in approximately 115 countries and territories. Approximately
one-third of the Budget System's United States fleet is operated by
franchisees. BRAC was established in 1960 as a franchisor of vehicle rental
operations serving the downtown and suburban areas of cities in the United
States and Canada. The first major airport location of the Budget System was
established in 1967. Since 1989, Ford has held a preferred stock interest in
the holding company that owns BRAC and has provided significant financial
support to BRAC. In 1995, the Budget System's combined revenue for both
BRAC-owned and franchised locations in the United States was approximately
$2.0 billion. An industry source has indicated that Budget was the fourth
largest United States vehicle rental system in 1995 based on revenue and the
fifth largest based on fleet size.

System-Wide Services. BRAC provides the Budget System with: (i) national
promotion, advertising and public relations; (ii) reservations and information
systems; (iii) data processing support; (iv) marketing programs with hotels
and airlines; (v) Sears Car and Truck rental concessions; (vi) a sales staff
for marketing to corporate customers and the travel community; (vii) credit
card services for commercial customers; (viii) training in local marketing
techniques; and (ix) operation and training support. In general, pursuant to
its agreements with its franchisees, BRAC is required to expend a certain
percentage of franchise royalties that it receives on national advertising and
promotion. In addition, BRAC negotiates with automobile manufacturers to
develop vehicle acquisition and disposition programs that are available to
franchisees as well as to BRAC-owned locations.

BRAC facilitates one-way car rentals between approximately 735 selected
BRAC-owned and franchised locations in the United States. This one-way program
is also in place for truck rentals at approximately 325 locations. A limited
fleet of vehicles owned by BRAC is dedicated to supplement the one-way vehicle
rental capacity of the participating locations, including the Company's
franchise operations. This program enables the Budget System to operate more
fully as an integrated network of locations.

Reservations. BRAC, in conjunction with its 50%-owned subsidiary, Compass
Computer Services, Inc. ("Compass"), operates a computerized reservation
system. Budget's main reservation facility is located in the Dallas
metropolitan area and has over 400 employees. Auxiliary centers are located in
Toronto, Canada, the United Kingdom, Australia and New Zealand. These centers
are linked with the major airline and travel industry reservation systems
through the worldwide Budget reservation network. The main reservation
facility accepts inquiries and reservations for Budget System locations
worldwide on a 24-hour basis, 365 days a year. The reservation centers utilize
an extensive database maintained by Compass on rates and vehicles available
for nearly all Budget System locations, a special file of pertinent
information on frequent renters and other information that facilitates the
Budget System's business.

<PAGE>

Sears Car and Truck Rental. In 1970, BRAC established a contractual
relationship with Sears, Roebuck and Co. which allows Budget operating
locations to provide car and truck rental under the Sears name for a
concession fee based on rental revenue. Sears Car and Truck Rental customers
may use their Sears charge card for payment of rental charges. Sears Car and
Truck Rental is available at Budget locations in the United States and Canada.

TEAM's Vehicle Rental Operations

Management Structure. The Company maintains decentralized management of
day-to-day rental operations. Many costs incurred by the Company are dependent
on local market conditions, including real property rents, collision and
damage repair costs and labor costs. The Company believes that decentralized
management can manage these costs better than corporate headquarter staff.
Decentralization also allows local managers to continue to identify potential
customer bases in their territories, to respond to competitive situations
within their territories in a flexible way and to adjust fleet size as
appropriate to local market conditions. Consequently, the Company relies
substantially on the quality and initiative of its local management. Each of
the Company's territories is under the direction of a general manager, who is
an owner of shares of Class A Common Stock and/or a participant in the
Company's 1994 Incentive Stock Option Plan (the "1994 Option Plan"). See
"Management--Benefit Plans--1994 Option Plan." The general managers employed
by the Company typically have significant experience in the vehicle rental
business.

The Company coordinates vehicle purchases among its franchised territories
to enable it to benefit from volume purchases of vehicles. The Company handles
billing and collection on a decentralized basis, but employs centralized cash
management to permit optimal use of its financial resources. The Company's
corporate staff manages the acquisition and financing of new franchises and
general managers develop local vehicle rental markets.

Rental Vehicle Purchasing. The Company participates in a variety of vehicle
purchase programs with major domestic and foreign manufacturers, although
actual purchases are made directly through local dealers. The average price
for automobiles purchased by the Company in 1995 for its rental fleet was
approximately $17,700. On average during 1995, 42% of the purchases were
comprised of Ford vehicles, 15% of Chrysler vehicles and 21% of Mazda
vehicles. These percentages vary among the Company's operations and will most
likely change from year to year. The vehicle purchase programs sponsored by
manufacturers sometimes provide the Company with sales incentives for the
purchase of certain models, and most of these programs allow the Company to
serve as a drop-ship location for vehicles, thus enabling the Company to
receive a fee from the manufacturers for preparing newly purchased vehicles
for use. There can be no assurance that the Company will continue to be able
to benefit from sales incentives in the future.

The Company financed its rental vehicle purchases in 1995 primarily through
the First Fleet Facility, manufacturers' finance subsidiaries and, during the
peak rental season, bank lines of credit. Approximately 31% of the Company's
fleet cost was financed through the First Fleet Facility at December 31, 1995.
The Company expects to continue to take advantage of asset-backed note
facilities, which have more attractive interest rates than traditional
financing sources, to finance future fleet purchases. The Los Angeles
franchise financed fleet purchases through the Second Fleet Facility, which
was acquired by TEAM together with the franchise. In addition, the Company
will seek to continue its arrangements with the finance subsidiaries of major
vehicle manufacturers and other traditional sources of credit. See "Risk
Factors--Potential Changes in Manufacturers' Repurchase Programs" and "Risk
Factors--Requirements for Capital; Effect of Changes in Interest Rates."

Fleet Utilization and Seasonality. The Company's business is subject to
seasonal variations in customer demand, with the summer vacation period
representing the peak season for vehicle rentals. This general seasonal
variation in demand, along with more localized changes in demand at each of
the Company's operations, causes the Company to vary its fleet size over the
course of the year. In 1995, on a pro forma basis (excluding the Phoenix
Budget franchise and Van Pool), the Company's average monthly fleet size
ranged from a low of 11,468 vehicles in November to a high of 16,450 vehicles
in July. Fleet utilization, which is based on the average number of days
vehicles are rented compared to the total

<PAGE>

number of days vehicles are available for rental, ranged from 70% in December
to 89% in August and averaged 80% for all of 1995. The Company has sought to
reduce this seasonal effect by acquiring franchise territories that are winter
travel destinations, and the Company believes that acquisitions of the Los
Angeles operation in October 1995 and the Phoenix operation in February 1996
have reduced and will continue to reduce the effect of these seasonal
characteristics.

Rental Vehicle Disposition. The Company's current operating strategy is to
maintain its fleet at an average age of 12 months or less. Approximately 85%
of the vehicles purchased by the Company in 1995 were eligible for
participation in manufacturers' repurchase programs. These programs currently
require that the Company maintain Program Vehicles in its fleet for a minimum
of six months and impose numerous return conditions, including those related
to mileage and repair condition. Less than 3% of the Program Vehicles
purchased by the Company and scheduled to be returned in 1995 were ineligible
for return. At the time of return to the manufacturer, the Company receives
the price guaranteed at the time of purchase and is thus protected from
fluctuations in the prices of previously-owned vehicles in the wholesale
market at the time of disposition. The future percentage of Program Vehicles
in the Company's fleet will be dependent on the availability and
attractiveness of the manufacturers' repurchase programs, over which the
Company has no control. See "Risk Factors--Potential Changes in Manufacturers'
Repurchase Programs." In addition to disposal of its vehicle rental fleet
through the manufacturers' repurchase programs, the Company also disposes of
its rental fleet through automobile auctions, sales to wholesalers and the
Company's retail car sales operations. While the disposal of rental vehicles
through the Company's retail car sales operation has been minimal to date, the
Company believes that such dispositions may increase as its retail car sales
operation continues to grow and as the Company evaluates the mix of its
Program Vehicles and vehicles not subject to manufacturers' repurchase
programs.

Vehicle Rental Facilities. The Company leases all of its airport and
non-airport vehicle rental facilities and currently operates from 159 rental
locations. The airport facilities are located on airport property owned by
airport authorities or located near the airport in locations convenient for
bus transport of customers to the airport. One of the Company's airport
facilities in each Budget franchise territory serves as the administrative
headquarters for the franchise territory and, as a general rule, each airport
facility includes vehicle storage areas, a vehicle maintenance facility, a car
wash, a refueling station and rental and return facilities. In all airport
locations, the facility leases are not co-terminus with the local airport
concession agreement. See "Risk Factors--Risk of Non-Renewal of Airport
Concessions." The Company's non-airport facilities generally consist of a
limited parking facility and a rental and return desk and are generally
subject to long-term leases with renewal options. Certain of these leases also
have purchase options at the end of their terms.

Van Pooling Operations. Van Pool, the Company's commuter van pooling
subsidiary, was acquired by the Company in February 1996 and maintains offices
in 21 cities located in 15 states and the District of Columbia. Founded in
1977, Van Pool provides van pooling services to individuals, corporations and
municipalities. Pursuant to van pool agreements between the Company and either
the volunteer driver, corporation or municipality (the "contracting party"),
the contracting party agrees to drive or arrange a van pool which travels a
fixed route set by the Company. The Company sets the fees, which are collected
by the driver and remitted to the Company. Van Pool employs approximately 40
individuals at its home office in Troy, Michigan and approximately 40
individuals in its local markets, and currently operates a fleet of
approximately 3,250 passenger vans.

RETAIL CAR SALES OPERATIONS

Since November 1994, TEAM has developed or acquired nine retail car sales
facilities, establishing TEAM as one of the largest independent retailers of
late model cars in the United States, with monthly revenue of $10.7 million in
May 1996.

Retail Car Sales Inventory. The Company has historically acquired most of
its retail car sales inventory at auctions, although it has acquired some cars
directly upon their disposition by other car rental companies and from the
TEAM rental fleet. In the future, the Company expects to increase its
acquisitions of cars from the disposition of cars used by other car rental
companies and to purchase a smaller portion from auctions. The Company
coordinates car purchases among its retail car sales locations

<PAGE>

to enable it to benefit from volume purchases of cars. The average price of
automobiles purchased by the Company in 1995 for its retail car sales
facilities was approximately $11,750. The Company financed its retail sale car
purchases in 1995 primarily through a third party finance company.

Management and Personnel. The Company maintains decentralized management of
the day-to-day functions of its sales operations. The Company's retail car
sales operations are managed by two regional vice presidents, both of whom own
shares of Class A Common Stock and/or participate in the 1994 Option Plan. See
"Management--Benefit Plans--1994 Option Plan." In addition, each retail car
sales location is operated by a general manager, one or two sales managers and
one or two individuals responsible for financing and insurance.

Trademarks. Within its franchise territories, the Company operates its
retail car sales operations under the name "Budget Car Sales." However, BRAC
has indicated that the use of the Budget name in connection with retail
vehicle sales operations is not a contractual right granted under its standard
franchise agreements. The Company's management does not believe that the
success of these operations is dependent on the use of the Budget name and
currently plans to operate under a different name in its franchise
territories, if necessary. The Company also plans to operate under a different
name in those locations in which it is not a Budget franchisee. Ultimately,
the Company will seek to establish retail car sales operations at multiple
sites in larger metropolitan areas and advertise those operations under one
name.

Vehicle Pricing and Financing. While many cars display stickers indicating
their "blue book" value, customers are permitted to negotiate pricing terms
with the sales managers. Various local enterprises provide financing to
customers of the Company on a non-exclusive basis. In 1995, the vehicles sold
at its retail car sales facilities consisted primarily of 1995 model
automobiles and passenger vans, with some 1994 models and very few 1993
models. To supplement its sale of vehicles, the Company sells extended service
contracts and related consumer insurance products to its customers.

Retail Car Sales/Service Facilities. Each of the Company's retail car sales
facilities consists of a showroom and an outdoor display area, which together
accommodate the on-site display of at least 100 cars, and a service area.
Although certain of the Company's retail car sales facilities have been
converted from facilities that were used in other businesses, the Company
prefers to build its own retail car sales facilities and believes that such
facilities can be built at an average cost of approximately $1.2 million. The
service departments operated at each retail car sales facility are responsible
for inspecting a car's condition and for providing necessary reconditioning
and maintenance services before sale. These services are provided uniformly
for its retail car sales facilities in accordance with an inspection checklist
developed by the Company. Service departments also provide after-sale service
for the Company's customers.

COMPETITION

The vehicle rental industry is characterized by intense price and service
competition. In any given location, the Company may encounter competition from
national, regional and local companies, many of which, particularly those
owned by the major automobile manufacturers, have greater financial resources
than the Company. The Company's main competitors for vehicle rentals are
Hertz, Avis, Alamo, National and Dollar, which serve primarily airport and
near-airport locations, and Enterprise, which primarily serves non-airport
locations. The Company's operations are generally the third or fourth largest
at the airports in which it operates, although its extensive non-airport
operations may give it a larger presence in the metropolitan regions in which
such airports are located. The key competitive factors in the industry are
pricing, quality of service, name identification, vehicle availability and
location. There have been many occasions during the history of the vehicle
rental industry in which all of the major vehicle rental companies have been
adversely affected by severe industry-wide price cutting, and the Company has,
on such occasions, lowered its prices in response to such price cutting.
However, during the past two years, industry-wide rates have increased,
reflecting, in part, both increased costs of owning and maintaining vehicles
and the need to generate returns on invested capital.

The retail car sales business is also characterized by intense competition
from a range of regional and local car dealerships and other retailers of
previously-owned vehicles. The Company believes that it

<PAGE>

competes primarily against new car dealers retailing previously-owned cars.
The Company's retail car sales facilities are located among similar facilities
and, in some instances, together with the Company's rental operations. The
entry of large, well-capitalized retailers of late model previously-owned cars
may provide the Company with significant additional competition.

FRANCHISE AGREEMENTS

The Company's status as a Budget franchisee is governed by franchise
agreements (the "Franchise Agreements"), which grant to the Company's
subsidiaries certain exclusive territories in which to operate the Budget
vehicle rental business. All of these agreements are direct, "prime" franchise
agreements with BRAC, except those relating to the Company's Los Angeles and
San Diego operations, which operates as a sub-franchisee of SoCal, and the
Company's Los Angeles truck rental operation, which operates as a
sub-franchisee of an unaffiliated third party. The Franchise Agreements
provide the franchisor with significant rights regarding the business and
operations of the Company and impose restrictions on the transfer of ownership
of the capital stock of the Company and its subsidiaries without the consent
of the franchisor. These provisions could affect the Company's ability to sell
a car rental operating subsidiary or acquire other franchises or expand within
its existing franchise territories.

The Company is required to operate each of its franchises in accordance
with certain standards contained in the Budget operating manual (the
"Operating Manual"). The franchisor has the right to monitor the operations of
the Company's franchises and any default by the Company under a Franchise
Agreement or the Operating Manual may give the franchisor the right to
terminate the underlying franchise. The loss of certain franchise rights could
have a material adverse effect on the Company.

In general, the Franchise Agreements grant the Company the exclusive right
to operate a Budget Rent a Car and/or Budget Rent a Truck franchise in a
particular geographic area for a period of five years. The Franchise
Agreements for the San Diego, California, Albany and Rochester, New York,
Richmond, Virginia, Philadelphia and Pittsburgh, Pennsylvania, Cincinnati,
Ohio, Ft. Wayne, Indiana, Charlotte, North Carolina, Dayton, Ohio and
Hartford, Connecticut territories generally provide for an unlimited number of
five year renewal terms. Upon renewal, these Franchise Agreements (except for
the San Diego, California automobile rental franchise) may contain terms and
conditions (other than with respect to royalty fees) different from those
contained in the existing Franchise Agreements. The Franchise Agreement for
the Los Angeles, California territory with respect to automobile rentals
automatically renews for an unlimited number of five year terms. The Franchise
Agreement for the Phoenix, Arizona territory automatically renews for an
unlimited number of five year renewal terms as long as the franchisee meets
certain targets regarding the size of its rental fleet.

The standard terms of the fees payable to the franchisors under the
Company's Franchise Agreements are 7.5% of monthly gross rental revenue plus a
$1.25 per month credit card fee per average number of fleet vehicles, but the
Company has negotiated certain franchise agreements with more favorable terms.

Pursuant to each Franchise Agreement, the Company must meet certain
guidelines relating to the number of rental offices in a franchised territory,
the number of vehicles maintained for rental and the amount of advertising and
promotion expenditures. The Franchise Agreements relating to the Pittsburgh
and Philadelphia operations grant the Company rights of first refusal with
respect to the franchise agreements relating to certain additional territories
in Delaware, New Jersey and Pennsylvania. In general, each Franchise Agreement
provides that the Company shall not (i) engage in any other vehicle rental
business within the franchise territory or within a two mile radius of any
other existing Budget rental location during the term of such agreement and
for 12 months thereafter; or (ii) disclose the terms of the Operating Manual
or any other confidential information relating to the Budget System to any
third party. In addition, each franchisee agrees not to use the word "Budget"
or any other Budget trademark other than in its vehicle rental business
without BRAC's consent, except with respect to the Los Angeles territory.
Further, the Company has agreed with BRAC in the Franchise Agreements for the
San Diego, California automobile rental operations that it will not conduct
any business other than its automobile rental operations at any location at
which it conducts Budget Rent a Car operations and not to conduct a car sales
business under the "Budget" name or on any Budget car rental premises unless
authorized to do so under a separate agreement.

<PAGE>

INSURANCE

The Company currently has insurance coverage in an amount of up to $1.0
million, with a $500,000 retention per occurrence, with respect to personal
injury and damage claims arising from the use of its vehicles, except with
respect to vehicles rented through its Los Angeles, San Diego and Phoenix
operations. The Company has entered into a contract with a third party
administrator, AIG Claim Service, Inc., to handle all claims outside of the
state of California involving injuries and property damage in excess of
$10,000. Crawford & Company adjusts property damage claims with values less
than $10,000. Under California law, vehicle rental customers are primarily
liable for damages arising from the use of rental vehicles. Vehicle rental
companies are secondarily liable for such damages up to an amount limited by
California law to $35,000 per occurrence (exclusive of legal fees and
conditioned upon the posting of a $35,000 bond), unless the vehicle rental
company has negligently maintained the vehicle or has "negligently entrusted"
the vehicle to a rental customer (e.g., the vehicle rental company rented to a
customer that did not have a valid driver's license). In addition, a vehicle
rental company can be held liable for damages arising from use of its vehicles
by its employees. A recent California Court of Appeals decision, although not
ruling on the issue, has suggested that rental car companies generally may be
subject to primary liability in connection with damages arising from
customers' operation of rental vehicles. If changes in California law were
ever effected to render permissively uninsured rental car companies primarily
liable for such damages, the Company would at such time review its claims
handling practices. The Company's Phoenix operations are self-insured, with a
$300,000 retention. There is a $700,000 excess coverage policy with Firemans
Fund Insurance and a $10 million excess policy through National Union Fire
Insurance Company. VPSI, Inc. is covered under the National Union Fire
Insurance Company policy up to $1.0 million, subject to a $500,000 retention
per occurrence. There is also a $4.0 million excess policy through National
Union.

The Company's workers compensation insurance coverage has been placed with
ITT Hartford, subject to a $500,000 retention. All claims will be administered
by ITT Hartford's claims operation. The Company's general liability coverage
has been placed with ITT Hartford. There is $1.0 million per occurrence, $2
million aggregate coverage with no retention. The Company's property coverage
has been placed with Northbrook Insurance Company. The retail vehicle sales
operations are insured through Travelers Insurance Company with $1.0 million
aggregate coverage per location. There is a $50,000 retention for automobile
accidents, $15,000 retention for garagekeepers legal liability claims and
$10,000 retention for garage operation losses. All claims will be handled by a
third party administrator, Frontier Adjusters. Finally, the Company has a
total of $5.0 million in directors and officers liability coverage through
Steadfast and RLI Insurance Companies. This coverage is subject to a $1.0
million retention for claims relating to violations under federal securities
laws and $100,000 retention for any other claim. The Company has secured
employment related practice coverage with a $1.0 million aggregate limit,
subject to a $25,000 per occurrence deductible.

REGULATION AND ENVIRONMENTAL MATTERS

The Company is subject to federal, state and local laws and regulations
including those relating to taxing and licensing of vehicles, franchising,
consumer credit, environmental protection, retail vehicle sales and labor
matters. The principal environmental regulatory requirements applicable to the
Company's operations relate to the ownership or use of tanks for the storage
of petroleum products, such as gasoline, diesel fuel and waste oils; the
treatment or discharge of waste waters; and the generation, storage,
transportation and off-site treatment or disposal of solid or liquid wastes.
The Company operates 29 locations at which petroleum products are stored in
underground or aboveground tanks. The Company has instituted an environmental
compliance program designed to ensure that these tanks are in compliance with
applicable technical and operational requirements, including periodic
integrity testing of underground storage tanks. The Company believes that the
locations where it currently operates are in compliance, in all material
respects, with such regulatory requirements.

The Company may also be subject to requirements related to the remediation
of, or the liability for remediation of, substances that have been released
to the environment at properties owned or operated by the Company or at
properties to which the Company sends substances for treatment or disposal.
Such

<PAGE>

remediation requirements may be imposed without regard to fault and liability
for environmental remediation can be substantial. Certain of the locations in
the Philadelphia, Pittsburgh and Cincinnati franchise territories have been
the subject of environmental remediation as a consequence of leaks or spills
and continue to have some level of environmental impairment that may require
further remediation. In connection with the acquisition of those franchise
territories, the Seller, Chrysler Credit Corporation, Inc. ("CCC"), agreed to
provide up to $873,750 for a period of three years for remediation activities
at sites shown to be impaired by assessments performed under the supervision
of the Company. Although the ultimate cost of these remediation activities is
currently unknown, the Company believes that the amount of funding to be
provided by CCC will be sufficient to cover the cost of these remediation
activities. See "Risk Factors--Environmental Risks Inherent in On-Site
Petroleum Storage."

The Company may be eligible for reimbursement or payment of remediation
costs associated with future releases from its regulated underground storage
tanks. Certain of the states in which the Company maintains underground
storage tanks have established funds to assist in the payment of remediation
costs for releases from certain registered underground tanks. Subject to
certain deductibles, the availability of funds, compliance status of the tanks
and the nature of the release, these tank funds may be available to the
Company for use in remediating future releases from its tank systems.

LEGAL MATTERS

From time to time, the Company is subject to routine litigation incidental
to its business. The Company maintains insurance policies that cover most of
the actions brought against the Company. See "Business--Insurance." The
Company is currently not involved in any legal proceeding which it believes
would have a material adverse effect upon its financial condition or
operations.

EMPLOYEES

The Company had approximately 2,000 employees at April 30, 1996, including
part-time and "on call" employees who shuttle vehicles between locations. At
April 30, 1996, 64 employees in San Diego, 53 employees in Pittsburgh and 69
employees in Philadelphia were subject to collective bargaining agreements.
The collective bargaining agreement covering the San Diego employees expires
in October 1997, the collective bargaining agreement covering the Pittsburgh
employees expires in November 1998 and the collective bargaining agreement
covering the Philadelphia employees expires in October 1998. The Company
believes that its employee relations are good.

HEADQUARTERS

The Company's headquarters facility consists of 2,500 square feet of leased
space in Daytona Beach, Florida. The Company believes that this facility is
sufficient for its needs because of the decentralized nature of the Company's
management.

<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers, directors and significant employees of the Company
are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- --------------------- ----- -----------------------------------------------
<S> <C> <C>
Sanford Miller ....... 43 Chairman of the Board of Directors, Chief
Executive Officer and Director
John P. Kennedy ...... 51 President, Chief Operating Officer and
Director
Jeffrey D. Congdon .. 53 Chief Financial Officer, Secretary and Director
Ronald D. Agronin ... 58 Director
Dr. Stephen L. Weber 54 Director
James F. Calvano .... 59 Director
Jeffrey R. Mirkin ... 43 Director
Alan D. Liker ........ 58 Director
Donald J. Norwalk ... 31 Vice President and Treasurer
Scott Tiemann ........ 37 Vice President and Corporate Controller
Jeffrey D. Widholm .. 32 Vice President--Corporate Development
</TABLE>

Directors are elected annually to serve until the next annual meeting of
stockholders and until their successors are elected and qualified. Officers
are elected by and serve at the discretion of the Board of Directors.

Sanford Miller has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since April 1994. From August 1991 until
August 1994, he was Vice President of Tranex Rental of New York, Inc.
("Tranex"), which operated the Albany and Rochester Budget franchises, and
from December 1991 until August 1994, was Vice President of Capital City
Leasing, Inc. ("Capital City"), which operated the Richmond, Virginia Budget
franchise. Between 1989 and 1991, Mr. Miller served as Director of Marketing,
Special Accounts for BRAC. From 1981 to 1989, Mr. Miller was an executive
officer and principal stockholder of corporations that owned and operated 30
Budget franchises that were sold to BRAC in 1989. From 1979 to 1981, he was a
North East Regional Field Operations Manager for BRAC. Mr. Miller served as
President of the American Car Rental Association, a nation-wide industry trade
association, in 1993 and as Chairman of the Licensee Local Market Advisory
Board of the Budget System in 1989 and 1990. Mr. Miller is also a director of
MoneyGram Payment Systems, Inc. and Tomoka State Bank.

John P. Kennedy has been President, Chief Operating Officer and a director
of the Company since April 1994. From November 1991 until August 1994, he was
President of Metro West, Inc., whose wholly-owned subsidiary owns the
Company's San Diego airport operations. From September 1989 until October
1991, he was an independent consultant to the vehicle rental industry. From
July 1985 to August 1989, he served as President of NYRAC, Inc. d/b/a Budget
Rent a Car of Kennedy and La Guardia Airports. From 1968 to 1984, he served in
various capacities with Avis, including the position of Vice President of
Operations.

Jeffrey D. Congdon has been the Chief Financial Officer, Secretary and a
director of the Company since April 1994. Since December 1990, he has been
Secretary and Treasurer of Tranex Credit Corporation, which provides financing
for purchases of previously-owned vehicles. From 1980 to 1989, he was an
executive officer and principal stockholder of corporations that owned and
operated 30 Budget franchises that were sold to BRAC in 1989. From 1982 to the
present, Mr. Congdon has owned and operated retail new and/or previously-owned
car sales operations in Indianapolis, Indiana.

Ronald D. Agronin was elected as a director in April 1994. Since 1993, Mr.
Agronin has served as Vice Chairman of Black Clawson Company, a manufacturer
of paper making machinery, and as President and Chief Executive Officer of
United Container Machinery, Inc., a container manufacturer. He served as
Executive Vice President and Chief Operating Officer of Black Clawson from
1987 until 1993. He serves as a director of both of these companies. Mr.
Agronin is the first cousin of Mr. Miller.

<PAGE>

Dr. Stephen L. Weber was elected as a director in April 1994. Since June
1996, Dr. Weber has been the President of San Diego State University. From
August 1995 to June 1996, he was the Interim Provost at the State University
of New York System Office. From 1988 until June 1996, he was President of
State University of New York at Oswego. In July 1996, Dr. Weber will become
President of San Diego State University.

James F. Calvano was elected as a director of the Company in August 1994.
Since February 1996, Mr. Calvano has been the President and Chief Executive
Officer of MoneyGram Payment Systems, Inc., a provider of electronic money
transfer services. From February 1995 until February 1996, Mr. Calvano was
Executive Vice President of Marketing for Travelers Group, a subsidiary of
Travelers, Inc. From November 1993 until February 1996, he was Chief
Administrative Officer of Travelers Insurance Companies. From June 1991 until
May 1993, Mr. Calvano was President and Chief Operating Officer of New Valley
Corp. Two months before he assumed this position, New Valley Corp. suspended
payments on its publicly held debt. An involuntary bankruptcy petition under
Title 11 of the U.S. Code was filed against New Valley Corp. in November 1991
and a voluntary bankruptcy petition under Title 11 was filed by New Valley
Corp. in March 1993. From January 1989 until December 1990, Mr. Calvano was
President and Chief Executive Officer of Carlson Travel Group and Executive
Vice President of Carlson Companies Inc. From November 1986 until December
1988, he served as President of Commercial Credit Corp. and Executive Vice
President of Primerica Corp. Mr. Calvano served American Express Travel
Related Services Co., Inc. as its Vice Chairman, President of Payment Systems
Division, USA and President of Consumer Financial Services Division, USA
between October 1981 and November 1986. From 1972 to 1981, Mr. Calvano was
employed by Avis and served in various capacities, including President and
Chief Executive Officer, Executive Vice President and Chief Operating Officer
and Group Vice President, Western Hemisphere.

Jeffrey R. Mirkin was elected as a director of the Company in October
1995. Since 1985, Mr. Mirkin has been the Chief Executive Officer of SoCal, a
licensee of BRAC and through its wholly owned subsidiary, an operator of
Budget locations in Southern California. See "Certain Transactions."

Alan D. Liker has been a director since October 1995. He has served as a
business advisor to a number of individuals and companies during the past
five years, including as Vice President of SoCal since February 1992. Mr.
Liker is also a director of Herbalife International. Mr. Liker was a director
of Shaklee Corporation and its Japanese affiliate, Shaklee KK until their
sale in 1989. From 1976 to 1980, he was a principal of Xerox Development
Corporation, a strategic planning unit of Xerox Corporation. Mr. Liker was
previously a law professor at the Harvard University, University of
California (Los Angeles) and University of Southern California law schools.
Previously he was a director of First Charter Bank and Shop Television
Network. See "Certain Transactions."

Donald J. Norwalk has been Vice President and Treasurer of the Company
since July 1994. From January 1994 until July 1994, he was the SEC Reporting
and Compliance Officer for FFLC Bancorp, Inc., a bank holding company. From
January 1989 to January 1994, he was an auditor for Deloitte & Touche, serving
clients primarily in the financial, manufacturing and real estate industries.

Scott Tiemann has been Vice President and Controller of the Company since
July 1994. From March 1992 until July 1994, he was employed by BRAC as the
Business Manager for Freedom River. From November 1989 until March 1992, he
was a city controller for BRAC.

Jeffrey D. Widholm has been Vice President of Corporate Development of the
Company since August 1995. From January 1987 until August 1995, he was a
corporate banking officer for BankOne, Indianapolis, N.A., where he was
responsible for a loan portfolio of middle market and large corporate clients.

The Company's Board of Directors has a Compensation Committee and an
Audit/Finance Committee. The Compensation Committee, composed of Mr. Agronin
and Dr. Weber, establishes salaries, incentives and other forms of
compensation for directors, officers and other employees of the Company,
administers various incentive compensation and benefit plans and recommends
policies relating to such plans. The Audit/Finance Committee, composed of
Messrs. Agronin and Calvano,

<PAGE>

reviews the Company's accounting practices, internal accounting controls and
financial results and oversees the engagement of the Company's independent
auditors. Nonemployee directors receive an annual retainer of $12,000 and
participate in the 1994 Directors' Stock Option Plan. The Company also pays
the reasonable out-of-pocket expenses of each director in connection with his
attendance at each Board or committee meeting.

In connection with the Los Angeles Acquisition, the Company and the
Principal Executive Officers agreed that for so long as SoCal and its general
partners own 500,000 or more shares of the Class A Common Stock received in
the Los Angeles Acquisition, the Company and the Principal Executive Officers
will nominate and use their best efforts to elect to the Company's Board of
Directors two persons designated by SoCal and further, for so long as SoCal
and its general partners own less than 500,000 but more than 250,000 shares of
Class A Common Stock, the Company and the Principal Executive Officers agreed
to nominate to the Company's Board of Directors one person designated by
SoCal. Following the Los Angeles Acquisition, Messrs. Mirkin and Liker were
selected by SoCal and thereafter elected to the Board of Directors of the
Company.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth a summary of the compensation paid by the
Company during the last three fiscal years to the Chief Executive Officer and
certain other executive officers of the Company.

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ---------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
- --------------------------- ------ ------------- -------------- ---------------------
<S> <C> <C> <C> <C>
Sanford Miller ............. 1995 $183,667 $ -- 30,000
Chairman of the Board and 1994 $ 91,108(1) $ 14,067(2) --
Chief Executive Officer 1993 30,000(1) $ 17,918(2) --
John P. Kennedy ............ 1995 $173,333 $ -- 25,000
President and Chief 1994 $ 94,558 $ -- --
Operating Officer 1993 $111,900 $ -- --
Jeffrey D. Congdon ......... 1995 $173,333 $ -- 25,000
Chief Financial Officer 1994 $ 26,250(3) $ -- --
and Secretary 1993 $ -- $ -- --
</TABLE>

- ------------
(1) Does not include $6,924 and $27,696 of cash dividends paid by Tranex
and Capital City to Mr. Miller in 1994 and 1993, respectively.

(2) Other annual compensation consists of $12,476 and $15,192 of payments
made by the Company with respect to vehicles used by Mr. Miller in 1994
and 1993, respectively, and $1,591 and $2,726 of gasoline expenses in
connection with the use of these vehicles in 1994 and 1993,
respectively.

(3) Represents salary for the period from August 24, 1994 through December
31, 1994.

<PAGE>

OPTION GRANTS DURING FISCAL 1995

The following tables describe the stock options granted to the Chief
Executive Officer and certain other executive officers of the Company in the
last fiscal year.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE
NAME GRANTED FISCAL YEAR PER SHARE
- ------------- ------------ ---------------- -------------
<S> <C> <C> <C>
Mr. Miller .. 30,000 15.6% $9.50
Mr. Kennedy . 25,000 13.0% $9.50
Mr. Congdon . 25,000 13.0% $9.50
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------- --------------------------------------
NAME EXPIRATION DATE 5% 10%
- ------------- ----------------------- ---------- ----------
<S> <C> <C> <C>
Mr. Miller .. March 1, 2005 $179,235 $454,217
Mr. Kennedy . March 1, 2005 $149,362 $378,514
Mr. Congdon . March 1, 2005 $149,362 $378,514
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
OPTIONS AT DECEMBER 31, 1995
------------------------------
NAME EXERCISEABLE UNEXERCISEABLE
- -------------- -------------- --------------
<S> <C> <C>
Mr. Miller .... -- 30,000
Mr. Kennedy .. -- 25,000
Mr. Congdon .. -- 25,000
</TABLE>

No options were exercised in 1995.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

The Compensation Committee is composed of Mr. Agronin and Dr. Weber,
neither of whom has ever (i) been an officer or employee of the Company or
any of its subsidiaries or (ii) entered into a related-party transaction with
the Company.

BENEFIT PLANS

1994 Option Plan. The 1994 Option Plan provides for the grant to selected
key employees of the Company and its subsidiaries of either incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986
(the "Code") or nonqualified options (intended not to qualify as incentive
stock options) to purchase Common Stock. The 1994 Option Plan is administered
by the Compensation Committee of the Board of Directors. The maximum number of
shares of Common Stock that may be made subject to options granted pursuant to
the 1994 Option Plan is 760,000, and the maximum number of shares for which an
employee may be granted options in any three-year period is 75,000, subject,
in each case, to adjustments for certain changes in the Company's
capitalization. The price per share of a stock option must be at least the
fair market value per share as of the date of grant. In the case of an
employee who owns more than 10% of the voting power of the Company, the price
per share under an incentive stock option must be at least 110% of the fair
market value per share as of the date of grant. No option may be exercised
within six months from the date of grant, except that an option will be
immediately exercisable upon the occurrence of certain events, including a
"change in control" of the Company as defined in the 1994 Option Plan. Except
in the event of the death or disability of a holder of nonqualified stock
options, no option may be exercised more than 10 years after its date of grant
(and, in the case of an employee who owns more than 10% of the voting power of
the Company, an incentive stock option held by such employee may not be
exercised more than five years after its date of grant). Unless sooner
terminated, the 1994 Option Plan terminates on April 24, 2004. As of the date
of this Prospectus, 442,600 options have been granted under the 1994 Option
Plan.

1994 Directors' Stock Option Plan. The Company's 1994 Directors' Stock
Option Plan (the "1994 Directors' Plan") provides for the grant to directors
of the Company who are not employees of the Company ("outside directors") of
options to purchase Class A Common Stock. Because the 1994 Directors' Plan by
its terms specifies the class of directors eligible to receive options, the
timing of the

<PAGE>

grant of options, the number of shares underlying options to be granted and
the exercise price of such options, there is no discretionary administration
with regard to these matters. The Board of Directors may appoint a committee
to perform ministerial duties in connection with the 1994 Directors' Plan. The
maximum number of shares of the Class A Common Stock subject to options
granted pursuant to the 1994 Directors' Plan is 25,000. Each outside director
was granted an option for 5,000 shares of Class A Common Stock on the date on
which the director was elected to office or, if later, the effective date of
the 1994 Directors' Plan. The exercise price per share under an option was the
fair market value per share as of the date of grant. The options are
exercisable in full beginning six months after the date of grant, except that
an option will be immediately exercisable upon the occurrence of certain
events, including a change in the control of the Company. Except in the event
of a holder's death or disability, no option may be exercised more than 10
years after its date of grant. Unless sooner terminated, the 1994 Directors'
Plan will terminate on April 24, 2004. As of the date of this Prospectus,
5,000 options have been granted to each of Messrs. Agronin, Calvano, Weber,
Mirkin and Liker under the 1994 Directors' Plan. There are no additional
options available for grant under the 1994 Directors' Plan.

CERTAIN TRANSACTIONS

Concurrently with the completion of the initial public offering in August
1994, Messrs. Miller, Kennedy, Congdon and certain current and former
employees of the Company (the "Exchange Stockholders"), who were the
stockholders of certain of the corporations that owned the Albany and
Rochester, New York, Richmond, Virginia and San Diego, California Budget
franchises, exchanged all of their shares of these corporate entities for an
aggregate of 563,400 shares of the Class A Common Stock and 1,936,450 shares
of the Class B Common Stock (the "Share Exchange"). The Principal Executive
Officers thereby acquired 100% of the shares of the Class B Common Stock that
have been issued by the Company. Upon consummation of the Share Exchange and
the redemption of the preferred stock of the Company's subsidiary that
operates the San Diego airport franchise, all of the Albany, Rochester,
Richmond and San Diego operating companies became wholly-owned subsidiaries of
the Company. See "Shares Eligible for Future Sale."

Pursuant to an agreement dated as of November 1, 1994, Team Rental of Ft.
Wayne, Inc. ("TRFW") a wholly-owned subsidiary of the Company, purchased all
of the shares of capital stock of Ft. Wayne Rental Group, Inc. ("Ft. Wayne").
Ft. Wayne, which was owned by Sanford Miller and others, including a former
employee of the Company, acquired the assets constituting the Ft. Wayne
business in June 1993 for approximately $26,000, plus the assumption of
approximately $66,000 of liabilities. The total purchase price for the stock
of Ft. Wayne was 18,500 shares of the Class A Common Stock of the Company
valued at approximately $200,000 (plus a de minimis amount of cash to prevent
the issuance of fractional shares of stock). Mr. Miller received 7,400 shares
of Class A Common Stock in exchange for his shares of Ft. Wayne stock. Prior
to the acquisition of Ft. Wayne, Tranex Rentals of New York, Inc. d/b/a
Budget Rent a Car of Albany and Rochester, which became a subsidiary of the
Company in the Share Exchange, leased vehicles to Ft. Wayne. The aggregate
payments under this lease amounted to approximately $366,000 in 1994.

Messrs. Miller, Kennedy and Congdon have guaranteed the performance of the
obligations of some or all of the Company's subsidiaries under their
respective Franchise Agreements. In connection with the initial public
offering, the Company's franchisors agreed to release these individuals from
their guarantees under the Franchise Agreements and substitute the Company's
guarantee therefor, provided that the Company maintains net worth of at least
$15 million. In the event that the Company's net worth falls below this level,
the Company has the option to provide the franchisors with a $5 million letter
of credit that could be drawn on in the event of a monetary default under the
Franchise Agreements or, in the alternative, to allow the personal guarantees
to be reinstated.

The Company's Richmond, Virginia airport facility is leased from a
partnership formed by Mr. Miller and an employee of the Company (the "Richmond
Partnership"). This lease terminates in 1998, subject to renewal. Rental
payments under the lease agreement amounted to approximately $31,200, $95,000
and $97,000 in 1993, 1994 and 1995, respectively. The monthly base rent under
this lease (approximately $7,800, $7,900 and $8,100 in 1993, 1994 and 1995,
respectively) escalates by approximately 3% per annum.

<PAGE>

The Company has entered into another lease for a non-airport facility located
in Chesterfield County, Virginia that is owned by the Richmond Partnership.
This lease commenced in June 1994 and terminates in May 1999, subject to
renewal. Rental payments under the lease agreement amounted to approximately
$24,000 and $33,000 in 1994 and 1995, respectively. The monthly base rent
under this lease was approximately $3,400 and $3,500 in 1994 and 1995,
respectively and escalates by approximately 3% per annum. The Company's
Rochester, New York airport facility is leased from a partnership formed by
Mr. Miller and a former employee of the Company. This lease terminates in
2003, subject to renewal. The monthly base rent under this lease
(approximately $6,350, $6,700 and $6,800 in 1993, 1994 and 1995, respectively)
escalates by 5% per annum until August 30, 1996, and thereafter annual
increases will be the higher of 5% or the amount of the increase in the
consumer price index. Rental payments under the lease amounted to $25,400,
$75,000 and $81,000 in 1993, 1994 and 1995, respectively. All of these leases
are on a triple net basis (i.e., the Company is responsible for the payment of
taxes and insurance, utilities and for the general maintenance of these
facilities in addition to its obligations to pay base rent). All of these
leases provide for an initial term of ten years and two five-year renewal
terms. The Company believes that these leases are on terms no less favorable
to the Company than could be obtained from unaffiliated third parties.

The Company's Philadelphia, Pennsylvania retail vehicle sales facility,
regional administrative headquarters and vehicle maintenance facility are
leased from MCK Real Estate Corporation ("MCK"), which is owned by Messrs.
Miller, Congdon and Kennedy. This lease terminates in September 2002, subject
to renewal. Rental payments under the lease were approximately $168,000 for
1995. The monthly base rent (approximately $26,000 per month in 1995)
escalates by 3% per annum. The Company's Richmond, Virginia retail car sales
facility is leased from MCK. This lease terminates in October 2000, subject to
renewal. Rental payments under this lease were approximately $10,000 for 1995.
The monthly base rent under this lease (approximately $10,000 per month in
1995) escalates by 3% per annum. The Company's second Dayton, Ohio retail car
sales facility, which opened in April 1996, is leased from MCK. This lease
terminates in March 2001, subject to renewal. The monthly base rent under this
lease (approximately $10,000 per month in 1996) escalates by 3% per annum. All
of these leases are on a triple net basis. The Company believes that these
leases are on terms no less favorable than could be obtained from unaffiliated
third parties.

Prior to the Company's initial public offering, the Company's subsidiaries
funded their operations in part through loans from the Company's executive
officers. The following table sets forth certain information with respect to
loans provided by the Principal Executive Officers. All such loans, together
with accrued interest, were repaid upon the completion of the initial public
offering.

<TABLE>
<CAPTION>
ORIGINAL OUTSTANDING
NAME OF EXECUTIVE PRINCIPAL INTEREST RATE
OFFICER PROVIDING LOAN DATE OF LOAN AMOUNT PER ANNUM
- ---------------------- -------------- ----------- ----------------
<S> <C> <C> <C>
Sanford Miller ........ January 1992 $ 40,000 10%
September 1992 $310,000 15%
December 1992 $ 56,000 10%
January 1993 $130,000 12%
June 1994 $516,257 12%
Jeff Congdon .......... December 1989 $200,000 prime plus 1.75%
September 1992 $310,000 15%
January 1993 $130,000 12%
June 1994 $516,257 12%
John Kennedy .......... September 1992 $310,000 15%
January 1993 $130,000 12%
June 1994 $250,000 12%
</TABLE>

In addition, in order to finance the organizational expenses incurred by
the Company prior to the initial public offering, Messrs. Miller, Congdon and
Kennedy advanced the following amounts: Mr. Miller--$41,289 at prime plus
1.5%; $3,300, non-interest bearing; Mr. Congdon--$14,266 at prime plus

<PAGE>

1.5%; $1,800, non-interest bearing; and Mr. Kennedy--$14,266 at prime plus
1.5%; $1,800, non-interest bearing. All of these advances, together with
accrued interest, were repaid upon completion of the initial public offering.

In connection with the Los Angeles Acquisition, the Company entered into a
Franchise Agreement with SoCal, under which the Company agreed to pay to the
seller, SoCal, a royalty of 5% of the monthly gross rental revenues derived
from those operations, subject to a minimum amount. In addition, the Company
issued a note to SoCal in the principal amount of approximately $4,750,000
(the "SoCal Note"), assumed the obligations of SoCal under a note in the
principal amount of approximately $4,700,000 which was secured by the personal
guaranty of Jeffrey R. Mirkin (the "SoCal Bank Note") and assumed certain
other indebtedness that was personally guaranteed by Mr. Mirkin. Mr. Mirkin is
the Chief Executive Officer and a general partner of SoCal and upon
consummation of the Los Angeles Acquisition became a director of the Company.
The Company operates as a sub-franchisee of SoCal in the San Diego territory
and pays royalty fees to SoCal based on rental revenues for vehicles other
than trucks. In 1993, 1994 and 1995, the Company paid SoCal approximately
$1,100,000, $1,000,000 and $1,200,000 in royalty fees, respectively. Except as
described above, prior to the Los Angeles Acquisition, there was no material
relationship between the Company and SoCal. The SoCal Note together with
accrued interest of $103,906, and the SoCal Bank Note were repaid in April
1996. There is approximately $700,000 of other indebtedness currently payable
by the Company to SoCal.

Sanford Miller is a member of the board of directors of Tomoka State Bank
in Ormond Beach, Florida. The Company maintains a checking account at that
bank with an average balance of $100,000.

<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The table below sets forth, as of June 10, 1996 certain information with
respect to the beneficial ownership of Common Stock by (i) each person who is
known by the Company to be the beneficial owner of more than 5% of the Common
Stock of the Company, (ii) each of the executive officers and directors of the
Company and all directors and executive officers as a group and (iii) each of
the Selling Stockholders, in each case both before and after giving effect to
this Offering.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY NUMBER OF SHARES BENEFICIALLY
OWNED PRIOR TO THE SHARES TO BE OWNED AFTER THE PERCENT OF TOTAL
OFFERING (1) SOLD IN THE OFFERING (1) VOTING POWER OF
----------------------- OFFERING ------------------------- COMMON STOCK AFTER
NUMBER PERCENT NUMBER PERCENT THE OFFERING
- ------------------------------- ----------- --------- --------- -------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE
OFFICERS
Sanford Miller(2) .............. 926,500 12.4% -- 926,500 8.7% 32.3%
Jeffrey D. Congdon(3) .......... 533,350 7.2 -- 533,350 5.0 18.4
John P. Kennedy(4) ............. 523,500 7.0 -- 523,500 4.9 18.4
Ronald D. Agronin (5) .......... 7,000 * -- 7,000 * *
Dr. Stephen L. Weber(5) ........ 8,100 * -- 8,100 * *
James Calvano(5) ............... 5,000 * -- 5,000 * *
Jeffrey R. Mirkin(6) ........... 1,023,019 13.8 368,019 655,000 6.1 2.3
Alan D. Liker(7) ............... 82,984 1.1 31,981 51,003 * *
All directors and officers as a
group (8 persons)(8) .......... 3,063,450 41.0 400,000 2,663,450 25.0 71.6
OTHER SELLING STOCKHOLDERS
Katzin Investments L.C.(9) .... 272,727 3.7 272,727 -- -- --
Richard Sapia(10) .............. 204,875 2.8 100,000 104,875 * *
James Salatto .................. 26,266 * 6,266 20,000 * *
OTHER FIVE PERCENT STOCKHOLDERS
Ronald Baron(11) ............... 454,000 6.1 -- 454,000 4.3 1.6
</TABLE>

- ------------
* Less than 1%.

(1) In determining the number and percent of shares beneficially owned by
each person, shares that may be acquired by such person pursuant to
options exercisable within 60 days of the date hereof are deemed
outstanding for purposes of determining the total number of
outstanding shares for such person and are not deemed outstanding for
such purpose for all other stockholders. To the best of the Company's
knowledge, except as otherwise indicated, beneficial ownership
includes sole voting and dispositive power with respect to all shares.

(2) Of the 926,500 shares of Common Stock owned, 905,800 are shares of
Class B Common Stock and 20,700 are shares of Class A Common Stock,
4,000 of which shares are owned by Mr. Miller's children. Mr.
Miller's address is 125 Basin Street, Daytona Beach, Florida 32114.

(3) Of the 533,350 shares of Common Stock, 515,400 are shares of Class B
Common Stock and 17,950 are shares of Class A Common Stock. Mr.
Congdon's address is 7050 West Washington Street, Indianapolis,
Indiana 46241.

(4) Of the 523,500 shares of Common Stock, 515,400 are shares of Class B
Common Stock and 8,100 are shares of Class A Common Stock. Mr.
Kennedy's address is 45 Riverside Avenue, Westport, Connecticut
06880.

(5) Includes 5,000 shares of Class A Common Stock issuable upon exercise
of options granted under the 1994 Directors' Plan.

(6) Consists of 1,018,019 shares of Class A Common Stock beneficially
owned by SoCal, a general partnership, of which Mr. Mirkin is a
general partner and the trustee of certain trusts which are general
partners of SoCal, and 5,000 shares of Class A Common Stock issuable
upon exercise of options granted under the 1994 Directors' Plan. Mr.
Mirkin's address is 150 South Doheny Drive, Beverly Hills, California
90211.

(7) Shares beneficially owned prior to the Offering include 46,003 shares
of Class A Common Stock that may be acquired by Mr. Liker from SoCal
pursuant to an option granted by SoCal to Mr. Liker in October 1995,
and 5,000 shares of Class A Common Stock issuable upon exercise of
options granted under the 1994 Directors' Plan.

(8) Includes 25,000 shares issuable upon the exercise of options granted
under the 1994 Directors' Plan.

<PAGE>

(9) Katzin Investments L.C. is controlled by the former stockholders of
Arizona Rent A Car Systems, Inc. ("ARAC"). The Company acquired the
Phoenix Budget franchise through the acquisition of ARAC in February
1996.

(10) Mr. Sapia is a former employee of the Company and was a stockholder of
certain companies from which the Company acquired Budget rental
franchises.

(11) Includes 240,000 shares owned by BAMCO, Inc., a registered investment
advisor controlled by Mr. Baron, in its capacity as an advisor to
clients, which may include registered investment companies; 114,000
shares owned by Baron Capital Management, Inc., a registered
investment company controlled by Mr. Baron; and 100,000 shares owned
by Baron Capital Partners, L.P., an investment partnership of which
Mr. Baron is a general partner. Mr. Baron shares voting and
dispositive power as to 354,000 shares, as to which he disclaims
beneficial ownership. This information is included in reliance upon a
Schedule 13D filed by Mr. Baron with the Securities and Exchange
Commission on or about April 24, 1996. Mr. Baron's address is c/o
BAMCO, Inc., 450 Park Avenue, New York, New York 10022.

<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 17,500,000 shares
of the Class A Common Stock, 2,500,000 shares of the Class B Common Stock and
250,000 shares of the preferred stock, $.01 par value per share (the
"Preferred Stock"). Immediately prior to the date of this Prospectus, there
were 5,493,176 shares of the Class A Common Stock, 1,936,600 shares of the
Class B Common Stock and no shares of the Preferred Stock outstanding. All of
the outstanding shares of Class B Common Stock are held by the Principal
Executive Officers.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

Voting Rights. Each share of the Class A Common Stock is entitled to one
vote and each share of the Class B Common Stock is entitled to ten votes on
all matters submitted to a vote of the stockholders. The Class A Common Stock
and the Class B Common Stock vote together as a single class on all matters
presented for a vote of the stockholders, except as noted below. Immediately
following the Offering, the holders of the Class B Common Stock will have
approximately 69.5% of the combined voting power of the outstanding Class A
and Class B Common Stock and therefore will retain effective control of the
Company, continue to direct the business, management and policies of the
Company and continue to have the ability to elect all of the members of the
Board of Directors.

The Company's Amended and Restated Certificate of Incorporation requires a
vote of 60% of the number of shares of the Class B Common Stock outstanding,
voting separately as a class, and a majority of the shares of the Class A
Common Stock, voting separately as a class, to approve any modification to the
rights and privileges of the Class A Common Stock or the Class B Common Stock
or any reclassification or recapitalization of the Company's outstanding
capital stock.

Dividends. Each share of the Class A Common Stock is entitled to receive
dividends if, as and when declared by the Board of Directors of the Company
out of funds legally available therefore. Identical dividends, if any, must be
paid on both the Class A Common Stock and the Class B Common Stock at any time
that dividends are paid on either, except that stock dividends payable on
shares of the Class B Common Stock are payable only in shares of the Class B
Common Stock and stock dividends payable on shares of the Class A Common Stock
are payable only in shares of the Class A Common Stock. If a dividend or
distribution payable in the Class A Common Stock is made on the Class A Common
Stock, the Company must also make a pro rata and simultaneous dividend or
distribution of shares of Class B Common Stock on the Class B Common Stock. If
a dividend or distribution payable in Class B Common Stock is made on the
Class B Common Stock, the Company must also make a pro rata and simultaneous
dividend or distribution of shares of Class A Common Stock on the Class A
Common Stock.

Convertibility. Each share of the Class B Common Stock is convertible at
any time at the option of the holder into the Class A Common Stock on a
share-for-share basis. Shares of the Class B Common Stock will be
automatically converted into shares of the Class A Common Stock on a
share-for-share basis in the event that the record or beneficial ownership of
such shares of the Class B Common Stock shall be transferred (including,
without limitation, by way of gift, settlement, will or intestacy) to any
person or entity that was not a holder of Class B Common Stock at the time of
transfer. Therefore, the shares of Class B Common Stock will only exist so
long as they are held by one or more of the Principal Executive Officers.
Shares of the Class A Common Stock are not convertible.

Liquidation Rights. In the event of the dissolution of the Company, after
satisfaction of amounts payable to creditors and distribution to the holders
of outstanding Preferred Stock, if any, of amounts to which they may be
preferentially entitled, holders of the Class A Common Stock and the Class B
Common Stock are entitled to share ratably in the assets available for
distribution to the stockholders.

Other Provisions. There are no preemptive rights to subscribe to any
additional securities which the Company may issue and there are no redemption
provisions or sinking fund provisions applicable to the Class A Common Stock
or the Class B Common Stock, nor is either class subject to calls or
assessments by the Company. All outstanding shares of Common Stock are, and
all shares to be outstanding upon completion of this Offering will be, legally
issued, fully paid and nonassessable.

<PAGE>

PREFERRED STOCK

The Board of Directors of the Company has the authority, without further
action by the stockholders, to cause the Company to issue up to 250,000 shares
of Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions granted to or imposed upon any unissued shares of
Preferred Stock and to fix the number of shares constituting any series and
the designations of such series. The issuance of Preferred Stock, while
providing flexibility in connection with possible financings, acquisitions and
other corporate transactions, could, among other things, adversely affect the
voting power of the holders of Common Stock and, under certain circumstances,
make it more difficult for a third party to gain control of the Company, deny
stockholders the receipt of a premium on their Common Stock and have a
depressive effect on market price of the Common Stock. The Company has no
present plan to issue any shares of Preferred Stock.

WARRANTS

In connection with the Company's initial public offering and acquisition of
the Budget operations in Philadelphia, Pittsburgh and Cincinnati, the Company
issued to BRAC a warrant (the "BRAC Warrant") to purchase 175,000 shares of
the Class A Common Stock at the price of the shares in the initial public
offering ($9.50 per share). The BRAC Warrant is exercisable commencing August
1996 and expires in August 1999. After August 24, 1998 and prior to August 24,
1999, the holder of the BRAC Warrant will have the right to cause the Company
to repurchase the BRAC Warrant for $2.0 million. In connection with financing
provided to the Company in April 1996, the Company issued to NationsBank,
National Association (South) a warrant (the "NationsBank Warrant") to purchase
187,500 shares of Class A Common Stock at the then current market price
($10.87 per share). The NationsBank Warrant is exercisable from the date of
its issuance and expires April 2001.

BYLAW PROVISIONS

The Company's Bylaws provide that special meetings of the stockholders may
be called only by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer, the President or Secretary of the Company, or by one or
more stockholders holding shares entitled to cast not less than a majority of
the aggregate votes entitled to be cast at such meeting. The Bylaws also
provide that any action which may be taken at any meeting of stockholders may
be taken without a meeting and without prior notice if written consents
approving the action are signed by the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to take such
action at a meeting of stockholders. Accordingly, the holders of the Class A
Common Stock will have insufficient voting power, in the aggregate, to call
special meetings of stockholders and the holders of the Class B Common Stock
may take certain actions by written consent without formally convening a
meeting of stockholders. These provisions will also make it more difficult for
a third party to gain control of the Company.

REGISTRATION RIGHTS

Concurrently with completion of the initial public offering, the Company
and the Exchange Stockholders entered into the registration rights agreement
(the "Registration Rights Agreement") granting such holders registration
rights with respect to the shares of Common Stock received by them as a result
of the Share Exchange. The Registration Rights Agreement provided that the
holders of at least 33% of the outstanding shares received in the Share
Exchange may require the Company to register such shares under the Securities
Act of 1933, as amended (the "Securities Act") on two occasions; provided that
the aggregate offering price of the shares so registered is not less than $1
million on each occasion. The Registration Rights Agreement also provided that
at any time Class A Common Stock is to be registered by the Company under the
Securities Act, the Company must notify the Exchange Shareholders to allow
their participation in the registration, subject to certain conditions. The
Company has agreed to refrain from selling its securities during the ten-day
period prior to, and the 180-day period following, the consummation of each
underwritten offering made pursuant to the Registration Rights Agreement. The
Company has also agreed to pay the costs and expenses of each registration
effected under the Registration Rights Agreement, other than underwriting
discounts and commissions. The

<PAGE>

Registration Rights Agreement was amended in November 1, 1994 to include the
signatories to the Ft. Wayne Stock Purchase Agreement. The shares issuable
upon the exercise of the BRAC Warrant are also entitled to two demands and
unlimited "piggyback" registration rights with respect to the shares issuable
upon its exercise, while the shares issuable upon the NationsBank Warrant are
entitled to one demand and unlimited "piggyback" registration rights. The
Company will bear the expenses of registering such shares, other than
underwriting discounts and commissions. In connection with the Los Angeles
Acquisition, the Company and SoCal entered into a registration rights
agreement granting SoCal and its affiliated entities an unlimited number of
"piggyback" registrations subject to certain conditions. The Company will bear
the expenses of registering such shares, other than underwriting discounts and
commissions. In connection with the Phoenix Acquisition, the Company granted
to Katzin Investments L.C. three demand and an unlimited number of "piggyback"
registration rights for a period of two years for the shares of Class A Common
Stock issued in the Phoenix Acquisition. Katzin Investments, L.C. is selling
all of its shares of Class A Common Stock in the Offering pursuant to its
Registration Rights. See "Principal and Selling Stockholders." In connection
with the Offering, the Company has agreed to pay the Selling Stockholders'
costs and expenses, other than underwriting discounts and commissions.

INDEMNIFICATION MATTERS

As permitted by the Delaware General Corporation Law, the Company's
Restated Certificate of Incorporation provides that directors of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
international misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, relating to prohibited dividends,
distributions and repurchases or redemptions of stock, or (iv) for any
transaction from which the director derives an improper personal benefit. The
Company's Bylaws provide that the Company shall indemnify its directors,
officers, employees and other agents, to the fullest extent provided by
Delaware law. The Company has also entered into indemnification agreements
with certain of its executive officers and directors. The indemnification
agreements require the Company, among other things, to indemnify such
directors and officers against certain liabilities that may arise by reason of
their status or service as directors or officers (other than liabilities
arising from willful misconduct of a culpable nature), and to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified. The Company maintains directors' and officers' insurance
against certain liabilities.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the arrangements described above, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

At present, there is no pending material litigation or proceeding involving
any director, officer, employee or agent of the Company where indemnification
will be required or permitted.

SECTION 203

The Company is subject to Section 203 of the Delaware General Corporation
Law, which prohibits a publicly held Delaware corporation from consummating a
"business combination," except under certain circumstances, with an
"interested stockholder" for a period of three years after the date such
person became an "interested stockholder" unless the business combination is
approved in a prescribed manner. An "interested stockholder" generally is
defined as a person who, together with affiliates and associates, owns (or,
within the prior three years, owned) 15% or more of a corporation's
outstanding voting stock. A "business combination" includes mergers, asset
sales and certain other transactions resulting in a financial benefit to an
interested stockholder.

TRANSFER AGENT

The transfer agent and registrar for the Class A Common Stock is
ChaseMellon Shareholder Services.

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
8,714,183 shares of the Class A Common Stock and 1,936,600 shares of the Class
B Common Stock (assuming the Underwriters' over-allotment option is not
exercised). The Class B Common Stock is convertible on a share-for-share basis
into Class A Common Stock and must be converted to effect any public sale of
such stock. Of these shares, 7,454,400 shares, including the 4,000,000 shares
of Class A Common Stock sold in the Offering, will be freely tradeable without
restriction under the Securities Act, except for any shares purchased by an
"affiliate" of the Company (as that term is defined in the Securities Act),
which will be subject to the resale limitations of Rule 144 under the
Securities Act.

The remaining 1,259,283 shares of the Class A Common Stock and all shares
of the Class B Common Stock are "restricted" securities within the meaning of
Rule 144 and may not be resold in a public distribution, except in compliance
with the registration requirements of the Securities Act or pursuant to Rule
144. Of these shares, 563,400 shares of Class A Common Stock and all of the
Class B Common Stock will become eligible for sale under Rule 144 in August
1996. The Company's executive officers and directors, who in the aggregate
will hold beneficially 705,850 shares of Class A Common Stock and all of the
Class B Common Stock after the Offering, have agreed that they will not sell,
contract or offer to sell or otherwise dispose of, directly or indirectly, any
shares of capital stock of the Company for a period of 90 days from the date
of this Prospectus without the prior written consent of CS First Boston on
behalf of the Underwriters. After such date, certain of these stockholders
have the right to demand that the Company register their shares under the
Securities Act in accordance with agreements between such holders and the
Company and may be able to dispose of their shares in a registered public
offering effected thereunder. In addition, certain stockholders and holders of
the stock purchase warrants possess certain demand and/or "piggyback"
registration rights. See "Description of Capital Stock--Registration Rights"
and "Management--Benefit Plans."

The Company has reserved 760,000 shares of Class A Common Stock for
issuance under the 1994 Option Plan and 25,000 shares of Class A Common Stock
for issuance under the 1994 Directors' Plan. 442,600 stock options are
currently issued or outstanding under the 1994 Option Plan and 25,000 stock
options are issued and outstanding under the 1994 Directors' Plan. The Company
filed a Form S-8 registration statement under the Securities Act to register
260,000 shares of the Class A Common Stock issuable under the 1994 Option Plan
and all 25,000 shares of Class A Common Stock issuable under the 1994
Directors' Plan. The registration statement became effective immediately upon
filing. Shares issued upon the exercise of stock options after the effective
date of the Form S-8 registration statement will be eligible for resale in the
public market without restriction, subject to Rule 144 limitations applicable
to affiliates and the lock-up agreements applicable to certain shares subject
to options as described in the preceding paragraph. The Company expects to
file a Form S-8 Registration Statement with respect to the remaining 500,000
shares of Class A Common Stock issuable under the 1994 Option Plan. The
Company has reserved 362,500 shares of the Class A Common Stock for issuance
upon the exercise of stock purchase warrants.

<PAGE>

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated July 2, 1996 (the "Underwriting Agreement") among TEAM, the
Selling Stockholders and the underwriters named below (the "Underwriters"),
the Underwriters have severally but not jointly agreed to purchase from the
Company and the Selling Stockholders the following respective numbers of
shares of Class A Common Stock, as set forth opposite their names.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------ -----------
<S> <C>
CS First Boston Corporation ......... 1,600,000
The Chicago Corporation ............. 1,600,000
McDonald & Company Securities, Inc. 800,000
-----------
Total ............................. 4,000,000
===========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of Class A Common
Stock offered hereby (other than those shares covered by the over-allotment
option described below) if any are purchased. The Underwriting Agreement
provides that, in the event of a default by an underwriter, in certain
circumstances the purchase commitments of non-defaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.

The Company has granted to the Underwriters an option exercisable by CS
First Boston Corporation on behalf of the Underwriters, expiring at the close
of business on the 30th day after the date of this Prospectus, to purchase up
to 600,000 additional shares of the Class A Common Stock at the public
offering price less underwriting discounts and commissions, all as set forth
on the cover page of this Prospectus. The Underwriters may exercise such
option only to cover over-allotments, if any, in the sale of the shares of
Class A Common Stock. To the extent such option is exercised, each Underwriter
will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares of Class A Common
Stock as it was obligated to purchase pursuant to the Underwriting Agreement.

The Company and the Selling Stockholders have been advised by the
Underwriters that the Underwriters propose to offer the shares of the Class A
Common Stock to the public initially at the public offering price set forth on
the cover page of this Prospectus and, through the Underwriters, to certain
dealers at such price less a concession of $0.43 per share, and the
Underwriters and such dealers may allow a discount of $0.10 per share on sales
to certain other dealers. After the public offering, the public offering price
and concession and discount to dealers may be changed by the Underwriters.

In connection with this offering, the Underwriters and their respective
affiliates may engage in passive market making transactions in the Class A
Common Stock on the Nasdaq National Market in accordance with Rule 10b-6A
under the Securities Exchange Act of 1934 (the "Exchange Act"), during a
period before commencement of offers or sales of the shares offered hereby.
The passive market making transactions must comply with applicable volume and
price limits and be identified as such.

The Company, its officers and directors and the Selling Stockholders have
agreed that they will not offer, sell, contract to sell, announce their
intention to sell, pledge or otherwise dispose of, directly or indirectly, or,
in the case of the Company, file with the Securities and Exchange Commission
(the "Commission") a registration statement under the Securities Act relating
to any additional shares of the Company's Common Stock or securities
convertible into or exchangeable or exercisable for any shares of the
Company's Common Stock without the prior written consent of CS First Boston
Corporation, in the case of the Company's officers and directors and the
Selling Stockholders, for a period of 90 days and, in the case of the Company,
for a period of 180 days, after the date of this Prospectus, except issuances
pursuant to the exercise of stock options granted under the 1994 Option Plan.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under
the Securities Act, or to contribute to payments which the Underwriters may be
required to make in respect thereof.

<PAGE>

CS First Boston Corporation acted as placement agent in connection with the
First Fleet Financing Facility and Second Fleet Financing Facility and is
expected to serve as the placement agent for the Third Fleet Financing
Facility. The Chicago Corporation and McDonald & Company Securities, Inc.
currently provide financial advisory services to the Company.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Class A Common Stock in Canada is being made only
on a private placement basis exempt from the requirement that the Company
prepare and file a prospectus with the securities regulatory authorities in
each province where trades of Class A Common Stock are effected. Accordingly,
any resale of the Class A Common Stock in Canada must be made in accordance
with applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made in accordance with
available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
are advised to seek legal advice prior to any resale of the Class A Common
Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Class A Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company, the Selling
Stockholder and the dealer from whom such purchase confirmation is received
that (i) such purchaser is entitled under applicable provincial securities
laws to purchase such Class A Common Stock without the benefit of a prospectus
qualified under such securities laws, (ii) where required by law, that such
purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons and the Selling Stockholders may be located
outside of Canada and, as a result, it may not be possible to satisfy a
judgment against the issuer or such persons and the Selling Stockholders in
Canada or to enforce a judgment obtained in Canadian courts against the issuer
or such persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Class A Common Stock to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Class A Common Stock acquired by such purchaser pursuant to this Offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from the
Company. Only one such report must be filed in respect of Class A Common Stock
acquired on the same date and under the same prospectus exemption.

<PAGE>

LEGAL MATTERS

The validity of the shares of the Class A Common Stock offered hereby will
be passed upon for the Company by King & Spalding, Atlanta, Georgia. Certain
legal matters in connection with the Offering will be passed upon for the
Underwriters by Hunton & Williams, Atlanta, Georgia.

EXPERTS

The consolidated financial statements of Team Rental Group, Inc. as of
December 31, 1995 and 1994 and for each of the three years in the period ended
December 31, 1995 included in this Prospectus and the related financial
statement schedules included elsewhere in the registration statement have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and elsewhere in the registration statement and are
included in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.

The following financial statements included in this Prospectus have been
audited by other independent auditors as stated in their reports appearing
herein and elsewhere in the Registration Statement and are included in
reliance upon the reports of such firms given upon their authority as experts
in accounting and auditing:

(1) The financial statements as of December 31, 1994 and for each of
the three years in the period ended December 31, 1994 of BRAC-OPCO,
Inc.--Coopers & Lybrand L.L.P.; and

(2) The consolidated financial statements as of February 29, 1996 and
for each of the three years in the period ended February 29, 1996 of
Arizona Rent-A-Car Systems, Inc.--Michael Silver & Company.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and
copied at the public reference section of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, or at its Regional Offices located
at 7 World Trade Center, Suite 1300, New York, New York 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of such
materials can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Class A Common Stock offered
hereby. This Prospectus, which is a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement.
For further information with respect to the Company and the Class A Common
Stock, reference is made to the Registration Statement and the exhibits and
schedules filed as a part thereof. Statements made herein concerning the
provisions of any documents are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by
such reference. The Registration Statement and the exhibits and schedules
thereto may be inspected, without charge, at the public reference section or
regional offices of the Commission at the address indicated above. Copies of
the Registration Statement can be obtained from the public reference section
of the Commission upon payment of prescribed fees.

<PAGE>

BUDGET RENT A CAR CORPORATION IS NOT SELLING, OFFERING FOR SALE OR
UNDERWRITING ALL OR ANY PART OF THE CLASS A COMMON STOCK. BUDGET RENT A CAR
CORPORATION DOES NOT ENDORSE OR MAKE ANY RECOMMENDATIONS WITH RESPECT TO THIS
OFFERING.

NEITHER THE OFFERING NOR THE CONTENTS OF THIS PROSPECTUS (AND SPECIFICALLY,
ANY FINANCIAL DATA CONTAINED HEREIN) HAVE BEEN PREPARED, APPROVED OR ENDORSED
BY BUDGET RENT A CAR CORPORATION, AND BUDGET RENT A CAR CORPORATION ASSUMES NO
OBLIGATION TO ANY INVESTOR IN CONNECTION WITH THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF ANY PORTION OF THIS PROSPECTUS.

BUDGET RENT A CAR CORPORATION FURTHER DISCLAIMS ANY LIABILITY UNDER STATE
OR FEDERAL SECURITIES LAWS ARISING OUT OF OR IN CONNECTION WITH THIS OFFERING,
INCLUDING WITHOUT LIMITATION ANY LIABILITY AS A SELLER, AFFILIATE OR
CONTROLLING PERSON OF A SELLER OR AFFILIATE.

BUDGET RENT A CAR CORPORATION IS THE EXCLUSIVE OWNER OF THE BUDGET NAME AND
LOGO, A FEDERALLY REGISTERED TRADEMARK. NO INVESTOR SHOULD INTERPRET THE USE
AND DISPLAY OF SUCH NAME HEREIN AS APPROVAL, ENDORSEMENT, ACCEPTANCE OR
ADOPTION OF ANY REPRESENTATION OR STATEMENT CONTAINED HEREIN.

<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
TEAM RENTAL GROUP, INC.
Independent Auditors' Report ......................................................... F-2
Consolidated Balance Sheets--December 31, 1994 and 1995 and (unaudited) March 31,
1996 ................................................................................ F-3
Consolidated Statements of Operations for Each of the Three Years in the Period Ended
December 31, 1995 and the (unaudited) Three Months Ended March 31, 1995 and
1996 ... F-4 Consolidated Statements of Stockholders' Equity for Each of the
Three Years in the
Period Ended December 31, 1995 and the (unaudited) Three Months Ended March 31, 1996 F-5
Consolidated Statements of Cash Flows for Each of the Three Years in the Period Ended
December 31, 1995 and the (unaudited) Three Months Ended March 31, 1995 and 1996 ... F-6
Notes to Consolidated Financial Statements ........................................... F-7
BRAC-OPCO, INC.
Report of Independent Accountants .................................................... F-21
Balance Sheets--December 31, 1993 and 1994 ........................................... F-22
Statements of Income for Each of the Three Years in the Period Ended
December 31, 1994 ................................................................... F-24
Statements of Stockholder's Equity for Each of the Three Years in the Period Ended
December 31, 1994 ................................................................... F-25
Statements of Cash Flows for Each of the Three Years in the Period Ended
December 31, 1994 ................................................................... F-26
Notes to Financial Statements ........................................................ F-28
Consolidated Balance Sheet--September 30, 1995 (unaudited) ........................... F-37
Consolidated Statements of Operations for the Nine Months Ended September 30, 1994
and 1995 (unaudited) ................................................................ F-38
Consolidated Statement of Changes in Stockholders' Equity for the Nine Months Ended
September 30, 1995 (unaudited) ...................................................... F-39
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1994
and 1995 (unaudited) ................................................................ F-40
ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
Independent Auditor's Report ......................................................... F-41
Consolidated Balance Sheets--February 28, 1994 and 1995, and February 29, 1996 ...... F-42
Consolidated Statements of Income (Loss) and Retained Earnings for Each of the Three
Years in the Period Ended February 29, 1996 ......................................... F-44
Consolidated Statements of Cash Flows for Each of the Three Years in the Period Ended
February 29, 1996 ................................................................... F-45
Notes to Consolidated Financial Statements ........................................... F-47
</TABLE>

F-1

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
Team Rental Group, Inc.:

We have audited the consolidated balance sheets of Team Rental Group, Inc.
as of December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholders' equity (deficiency) and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the consolidated 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Team Rental Group, Inc. as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Indianapolis, Indiana
April 12, 1996

F-2

<PAGE>

TEAM RENTAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------- 1996
1994 1995
---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents ........................... $ 878 $ 357 $ 4,674
Restricted cash and cash equivalents ................ 32,691 67,731 24,197
Trade and vehicle receivables, net of allowance for
doubtful accounts of $501 and $2,297 ............... 5,501 20,928 29,317
Accounts receivable, related parties ................ 59 61 61
Vehicle inventory ................................... 943 8,938 13,832
Revenue earning vehicles, net ....................... 97,127 219,927 314,591
Other property and equipment, net ................... 5,243 12,503 18,888
Deferred financing fees, net of accumulated
amortization of $102 and $425 ...................... 1,512 2,266 2,092
Franchise rights, net of accumulated amortization of
$641 and $1,500 .................................... 13,953 46,670 60,554
Other assets ........................................ 5,084 6,942 10,471
---------- ---------- -----------
Total ............................................. $162,991 $386,323 $478,677
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable (including amounts to related parties
of $5,792 in 1995) ................................ $126,564 $318,233 $400,229
Capital lease obligations .......................... 623 784 739
Accounts payable ................................... 1,366 14,698 11,870
Accrued and other liabilities ...................... 4,529 9,315 18,684
Deferred income taxes .............................. 1,161 1,701 1,559
---------- ---------- -----------
Total liabilities ................................. 134,243 344,731 433,081
---------- ---------- -----------
COMMITMENTS (NOTE 12)
COMMON STOCK WARRANT ................................ 2,000 2,000 2,000
---------- ---------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 250,000 shares
authorized, no shares issued ......................
Class A common stock, $.01 par value, one vote per
share, 17,500,000 shares authorized, 4,036,300,
5,257,116 and 5,529,843 shares issued .............. 40 52 54
Class B common stock, $.01 par value, ten votes
per share, 2,500,000 shares authorized, 1,936,600
shares issued and outstanding ..................... 20 20 20
Additional paid-in capital ......................... 29,159 41,984 44,709
Accumulated deficit ................................ (2,471) (2,134) (857)
Treasury stock at cost (36,667 shares of Class A
common stock) ..................................... (330) (330)
---------- ---------- -----------
Total stockholders' equity ........................ 26,748 39,592 43,596
---------- ---------- -----------
Total ............................................. $162,991 $386,323 $478,677
========== ========== ===========
</TABLE>

See notes to consolidated financial statements.

F-3

<PAGE>

TEAM RENTAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- ---------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUE:
Vehicle rental revenue ............ $22,321 $38,642 $107,067 $17,354 $44,697
Retail car sales revenue .......... 42,662 4,916 21,097
--------- --------- ---------- ---------- ---------
Total operating revenue .......... 22,321 38,642 149,729 22,270 65,794
--------- --------- ---------- ---------- ---------
OPERATING COSTS AND EXPENSES:
Direct vehicle and operating ...... 5,452 9,439 13,704 2,625 5,959
Depreciation--vehicles ............ 4,358 7,382 27,476 5,126 11,804
Depreciation--nonvehicle .......... 229 446 1,341 285 536
Cost of vehicle sales ............. 38,021 4,258 17,840
Advertising, promotion
and selling ..................... 1,658 3,090 11,826 2,036 4,600
Facilities ........................ 2,695 4,398 11,121 2,076 4,328
Personnel ......................... 4,537 7,947 24,515 4,494 10,689
General and administrative ........ 790 1,515 6,686 886 2,270
Amortization of franchise rights .. 152 229 859 112 514
--------- --------- ---------- ---------- ---------
Total operating costs and
expenses ....................... 19,871 34,446 135,549 21,898 58,540
--------- --------- ---------- ---------- ---------
Operating income .................... 2,450 4,196 14,180 372 7,254
--------- --------- ---------- ---------- ---------
OTHER (INCOME) EXPENSE:
Interest expense--vehicles ........ 2,462 3,909 13,874 2,616 5,621
Interest expense--other ........... 181 341 473 67 136
Interest income--restricted cash .. (670) (1,348) (400) (749)
Interest expense--related party ... 220 190 159 118
Nonrecurring income ............... (1,023)
--------- --------- ---------- ---------- ---------
Other expense--net ............... 1,840 3,770 13,158 2,283 5,126
--------- --------- ---------- ---------- ---------
Income (loss) before income taxes .. 610 426 1,022 (1,911) 2,128
Provision (credit) for income taxes 182 176 685 (765) 851
--------- --------- ---------- ---------- ---------
Net income (loss) ................... $ 428 $ 250 $ 337 $(1,146) $ 1,277
========= ========= ========== ========== =========
Weighted average common shares
outstanding ....................... 3,704 6,369 6,037 7,256
========= ========== ========== =========
Earnings (loss) per common share ... $ 0.07 $ 0.05 $ (0.19) $ 0.18
========= ========== ========== =========
</TABLE>

See notes to consolidated financial statements.

F-4

<PAGE>

TEAM RENTAL GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
ADDITIONAL STOCKHOLDERS'
COMMON PAID-IN ACCUMULATED TREASURY EQUITY
STOCK CAPITAL DEFICIT STOCK (DEFICIENCY)
-------- ------------ ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1993 ..... $15 $ 514 $(1,873) $(1,344)

Net income ....................... 428 428
Distributions on redeemable
preferred stock ................. (275) (275)
Dividends to common stockholders (60) (60)
-------- ------------ ------------- ---------- ---------------
Balances at December 31, 1993 ... 15 239 (1,505) (1,251)

Net income ....................... 250 250
Distributions on redeemable
preferred stock ................. (183) (183)
Dividends to common stockholders (47) (47)
Net proceeds from initial public
offering ........................ 45 28,903 28,948
Deferred taxes due to a change in
tax status ...................... (1,169) (1,169)
Shares issued in business
combinations .................... 200 200
-------- ------------ ------------- ---------- ---------------
Balances at December 31, 1994 ... 60 29,159 (2,471) 26,748

Net income ....................... 337 337
Shares issued in business
combinations .................... 12 12,825 12,837
Class A common stock acquired for
treasury ........................ $(330) (330)
-------- ------------ ------------- ---------- ---------------
Balances at December 31, 1995 ... 72 41,984 (2,134) (330) 39,592
Net income (unaudited) ........... 1,277 1,277
Shares issued in business
combination (unaudited) ......... 2 2,725 2,727
-------- ------------ ------------- ---------- ---------------
Balances at March 31, 1996
(unaudited) ..................... $74 $44,709 $ (857) $(330) $43,596
======== ============ ============= ========== ===============
</TABLE>

See notes to consolidated financial statements.

F-5

<PAGE>

TEAM RENTAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1993 1994 1995
---------- ----------- -----------

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................... $ 428 $ 250 $ 337
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation .............................................. 4,587 7,828 28,817
Amortization .............................................. 152 534 1,761
Deferred income tax provision ............................. (8) 540
Provision for doubtful accounts ........................... (112) (282) 1,796
Discount on acquisition note .............................. 58
Changes in certain assets and liabilities, net of effects of acquisitions:
Receivables ............................................... (297) (871) (11,189)
Other assets .............................................. (323) (1,788) 387
Car sales inventory ....................................... (7,995)
Accounts payable .......................................... 247 (2,259) 9,484
Accrued and other liabilities ............................. 305 256 (7,790)
---------- ----------- -----------
Net cash provided by operating activities ................ 5,045 3,660 16,148
---------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash ............................................ (32,691) (13,271)
Proceeds from sale of revenue earning vehicles ............ 48,516 73,728 293,905
Proceeds from sale of other property and equipment ........ 51
Purchases of revenue earning vehicles ...................... (52,767) (155,176) (315,863)
Purchases of other property and equipment .................. (229) (637) (4,562)
Purchase of franchise rights ............................... (1,839)
Payment for acquisitions, net of cash acquired ............ (5,727) (6,507)
---------- ----------- -----------
Net cash used in investing activities .................... (4,480) (122,291) (46,298)
---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net ................. 28,948
Net increase (decrease) in vehicle obligations ............ (33) (5,760) 20,947
Proceeds from notes payable:
Medium term notes ......................................... 105,682
Working capital facilities ................................ 6,890
Related party ............................................. 559 1,392
Other ..................................................... 2,610 3,399
Principal payments:
Related party ............................................. (33) (3,200) (276)
Capital leases ............................................ (66) (410) (666)
Other ..................................................... (747) (5,665) (259)
Deferred financing fees .................................... (1,614) (76)
Distributions on redeemable preferred stock ................ (275) (183)
Repayment of redeemable preferred stock .................... (2,747)
Dividends to common stockholders ........................... (60) (47)
Purchase of treasury stock ................................. (330)
---------- ----------- -----------
Net cash provided by (used in) financing activities .... (655) 119,006 29,629
---------- ----------- -----------
Net increase (decrease) in cash and cash equivalents ....... (90) 375 (521)
Cash and cash equivalents, beginning of period .............. 593 503 878
---------- ----------- -----------
Cash and cash equivalents, end of period .................... $ 503 $ 878 $ 357
========== =========== ===========
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................... $ (1,146) $ 1,277
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation .............................................. 5,411 12,340
Amortization .............................................. 296 514
Deferred income tax provision ............................. (520) (142)
Provision for doubtful accounts ...........................
Discount on acquisition note ..............................
Changes in certain assets and liabilities, net of effects of acquisitions:
Receivables ............................................... (2,790) (8,389)
Other assets .............................................. (3,650) (3,529)
Car sales inventory ....................................... (4,894)
Accounts payable .......................................... 3,679 (2,828)
Accrued and other liabilities ............................. 7,172 9,369
----------- -----------
Net cash provided by operating activities ................ 8,452 3,718
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash ............................................ 14,925 43,534
Proceeds from sale of revenue earning vehicles ............ 60,831 43,878
Proceeds from sale of other property and equipment ........
Purchases of revenue earning vehicles ...................... (109,091) (106,812)
Purchases of other property and equipment .................. (2,176) (6,921)
Purchase of franchise rights ............................... (11,497)
Payment for acquisitions, net of cash acquired ............ (7,103)
----------- -----------
Net cash used in investing activities .................... (42,614) (37,818)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net .................
Net increase (decrease) in vehicle obligations ............ 29,112 13,540
Proceeds from notes payable:
Medium term notes .........................................
Working capital facilities ................................ 6,950 24,922
Related party .............................................
Other .....................................................
Principal payments:
Related party .............................................
Capital leases ............................................ (177) (45)
Other ..................................................... (58)
Deferred financing fees ....................................
Distributions on redeemable preferred stock ................
Repayment of redeemable preferred stock ....................
Dividends to common stockholders ...........................
Purchase of treasury stock .................................
----------- -----------
Net cash provided by (used in) financing activities .... 35,827 38,417
----------- -----------
Net increase (decrease) in cash and cash equivalents ....... 1,665 4,317
Cash and cash equivalents, beginning of period .............. 878 357
----------- -----------
Cash and cash equivalents, end of period .................... $ 2,543 $ 4,674
=========== ===========
</TABLE>
See notes to consolidated financial statements.

F-6

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(INTERIM FINANCIAL INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED. THE UNAUDITED INTERIM
FINANCIAL STATEMENTS REFLECT ALL ADJUSTMENTS, CONSISTING OF NORMAL RECURRING
ADJUSTMENTS WHICH ARE, IN THE OPINION OF MANAGEMENT, NECESSARY TO A FAIR
STATEMENT OF THE RESULTS FOR THE INTERIM PERIODS. INFORMATION FOR THE INTERIM
PERIODS IS NOT NECESSARILY INDICATIVE OF RESULTS TO BE ACHIEVED FOR THE FULL
YEAR.)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS--Team Rental Group, Inc. (the "Company") is engaged
in the business of the daily rental of vehicles, including cars, trucks and
passenger vans, and the retail sale of used vehicles. The Company operates
Budget Rent a Car ("Budget") franchises granted by Budget Rent a Car
Corporation ("BRAC") through its operating subsidiaries serving twelve
metropolitan regions in the U.S. including Philadelphia and Pittsburgh,
Pennsylvania; San Diego, California; Southern California (excluding San
Diego); Cincinnati and Dayton, Ohio; Albany and Rochester, New York;
Charlotte, North Carolina; Richmond, Virginia; Hartford, Connecticut and Fort
Wayne, Indiana. MCK Realty, Inc. ("MCK") is owned by the Company's principal
stockholders. Because MCK is controlled by the Company's principal
stockholders and the Company has guaranteed the lease payments assigned to a
bank, MCK is included in the consolidated financial statements.

BASIS OF PRESENTATION--The 1993 financial statements consist of companies
affiliated through common ownership and control and reflect the consolidated
accounts of each company. Concurrent with the initial public offering (Note
2), the Company exchanged 563,400 shares of Class A common stock and 1,936,450
shares of Class B common stock for all of the outstanding common stock of the
combined companies, which accordingly, became wholly owned subsidiaries (the
"Share Exchange"). The 1994 and 1995 consolidated financial statements include
the accounts of Team Rental Group, Inc. and its wholly owned subsidiaries. All
significant intercompany accounts have been eliminated.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management of the
Company 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 highly liquid
investments including money market funds, commercial paper and time deposits
purchased with an original maturity of three months or less to be cash
equivalents.

RESTRICTED CASH AND CASH EQUIVALENTS--Restricted cash and cash equivalents
consists of Medium Term Notes (Note 2) proceeds not currently invested in
eligible revenue earning vehicles. Under the terms of the Medium Term Notes
Indentures, the Company is required to invest the proceeds in either
restricted cash investments as defined by the indenture or revenue earning
vehicles.

REVENUE EARNING VEHICLES--Revenue earning vehicles are stated at cost,
after deducting related discounts and manufacturers' incentives, and are
depreciated over their estimated economic lives or at rates corresponding to
manufacturers' repurchase program guidelines, where applicable. Depreciation
rates range from .5% to 3% per month. Management periodically reviews
depreciable lives and rates based on a variety of factors including general
economic conditions and estimated holding periods of the vehicles. Gains and
losses upon the sale of revenue earning vehicles are recorded as an adjustment
to depreciation expense.

ADVERTISING, PROMOTION AND SELLING--Advertising, promotion and selling
expense are charged to expense as incurred. The Company incurred advertising
expense of $275, $412 and $2,347 in 1993, 1994 and 1995, respectively.

F-7

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RETAIL CAR SALES INVENTORY--Retail car sales inventory is stated at the
lower of cost (first-in, first-out method) or market.

OTHER PROPERTY AND EQUIPMENT--Other property and equipment is recorded at
cost. Depreciation is being provided on the straight-line method over the
following estimated useful lives:

<TABLE>
<CAPTION>
<S> <C>
Buildings .....................................10 - 23 years
Equipment, furniture and fixtures ............. 3 - 10 years
Capital leases and leasehold improvements .... Lesser of estimated useful lives or terms of
related leases
</TABLE>

DEFERRED FINANCING FEES--Direct costs incurred in connection with the
Company's borrowings have been deferred and are being amortized over the terms
of the related loan agreements on the straight-line basis.

PREPAID ROYALTY FEES--Prepaid royalty fees of $1,797 and $1,217 (net of
accumulated amortization of $203 and $783) at December 31, 1994 and 1995,
respectively, are related to the abatement of fees at the Company's
Philadelphia operations through June 15, 1999 and are recorded in other
assets. The prepaid fees are being amortized using an accelerated method over
the royalty abatement period of five years.

FRANCHISE RIGHTS--Franchise agreements are renewable for an unlimited
number of one- and five-year periods, subject to certain terms and conditions.
Franchise rights are amortized using the straight-line method over forty
years. The Company believes that the vehicle rental industry and, therefore,
vehicle rental franchises have an expected life in excess of forty years and
the industry will continue as long as the automobile is an accepted method of
transportation. The specific markets the Company serves are considered to be
stable and are locations which are major national or regional commercial
centers that attract business and leisure travelers who need rental vehicles.
Circumstances that would indicate possible impairment to franchise rights
include the failure of Budget Rent a Car to maintain its international network
of rental car franchisers, the termination of the Company's presence in one or
more major airport markets, or a significant permanent decline in cash flows
from rental operations. The impairment would be measured as the amount by
which the carrying value of the related asset exceeds the present value of
estimated annual discounted cash flows generated by the franchise operations
utilizing an appropriate discount rate. Effective January 1, 1995, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of, which requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amounts of these assets may not be
recoverable. There was no material effect on the Company's consolidated
financial statements upon adoption of SFAS No. 121 in 1995.

INCOME TAXES--Deferred tax assets and liabilities are computed based on
differences between the financial statement and income tax bases of assets and
liabilities using enacted tax rates. Deferred income tax expense or benefit is
based on the change in deferred tax assets and liabilities from period to
period, subject to an ongoing assessment of realization.

EARNINGS PER COMMON SHARE--Earnings per common share for the year ended
December 31, 1994 was computed assuming all of the outstanding common stock of
the combined companies (which totaled 2,500,000 shares) was outstanding the
entire year and the shares issued in connection with the initial public
offering and the Fort Wayne acquisition were outstanding from the dates
issued. Earnings per common share for the year ended December 31, 1995 was
based on the weighted average number of common shares outstanding during the
year considering the 1995 and 1996 acquisitions and the purchase of treasury
stock. The assumed issuance of the shares for the common stock warrant to BRAC
and the exercise of stock options does not have a materially dilutive effect.

F-8

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RETENTION OF SELF INSURED RISKS--At December 31, 1995, the Company has
automobile liability insurance coverage of up to $1,000, with a $500 retention
per occurrence with respect to personal injury and damage claims arising from
the use of its vehicles. The Company provides reserves on reported claims and
claims incurred but not reported at each balance sheet date based on actuarial
estimates. The actuarially determined reserves are necessarily based on
estimates, and while management believes that the amounts are adequate, the
ultimate liability may be in excess of, or less than, the amounts provided.
Such estimates are reviewed and evaluated in light of emerging claim
experience and existing circumstances. Any changes in estimates from this
review process are reflected in operations currently.

STOCK OPTIONS--In October 1995, the Financial Accounting Standards Board
issued SFAS No. 123, Accounting for Stock-Based Compensation, which
encourages, but does not require, companies to adopt the fair value based
method of accounting for stock-based employee compensation plans. Under the
fair value method, compensation cost is measured at the grant date based on
the fair value of the award and is recognized over the service period, which
is usually the vesting period. Companies are also permitted to continue to
account for such transactions under Accounting Principles Board Opinion No.
25, but would be required to disclose on a pro forma basis, net income and, if
presented, earnings per share, as if the fair value based method of accounting
had been applied.

The accounting requirements of the new method are effective for financial
statements for fiscal years beginning after December 15, 1995. The Company has
not yet determined if it will elect to change to the fair value based method,
nor has it determined the effect the new standard will have on net income and
earning per share should it elect to make such a change. Adoption of the new
standard will not have an effect on the Company's cash flows.

RECLASSIFICATIONS--Certain reclassifications have been made to the 1993 and
1994 consolidated statements to conform with the 1995 presentation.

2. INITIAL PUBLIC OFFERING AND MEDIUM TERM NOTES

The Company sold 3,300,000 shares of Class A common stock on August 25,
1994 and 154,400 shares of Class A common stock on September 19, 1994 at $9.50
per share to investors in an initial public offering resulting in gross
proceeds of $32,800 to the Company. Net proceeds to the Company after offering
expenses were $28,948. The net proceeds were used to acquire certain assets
(certain liabilities were also assumed) of Freedom River, Inc. ("Freedom
River"), capitalize Team Fleet Finance Corporation ("TFFC") a wholly owned
subsidiary, acquire vehicles under operating leases, redeem the outstanding
redeemable preferred stock, acquire the Budget Rent a Truck franchise rights
for San Diego, California, repay loans and accrued interest to related and
non-related third parties, and purchase equipment leased from related parties.

Concurrent with the initial public offering, TFFC issued senior and
subordinated asset-backed notes ("Medium Term Notes") of $100,000 and $5,682,
respectively, in a private placement pursuant to an Indenture between TFFC and
Bankers Trust Company, as Trustee. The proceeds of the Medium Term Notes are
available to finance the purchase of rental fleet vehicles subject to
manufacturers' repurchase programs sponsored by Chrysler, General Motors and
Ford.

F-9

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

3. ACQUISITIONS

During 1994, 1995 and the three months ended March 31, 1996, the Company
acquired certain Budget franchise operations. The acquisitions have been
accounted for under the purchase method of accounting and, accordingly, the
Company has allocated the cost of the acquisitions on the basis of the
estimated fair value of the assets acquired and liabilities assumed. The 1995
and 1996 allocations are based on preliminary estimates and may be revised at
a later date. The accompanying consolidated statements of operations and cash
flows reflect the operations of the acquired companies from their respective
acquisition dates through the years ended December 31, 1994 and 1995, and the
three months ended March 31, 1995 and 1996.

1994 ACQUISITIONS

FREEDOM RIVER--Concurrent with the initial public offering, the Company
acquired certain assets and assumed certain operating liabilities of Freedom
River from Chrysler Credit Corporation ("CCC"), a secured creditor of Freedom
River, pursuant to a private foreclosure sale conducted by CCC. The assets
acquired consisted of the Budget vehicle rental operations in the Philadelphia
and Pittsburgh, Pennsylvania and Cincinnati, Ohio metropolitan areas.
Substantially all of Freedom River's assets, other than its fleet, were
purchased for approximately $10,600.

FORT WAYNE FRANCHISE--In November 1994, the Company exchanged 18,500 shares
of Class A common stock with a value of $200 for all of the outstanding common
stock of Fort Wayne Rental Group, Inc. located in Fort Wayne, Indiana. A
principal stockholder and director of the Company, who was a stockholder of
Fort Wayne Rental Group, Inc., received 7,400 shares of Class A common stock
with a value of $80 in this transaction.

1995 ACQUISITIONS

DAYTON FRANCHISE--In January 1995, the Company purchased all of the
outstanding stock of Don Kremer, Inc., located in Dayton, Ohio, for $1,300.
The acquisition funding consisted of $650 cash and two notes totaling $650.

CHARLOTTE FRANCHISE--In January 1995, the Company purchased all of the
outstanding stock of MacKay Car & Truck Rentals, Inc., located in Charlotte,
North Carolina, for approximately $8,405 consisting of cash of $8,277 and
13,483 shares of Class A common stock.

HARTFORD FRANCHISE--In March 1995, the Company purchased all of the
outstanding stock of Rental Car Resources, Inc., located in Hartford,
Connecticut, for approximately $1,475 by issuing 157,333 shares of Class A
common stock.

OPCO FRANCHISE--In October 1995, the Company purchased all of the
outstanding stock of BRAC-OPCO, Inc., which operates Budget franchises in the
greater Los Angeles area, excluding the vehicle rental operations at Los
Angeles International Airport of Southern California and certain other
territories as set forth in the franchise agreement, for approximately $11,
234 by issuing 1,050,000 shares of Class A common stock.

The Company's results of operations as shown in the following table are
presented as if the acquisitions had occurred at the beginning of 1994. The
unaudited pro forma results are not necessarily indicative of the actual
results of operations that would have occurred had the acquisitions actually
been made at the beginning of 1994.

F-10

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

3. ACQUISITIONS (Continued)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1994 1995
---------- ----------
<S> <C> <C>
Operating revenue ............................... $155,343 $199,743
Income (loss) before provision for income taxes 3,634 (271)
Net income (loss) ............................... 1,781 (516)
Earnings (loss) per common share ................ 0.25 (0.07)
</TABLE>

Subsequent to December 31, 1995, the Company made two acquisitions as
listed below. The acquisitions will be accounted for under the purchase method
of accounting and, accordingly, the Company will allocate the cost of the
acquisitions on the basis of the estimated fair value of assets acquired and
liabilities assumed. Franchise rights acquired will be amortized over forty
years. The Company's consolidated statement of operations will not include the
revenues and expenses of the acquired businesses until 1996.

1996 ACQUISITIONS

VAN POOL OPERATIONS--In February 1996, the Company purchased for a nominal
amount all of the outstanding stock of VPSI, Inc. ("VPSI") located in Detroit,
Michigan. The Company borrowed $36,700 under a new financing facility to
finance the van fleet. VPSI provides commuter van pooling services to business
commuters in 22 states.

PHOENIX FRANCHISE--In February 1996, the Company purchased all of the
outstanding stock of Arizona Rent-A-Car Systems, Inc. located in Phoenix,
Arizona for approximately $18,000 consisting of cash of approximately $5,000,
a promissory note of $10,000 and 272,727 shares of Class A common stock.

The Company's results of operations as shown in the following table are as
if the 1995 and 1996 acquisitions had occurred at the beginning of 1995. These
unaudited pro forma results are not necessarily indicative of the actual
results of operations that would have occurred had the acquisitions actually
been made at the beginning of 1995.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Operating revenue ............................... $63,019 $76,831
Income (loss) before provision for income taxes 764 (921)
Net income (loss) ............................... 458 (553)
Earnings (loss) per common share ................ 0.06 (0.07)
</TABLE>

4. REVENUE EARNING VEHICLES

Revenue earning vehicles consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
---------- ----------
<S> <C> <C>
Revenue earning vehicles ....................... $102,014 $245,849
Less accumulated depreciation and amortization (4,887) (25,922)
---------- ----------
$ 97,127 $219,927
========== ==========
</TABLE>

Depreciation expense was adjusted for losses of $111, $24 and $90 upon the
sale of revenue earning vehicles during the years ended December 31, 1993,
1994 and 1995, respectively.

F-11

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

5. OTHER PROPERTY AND EQUIPMENT

Other property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Buildings ...................................... $ 4,632 $10,160
Leasehold improvements ......................... 1,055 3,994
Furniture, fixtures and office equipment ...... 2,913 7,069
--------- ---------
8,600 21,223
Less accumulated depreciation and amortization (3,357) (8,720)
--------- ---------
$ 5,243 $12,503
========= =========
</TABLE>

Included in other property and equipment at December 31, 1994 and 1995 are
$256 and $827, respectively, of assets held under capital leases.

6. NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
---------- ----------
<S> <C> <C>
Medium Term Notes:
Senior .................... $100,000 $138,500
Subordinated .............. 5,682 7,182
Vehicle obligations ........ 18,097 149,965
Working capital facilities 2,610 9,500
Related party obligations . 5,792
Other notes payable ........ 175 7,294
---------- ----------
$126,564 $318,233
========== ==========
</TABLE>

MEDIUM TERM NOTES--Medium term notes are comprised of Notes issued by TFFC
in August 1994 ("TFFC notes") and notes assumed in the acquisition of
BRAC-OPCO, Inc. in October 1995 ("OPCO notes").

The TFFC notes are comprised of senior notes requiring monthly interest
payments at average LIBOR, as defined, plus 0.75% (6.75% at December 31,
1995). Monthly principal payments of $16,667 commence in June 1999 with the
last payment due in November 1999. The subordinated notes require monthly
interest payments at average LIBOR, as defined, plus 1.30% per annum (7.3% at
December 31, 1995) and are payable in full in December 1999.

The OPCO notes are comprised of senior notes requiring monthly interest
payments at average LIBOR, as defined, plus 0.60% (6.60% at December 31,
1995). Monthly principal payments of $4,812 commence in November 1997 with the
last payment due in June 1998. The subordinated notes require monthly interest
payments at average LIBOR, as defined, plus 1.0% per annum (7.0% at December
31, 1995) and are payable in full in December 1998.

The Company has two consolidated subsidiaries that have net assets totaling
$10.3 million which are restricted from transfer or distribution to the parent
company. These net assets are restricted in accordance with terms of the
Medium Term Notes.

F-12

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

6. NOTES PAYABLE (Continued)
VEHICLE OBLIGATIONS--Vehicle obligations consist of outstanding lines of
credit to purchase rental fleet and used vehicle inventory. Available
collateralized lines of credit at December 31, 1995 consist of $150,000 for
rental vehicles and $25,700 for used vehicle inventory with maturity dates
ranging from February 1996 to April 1997. Vehicle obligations are
collateralized by revenue earning vehicles financed under these credit
facilities and proceeds from the sale, lease or rental of vehicles and used
vehicle inventory.

Rental vehicle obligations are generally amortized over 5 to 15 months
resulting in monthly principal payments ranging from 2% to 3% of the
capitalized vehicle cost. When rental vehicles are sold, the related unpaid
obligation is due. Interest payments for rental fleet facilities are due
monthly at annual interest rates ranging from 8.0% to 9.75% at December 31,
1995. Management expects vehicle obligations will generally be repaid within
one year from the balance sheet date with proceeds received from either the
repurchase of the vehicles by the manufacturers in accordance with the terms
of the manufacturers' rental fleet programs or from the sale of the vehicles.

Monthly payments of interest only for used vehicle inventory obligations
are required at annual interest rates ranging from 8.25% to 9.75% at December
31, 1995. Used vehicle inventory obligations are paid when the inventory is
sold but in no event later than 120 days after the date of purchase.

WORKING CAPITAL FACILITIES--Working capital facilities of up to $13,000 are
for the purchase of used vehicle inventory and working capital, require
monthly interest payments on the outstanding balance at LIBOR plus 1.85%
(7.53% at December 31, 1995) and expire November 1996. The facilities are
collateralized by accounts receivable, inventory, equipment, general
intangibles, investments and all other personal property of the Company and
guarantees of the respective subsidiaries. Under the terms of one of the
agreements, the Company is required to pay commitment fees quarterly equal to
0.125% per annum on the maximum amount of credit available under the credit
facility and an annual agent fee of $50 as long as the facility has an
outstanding balance. This agreement is subject to certain covenants, the most
restrictive of which requires the Company to maintain certain financial ratios
and minimum tangible net worth and prohibits the payment of cash dividends. At
December 31, 1995, the Company was not in compliance with certain debt
requirements and obtained waivers of such covenants. In February 1996, certain
covenants were amended and the Company is in compliance with the amended terms
of the agreement.

RELATED PARTY OBLIGATIONS--At December 31, 1995, related party obligations
due to stockholders related primarily to the acquisition of certain franchise
territories and consist of an unsecured promissory note bearing interest at
8.75% per annum due January 1996; an unsecured promissory note bearing
interest at 9% per annum, payable in monthly installments of $4.3 plus
interest due March 2000; and two unsecured promissory notes bearing interest
at 8% per annum, payable in quarterly installments of $6.5 and $32.5 plus
interest and due October 1999 and October 1997, respectively.

OTHER NOTES PAYABLE--Other notes payable consist primarily of a secured
promissory note that bears interest at 8% per annum payable in annual
installments of $750, due August 1999, collateralized by personal guarantees
from the previous owners of Southern California operations; a business credit
note due November 1996 bearing interest at prime (8.75% December 31, 1995)
collateralized by real estate property and secured by personal guarantees of
certain stockholders of the Company; a collateralized promissory note bearing
interest at 8% per annum, payable in monthly installments of $7 plus interest,
due September 2010, collateralized by real estate property and personal
guarantees of certain stockholders of the Company; a mortgage note bearing
interest at 9.10% per annum, payable in monthly installments ranging from $5.4
to $7.8 plus interest, due September 2000 with an option to extend to
September 2005, collateralized by real estate property; and a mortgage note
bearing interest at 7.5% per annum, payable in monthly installments of $8.3
plus interest, due June 1998, collateralized by real estate property.

F-13

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

6. NOTES PAYABLE (Continued)
Future principal payments at December 31, 1995 were as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- -------------- ----------
<S> <C>
1996 .......... $165,147
1997 .......... 1,304
1998 .......... 41,183
1999 .......... 106,796
2000 .......... 3,086
Thereafter .... 717
----------
$318,233
==========
</TABLE>

7. RELATED PARTY TRANSACTIONS

The Company leases facilities from certain stockholders. Operating lease
payments for the years ended December 31, 1993, 1994 and 1995 were $33, $196
and $220, respectively. Capital lease payments for the year ended December 31,
1993 were $31. There were no capital lease payments to the stockholders during
1994 or 1995. MCK has assigned lease payments from the Company to a bank.

At December 31, 1995, the Company was leasing approximately $2,001 of
revenue earning vehicles to Arizona Rent-A-Car Systems, a franchise the
Company acquired in 1996 (see Note 3).

Prior to the acquisition of the Fort Wayne operations (see Note 3), the
Company leased fleet vehicles to Fort Wayne Rental Group, Inc. for
approximately $60 and $366 for the years ended December 31, 1993 and 1994,
respectively.

At December 31, 1994, the Company was leasing approximately $1,200 of
revenue earning vehicles to the Dayton Budget franchise which the Company
acquired in 1995 (see Note 3) and had trade vehicle receivables of $43 at that
date from the Dayton franchise.

At December 31, 1994 and 1995, the Company has non-interest bearing notes
receivable totaling $59, $61, respectively, due from a stockholder and
director which are payable on demand.

Approximately $635, $564 of cash and cash equivalents are on deposit with
or are being held as agent for the Company with a bank at December 31, 1994
and 1995, respectively. A stockholder and director of the Company serves on
the bank's board of directors.

8. LEASES

The Company leases revenue earning vehicles and facilities under leases
that expire at various dates through August 2013. Generally, the facility
leases are subject to payment increases based on cost of living indices and
require the Company to pay taxes, maintenance, insurance and certain other
operating expenses. Certain facility leases require the Company to pay fixed
amounts plus contingent rentals based on gross rental revenues, as defined,
and gasoline sales.

F-14

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

8. LEASES (Continued)
Future minimum payments under noncancellable leases at December 31, 1995
are as follows:

<TABLE>
<CAPTION>
OPERATING LEASES
------------------------
YEAR ENDING CAPITAL RELATED NON-RELATED
DECEMBER 31, LEASES PARTIES PARTIES
- ----------------------------------- --------- --------- -------------
<S> <C> <C> <C>
1996 ............................... $280 $ 186 $ 6,743
1997 ............................... 214 193 5,427
1998 ............................... 170 164 3,191
1999 ............................... 166 99 2,234
2000 ............................... 125 102 2,283
Thereafter ......................... 1,247 4,928
--------- --------- -------------
955 $1,991 $24,806
========= =============
Less amounts representing interest 171
---------
$ 784
=========
</TABLE>

Rent expense consists of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1993 1994 1995
-------- -------- ---------
<S> <C> <C> <C>
Revenue earning vehicles $ 905 $3,121 $ 1,518
Facilities:
Minimum rentals ........ 878 1,990 5,914
Contingent rentals .... 1,649 1,923 3,502
-------- -------- ---------
Total ................... $3,432 $7,034 $10,934
======== ======== =========
</TABLE>

9. INCOME TAXES

The provision (credit) for income taxes consists of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------ ------ -------
<S> <C> <C> <C>
Current:
Federal .. $ 21 $184
State ..... 161 $ 145
Deferred:
Federal .. (23) 470
State ..... 15 70
------ ------ -------
Total ...... $182 $176 $685
====== ====== =======
</TABLE>

F-15

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

9. INCOME TAXES (Continued)
The provision (credit) for income taxes differs from the amount computed
using the statutory federal income tax rate as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1993 1994 1995
------- ------- ------
<S> <C> <C> <C>
Income tax provision at federal statutory rate .......... $ 208 $ 130 $348
Effect of (earnings) losses of nontaxable (subchapter S)
companies ............................................... (199) 645
Deductible preferred stock dividends ..................... (110)
Nondeductible portion of amortization of franchise rights 40 12 94
State tax provision, net of federal benefit .............. 161 30 215
Benefit of net operating loss carryforwards .............. (645)
Tax loss carryforwards not recognized .................... 57
Other .................................................... 25 4 28
------- ------- ------
$ 182 $ 176 $685
======= ======= ======
</TABLE>

The tax effects of temporary differences that give rise to the Company's
deferred tax assets and liabilities are as follows at December 31:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1994 1995
-------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ...................... $1,048 $13,195
Non-deductible reserves ............................... 292 2,267
Alternative minimum tax carryforward .................. 197 197
Valuation allowance ................................... (7,378)
-------- ---------
1,537 8,281
-------- ---------
Deferred tax liabilities:
Difference between book and tax bases of revenue
earning vehicles and other property and equipment ... 2,613 8,690
Franchise rights ...................................... 85 1,292
-------- ---------
2,698 9,982
-------- ---------
Net deferred tax liability ............................ $1,161 $ 1,701
======== =========
</TABLE>

Concurrent with the Share Exchange, the nontaxable status of the commonly
owned companies was terminated and a deferred tax liability of approximately
$1,169 was recorded with a corresponding charge to the accumulated deficit.
The change in the deferred tax liability after the Share Exchange has been
reflected as a deferred income tax provision for the years ended December 31,
1994 and 1995, respectively.

At December 31, 1995, the Company and its subsidiaries have federal tax
loss carryforwards of approximately $36,942 expiring between December 2005 and
December 2010. The Company has recorded a valuation allowance for a portion of
the acquired net operating loss carryforwards due to the uncertainty of their
ultimate realization. Any subsequently recognized tax benefits attributed to
the change in the valuation allowance will reduce franchise rights.

The Internal Revenue Code places limitations on the utilization of net
operating losses and similar tax attributes by a corporation in the event of a
stock ownership change aggregating more than 50% over

F-16

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

9. INCOME TAXES (Continued)
a specified time period. Net operating loss carryforwards in existence when
ownership changes occur are subject to an annual utilization limitation that
may restrict the future utilization of the net operating losses. Similarly,
utilization of losses generated during years when separate returns have been
filed may be limited in the future. Such limitations have been considered in
the determination of deferred income taxes.

10. BENEFIT PLANS

STOCK OPTIONS--On April 25, 1994, the Company adopted the 1994 Incentive
Stock Option Plan (the "ISO Plan") and the 1994 Directors' Stock Option Plan
(the "Directors' Plan").

The ISO Plan provides for the issuance of up to 260,000 shares of Class A
common stock to key employees. The ISO Plan stock options may be either
incentive stock options or nonqualified options and expire ten years after the
date of grant. The exercise price of incentive stock options may not be less
than the fair market value of the underlying shares at the date of grant. The
exercise price for nonqualified options may not be less than 85% of the fair
market value of the underlying shares or, if greater, the book value of the
underlying shares at the date of grant.

The Directors' Plan provides for the issuance of 25,000 shares of Class A
common stock to selected directors of the Company. The Directors' Plan stock
options are nonqualified and expire ten years after the date of grant. The
exercise price of the nonqualified options under the Directors' Plan is the
fair market value of the underlying shares at the date of grant.

The Company has reserved 285,000 shares of Class A common stock for the
stock option plans. The following is an analysis of stock option activity for
each of the three years in the period ended December 31, 1995 and the stock
options outstanding at December 31, 1995:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTIONS SHARES PRICE
- -------------------------------------------------- --------- ----------
<S> <C> <C>
Outstanding, January 1, 1993 to December 31, 1994 15,000 $9.50
Granted during 1995 ............................... 202,600 9.50
---------
Outstanding, December 31, 1995 .................... 217,600 9.50
=========
</TABLE>

At December 31, 1995, none of the outstanding stock options were
exercisable prior to September 1, 1996 and expire March 1, 2005. The options
are nontransferable and will be forfeited upon termination of employment, as
defined.

PROFIT SHARING PLAN--The Company adopted a Profit Sharing Plan with a
401(k) arrangement under the Internal Revenue Code effective January 1, 1996.
Employees are eligible to participate after completing one year of service and
attaining age 21. Participants may contribute 1% - 15% of their gross
compensation. The Company may make discretionary contributions not to exceed
15% of the total plan compensation. There were no contributions made during
1995 or the first quarter of 1996.

F-17

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

11. COMMON STOCK WARRANT

Concurrently with the Freedom River acquisition and in consideration of the
abatement of certain future royalty fees to BRAC with respect to Freedom
River's Philadelphia vehicle rental operation and other consideration received
from BRAC, the Company issued a warrant to BRAC (the "BRAC Warrant") to
purchase 175,000 shares of Class A common stock at the initial public offering
price. The warrant cannot be exercised prior to August 24, 1996 and expires on
August 24, 1999. Subsequent to August 24, 1998 and prior to August 24, 1999,
BRAC will have the right to cause the Company to repurchase the BRAC Warrant
for $2,000. The Company has reserved Class A common stock for the BRAC
Warrant.

12. COMMITMENTS

FRANCHISE AGREEMENTS--The Company has various franchise agreements with
BRAC which require the payment of monthly royalty fees. These fees vary from a
flat fee of $13.25 per car per month to 7.5% of gross rental revenues, as
defined in the franchise agreements. The above franchise agreements are
generally renewable for an unlimited number of five-year periods, subject to
certain terms and conditions.

Concurrent with the initial public offering, the Company purchased for
$1,750 the direct franchise rights for Budget Rent a Truck facilities to
operate in certain geographic locations in San Diego County and Imperial
County, California. This reduced substantially all truck rental royalty fees
to 5% of gross rental revenues, as defined. Prior to the purchase of the
direct franchise rights, the Company paid royalty fees of 12% of gross rental
revenue.

The Company also participates in a "One-Way" truck rental program in San
Diego County and Imperial County, California sponsored by Budget whereby
trucks owned by Budget are stationed at the Company's facilities for one-way
rental by outside parties. The Company retains fees for Budget "One- Way"
truck rental revenue of 20%. Revenues from the "One-Way" truck rental program
for the years ended December 31, 1993, 1994 and 1995 were $301, $558 and
$1,027, respectively.

SUBLICENSE AGREEMENTS--The Company has sublicense agreements with Budget of
Southern California which entitle the Company to operate Budget Car Rental
facilities in Southern California. Sublicense fees to Budget of Southern
California range from 5% to 6.5% of gross revenues as defined in the
sublicense agreements.

The Company also has a sublicense agreement with Transportation Storage
Associates ("TSA") for the right to rent trucks in and around Los Angeles
County. Fees to TSA are 12% of gross revenues as defined in the sublicense
agreement.

Royalty and sublicense fees expensed by the Company for the years ended
December 31, 1993, 1994 and 1995 were $1,498, $2,348 and $5,715, respectively.
Budget reservation fees expensed by the Company for the years ended December
31, 1993, 1994 and 1995 were $1,023, $1,574 and $3,904, respectively.

13. FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosure About Fair Value of Financial Instruments. The estimated fair value
amounts are determined by the Company, using available market information and
appropriate valuation methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amount.

F-18

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

13. FINANCIAL INSTRUMENTS (Continued)
CASH AND CASH EQUIVALENTS, RECEIVABLES, ACCOUNTS PAYABLE AND NOTES
PAYABLE--The carrying amounts of these items are reasonable estimates of their
fair value.

BRAC STOCK WARRANT--The estimated fair value is based on a pricing model
which considers stock volatilities and the put feature of the BRAC Stock
Warrant. The estimated fair value was $2,000 and, $1,900 at December 31, 1994
and 1995, respectively.

14. NONRECURRING INCOME

In 1993, the Company ordered revenue earning vehicles from a vehicle
manufacturer pursuant to the manufacturer's repurchase program. Such vehicles
were not delivered by the manufacturer. The Company recognized as nonrecurring
income cash received of $1,023 for the non-delivery of the vehicles.

15. SUPPLEMENTAL CASH FLOW DISCLOSURE

In 1995, the Company issued approximately $12,837 of Class A common stock
and notes payable of $650 for the 1995 acquisitions. Equipment financed
through capital leases in 1995 totaled approximately $827.

In 1994, $525 of revenue earning vehicles and property and equipment were
financed through capital leases. The terms of a capital lease with certain
stockholders and a director were modified and, therefore, the capital lease
asset and obligation of $536 were eliminated. The net book value of the
facility lease and capital lease obligation of $536 was deducted from proceeds
from the sale of property and equipment and principal payments of capital
lease obligations, respectively. The Company also issued $200 of Class A
common stock to acquire the Fort Wayne franchise. In addition, property and
equipment of $4,441 were acquired and notes payable of $4,016 were assumed in
connection with the Freedom River acquisition.

In 1994, the Company recorded prepaid royalty fees and the BRAC Stock
Warrant of $2,000 for the abatement of certain fees and other consideration
received from BRAC (see Note 11).

In 1993, a $92 note was issued to the lessor of the Albany, New York
facility in satisfaction of an agreement to share leasehold improvement costs
and a corresponding asset was recorded. Facilities and equipment financed
through capital leases in 1993 totaled $916.

The Company paid interest of $2,756, $4,091 and $13,764 in 1993, 1994 and
1995, respectively.

Income taxes of $182 and $346 were paid in 1994 and 1995, respectively.

F-19

<PAGE>

TEAM RENTAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

16. SEGMENT INFORMATION

The Company is engaged in the business of the daily rental of vehicles,
principally cars, trucks, and passenger vans, and the retail sale of used
cars. Segment information for the year ended December 31, 1995 is as follows:

<TABLE>
<CAPTION>
RETAIL CAR VEHICLE
SALES RENTAL ELIMINATIONS CONSOLIDATED
------------ ---------- -------------- --------------
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers ........ $42,662 $107,067 $149,729
Intersegment Sales ...................... 4,655 $(4,655)
Operating Revenue ....................... 42,662 111,722 (4,655) 149,729
Depreciation and Amortization ........... 193 29,483 29,676
Income Before Provision for Income Taxes 1,869 (847) 1,022
Identifiable Assets ..................... 30,195 356,127 386,322
</TABLE>

The Company operated in only the rental segment for the years ended
December 31, 1993 and 1994. No one customer represented more than 10% of the
Company's consolidated net sales for the years ended December 31, 1993, 1994
and 1995.

F-20

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

BRAC-OPCO, Inc.
Santa Ana, California

We have audited the accompanying balance sheets of BRAC-OPCO, Inc. (a
wholly owned corporation of Budget Rent A Car of Southern California) as of
December 31, 1993 and 1994, and the related statements of income,
stockholder's equity, and cash flows for each of the three years in the period
ended December 31, 1994. 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 audits 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 financial position of BRAC-OPCO, Inc. as of
December 31, 1993 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Sherman Oaks, California
March 23, 1995

F-21

<PAGE>

BRAC-OPCO, INC.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ASSETS
DECEMBER 31,
---------------------
1993 1994
---------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash ....................................................... $ 1,442 $ 1,159
Receivables--
Trade accounts (net of allowance for doubtful accounts of
$207 in 1993; $234 in 1994) .............................. 2,870 3,295
Vehicle sales ............................................. 13,404 9,691
Other ..................................................... 919 1,120
Prepaid vehicle licenses ................................... 1,216 1,345
Other prepaid expenses and current assets .................. 879 1,161
Rental vehicles (net of accumulated depreciation of
$9,769 in 1993; $11,319 in 1994) .......................... 99,799 108,622
---------- ---------

TOTAL CURRENT ASSETS .................................... 120,529 126,393

Property and equipment, net of accumulated depreciation .... 2,040 1,761

OTHER ASSETS:
Franchise rights at cost (net of accumulated amortization
of
$1,114 in 1993; $1,449 in 1994) ........................... 12,307 11,971
Deposits and other assets .................................. 420 314
---------- ---------

TOTAL ASSETS ............................................ $135,296 $140,439
========== =========
</TABLE>

See accompanying notes to financial statements.

F-22

<PAGE>

BRAC-OPCO, INC.
BALANCE SHEETS (CONTINUED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
DECEMBER 31,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
Vehicle contracts payable ................... $114,852 $120,110

Notes payable
So Cal ..................................... 949 1,453
Robert Steven Investments .................. 133 33
Other ...................................... 58 46

Accounts payable and accrued expenses ...... 4,685 4,796

Obligations under capital leases ............ 267 25

Other current liabilities ................... 763 1,288
---------- ----------

TOTAL CURRENT LIABILITIES ................ 121,707 127,751

LONG-TERM LIABILITIES:
Notes payable
So Cal ..................................... 7,083 5,801
Spectrum ................................... 3,558 3,000
Other ...................................... 29
Obligations under capital leases ............ 171 46
---------- ----------

TOTAL LIABILITIES ........................ 132,548 136,598

Contingencies and commitments (Notes 7 and 8)

STOCKHOLDER'S EQUITY:
Common stock, no par value--
Authorized--100,000 shares .................
Issued and outstanding--3,300 shares ...... 2,783 2,783
Additional paid-in capital .................. 3,635 3,635
Deficit ..................................... (3,670) (2,577)
---------- ----------
2,748 3,841
---------- ----------

TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY ...................................... $135,296 $140,439
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-23

<PAGE>

BRAC-OPCO, INC.
STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Auto rentals ............................... $44,391 $56,956 $56,640
Truck rentals .............................. 4,196 6,886 7,715
Other ...................................... 425 594 700
--------- --------- ---------

TOTAL REVENUES .......................... 49,012 64,436 65,055
--------- --------- ---------

OPERATING EXPENSES:
Direct vehicle expenses--
Lease expenses ............................ 877 1,576 3,140
Depreciation .............................. 10,786 16,578 19,044
Interest on vehicle contracts ............. 7,731 8,352 8,315
Other ..................................... 7,602 10,205 9,474
Auto lease income ......................... (1,858) (2,740) (4,654)
--------- --------- ---------

TOTAL DIRECT VEHICLE EXPENSES ........... 25,138 33,971 35,319

Salaries and related overhead .............. 11,241 14,842 14,168
Occupancy .................................. 5,421 6,785 6,652
Selling, advertising and promotion ........ 3,602 4,745 4,764
General and administrative ................. 1,528 1,688 1,652
Bad debts .................................. 78 145 145
Amortization of franchise rights ........... 255 336 336
Other interest ............................. 304 464 345
--------- --------- ---------

TOTAL OPERATING EXPENSES ................ 47,567 62,976 63,381
--------- --------- ---------

INCOME FROM OPERATIONS ...................... 1,445 1,460 1,674
Other income (expenses):
Investment income .......................... 24 23 25
Interest expense--So Cal ................... (863) (629) (606)
--------- --------- ---------
Income before provision for income
taxes, and before extraordinary item ....... 606 854 1,093
Provision for income taxes .................. 264
--------- --------- ---------
Income before extraordinary item ....... 342 854 1,093
Extraordinary item--tax benefit resulting
from utilization of operating loss
carryforward ............................... 264
--------- --------- ---------

NET INCOME .............................. $ 606 $ 854 $ 1,093
========= ========= =========
</TABLE>

See accompanying notes to financial statements.

F-24

<PAGE>

BRAC-OPCO, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN
------------------ CAPITAL
SHARES AMOUNT DEFICIT TOTAL
-------- -------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1992 ..................... 1,200 $1,677 $3,435 $(5,130) $ (18)
Capital contributions from So Cal .............. 131 131
Issuance of stock to So Cal in consideration of
assignment of receivables ..................... 2,100 1,106 69 1,175
Net income ..................................... 606 606
-------- -------- ------------ ---------- --------
BALANCE AT DECEMBER 31, 1992 ................... 3,300 2,783 3,635 (4,524) 1,894
Net income ..................................... 854 854
-------- -------- ------------ ---------- --------
BALANCE AT DECEMBER 31, 1993 ................... 3,300 2,783 3,635 (3,670) 2,748
Net income ..................................... 1,093 1,093
-------- -------- ------------ ---------- --------
BALANCE AT DECEMBER 31, 1994 ................... 3,300 $2,783 $3,635 $(2,577) $3,841
======== ======== ============ ========== ========

</TABLE>

See accompanying notes to financial statements.

F-25

<PAGE>

BRAC-OPCO, INC.
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1992 1993 1994
----------- ----------- -----------
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Net income ..................................... $ 606 $ 854 $ 1,093
Adjustments to reconcile net income to net cash
provided by operating activities--
Depreciation and amortization ................ 17,917 22,182 22,073
Bad debts .................................... 78 145 145
(Gain) loss on disposition of assets ......... 171 (530) (796)
(Increase) in trade receivables .............. (349) (28) (570)
(Increase) decrease in vehicle
rebates receivable ......................... (150) 320
(Increase) decrease in other receivables ..... (311) (62) (197)
(Increase) in prepaid vehicle licenses ....... (132) (129)
(Increase) in prepaid expenses and other
current assets ............................. (610) 19 (272)
(Increase) decrease in deposits .............. (168) 87 (46)
Increase (decrease) in accounts payable and
accrued expenses ........................... 994 461 107
(Decrease) in deferred vehicle rebate income . (826) (445) (51)
Increase (decrease) in other current
liabilities ................................ 340 (1) 549
----------- ----------- -----------
Net cash provided by operating activities .. 17,692 22,870 21,906
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of rental vehicles .......... 139,525 159,096 140,822
Repayments of vehicle contracts payable ........ (156,770) (179,380) (161,373)
Payments for purchase of property and equipment (589) (480) (412)
Proceeds from note receivable .................. 100 148
Acquisition of franchise rights ................ (263)
Proceeds from sale of property and equipment ... 71
----------- ----------- -----------
Net cash used in investing activities ....... (18,026) (20,664) (20,815)
----------- ----------- -----------
</TABLE>

See accompanying notes to financial statements.

F-26

<PAGE>

BRAC-OPCO, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1992 1993 1994
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan from So Cal ................................ 314 729
Increase (decrease) in interest payable So Cal .. 225 $ (905) (243)
Loan from Robert Steven Investments ............. 400
Repayments of principal to--
So Cal ......................................... (130) (256) (793)
Robert Steven Investments ...................... (50) (200) (117)
Others ......................................... (561) (271) (582)
Payment of obligations under capital leases ..... (197) (255) (368)
Capital contributions from So Cal ............... 131
---------- ---------- ----------
Net cash used in financing activities ........ (132) (1,887) (1,374)
---------- ---------- ----------
Net increase (decrease) in cash ................... (202) 319 (283)
Cash, beginning of year ........................... 1,325 1,123 1,442
---------- ---------- ----------
Cash, end of year ................................. $ 1,123 $ 1,442 $ 1,159
========== ========== ==========
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION:
Cash paid for interest ........................... $ 8,673 $ 10,351 $ 9,509
SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of rental vehicles by incurring debt $192,185 $182,104 $166,165
Acquisition of franchise rights by incurring debt 3,750
Acquisition of other assets by incurring debt ... 396
Acquisition of franchise rights by reducing note
receivable .................................... 740
Acquisition of property and equipment by reducing
note receivable ............................... 10
Issuance of stock to So Cal in consideration of
assignment of receivables ..................... 1,175
</TABLE>

See accompanying notes to financial statements.

F-27

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION

BRAC-OPCO, Inc. (Opco or the Company), a wholly owned subsidiary
corporation of Budget Rent A Car of Southern California (So Cal), a California
general partnership, was formed on May 23, 1989 to acquire and operate vehicle
rental businesses in the name and style of "Budget Rent A Car" as a franchisee
of So Cal, and "Budget Rent A Truck" as a franchisee of Transportation and
Storage Associates, Inc., an unrelated franchisor.

So Cal holds the prime franchise rights to operate or sub-franchise auto
rental operations in Southern California and certain Nevada territories in the
name and style of "Budget Rent A Car". So Cal is owned 75% by The Mirkin
Partnership and Mirkin & Family, Inc., and 25% by Rubin Bird and R. & G.
Bird, Inc.

NOTE 2--ACQUISITIONS

The Company has acquired various assets and assumed certain liabilities of
several of So Cal's franchisees. Each acquisition was accounted for by the
purchase method of accounting. The results of operations of the acquired
franchises are included in the Company's statements of income for the periods
in which they were owned by the Company.

Effective August 11, 1992, the Company acquired certain assets, including
franchise rights, and assumed certain liabilities of Spectrum Investment
Corporation ("Spectrum") for $5,162,000. Spectrum previously operated several
franchises in territories covering the San Fernando Valley (including Burbank
Airport) and Orange County (other than Orange County Airport) under a
franchise agreement with So Cal. The purchase price consisted of $115,000 in
cash, $1,297,000 in assumed vehicle contracts payable, and a $3,750,000 note
(see Note 6B).

Effective January 6, 1993, the Company acquired certain assets, including
franchise rights, of an existing franchisee of So Cal in territories covering
Ventura and Santa Barbara counties for approximately $750,000. The purchase
price was paid through the reduction of $750,000 of an existing note
receivable which was due from the franchisee.

In each of the acquisitions, the full purchase price was allocated to
tangible assets and franchise rights which are being amortized using the
straight line method over 40 years.

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. REVENUE RECOGNITION

Revenue from vehicle rental operations is recognized as earned under the
terms of rental contracts and excludes sales tax. Revenue on open contracts is
accrued to the balance sheet date based on the contract rental rates.

B. DEPRECIATION

Rental vehicles are stated at cost and are classified on the balance sheets
as a current asset because, in the ordinary course of business, they are
expected to be held for less than one year. Most vehicles are purchased
pursuant to guaranteed buy-back agreements with manufacturers, and are
depreciated by reference to such buy-back provisions at rates ranging from .8%
to 2.25% per month in 1992, .85% to 2.5% per month in 1993, and .875% to 2.25%
per month in 1994 with the rate most prevalent being approximately 1.5%, 1.6%
and 1.8%, in 1992, 1993 and 1994, respectively. Other rental vehicles are
depreciated at 2.5% in 1992, and rates ranging from 2.5% to 3% in 1993 and
1994.

Vehicle rebates from manufacturers are recorded as deferred income on the
balance sheet and are amortized as a reduction of depreciation expense over
the anticipated holding period of the vehicles which range principally from 6
to 9 months. Depreciation expense is further adjusted by gains or losses on
sales of rental vehicles.

F-28

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Depreciation
under "direct vehicle expenses" on the statements of income
is summarized as follows (dollars in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Depreciation on rental vehicles ... $15,512 $19,142 $19,891
Amortization of rebates ............ (4,877) (2,034) (51)
Net loss (gain) on sale of vehicles 151 (530) (796)
--------- --------- ---------
$10,786 $16,578 $19,044
========= ========= =========
</TABLE>

The cost of other property and equipment is depreciated using straight-line
and accelerated methods over estimated useful lives ranging from three to 32
years.

C. FRANCHISE RIGHTS

The Company assesses whether there has been a permanent impairment in the
value of franchise rights by considering factors such as expected future
operating income and trends, as well as the effects of demand, competition and
other economic factors. Management believes no permanent impairment has
occurred.

D. VEHICLE LICENSES

Vehicle license costs are capitalized and are amortized over the expected
holding period of the vehicles. The amortization expense is included in
"direct vehicle expenses - other" on the statements of income.

E. INCOME TAXES

Certain items of income and expense are recognized in different periods for
income tax and financial reporting purposes. Deferred taxes are provided on
such temporary differences. The principal temporary differences relate to
depreciation on rental vehicles, vehicle accident claims expenses, bad debts,
and amortization of franchise rights.

F. CASH AND CASH EQUIVALENTS

Cash equivalents are all highly liquid investments with a maturity of three
months or less from the date of acquisition.

The Company maintains its cash in bank accounts which, at times, exceeds
federally insured limits. The Company has not experienced any losses in such
accounts.

G. AUTO LEASE INCOME

Opco acts as a conduit in the acquisition of rental vehicles and the
leasing of said vehicles to other franchisees of So Cal, to assist such
franchisees in the acquisition of fleet. The lease income is reported as a
reduction of the related direct vehicle expenses and the net results of this
activity is not material to the statements of income.

H. ADVERTISING AND PROMOTION

Advertising and promotion expenses are reported net of reimbursements from
General Motors Corporation under a co-op advertising agreement which expired
August 31, 1992 and was not renewed. For the year ended December 31, 1992, the
reimbursement totalled $334,000.

F-29

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--PROPERTY AND EQUIPMENT

Property and equipment, other than rental vehicles, is summarized as
follows (dollars in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1993 1994
-------- --------
<S> <C> <C>
Building improvements ............................ $1,924 $2,157
Furniture, fixtures and equipment ................ 2,212 2,484
Vehicles ......................................... 52 46
-------- --------
Total property and equipment (including property
under capital leases of and $454 in 1993 and
$165 in 1994) ................................... 4,188 4,687
Less accumulated depreciation and amortization .. 2,148 2,926
-------- --------
$2,040 $1,761
======== ========
</TABLE>

NOTE 5--VEHICLE CONTRACTS PAYABLE

The Company purchases and leases its rental vehicles primarily from
manufacturers. Financing for the acquisition of the rental vehicles is
generally provided by affiliated finance companies of automobile
manufacturers. The lenders hold legal title to the vehicles as security for
the financing, and have a security interest in all revenue and receivables
resulting from vehicle rentals or sales

F-30

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--VEHICLE CONTRACTS PAYABLE (Continued)
The terms of the major vehicle financing contracts are summarized as
follows:

<TABLE>
<CAPTION>
BALANCE AS OF DECEMBER
31,
----------------------
1993 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
GMAC--prime plus .75%, with monthly principal payments of
approximately $1,193,000 and $871,000, respectively. The maximum
allowable borrowings under this line are $100 million and $75
million in 1993 and 1994, respectively. .......................... $ 75,126 $ 59,823
Volvo Car Finance, Inc.--prime plus .75% for program vehicles, and
1% above prime for non-program vehicles, with monthly principal payments of
approximately $440,000 and $680,000, respectively.
The maximum allowable borrowings under this line are $60 million. 23,686 35,241
Ford Motor Credit Corp.--prime plus 1%, with monthly principal
payments of approximately $139,000 and $173,000, respectively. The maximum
allowable borrowings under this line are $26.5 million, including other
franchisees' borrowings. There were no other franchisees' borrowings
outstanding at December 31, 1993
and 1994. ........................................................ 3,346 8,294
1st Source Bank--Trucker's Bank Plan - prime plus .75% to 1%, with
monthly principal payments of approximately $92,000 and $88,000,
respectively. The maximum allowable borrowings under this line
are $7 million. .................................................. 5,613 4,192
First Los Angeles Bank--prime plus 1%, with monthly principal
payments of approximately $29,000 and $193,000, respectively. The
maximum allowable borrowings under this line are $2 million and
$9 million in 1993 and 1994, respectively. ....................... 1,480 5,623
Associates Commercial Corporation--at rates of 8.5% to 8.75%, with
monthly principal payments of approximately $35,000 and $68,000,
respectively. .................................................... 1,820 2,701
So Cal--prime less .25%, with monthly principal payments of
approximately $16,000. ........................................... -- 466
Robert Steven Investments--greater of 12.5% or Union Bank's
reference rate plus 2.5%, with monthly principal payments of
approximately $39,000. (See Note 6A for description of
relationship.) ................................................... 307 --
Navistar Financial Corp.--at a rate of 7.75% with principal
payments of approximately $85,000 and $105,000, respectively. ... 3,474 3,770
---------- ----------
$114,852 $120,110
========== ==========
</TABLE>

Interest is paid monthly on all of the vehicle financing contracts.

Certain loan agreements contain provisions limiting the amount that can be
used to finance "risk vehicles" (other than manufacturer's buy-back program
eligible vehicles), and the GMAC agreement contains a provision which could
limit the amount of distributions to the partners of So Cal and provides,
under certain circumstances, for a prepayment premium of 3% of any principal
paid in advance.

Included above is approximately $13.4 and $9.7 million of debt related to
vehicles which had been sold as of December 31, 1993 and 1994, respectively.
This debt is repaid from the collections of the vehicle sales receivables,
which are included in current assets. Approximately $1.2 million and $957,000
of the

F-31

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--VEHICLE CONTRACTS PAYABLE (Continued)
outstanding debt as of December 31, 1993 and 1994 respectively, was for the
financing of vehicle licenses, which is related to prepaid vehicle licenses,
included in current assets, at December 31, 1993 and 1994.

The entire balance of the vehicle financing obligations is classified as a
current liability on the balance sheets because, in the ordinary course of
business, the obligations are expected to be repaid within one year. However,
contractually vehicle finance obligations are repayable at varying monthly
rates of up to 2.25% of the loan.

So Cal guarantees the majority of the above loans.

NOTE 6--NOTES PAYABLE

A. ROBERT STEVEN INVESTMENTS (RSI)

As of December 31, 1993 and 1994, Opco was indebted to RSI, a partnership
of Rubin Bird (a partner of So Cal) and his children, in the amount of
$150,000 and $33,333, respectively under a note bearing interest at the rate
of 12.5% or 2.5% over prime, whichever is greater. The December 31, 1994
balance is payable in monthly installments of $16,667 plus interest at a rate
of 9% per annum. This promissory note is guaranteed by So Cal and
collateralized by certain equipment.

B. SPECTRUM

In connection with the acquisition of assets from Spectrum and Cal Fleet,
Opco is indebted to Spectrum in the original amount of $3,750,000 evidenced by
a promissory note bearing interest, payable quarterly, at 8% per annum.
Principal is payable in five equal annual installments of $750,000 commencing
August 11, 1995; however, the Company has prepaid $704,000 of principal as of
December 31, 1994, which reduces the principal payment otherwise due August
11, 1995. This note is guaranteed by So Cal and collateralized by the
franchise right to the territories purchased. The balance as of December 31,
1993 and 1994 was $3,558,000 and $3,046,000, respectively.

C. SUMMARY OF DEBT MATURITIES

Notes payable are scheduled to mature as of December 31, 1994 as follows
(dollars in thousands):

<TABLE>
<CAPTION>
RSI SPECTRUM TOTAL
----- ---------- -------
<S> <C> <C> <C>
Current portion ........................ $33 $ 46 $ 79
----- ---------- -------
Long-term portion, maturing as follows:
1996 .................................. -- 750 750
1997 .................................. -- 750 750
1998 .................................. -- 750 750
1999 .................................. -- 750 750
2000 and after ........................ -- -- --
----- ---------- -------
-- 3,000 3,000
----- ---------- -------
Total .............................. $33 $3,046 $3,079
===== ========== =======
</TABLE>

For current and long-term portion of notes payable to So Cal (see Note 11).

NOTE 7--CONTINGENCIES

A. VEHICLE ACCIDENT CLAIMS

Under California law, Opco is permissively uninsured with respect to bodily
injury and property damage claims arising from accidents involving its
vehicles. Except as further provided below, the

F-32

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--CONTINGENCIES (Continued)

Company's liability generally will not exceed $35,000 per incident when the
accident is solely the responsibility of the renter or an unrelated third
party. The Company's special legal counsel, engaged specifically to deal with
these matters, advises that when such renter has insurance - which is the case
in approximately 85% of incidents - the Company has little, if any, potential
liability. However, in at least the following three circumstances the Company
could have unlimited liability mitigated by insurance coverage as indicated:

1) Product liability - e.g., if a rented vehicle had not been properly
maintained.

2) Employee negligence - e.g., an accident caused by an employee of the
Company.

3) Negligent entrustment - e.g., renting a vehicle to a customer who, at
the time of the rental, is under the influence of alcohol or other controlled
substances.

With respect to either product liability or employee negligence, the
Company carries $1,000,000 of primary insurance coverage and an additional
$2,000,000 of excess liability coverage.

Based on the advice of special legal counsel, as well as the Company's
recent experience, management has established what it believes to be an
adequate provision for estimated losses on known and unreported claims at
December 31, 1993 and 1994 totaling $875,000 and $850,000, respectively, which
are included in "accounts payable and accrued expenses" on the balance sheets.

B. LEGAL ACTIONS

The Company is party to a number of legal actions arising in the ordinary
course of its business. In management's opinion, based on advice of outside
legal counsel, the Company has adequate legal defenses and/or insurance
coverage respecting each of these actions and they will not have a material
adverse effect on the Company's operations or financial condition.

C. GROUP MEDICAL PLAN

The Company maintains a group medical insurance plan which, if terminated,
would have resulted in a liability as of December 31, 1994 in the amount of
approximately $266,000 in the form of a supplemental premium.

NOTE 8--LEASE COMMITMENTS

Opco leases numerous branch offices and other facilities under operating
leases, and various equipment and building improvements under capital leases.
The operating leases expire from 1995 to 2004, without regard to renewal
options extending beyond such dates. Various leases require payments in excess
of minimum base rent for property taxes, insurance, maintenance, and cost of
living escalations; or for overages based on percentage of sales. Total rent
expense for the years ended December 31, 1992, 1993, and 1994 was
approximately $3,900,000, $4,900,000, and $4,900,000, respectively.

So Cal operates certain of its properties under noncancelable operating
leases that, in addition to fixed rental payments, contain escalation clauses
that require the tenants to pay for real estate taxes and operating costs.

F-33

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--LEASE COMMITMENTS (Continued)
Future minimum annual payments under capital and operating leases as of
December 31, 1994 were as follows (dollars in thousands):

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR LEASES LEASES
- ------------------------------------------------------ --------- -----------
<S> <C> <C>
1995 .................................................. $33 $3,274
1996 .................................................. 32 1,717
1997 .................................................. 19 1,149
1998 .................................................. -- 435
1999 .................................................. -- 317
Subsequent years ...................................... -- 1,159
--------- -----------
Total minimum lease payments ........................ 84 $8,051
===========
Less amount representing interest (rate equals 12.66%) 13
---------
Total obligations under capital leases .............. 71
Less current portion ................................ 25
---------
Long-term obligations under capital leases ......... $46
=========
</TABLE>

Opco leases five if its branch office and facilities from So Cal under
operating leases which expire from 1995 to 2004, without regard to renewal
options extending beyond such dates. Opco paid $243,000, $195,000 and $185,000
in rent to So Cal for the years ended December 31, 1992, 1993 and 1994,
respectively.

NOTE 9--RETIREMENT PLAN

Opco maintains a noncontributory qualified deferred compensation ("401K")
plan which enables eligible employees to set aside a portion of their salaries
as a contribution to the plan.

NOTE 10--INCOME TAXES

No net provision for federal or state income taxes has been made due to the
utilization of net operating loss carryforwards.

As of December 31, 1994, for income tax purposes, Opco's federal and state
net operating loss carryforwards were approximately $19.4 million and $3.5
million, respectively, which will expire during the years 1995 - 2009. U.S.
tax rules impose limitations on the use of net operating losses following
certain changes in ownership (see Note 13).

Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standard No. 109, "Accounting of Income
Taxes" (SFAS 109). As permitted under the new rules, the prior period's
financial statements have not been restated.

Under SFAS 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption
of SFAS 109, income tax expense was determined using the deferred method.
Deferred tax expense was based on items of income and expense that were
reported in different years in the financial statements and tax returns and
were measured at the tax rate in effect in the year the difference originated.

F-34

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES (Continued)
There was no cumulative or current effect of initial adoption of SFAS 109,
on the net income or income tax expense for the year ended December 31, 1993.

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

The Company's deferred tax assets and liabilities at December 31, 1993 and
1994 are as follows (dollars in thousands):

<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Deferred tax assets:
Vehicle related accruals ......... $ 771 $ 579
Other items ...................... 566 557
Net operating loss carryforwards 8,118 7,177
Valuation allowance .............. (3,539) (3,508)
--------- ---------
5,916 4,805
Deferred tax liabilities:
Depreciation of fleet ............ (4,759) (3,298)
Amortization of franchise rights (1,157) (1,507)
--------- ---------
Net ........................... $ 0 $ 0
========= =========
</TABLE>

A full valuation allowance has been established as the potential deferred
tax asset above may not be realized.

A reconciliation between the Company's effective tax rate and the federal
income tax rate is as follows:

<TABLE>
<CAPTION>
1992 1993 1994
-------- -------- --------
<S> <C> <C> <C>
Federal income tax rate ............................ 34.0% 35.0% 35.0%
State taxes, net of federal effect ................. 6.3 6.6 6.0
Notes receivable and other assets with no tax basis -- 4.8 8.9
Net operating loss carryforwards ................... (41.0) (47.8) (52.7)
Other, net ......................................... 7 1.4 2.8
-------- -------- --------
Total .............................................. 0% 0% 0%
======== ======== ========
</TABLE>

NOTE 11--OTHER RELATED PARTY TRANSACTIONS

As of December 31, 1993 and 1994, Opco's total indebtedness to So Cal was
$8,032,000 and $7,254,000, respectively. The outstanding balance is comprised
of various loans in connection with the financing of one of Opco's initial
acquisitions as well as Opco's working capital needs.

F-35

<PAGE>

BRAC-OPCO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--OTHER RELATED PARTY TRANSACTIONS (Continued)
The notes and loans payable to So Cal are summarized as follows (dollars
in thousands):

MONTHLY
PAYMENT 1993 1994
(INCLUDING ----------------------- -------------------------
INTEREST PRINCIPAL AND CURRENT LONG-TERM CURRENT LONG-TERM
RATE TERM INTEREST) PORTION PORTION PORTION PORTION
- ------------ ----------- -------------- ---------- ----------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
8.0% Demand $130 $662 $6,993 $1,185 $5,755
11.5% Due 10/96 4 40 90 44 46
- -- -- -- 247 -- 224 --
--------- ----------- --------- -----------
$949 $7,083 $1,453 $5,801
========= =========== ========= ===========
</TABLE>

Both interest and principal on the 8% promissory notes are payable on
demand, or if no demand is made, then the entire balance of unpaid principal
and interest is due upon either the sale of more than 49% of the stock of
Opco, or substantially all of its assets. No demand has been made and,
accordingly, management has classified this liability between current and
long-term based on the principal that was anticipated, to be paid within one
year (See Note 13). Interest expense to So Cal for the years ended December
31, 1992, 1993, and 1994, was approximately $863,000, $629,000, and $606,000,
respectively.

So Cal has waived its rights to receive franchise fees from Opco until all
of the above debt has been repaid.

In addition, Opco was contingently liable to So Cal, which in turn was
contingently liable with respect to certain bank letters of credit issued in
the approximate amount of $672,000 as of December 31, 1994 relating to Opco's
operations.

Opco has not been charged for any of So Cal's salaries or other
administrative expenses.

NOTE 12--SUBSEQUENT EVENT

BRAC SOCAL Funding Corporation (Funding Corp.) was formed in December 1994
as a wholly-owned subsidiary of Opco for the purpose of purchasing vehicles
and leasing them to Opco and certain other franchisees of So Cal. In March
1995, Funding Corp. issued $40 million of floating rate rental car asset
backed notes under a private placement memorandum. In conjunction with this
financing, Opco also borrowed $4.5 million from First Los Angeles Bank which
was used in part, together with the $40 million, to pay down approximately
$42.9 million of the GMAC outstanding vehicle debt (see Note 5).

Concurrent with the GMAC Corporation prepayment described above, the
Company entered into an agreement with GMAC to modify the prepayment clause of
the vehicle financing agreement. Under the original agreement the Company
would have been subject to a premium of approximately $1.3 millon resulting
from the prepayment (see Note 5).

Under the new agreement, this premium is allocated over the next six years,
approximately $215,000 each year. However, the annual premium is waived
entirely if the Company maintains an average debt balance of $25 million
during that year. If the average debt balance during any given year falls
between $20 million and $25 million, a prorated amount of the premium is due
GMAC for that year. The full annual premium is due for any year during which
the average debt balance falls below $20 million.

NOTE 13--TEAM ACQUISITION (UNAUDITED)

On April 10, 1995, an agreement in principle between So Cal and Team Rental
Group, Inc. (Team) was announced regarding the acquisition by Team or its
affiliate of all of Opco's outstanding stock for shares of Team stock to be
issued.

F-36

<PAGE>

BRAC-OPCO, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ASSETS (UNAUDITED)
<S> <C>
Cash and cash equivalents ...................... $ 421
Restricted cash ................................ 21,769
Trade receivables, net ......................... 3,063
Vehicle receivables, net ....................... 1,011
Notes receivable ............................... 81
Revenue earning vehicles, net .................. 95,390
Property and equipment, net .................... 1,175
Franchise rights, net .......................... 11,719
Other assets ................................... 3,549
-----------
Total assets .................................. $138,178
===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES:
Vehicle obligations--banks, finance companies . $ 79,073
Vehicle obligations--fleet financing facilities 40,000
Accounts payable ............................... 1,766
Accrued and other liabilities .................. 2,873
Auto liability ................................. 1,858
Notes due to sellers of acquired businesses ... 9,500
-----------
Total liabilities ............................. 135,070
STOCKHOLDERS' EQUITY:
Common stock ................................... 2,783
Additional paid-in-capital ..................... 6,470
Accumulated deficit ............................ (6,145)
-----------
Total stockholders' equity .................... 3,108
-----------
Total liabilities and stockholders' equity $138,178
===========
</TABLE>

F-37

<PAGE>

BRAC-OPCO, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
(UNAUDITED)
1995 1994
-------- -------
<S> <C> <C>
Operating Revenues .............................. $49,121 $52,698
Operating Expenses:
Direct vehicle and operating ................... 4,949 7,479
Depreciation/Lease--vehicles ................... 18,123 16,019
Depreciation--nonvehicle ....................... 545 310
Advertising, promotion and selling ............. 3,988 3,573
Facilities ..................................... 4,885 5,133
Personnel ...................................... 10,209 10,715
General and administrative ..................... 1,539 1,383
Amortization ................................... 251 252
---------- ---------
Total operating expenses ...................... 44,489 44,864
---------- ---------
Operating income ................................ 4,632 7,834
Other (income) expense:
Vehicle interest .............................. 7,587 6,058
Other interest ................................ 640 731
Interest income ............................... (27) (18)
---------- ---------
Total other expenses ......................... 8,200 6,771
Income (loss) before provision for income taxes (3,568) 1,063
Provision (benefit) for income taxes ............
---------- ---------
Net income (loss) ............................... $(3,568) $ 1,063
========== =========
</TABLE>

F-38

<PAGE>

BRAC-OPCO, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the
nine-month period ended September 30, 1995
(Unaudited)

<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS TOTAL
COMMON PAID-IN (ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT) EQUITY
-------- ------------ ------------- ---------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $2,783 $3,635 $(2,577) $ 3,841
Net income ................... (3,568) (3,568)
Capital contribution ......... 2,835 2,835
-------- ------------ ------------- ---------------
Balance at September 30, 1995 $2,783 $6,470 $(6,145) $ 3,108
======== ============ ============= ===============
</TABLE>

F-39

<PAGE>

BRAC-OPCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE-MONTHS
PERIODS ENDED SEPTEMBER
30,
1995 1994
----------- -----------
(DOLLAR AMOUNTS IN
THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..................................... $ (3,568) $ 1,063

Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation & amortization ........................... 20,600 15,770
Changes in operating assets and liabilities:
Accounts receivable .................................. 8,912 (176)
Other receivable ..................................... 1,039 (274)
Other assets ......................................... (729) 215
Accounts payable ..................................... (3,030) (658)
Auto liability ....................................... 1,858
Other liabilities .................................... 1,514 (165)
----------- -----------
Total adjustments ................................... 30,164 14,712
----------- -----------
Net cash provided by operating activities ............ 26,596 15,775

CASH FLOWS FROM OPERATING ACTIVITIES:
Restricted cash ....................................... (21,769)
Proceeds from sale of revenue-earning vehicles ....... 96,450 106,079
Purchases of revenue-earning vehicles ................. (102,736) (120,518)
Purchases of equipment and improvements ............... (244) (346)
----------- -----------
Net cash used in investing activities ................ (28,299) (14,785)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under notes payable ......... 40,750 200
Principal payments:
Vehicle obligations .................................. (38,202) (1,067)
Borrowings ........................................... (1,583)
Capital leases ....................................... (346)
----------- -----------
Net cash provided by (used in) financing activities .. 965 (1,213)
Net decrease in cash and cash equivalents ............. (738) (223)
Cash and cash equivalents, beginning of period ....... 1,159 1,372
----------- -----------
Cash and cash equivalents, end of period .............. $ 421 $ 1,149
=========== ===========
</TABLE>

F-40

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Arizona Rent-A-Car Systems, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of Arizona
Rent-A-Car Systems, Inc. and Subsidiary as of February 28, 1994 and 1995, and
February 29, 1996, and the related consolidated statements of income (loss)
and retained earnings, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Arizona
Rent-A-Car Systems, Inc. and Subsidiary as of February 28, 1994 and 1995, and
February 29, 1996, and the results of their operations and their cash flows
for the years then ended, in conformity with generally accepted accounting
principles.

As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of computing depreciation for rental vehicles in
1996.

Michael Silver & Company
Certified Public Accountants
Skokie, Illinois
May 3, 1996

F-41

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
ASSETS 1994 1995 1996
-------------- -------------- --------------
(IN 000'S)
<S> <C> <C> <C>
Cash ............................................... $ 947 $ 775 $ 571
Trade and vehicle receivables (net of allowance for
doubtful accounts of $60, $83 and $316,
respectively) ..................................... 5,437 5,340 3,066
Used vehicle inventory ............................. 1,756 1,392 --
Prepaid expenses ................................... 1,451 2,043 1,308
Other assets ....................................... 223 277 83
Goodwill, net of amortization ...................... 468 448 429
Cash surrender value of officer's life insurance .. -- 182 --
Refundable income taxes ............................ -- 998 --
Deferred income taxes .............................. -- -- 245
Other intangibles, net of amortization ............. 57 40 28
-------------- -------------- --------------
10,339 11,495 5,730
-------------- -------------- --------------
Rental vehicles .................................... 82,384 80,731 73,181
Less: accumulated depreciation ..................... 6,147 5,012 6,245
-------------- -------------- --------------
76,237 75,719 66,936
-------------- -------------- --------------
Net property and equipment ......................... 7,017 7,025 5,406
-------------- -------------- --------------
TOTAL ASSETS ..................................... $93,593 $94,239 $78,072
============== ============== ==============
</TABLE>

F-42

<PAGE>

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1995 1996
-------------- -------------- --------------
(IN 000'S)
<S> <C> <C> <C>
LIABILITIES
Cash overdraft ................................ $ -- $ 952 $ --
Notes payable -- rental vehicles .............. 76,816 76,695 68,007
Notes payable -- floor plan ................... 1,062 1,027 --
Notes payable -- other ........................ 1,682 1,488 --
Accounts payable and accrued expenses ........ 2,845 2,710 2,305
Vehicle self-insurance reserve ................ 1,373 1,331 2,298
Other liabilities ............................. 611 642 1,991
Income taxes payable .......................... 350 -- 50
Deferred income taxes ......................... 1,495 2,175 --
-------------- -------------- --------------
TOTAL LIABILITIES 86,234 87,020 74,651
-------------- -------------- --------------
STOCKHOLDERS' EQUITY
Common stock -- no par value; 2,000 shares
authorized; 667 shares issued and outstanding 67 67 67
Additional paid-in capital .................... 493 493 493
Retained earnings ............................. 6,799 6,659 2,861
-------------- -------------- --------------
TOTAL STOCKHOLDERS' EQUITY ................... 7,359 7,219 3,421
-------------- -------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $93,593 $94,239 $78,072
============== ============== ==============
</TABLE>

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

F-43

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS
FOR THE YEARS ENDED,

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
(IN 000'S)
<S> <C> <C> <C>
Revenue ............................................ $49,934 $51,427 $47,337
Direct expenses .................................... 25,203 28,417 30,039
-------------- -------------- --------------
Gross profit ....................................... 24,731 23,010 17,298
Operating expenses ................................. 22,907 22,632 22,187
-------------- -------------- --------------
Income (loss) from continuing operations before provision
(benefit) for income taxes and cumulative effect of
a change in accounting principle .................. 1,824 378 (4,889)
Provision (benefit) for income taxes ............... 1,037 97 (1,880)
-------------- -------------- --------------
Income (loss) from continuing operations before
cumulative effect of a change in accounting
principle ......................................... 787 281 (3,009)
Cumulative effect on prior years of changing to
different depreciation method (less applicable
income taxes of $215--see note 2) ................. -- -- (335)
-------------- -------------- --------------
Income (loss) from continuing operations .......... 787 281 (3,344)
Loss from discontinued operations (less applicable
income taxes of $272, $146 and $179, respectively) (202) (421) (284)
-------------- -------------- --------------
Net income (loss) .................................. 585 (140) (3,628)
Retained earnings--beginning of year ............... 6,214 6,799 6,659
Divident paid to stockholder ....................... -- -- (170)
-------------- -------------- --------------
Retained earnings--end of year ..................... $ 6,799 $ 6,659 $ 2,861
============== ============== ==============
</TABLE>

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

F-44

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED,

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
(IN 000'S)
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income (loss) .............................. $ 585 $ (140) $(3,628)
-------------- -------------- --------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization ................. 16,998 14,102 15,492
(Gain) loss on sale of rental vehicles and
property and equipment ...................... (7,723) (2,570) 137
Deferred income taxes ......................... 80 680 (2,420)
Changes in operating assets and liabilities:
(Increase)/decrease in:
Trade and vehicle receivables ............... (645) 98 2,274
Used vehicle inventory ...................... (1,755) 363 1,392
Prepaid expenses ............................ (543) (592) 735
Other assets ................................ 6 (69) 14
Cash surrender value of officer's life
insurance ................................. -- (182) --
Refundable income taxes ..................... -- (998) 998
Increase/(decrease) in:
Cash overdraft .............................. (2,062) 952 (953)
Accounts payable, accrued expenses and
other liabilities ......................... 1,022 (145) 1,911
Income taxes payable ........................ 335 (350) 50
-------------- -------------- --------------
TOTAL ADJUSTMENTS .......................... 5,713 11,289 19,630
-------------- -------------- --------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES .................................... 6,298 11,149 16,002
-------------- -------------- --------------
</TABLE>

F-45

<PAGE>

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from investing activities:
Proceeds from sale of rental vehicles .......... 95,772 82,437 75,477
Purchases of rental vehicles .................... (83,614) (104,331) (58,352)
Purchases of property and equipment ............. (1,290) (676) (114)
-------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES ....................................... 10,868 (22,570) 17,011
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from issuance of debt .................. 91,765 107,867 74,548
Payment of debt ................................. (109,162) (96,583) (106,738)
Net payments of notes payable -- floor plan .... 1,062 (35) (1,027)
-------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES ....................................... (16,335) 11,249 (33,217)
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH ................... 831 (172) (204)
CASH--BEGINNING OF YEAR ........................... 116 947 775
-------------- -------------- --------------
CASH--END OF YEAR ................................. $ 947 $ 775 $ 571
============== ============== ==============
Supplemental disclosures of cash flow information: Cash paid (received) during
the year for:
Interest ........................................ $ 4,138 $ 5,140 $ 5,455
============== ============== ==============
Income taxes .................................... $ 350 $ 619 $ (902)
============== ============== ==============
</TABLE>

Non-cash investing and financing activities:

The Company acquired vehicles under capital lease agreements totaling
$22,658, $7,842 and $30,398 in the years ended 1994, 1995 and 1996,
respectively. The Company also disposed of vehicles, with a net book value of
approximately $19,400 and $7,000, under capital lease agreements during the
years ended 1995 and 1996, respectively.

The Company distributed a non-cash dividend to its former stockholder
totaling $170 during the year ended 1996. This dividend consisted of assets in
excess of liabilities owed to the former stockholder.

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

F-46

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1994 AND 1995, AND FEBRUARY 29, 1996
(IN 000S)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS--Arizona Rent-A-Car Systems, Inc. (the Company) is
engaged in the business of the daily rental of vehicles, including cars,
trucks and passenger vans. The Company operates as the exclusive licensee of
Budget Rent-A-Car Corporation (BRAC) for the state of Arizona. The Company is
obligated to pay certain monthly fees and meet certain other requirements
defined in the license agreement.

On February 27, 1996, Team Rental Group, Inc. (TEAM) purchased all of the
outstanding stock of the Company. TEAM owns and operates Budget vehicle rental
franchises granted by BRAC.

BASIS OF PRESENTATION--The consolidated financial statements include the
accounts of the Company and BRAC Car Sales, Inc., a wholly-owned subsidiary of
the Company. BRAC Car Sales, Inc. ceased operations in May 1995 and their
financial results have been reflected in the financial statements as
discontinued operations for 1994, 1995 and 1996. All significant inter-company
accounts and transactions have been eliminated.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires Company 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.

RENTAL VEHICLES--Rental vehicles are stated at cost less related discounts
and are depreciated over their estimated economic lives or at rates
corresponding to the manufacturers' repurchase program guidelines, where
applicable. Depreciation rates range from 1% to 3% per month. Management
periodically reviews depreciable lives and rates based on a variety of factors
including general economic conditions and estimated holding periods of the
vehicles. Gains and losses upon the sale of rental vehicles are recorded as an
adjustment to depreciation expense.

PROPERTY AND EQUIPMENT--Property and equipment are recorded at cost.
Depreciation is being provided on the straight-line and accelerated methods
over the following estimated useful lives:

<TABLE>
<CAPTION>
<S> <C>
Buildings 31 years
Equipment, furniture and fixtures 3 - 10 years
Capital leases and leasehold improvements lesser of estimated useful lives or terms of
related leases
</TABLE>

GOODWILL AND OTHER INTANGIBLES--Goodwill represents the excess of purchase
price over the fair value of identifiable net assets acquired and is being
amortized using the straight-line method over forty years. Other intangibles
represent acquisition costs of sub-franchisees allocated to franchise
agreements, customer lists and other items, and are being amortized on the
straight-line method over their estimated lives, ranging from five to ten
years.

VEHICLE SELF-INSURANCE RESERVE--At February 29, 1996, the Company has
automobile liability insurance coverage of up to $1,000 with a $300 retention
per occurrence with respect to personal injury and damage claims arising from
the use of its vehicles . The Company estimates and records reserves on all
reported claims. The Company provides reserves on claims incurred but not
reported based on actuarial estimates. The actuarially determined reserves are
necessarily based on estimates, and while management believes that the amounts
are adequate, the ultimate liability may be in excess of, or less than, the
amounts provided. Such estimates are reviewed and evaluated in light of
emerging claim experience and existing circumstances. Any changes in estimates
from this review process are reflected in operations currently.

F-47

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1994 AND 1995, AND FEBRUARY 29, 1996
(IN 000S)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ADVERTISING, PROMOTION AND SELLING--Advertising, promotion and selling
expenses are charged to expense as incurred. The Company incurred advertising
expense of $1,055, $521 and $335 in 1994, 1995 and 1996, respectively.

INCOME TAXES--Deferred income taxes are provided in amounts sufficient to
give effect to timing differences between financial and tax reporting,
principally related to depreciation of rental vehicles and property and
equipment, self-insurance reserves and income tax credit carryforwards.

RECLASSIFICATIONS--Certain reclassifications have been made to the 1994 and
1995 consolidated statements to conform to the 1996 presentation.

NOTE 2--CHANGE IN DEPRECIATION METHOD OF RENTAL VEHICLES

Depreciation of rental vehicles has been computed using the number of days
method for the year ended February 29, 1996. Depreciation in prior years was
computed using the number of months method. The new method of depreciation was
adopted to more accurately reflect the holding cost of rental vehicles.
Pro-forma amounts have not been included due to immateriality.

NOTE 3--CHANGE IN ACCOUNTING ESTIMATE

During the year ended February 28, 1995, the Company revised the estimated
rate of depreciation of capital assets. If the Company would have continued to
use the prior depreciation rates the Company's net loss before income taxes
for the year ended February 28, 1995 would have been increased by
approximately $750. The effect for the year ended February 29, 1996 of the
revised estimated rate of depreciation of capital leases cannot be accurately
determined.

NOTE 4--OTHER PROPERTY AND EQUIPMENT

Other property and equipment consisted of the following as of:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Land ........................................... $1,303 $ 1,303 $1,303
Buildings ...................................... 3,327 1,679 1,680
Leasehold improvements ......................... 1,443 3,419 3,102
Furniture and fixtures ......................... 415 434 881
Signs .......................................... 174 202 174
Equipment ...................................... 2,413 2,683 2,112
Computer software .............................. 627 658 651
-------------- -------------- --------------
9,702 10,378 9,903
Less accumulated depreciation and amortization 2,685 3,353 4,497
-------------- -------------- --------------
OTHER PROPERTY AND EQUIPMENT--NET ............ $7,017 $ 7,025 $5,406
============== ============== ==============
</TABLE>

Effective March 1, 1995, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires
that long-lived assets and certain identifiable assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amounts of these assets may not be recoverable. Upon adoption of this
standard, the Company reduced the useful lives for certain

F-48

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1994 AND 1995, AND FEBRUARY 29, 1996
(IN 000S)
NOTE 4--OTHER PROPERTY AND EQUIPMENT (Continued)

leasehold improvements due to changes in the business climate. This change
resulted in an increase in amortization expense of approximately $720 for the
year ended February 29, 1996. This is included in Operating Expenses in the
1996 Statement of Income and Retained Earnings. Depreciation and amortization
expense on property and equipment was $618, $641 and $1,428 for the years
ended 1994, 1995 and 1996, respectively.

NOTE 5--NOTES PAYABLE--RENTAL VEHICLES

The following is a summary of notes payable--rental vehicles as of:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Notes payable .................. $54,525 $68,830 $37,478
Capital lease obligation--TEAM -- -- 30,472
Capital lease obligation--Other 22,291 7,865 57
-------------- -------------- --------------
Total ........................ $76,816 $76,695 $68,007
============== ============== ==============
</TABLE>

Notes payable are short-term borrowings with various lenders. The note
agreements provide for principal payments ranging from 1 1/2 % to 3% of the
original note balance per month, but may be accelerated upon the occurrence of
certain events including the sale of vehicles. The notes bear interest on
formulas based on prime or the federal reserve 30-day direct commercial paper
rate. The rates ranged from 6.00% to 6.75%, 8.55% to 10.75% and 8.85% to
10.75% at the end of fiscal 1994, 1995 and 1996, respectively. The notes are
secured by rental vehicles and all inventories and receivables. The Company is
responsible for maintaining certain financial ratios under the terms of their
loan agreements, of which certain of these ratios have not been satisfied at
February 29, 1996. Waivers have been granted or the obligations subsequently
satisfied for those ratios not satisfied.

In December 1995, the Company entered into an arrangement to lease vehicles
from TEAM under a capital lease. Lease payments are calculated based on TEAM's
borrowing interest rate and depreciation equal to the manufacturers'
depreciation rates. The Company entered into another capital lease agreement
in December 1994 to acquire rental vehicles with no additional vehicle leases
allowed after February 28, 1995. The Company is obligated to make monthly
rental payments which are computed in a manner similar to that used in
determining the principal and interest payments due under the Company's
lending agreement with this lessor. The Company is accounting for both of
these lease arrangements as capital leases whereby upon lease inception it
records the cost of the related rental vehicles and the entire lease
obligation, including the residual guarantee.

The following is a summary of vehicles under these capital leases as of:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Vehicle cost ................... $22,064 $7,976 $30,435
Less: accumulated depreciation 533 214 672
-------------- -------------- --------------
Net .......................... $21,531 $7,762 $29,763
============== ============== ==============
</TABLE>

Interest expense on the vehicle notes payable and capital lease obligations
was $3,894, $5,082 and $5,361 for the years ended 1994, 1995 and 1996,
respectively.

F-49

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1994 AND 1995, AND FEBRUARY 29, 1996
(IN 000S)
NOTE 5--NOTES PAYABLE--RENTAL VEHICLES (Continued)

Depreciation expense for rental vehicles was approximately $16,326,
$13,382 and $13,770 for the years ended 1994, 1995 and 1996, respectively,
including amortization for vehicles under capital leases.

NOTE 6--NOTES PAYABLE--OTHER

Notes payable--other consisted of the following as of:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Mortgages on real estate properties requiring monthly
principal payments of $29 plus interest at rates
ranging from 6.25% to 8.75% in 1994 and 9.25% to
11.75% in 1995. This debt was paid by TEAM in 1996
(See Note 11) ....................................... $1,497 $1,166 $--
Loan from former stockholder requiring interest
payments of prime plus .50%. This loan was repaid
concurrent with the sale of the Company to TEAM .... 100 322 --
Notes payable on insurance premiums, was secured by
unearned premiums and unpaid claims, and beared
interest at 6.61% as of February 28, 1994 ........... 85 -- --
-------------- -------------- --------------
TOTAL NOTES PAYABLE--OTHER ......................... $1,682 $1,488 $--
============== ============== ==============
</TABLE>

Interest expense on the above debt was $166, $146 and $136 for the years
ended 1994, 1995 and 1996, respectively; of which $13, $17 and $31 was related
to the loan from the stockholder for the years ended 1994, 1995 and 1996,
respectively.

NOTE 7--INCOME TAXES

The components of the provision (benefit) for income taxes are as follows
for the years ended:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Current ................................ $685 $(730) $ 146
Deferred ............................... 80 681 (2,420)
-------------- -------------- --------------
PROVISION (BENEFIT) FOR INCOME TAXES $765 $ (49) $(2,274)
============== ============== ==============
</TABLE>

F-50

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1994 AND 1995, AND FEBRUARY 29, 1996
(IN 000S)

NOTE 7--INCOME TAXES (Continued)

The deferred tax asset (liability) consisted of the following as of:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Net deferred tax liabilities resulting primarily from
tax and financial reporting differences in recording
depreciation on rental vehicles and property and
equipment ........................................... $(3,145) $(4,345) $(1,645)
Net deferred tax asset resulting primarily from
nondeductible self-insurance reserves, bad debt
allowances and deferred compensation ................ 700 695 1,210
Net deferred tax asset resulting from net operating
loss and credit carryforwards ....................... 950 1,475 680
-------------- -------------- --------------
NET DEFERRED TAX ASSET (LIABILITY) ................. $(1,495) $(2,175) $ 245
============== ============== ==============
</TABLE>

As of February 29, 1996, the Company had an alternative minimum tax credit
carryforward for income tax purposes of approximately $400, which has an
indefinite carryforward period, and general business tax credit carryovers of
approximately $225, which expire through 2001.

The income tax provisions for the years ended 1994, 1995 and 1996 do not
bear the customary relationship to the federal statutory rate due to state
taxes, permanent nondeductible expenses and adjustments to the estimates used
in computing the income tax provision for the previous year.

NOTE 8--FACILITY LEASE COMMITMENTS

The Company leases the land for its major airport facility from the city of
Phoenix under a noncancellable lease expiring in the year 2004. The base
annual rental is $161 with annual increases based on changes in the Consumer
Price Index.

The Company has a license to operate as an auto rental agency in the
Phoenix Sky Harbor International Airport which expires on October 31, 2000.
Rents due under this agreement are the greater of 10% of gross receipts, or
annual minimum rentals of $2,612. In addition, the Company is leasing parking
space and other related facilities for $325 per year.

The Company also leases facilities from former stockholders (see Note 11).

The Company leases additional rental locations on a month-to-month basis
which call for payment of fixed amounts and contingent percentage rentals.

Future minimum lease payments under all operating leases are as follows:

<TABLE>
<CAPTION>
YEARS ENDING FEBRUARY 28:
- -------------------------
<S> <C>
1997 ..................... $ 2,876
1998 ..................... 2,911
1999 ..................... 2,937
2000 ..................... 2,937
2001 ..................... 2,030
Thereafter ............... 565
--------
$14,256
========
</TABLE>

F-51

<PAGE>

ARIZONA RENT-A-CAR SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1994 AND 1995, AND FEBRUARY 29, 1996
(IN 000S)

NOTE 8--FACILITY LEASE COMMITMENTS (Continued)

Total rent expense on all operating leases for rental locations was
$3,821, $3,910 and $3,819 for the years ended 1994, 1995 and 1996,
respectively.

NOTE 9--RETIREMENT PLANS

The Company has a defined contribution employee profit sharing plan. All
employees of the Company are eligible upon satisfying entrance requirements.
Contributions, not to exceed 15% of qualified compensation, are at the
discretion of management. The Company's contribution to the Plan was $100 for
the year ended 1994. The Company did not make contributions in 1995 and 1996.

The Company has also instituted a 401(k) retirement plan whereby all
eligible employees may make contributions to the Plan. The Plan also provides
for discretionary Company contributions. The Company made plan contributions
of $29, $29 and $18 during the years ended 1994, 1995 and 1996, respectively.

NOTE 10--COMMITMENTS AND CONTINGENCIES

As of February 29, 1996, cash deposits in certain banks exceeded the
Federal Deposit Insurance Corporation insured limits by approximately $535.

At February 28, 1995 and February 29, 1996, the Company has recorded
approximately $450 and $650, respectively, for the potential settlement costs
of various claims. It is reasonably possible that there may be a change in
this estimate in the near term.

NOTE 11--TRANSACTIONS WITH RELATED PARTIES

Under the terms of sale of the Company's stock to TEAM, the former
stockholders accepted promissory notes which are collateralized by the stock
of the Company.

The Company leases a facility from these former stockholders. This lease
expires in September 2000, and requires base monthly rentals of $6. The
Company is responsible for additional rents based on a percentage of monthly
revenues in excess of those defined in the leases, as well as real estate
taxes. Rent expense on this location was $217, $310 and $303 for the years
ended 1994, 1995 and 1996, respectively.

The Company also leased facilities associated with BRAC Car Sales, Inc.
from the former principal stockholder. This lease was canceled in 1995 (see
Note 12). Rent expense on these locations was $315, $279 and $136 for the
years ended 1994, 1995 and 1996, respectively.

Upon acquiring the Company, TEAM satisfied the outstanding real estate
notes. This payable to TEAM of $852 at February 29, 1996 is included in Other
Liabilities on the Balance Sheet.

NOTE 12--DISCONTINUED OPERATIONS

On May 1, 1995, BRAC Car Sales Inc. ceased operations. The Company had
leased facilities associated with this operation from the former principal
stockholder. These lease obligations were canceled by this stockholder in
1995. In addition, this stockholder purchased the leasehold improvements and
certain other assets of BRAC Car Sales, Inc. at their net book values. The
used vehicle inventories were sold and the related flooring notes were
satisfied with the lenders. All other assets and liabilities of BRAC Car
Sales, Inc. were assumed by the Company. Any losses incurred after the
disposal date are considered to be losses from operations of the discontinued
segment, and are included in the accompanying financial statements.

F-52

<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary ......................... 3
Risk Factors ............................... 9
The Company ................................ 14
Use of Proceeds ............................ 15
Price Range of Common Stock ................ 15
Dividend Policy ............................ 15
Capitalization ............................. 16
Pro Forma Consolidated Financial
Statements ................................ 17
Selected Financial Data .................... 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................ 24
Business ................................... 30
Management ................................. 40
Certain Transactions ....................... 44
Principal and Selling Stockholders ........ 47
Description of Capital Stock ............... 49
Shares Eligible for Future Sale ............ 52
Underwriting ............................... 53
Notice to Canadian Residents ............... 54
Legal Matters .............................. 55
Experts .................................... 55
Additional Information ..................... 55
Index to Financial Statements .............. F-1
</TABLE>

#############################################################################

GRAPHIC OMITTED
IGT: "team"

#############################################################################

4,000,000 Shares
Class A Common Stock
PROSPECTUS

CS First Boston
The Chicago Corporation
McDonald & Company Securities, Inc.