SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
AMENDMENT No. 1 TO CURRENT REPORT ON
FORM 8-K DATED AUGUST 14, 1996
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 1, 1996
TEAM RENTAL GROUP, INC.
(Exact name of registrant as specified in charter)
Delaware 0-23962 59-3327576
- -------- ------- ----------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
125 Basin Street, Suite 210, Daytona Beach, Florida 32114
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (904) 238-7035
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
This Amendment No. 1 (this "Amendment") to Form 8-K dated August 14, 1996 is
being filed to include the required financial statement pro forma disclosure for
ValCar Rental Car Sales, Inc., an Indiana corporation ("ValCar"), which was
acquired from its sole shareholders, Jeffrey D. Congdon and Gary L. Levine on
August 1, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following statements are being filed as part of this report:
a) Report of Independent Accountants
b) Balance Sheets as of December 31, 1995 and 1994
c) Statements of Income for the three years ended December 31, 1995,
1994, and 1993
d) Statements of Changes in Stockholders' Equity for the three years
ended December 31, 1995, 1994, and 1993
e) Statements of Cash Flows for the three years ended December 31,
1995, 1994, and 1993
f) Pro Forma Balance Sheet at June 30, 1996
g) Pro Forma Statement of Income for the six-month period ended
June 30, 1996
h) Pro Forma Statement of Income for the year ended December 31, 1995
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEAM RENTAL GROUP, INC.
By: By: /s/ Sanford Miller
------------------
Sanford Miller
Chief Executive Officer
Dated: October 25, 1996
<PAGE>
VALCAR RENTAL CAR SALES, INC.
Balance Sheets as of December 31, 1995 and 1994, and Related Statements
of Operations, Changes in Stockholders' (Deficiency) Equity and Cash
Flows for each of the Three Years in the Period Ended December 31, 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
ValCar Rental Car Sales, Inc.:
We have audited the accompanying balance sheets of ValCar Rental Car Sales, Inc.
as of December 31, 1995 and 1994, and the related statements of operations,
changes in stockholders' (deficiency) equity 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 these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1995 and 1994,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
Indianapolis, Indiana
April 26, 1996
(October 22, 1996 as to Notes 10, 11 and 12)
<PAGE>
<TABLE>
<CAPTION>
VALCAR RENTAL CAR SALES, INC.
BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
ASSETS 1995 1994
CURRENT ASSETS:
<S> <C> <C>
Cash $ 61,587 $ 96,629
Contracts in-transit 624,195 427,702
Receivables, net 405,041 427,864
Receivables from stockholders 63,000 82,000
Inventories 7,129,734 7,477,451
Prepaid expenses 52,628 45,765
Total current assets 8,336,185 8,557,411
PROPERTY AND EQUIPMENT, NET 965,276 749,605
OTHER ASSETS, NET 2,618 72,244
TOTAL $ 9,304,079 $ 9,379,260
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
CURRENT LIABILITIES:
Notes payable - current portion $ 6,117,050 $ 5,432,989
Vehicles payable 192,781 775,418
Accounts payable 1,034,002 636,821
Other accrued liabilities 446,835 516,052
Reserve for finance, insurance and mechanical
service contract chargebacks 78,614 74,832
Total current liabilities 7,869,282 7,436,112
LONG-TERM LIABILITIES:
Notes payable, less current portion 282,981 251,385
Notes payable - stockholders 980,000 275,000
Reserve for finance, insurance and mechanical
service contract chargebacks 314,457 299,326
Total long-term liabilities 1,577,438 825,711
COMMITMENTS AND CONTINGENCIES (Notes 9 and 12)
STOCKHOLDERS' (DEFICIENCY) EQUITY:
Common stock, $1 par value, 1,000 shares authorized, 600 shares
issued and outstanding 600 600
Additional paid-in capital 1,169,400 779,400
Accumulated earnings (deficit) (1,312,641) 337,437
Total stockholders' (deficiency) equity (142,641) 1,117,437
TOTAL $ 9,304,079 $ 9,379,260
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
VALCAR RENTAL CAR SALES, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
1995 1994 1993
REVENUES:
<S> <C> <C> <C>
Vehicle sales $ 61,355,497 $ 63,284,369 $ 52,383,958
Finance, insurance and mechanical
service contract income, net 2,204,879 2,065,451 1,311,203
Mechanical repair and parts sales 268,583 76,875 16,728
Interest income 10,887 4,408 2,332
Other 331,210 263,906 50,189
---------- ---------- ----------
Total revenues 64,171,056 65,695,009 53,764,410
---------- ---------- ----------
COST
Cost of sales 52,430,044 52,591,814 43,720,355
Selling and administrative expenses 10,212,541 9,646,161 7,392,986
Discount on sale of receivables :
Trade 513,171
Related party 1,940,460 3,016,255 1,686,843
Interest expense 544,918 308,653 140,352
---------- ---------- ----------
Total costs and expenses 65,641,134 65,562,883 52,940,536
---------- ---------- ----------
NET INCOME (LOSS) $ (1,470,078) $ 132,126 $ 823,874
============ ============ ============
(Loss) earnings per share $ (2,450.13) $ 220.21 $ 1,373.12
============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
VALCAR RENTAL CAR SALES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,470,078) $ 132,126 $ 823,874
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 140,270 141,507 108,208
Gain on sale of property and equipment (985) (1,996)
Changes in certain assets and liabilities:
Contracts in-transit (196,493) (246,625) (142,009)
Receivables 22,823 (79,828) (206,491)
Inventories 347,717 (2,610,531) (3,138,379)
Prepaid expenses (6,863) 13,596 (18,146)
Other assets, net 69,626 77,269 (106,429)
Vehicles payable (582,637) 606,243 77,265
Accounts payable 397,181 127,461 333,609
Other accrued liabilities (69,217) 114,963 241,637
Reserve for finance, insurance and mechanical
service contract chargebacks 18,913 112,361 126,877
---------- ---------- ----------
Net cash used in operating activities (1,328,758) (1,612,443) (1,901,980)
---------- ---------- ----------
CASH FLOWS USED IN INVESTING ACTIVITIES-
Proceeds from sale of property and equipment 17,597 37,684
Purchase of property and equipment (355,941) (453,199) (445,920)
Net cash used in investing activities (355,941) (435,602) (408,236)
CASH FLOWS FROM FINANCING ACTIVITIES:
Vehicle inventory financing, net 707,441 1,817,127 2,366,086
Proceeds from notes payable - stockholders 705,000 275,000 480,000
Proceeds from installment note 58,216 120,000
Repayment of notes payable (50,000) (116,667) (19,444)
Advances on notes receivable from stockholders (60,000) (82,000)
Collections on notes receivable from stockholders 79,000
Contributions from stockholders 390,000 100,000 160,000
Distributions to stockholders (180,000) (168,000) (522,000)
Net cash provided by financing activities 1,649,657 1,945,460 2,464,642
NET INCREASE (DECREASE) IN CASH (35,042) (102,585) 154,426
CASH AT BEGINNING OF YEAR 96,629 199,214 44,788
---------- ---------- ----------
CASH AT END OF YEAR $ 61,587 $ 96,629 $ 199,214
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 530,470 $ 293,271 $ 121,373
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VALCAR RENTAL CAR SALES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIENCY) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Common Stock
------------
Additional Accumulated
Issued and Paid-in Earnings
Authorized Outstanding Amount Capital (Deficit) Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 1,000 600 $ 600 $ 519,400 $ 71,437 $ 591,437
Net income 823,874 823,874
Capital contributions 160,000 160,000
Distributions (522,000) (522,000)
----- --- --- ------- ------- ---------
BALANCE AT DECEMBER 31, 1993 1,000 600 600 679,400 373,311 1,053,311
Net income 132,126 132,126
Capital contributions 100,000 100,000
Distributions (168,000) (168,000)
----- --- --- ------- ------- ---------
BALANCE AT DECEMBER 31, 1994 1,000 600 600 779,400 337,437 1,117,437
Net loss (1,470,078) (1,470,078)
Capital contributions 390,000 390,000
Distributions (180,000) (180,000)
----- --- --- ------- ------- ---------
BALANCE AT DECEMBER 31, 1995 1,000 600 $ 600 $ 1,169,400 $(1,312,641) $ (142,641)
===== === =========== =========== =========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
VALCAR RENTAL CAR SALES, INC.
NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995 AND 1994
AND FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - ValCar Rental Car Sales, Inc. (the Company ), was
incorporated in the State of Indiana in December 1990. The Company is
engaged in the sale of used motor vehicles in Indianapolis, Indiana.
Merger - On August 1, 1995, ValCar Rental Car. Sales, Inc. entered into an
Agreement and Plan of Merger (the Merger ) whereby Cars Plus, Inc., a
company under common control, was merged with and into ValCar Rental Car
Sales, Inc. The merger of these entities under common control has been
recorded similar to a pooling of interests. The financial statements have
been restated to reflect the merger effective January 1, 1993.
Basis of Presentation - The accounting and reporting policies of the
Company conform to generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statement
and accompanying notes. Actual results could differ from these estimates.
Vehicle Sales - Sales of vehicles are recognized as revenue when title to
the vehicle transfers.
Finance, Insurance and Mechanical Service Contract Income - The Company
arranges financing for many of its customers through financial
institutions and sells credit life, disability insurance, and extended
service contracts offered by third parties for which it receives fees. If
the customers pay off the financing or cancel the coverage prematurely, a
portion of this income will be refundable. Management believes the
reserves established for these refunds are adequate.
Inventories - Vehicle inventories are stated at the lower of cost or
market on a specific unit basis.
Property and Equipment - Property and equipment are recorded at cost.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets, ranging from 36 to 60 months. Leasehold
improvements are amortized using the straight-line method over the shorter
of the estimated life of the improvement or the remaining term of the
related lease.
Advertising - The Company expenses advertising costs as incurred. Total
advertising expense was approximately $2,153,000, $2,102,000 and
$1,732,000 in 1995, 1994 and 1993, respectively.
Income Taxes - The stockholders of the Company have elected to be taxed
under Subchapter S of the Internal Revenue Code. Accordingly, the
Company's income will be taxed at the individual stockholder level and no
provision for taxes is made in the financial statements.
Earnings Per Share - Earnings per share of common stock is based on the
weighted average number of common shares outstanding during the year. The
weighted average number of common shares outstanding was 600 for each of
the three years in the period ended December 31, 1995. The per share
information has been restated to reflect the merger of companies under
common ownership.
Reclassifications - Reclassifications of certain amounts in the 1994 and
1993 financial statements have been made to conform to the 1995
presentation.
2. RECEIVABLES
Receivables consist of the following at December 31:
1995 1994
Vehicle sales $ 100,567 $ 156,738
Due from finance companies 155,912 161,274
Other 238,321 110,147
Allowance for doubtful accounts (89,759) (295)
------- ----
Total receivables $ 405,041 $ 427,864
========= =========
3. INVENTORIES
Inventories consist of the following at December 31:
1995 1994
Used vehicles $7,089,333 $7,431,234
Parts and accessories 40,401 46,217
------ ------
Total inventories $7,129,734 $7,477,451
========== ==========
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
1995 1994
Leasehold improvements $ 507,183 $ 479,149
Machinery and shop equipment 154,387 137,585
Furniture and fixtures 323,317 306,427
Rental vehicles 299,266 16,864
------- ------
1,284,153 940,025
Less accumulated depreciation and amortization (318,877) (190,420)
-------- --------
Property and equipment - net $ 965,276 $ 749,605
=========== ===========
<PAGE>
<TABLE>
<CAPTION>
5. NOTES PAYABLE
Notes payable consist of the following at December 31:
<S> <C> <C>
1995 1994
Floor plan line of credit with a bank which
bears interest at the prime rate (8.5% at
December 31, 1995) plus 0.75% per annum and
which matures on May 31, 1996. Repayment of
advances are due when the related vehicles are
sold. The floor plan line of credit is
collateralized by the Company's vehicle
inventory, equipment, accounts receivable and
general intangibles and by the personal
guarantees of the Company's stockholders. The
floor plan agreement contains various
covenants, the most restrictive of which
require the Company to maintain minimum net
worth and certain financial ratios. $5,927,926 $5,220,485
Note payable to a bank with monthly payments of
$10,029 of principal and interest at 9.25%
through August 1, 1999. The note is
collateralized by certain assets and by the
personal guarantees of the Company's
stockholders. 372,105 413,889
Note payable to a bank with interest paid
monthly at the prime rate plus 1% and which
matures on May 31, 1996. The note is
collateralized by certain assets and by the
personal guarantees of the Company's
stockholders. 100,000 50,000
------- ------
Total notes payable 6,400,031 5,684,374
Less notes payable - current portion 6,117,050 5,432,989
--------- ---------
Notes payable, long-term portion $ 282,981 $ 251,385
========== ==========
</TABLE>
The Company had received a waiver from its Bank related to the violation
of the liabilities to minimum net worth ratio covenant of its floor plan
line of credit at December 31, 1995. Such violation was cured in January
1996 through contributions made by the stockholders (see Note 10).
Maturities of notes payable are as follows:
1996 $6,117,050
1997 97,950
1998 107,545
1999 77,486
---- ------
$6,400,031
==========
At December 31, 1995 and 1994, the fair value of notes payable
approximates the recorded amounts due to the self-adjusting interest rate
features of substantially all of these financial instruments.
6. NOTES PAYABLE - STOCKHOLDERS
At December 31, 1995, the Company had unsecured revolving credit notes
with certain stockholders with maximum available borrowings of $2,250,000.
The notes are due on demand and bear interest at the prime rate plus 2%.
Advances under the revolving credit notes totaled $950,000 at December 31,
1995. These notes are classified as long-term in the accompanying balance
sheet based on the stockholders commitment to extend the availability of
these borrowings until January 1, 1997.
At December 31, 1995, the Company had an unsecured promissory note with a
stockholder with a balance of $30,000. The note bears interest at the
prime rate plus 1%.
The fair value of these notes approximates the recorded amounts due to the
self-adjusting interest rate features.
7. OTHER RELATED PARTIES
The Company has notes receivable from a stockholder of $63,000 and $82,000
as of December 31, 1995 and 1994, respectively. The notes bear interest at
rates which range from the prime rate to the prime rate plus 1%. These
notes were repaid in 1996.
The Company arranges financing for customers who do not qualify for
traditional bank financing using retail installment contracts, a portion
of which are sold to a related company. Substantially all contracts are
sold without recourse and at a discount from face value. The discount on
the sale of these contracts does not exceed the gross margin on the
related sale of the vehicle.
Contracts with a face value and discounts were sold to the related Company
as follows:
Face
Value Discount
1995 $10,962,000 $ 1,941,000
1994 10,934,000 3,016,000
1993 4,900,000 1,687,000
The Company has operating leases for three dealership facilities with
partnerships owned by certain stockholders of the Company. Rent expense
for these leases in 1995, 1994 and 1993 was $327,000, $231,300 and
$193,000, respectively. Future minimum obligations under these leases are
as follows:
1996 $302,000
1997 300,000
1998 300,000
1999 287,000
2000 174,000
Thereafter 551,000
-------
$1,914,000
==========
During 1995, 1994 and 1993, the Company paid management fees totaling
$385,000, $475,600 and $396,700, respectively, to a company owned by
certain stockholders of the Company.
The Company purchased vehicles totaling $426,000, $1,612,000, and
$2,263,000 in 1995, 1994 and 1993, respectively, from a company controlled
by certain stockholders of the Company. At December 31, 1995 and 1994,
vehicles in inventory purchased from related parties totaled $87,000 and
$285,000, respectively.
8. COMMITMENTS
The Company has operating leases for two dealership facilities in addition
to those leased from related parties. These leases commenced in 1994. Rent
expense was $126,000 in 1995 and $126,000 in 1994 for these facilities.
Future minimum obligations under these leases are as follows:
1996 $126,000
1997 129,000
1998 98,000
---- ------
$353,000
========
9. CONTINGENCIES
The Company is subject to legal actions and proceedings in the normal
course of business. Although litigation is subject to many uncertainties
and the ultimate exposure with respect to these matters cannot be
ascertained, management does not believe the ultimate outcome of any
existing actions will have a material adverse effect on the financial
condition of the Company (see Note 12).
10. SUBSEQUENT EVENT - STOCKHOLDERS' TRANSACTIONS
Through August 1, 1996, certain stockholders of the Company have converted
$400,000 of notes payable - stockholders to additional paid-in-capital,
made additional loans to the Company of $950,000, and contributed $800,000
to the Company in additional paid-in-capital.
11. SUBSEQUENT EVENT - ACQUISITION OF THE COMPANY
On August 1, 1996, Team Rental Group, Inc. ( Team ) acquired all of the
outstanding capital stock of the Company (the Acquisition ). The
Acquisition was consummated in accordance with the terms of an agreement
dated August 1, 1996. The aggregate consideration paid by Team in
connection with the Acquisition was $400,000 in cash. Team is related to
the Company through a common stockholder.
12. SUBSEQUENT EVENT - LITIGATION
In September 1996, the Company was named as a defendant in a suit that
alleges truth-in-lending violations and deceptive trade practices, among
other things. The relief requested by the plaintiffs includes requests for
compensatory, statutory and punitive damages. This proceeding has been
brought as a putative class action and is pending in federal district
court. As of October 22, 1996, the defendant has not been served with a
motion for class certification. This litigation is at a preliminary stage
and the Company has not yet filed a responsive pleading. Management is not
able to estimate the effect, if any, that this litigation may have on the
financial position of the Company.
* * * * * *
10
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma income statements for the six month period
ended June 30, 1996 and for the year ended December 31, 1995 gives effect to the
ValCar Acquisition (the "Acquisition") of August 1, 1996 as if the Acquisition
had occurred as of January 1, 1996 and 1995, respectively. The following
unaudited pro forma balance sheet as of June 30, 1996 gives effect to the
acquisition of the assets of ValCar as if such transactions had occurred on June
30, 1996.
These unaudited pro forma 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 attained in
the future.
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
As of June 30, 1996
(in thousands)
Adjustments
Team for the
Historical Valcar Acquisition Pro Forma
---------- ------ ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 10,970 24 (400)(1) 10,594
Restricted cash 2,878 2,878
Trade and vehicle receivables, net of allowances
for doubtful accounts of $3,296 24,249 1,238 25,487
Accounts receivable, related parties 61 61
Vehicle inventory 15,890 4,722 20,612
Revenue earning vehicles, net 337,633 337,633
Property and equipment, net 20,217 598 20,815
Deferred financing fees, net of accumulated
amortization of $562 2,129 2,129
Franchise rights, net of accumulated
amortization of $3,269 59,315 1,172(1) 60,487
Other Assets 9,449 77 9,526
------- ----- ----- -------
Total 482,791 6,659 772 490,222
LIABILITES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable 402,338 6,119 408,457
Capital lease obligations 702 702
Accounts payable 14,501 669 15,170
Accrued and other liabilities 15,289 643 15,932
Deferred income taxes 1,433 1,433
------- ----- ----- -------
Total liabilities 434,263 7,431 -- 441,694
COMMITMENTS AND CONTINGENCIES
COMMON STOCK WARRANT 2,000 2,000
------- ----- ----- -------
STOCKHOLDERS' EQUITY
Common stock 74 1 (1)(2) 74
Additional paid-in-capital 45,395 2,369 (2,369)(2) 45,395
Accumulated deficit 1,389 (3,142) 3,142 (2) 1,389
Treasury stock (330) (330)
------- ----- ----- -------
Total stockholders' equity 46,528 (772) 772 46,528
Total 482,791 6,659 772 490,222
======= ===== ===== =======
Notes to Pro Forma Consolidated Balance Sheet
as of June 30, 1996
(1) To record $400,000 cash paid to the sellers representing the acquisition
price, and to record franchise rights from the acquisition, representing
the excess of the net assets acquired over the purchase price.
(2) Eliminate common stock, additional-paid-in capital and retained earnings of
ValCar.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS Six Month-Period Ended
June 30, 1996 (in thousands)
Adjustments
Team for the
Historical ValCar Acquisition Pro Forma
<S> <C> <C> <C> <C>
Operating revenue 159,528 18,514 178,042
------- ------- -------- -------
Operating expenses:
Direct vehicle and operating 14,492 14,492
Depreciation - vehicles 28,023 28,023
Depreciation - nonvehicle 1,210 91 1,301
Cost of vehicle sales 47,295 17,208 64,503
Advertising, promotion and selling 10,609 10,609
Facilities 9,417 9,417
Personnel 24,005 24,005
General and administrative 5,385 2,771 (32)(1),(2) 8,124
Amortization 996 19 (6) 1,015
------- ------- -------- -------
Total operating expenses 141,432 20,070 (13) 161,489
------- ------- -------- -------
Operating income 18,096 (1,556) 13 16,553
------- ------- -------- -------
Other (income) expense:
Interest expense - vehicles 11,963 273 (26)(3),(4) 12,210
Interest expense - other 931 931
Interest income - restricted cash (787) (787)
Interest expense - related party 118 118
Nonrecurring income --
------- ------- -------- -------
Total other (income) expense 12,225 273 (26) 12,472
------- ------- -------- -------
Income before provision
for income taxes 5,871 (1,829) 39 4,081
Provision for income taxes 2,348 (711)(5) 1,637
------- ------- -------- -------
Net income 3,523 (1,829) 750 2,444
======= ======= ======== =======
Weighted average common shares outstanding 7,497 7,497
======= =======
Earnings per common share 0.47 0.33
======= =======
Notes to Pro Forma Consolidated Statement
of Operations for the Six-Month Period Ended June 30, 1996
(1) To eliminate $93,000 of management fees paid to former shareholders.
(2) To record royalty payments in the amount of $61,000 to Budget Corporation
for the right to the use of the "Budget" trade name in a city for which
Team rental does not have the Budget vehicle rental franchise.
(3) To record the elimination of interest expense of $5,000 related to notes
paid off at the time of the acquisition.
(4) To record reduction in interest expense of $14,000 due to the reduced
interest rates for vehicle financing available to Team Rental Group through
its floor plan financing facilities.
(5) To record reduction in provision for income taxes resulting from losses
incurred by ValCar.
(6) To record amortization of franchise rights resulting from the acquisition
of ValCar.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31,
1995 (in thousands)
Adjustments
Team for the
Historical ValCar Acquisition Pro Forma
---------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Operating revenue 149,729 64,171 213,900
------- ------ ---- ------
Operating expenses:
Direct vehicle and operating 13,704 13,704
Depreciation - vehicles 27,476 27,476
Depreciation - nonvehicle 1,341 140 1,481
Cost of vehicle sales 38,021 54,744 92,765
Advertising, promotion and selling 11,826 11,826
Facilities 11,121 11,121
Personnel 24,515 24,515
General and administrative 6,686 10,213 (261)(1),(2) 16,638
Amortization 859 38 (6) 897
------- ------ ---- ------
Total operating expenses 135,549 65,097 (223) 200,423
------- ------ ---- ------
Operating income 14,180 (926) 223 13,477
------- ------ ---- ------
Other (income) expense:
Interest expense - vehicles 13,874 544 (25)(3),(4) 14,393
Interest expense - other 632 632
Interest income - restricted cash (1,348) (1,348)
Interest expense - related party --
Nonrecurring income --
------- ------ ---- ------
Total other (income) expense 13,158 544 (25) 13,677
------ ------ ---- ------
Income before provision
for income taxes 1,022 (1,470) 248 (200)
Provision for income taxes 685 (479)(5) 206
----- ------ ---- ------
Net income 337 (1,470) 727 (406)
=== ====== === ====
Weighted average common shares outstanding 6,369 6,369
===== =====
Earnings per common share 0.05 (0.06)
==== =====
<PAGE>
Notes to Pro Forma Consolidated Statement
of Operations for the Year Ended December 31, 1995
(1) To eliminate $385,000 of management fees paid to former shareholders.
(2) To record royalty payments in the amount of $124,000 to Budget Corporation
for the right to the use of the "Budget" trade name in a city for which
Team rental does not have the Budget vehicle rental franchise.
(3) To record the elimination of interest expense of $15,000 related to notes
paid off at the time of the acquisition.
(4) To record reduction in interest expense of $10,000 due to the reduced
interest rates for vehicle financing available to Team Rental Group through
its floor plan financing facilities.
(5) To record reduction in provision for income taxes resulting from losses
incurred by ValCar.
(6) To record amortization of franchise rights resulting from the acquisition
of ValCar.
</TABLE>
<PAGE>
