<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 29, 1997
--------------
Budget Group, Inc.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-78274 59-3227576
- ---------------------------- -------------- ---------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
125 Basin Street, Suite 210, Daytona Beach, FL 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:
--------------------
This document consists of 19 pages
<PAGE> 2
Item 2. Aquisition or Disposition of Assets
On April 29, 1997, Budget Group, Inc., a Delaware corporation (the
"Company"), which was formerly named Team Rental Group, Inc., acquired all the
capital stock (the "BRACC Acquisition") of Budget Rent A Car Corporation, a
Delaware corporation ("BRACC"), pursuant to the terms of stock purchase
agreements (the "Stock Purchase Agreements") with Ford Motor Company ("Ford"),
BRACC and the common stockholder of BRACC. The consideration paid by Budget
pursuant to the Stock Purchase Agreements consisted of (i) $275.0 million in
cash and (ii) the issuance to Ford of 4,500 shares of the Company's newly
created Series A Convertible Preferred Stock. Each share of Series A Convertible
Preferred Stock is non-voting, does not carry a dividend and will automatically
be converted into 1,000 shares of Class A Common Stock, par value $.01 per
share, of the Company (the "Class A Common Stock") at such time as the record
ownership of such share of Series A Convertible Preferred Stock is transferred
to or held by any person or any entity other than Ford or any affiliate of Ford.
Pursuant to the Stock Purchase Agreements, BRACC repaid a portion of its
outstanding indebtedness to Ford and Ford canceled a portion of the remaining
outstanding BRACC indebtedness.
Concurrently with the BRACC Acquisition, (i) the Company issued
8,625,000 shares of Class A Common Stock in a public offering, resulting in
proceeds (less underwriting discounts and commissions) to the Company of
approximately $176.4 million, (ii) the Company issued $45.0 million aggregate
principal amount of 6.85% Convertible Subordinated Notes, Series B, due 2007,
(iii) BRACC issued $165.0 million aggregate principal amount of 9.57% Guaranteed
Senior Notes due 2007, (iv) BRACC entered into a new $900.0 commercial paper
facility and a $500.0 million asset-backed note facility, and (v) BRACC entered
into a new $300.0 million working capital facility.
The Company and BRACC (collectively, "Budget Group") and their
franchisees (collectively, the "Budget System") operate the third largest
worldwide general use car and truck rental system, with approximately 3,200
locations and a peak fleet size during 1996 of 266,000 cars and 18,000 trucks.
The Budget System includes locations in both the airport and local (downtown and
suburban) markets in all major metropolitan areas in the United States, in many
other small and mid-size U.S. markets and in more than 110 countries worldwide.
Pro forma for the BRACC Acquisition, the Budget System included approximately
455 company-owned locations in the United States at December 31, 1996,
accounting for approximately 76% of 1996 U.S. System-wide revenues. In addition,
Budget franchisees operated approximately 500 royalty-paying franchise locations
in the United States at December 31, 1996. Budget Group is also one of the
largest independent retailers of late model vehicles in the United States,
operating 22 retail car sales facilities with pro forma revenues of $246.9
million for 1996.
-2-
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Required
- The following financial statements of Budget Rent a
Car Corporation, together with the independent
auditors' report on certain of such financial
statements (incorporated by reference to the
financial statements of Budget Rent a Car Corporation
contained in the Prospectus dated April 23, 1997
included in the Registration Statement on Form S-1,
File No. 333-21691):
(i) Consolidated Balance Sheets -- December 31,
1995 and 1996
(ii) Consolidated Statements of Operations --
December 31, 1994, 1995 and 1996
(iii) Consolidated Statements of Stockholders'
Equity -- Years ended December 31, 1994,
1995 and 1996
(iv) Consolidated Statements of Cash Flows --
December 31, 1994, 1995 and 1996
(v) Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
- The following pro forma consolidated financial
statements of Budget Group:
(i) Pro Forma Consolidated Statement of
Operations for the Year Ended December 31,
1996
(ii) Notes to Pro Forma Consolidated Statement of
Operations
(iii) Pro Forma Consolidated Balance Sheet as of
December 31, 1996
(iv) Notes to Pro Forma Consolidated Balance
Sheet
(c) Exhibits.
2.1 - Common Stock Purchase Agreement, dated as of January
13, 1997, between John J. Nevin and Team Rental
Group, Inc. (incorporated by reference to Exhibit 2.7
of Registration Statement on Form S-1, File No.
333-21691).
2.2 - Budget Stock Purchase Agreement, dated as of January
13, 1997, between Budget Rent a Car Corporation and
Team Rental Group, Inc. (incorporated by reference to
Exhibit 2.8 of Registration Statement on Form S-1,
File No. 333-21691).
2.3 - Preferred Stock Purchase Agreement, dated as of
January 13, 1997, between Ford Motor Company and Team
Rental Group, Inc. (incorporated by reference to
Exhibit 2.9 of Registration Statement on Form S-1,
File No. 333-21691).
23.1 - Consent of KPMG Peat Marwick, LLP.
-3-
<PAGE> 4
PRO FORMA FINANCIAL STATEMENTS
INTRODUCTION
The following unaudited pro forma consolidated financial statements (the
"Pro Forma Consolidated Financial Statements") are based on the historical
financial statements of TEAM and BRACC as of and for the year ended December 31,
1996, adjusted to give effect to the transactions described below. The Pro Forma
Consolidated Statement of Operations gives effect to the following transactions
as if they had occurred on January 1, 1996: (i) certain transactions effected by
TEAM during 1996 that are more fully described below (the "1996 TEAM
Transactions") and (ii) the Budget Acquisition and certain related transactions
that are more fully described below (the "Budget Acquisition Transactions" and,
together with the 1996 TEAM Transactions, the "Transactions"). The Pro Forma
Consolidated Balance Sheet gives effect to the Budget Acquisition Transactions
as if they had occurred on December 31, 1996.
The 1996 TEAM Transactions consist of the following: (i) TEAM's acquisition
of Van Pool, which was effective on February 1, 1996, TEAM's acquisition of the
Phoenix Budget franchise (the "Phoenix Acquisition"), which was effective on
March 1, 1996, and TEAM's acquisition of ValCar Rental Car Sales, Inc.
("ValCar"), which was effective on August 1, 1996 (the "ValCar Acquisition");
(ii) the sale of 3,821,007 shares of Class A Common Stock by TEAM in a public
offering in July 1996 (the "July 1996 Public Offering"); (iii) the partial
refinancing of TEAM's vehicle rental fleet in December 1996 through the $176.0
million aggregate principal amount Third Fleet Financing Facility; (iv) the
private placement of $80.0 million aggregate principal amount of Series A
Convertible Notes in December 1996; and (v) the repayment of certain of TEAM's
outstanding indebtedness from the proceeds of (ii), (iii) and (iv) above. The
Budget Acquisition Transactions consist of the following: (i) the Budget
Acquisition, including the repayment, purchase and forgiveness of certain
indebtedness and the necessary purchase accounting and elimination entries; (ii)
the Offering and the application of the net proceeds thereof; (iii) the Debt
Placements and the application of the net proceeds thereof; and (iv) the New
Fleet Financings and the application of the net proceeds thereof and the
repayment of certain of BRACC's outstanding indebtedness to Ford from the net
proceeds thereof. All acquisitions, including the Budget Acquisition, have been
accounted for using the purchase method of accounting.
The Pro Forma Consolidated Financial Statements do not purport to represent
what Budget Group's results of operations or financial condition would have been
had the Transactions actually occurred on the dates indicated or to predict
Budget Group's results of operations or financial condition in the future. These
statements are qualified in their entirety by, and should be read in conjunction
with, the historical financial statements of TEAM and BRACC and the notes
thereto included elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of TEAM" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of BRACC."
The Pro Forma Consolidated Financial Statements have been prepared using
the purchase method of accounting, whereby the total cost of the Budget
Acquisition will be allocated to the tangible and intangible assets acquired and
liabilities assumed based upon their respective fair values at the effective
date of the Budget Acquisition. Such allocations will be based on studies and
valuations which have not yet been completed. Accordingly, the allocations
reflected in the Pro Forma Consolidated Financial Statements are preliminary and
subject to revision. However, Budget Group does not expect material changes to
the allocation of the purchase price.
The Pro Forma Consolidated Financial Statements give effect only to the
adjustments set forth in the accompanying notes and do not reflect any other
benefits anticipated by management as a result of the Budget Acquisition
Transactions and the implementation of its business strategy or the possible
effects of the Supply Agreement and Advertising Agreement.
4
<PAGE> 5
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
ADJUSTMENTS FOR PRO FORMA FOR BUDGET PRO FORMA
HISTORICAL 1996 TEAM HISTORICAL HISTORICAL ACQUISITION BUDGET
TEAM TRANSACTIONS(A) TEAM BRACC TRANSACTIONS GROUP
---------- --------------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue:
Vehicle rental revenue....... $223,250 $10,874 $234,124 $ 963,764 $ -- $1,197,888
Royalty fees................. -- -- -- 60,352 (7,641)(k) 52,711
Retail car sales revenue..... 134,120 21,313 155,433 91,503 -- 246,936
Other........................ -- -- -- 17,202 (2,509)(k) 14,693
-------- ------- -------- ---------- -------- ----------
Total operating
revenue............. 357,370 32,187 389,557 1,132,821 (10,150) 1,512,228
Operating costs and expenses:
Direct vehicle and
operating.................. 35,098 2,372 37,470 121,288 (6,719)(k) 152,039
Depreciation -- vehicle...... 60,735 2,855 63,590 263,846 -- 327,436
Depreciation -- non-vehicle... 2,589 343 2,932 26,645 -- 29,577
Cost of car sales............ 113,747 19,639 133,386 78,944 -- 212,330
Advertising, promotion and
selling.................... 22,983 915 23,898 83,304 (2,509)(k) 104,693
Facilities................... 20,406 871 21,277 114,325 -- 135,602
Personnel.................... 53,097 1,955(b) 55,052 248,655 -- 303,707
General and administrative... 11,605 3,968(c) 15,573 54,194 -- 69,767
Amortization................. 1,843 90(d) 1,933 16,969 (10,076)(1) 8,826
-------- ------- -------- ---------- -------- ----------
Total operating costs
and expenses........ 322,103 33,008 355,111 1,008,170 (19,304) 1,343,977
-------- ------- -------- ---------- -------- ----------
Operating income (loss)........ 35,267 (821) 34,446 124,651 9,154 168,251
-------- ------- -------- ---------- -------- ----------
Other (income) expense:
Vehicle interest expense..... 25,336 (4,419)(e) 20,917 92,738 (7,064)(m)(n)(o) 106,591
Non-vehicle interest
expense.................... 1,501 4,292(f) 5,793 31,444 (11,388)(o)(p)(q) 25,849
Interest income -- restricted
cash....................... (781) (929)(g) (1,710) -- (108)(r) (1,818)
Non-recurring bank fees...... 1,275 (1,275)(h) -- -- -- --
Related party interest....... 118 (118)(i) -- -- -- --
-------- ------- -------- ---------- -------- ----------
Total other (income)
expense............. 27,449 (2,449) 25,000 124,182 (18,560) 130,622
Income before income taxes..... 7,818 1,628 9,446 469 27,714 37,629
Provision for income taxes... 3,321 651(j) 3,972 3,000 8,832(s) 15,804
-------- ------- -------- ---------- -------- ----------
Net income (loss)..... $ 4,497 $ 977 $ 5,474 $ (2,531) $ 18,882 $ 21,825
======== ======= ======== ========== ======== ==========
Weighted average common and
common equivalent shares
outstanding:
Primary...................... 9,488 11,515 23,454
==========
Fully diluted................ 9,552 11,578 27,493
==========
Earnings per common and common
equivalent share:
Primary...................... $ 0.47 $ 0.48 $ 0.93(t)
==========
Fully diluted................ $ 0.47 $ 0.47 $ 0.92
==========
</TABLE>
5
<PAGE> 6
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
Adjustments for 1996 TEAM Transactions:
(a) Reflects the inclusion of the operations of Van Pool, the Phoenix Budget
franchise, and ValCar from January 1, 1996, to their respective dates of
acquisition by TEAM of February 1, March 1, and August 1, 1996,
respectively, as reflected in the table below.
<TABLE>
<CAPTION>
VAN POOL PHOENIX VALCAR TOTAL
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating revenue:
Vehicle rental revenue............................. $2,660 $8,214 -- $10,874
Retail car sales revenue........................... -- -- $21,313 21,313
------ ------ ------- -------
Total operating revenues...................... 2,660 8,214 21,313 32,187
------ ------ ------- -------
Operating costs and expenses:
Direct vehicle and operating....................... 893 1,479 -- 2,372
Depreciation -- vehicle............................ 676 2,179 -- 2,855
Depreciation -- non-vehicle........................ 8 229 106 343
Cost of car sales.................................. -- -- 19,639 19,639
Advertising, promotion and selling................. -- 915 -- 915
Facilities......................................... 33 838 -- 871
Personnel.......................................... 379 1,913 -- 2,292
General and administrative......................... 148 436 3,421 4,005
Amortization of franchise rights................... -- 8 -- 8
------ ------ ------- -------
Total operating costs and expenses............ 2,137 7,997 23,166 33,300
------ ------ ------- -------
Operating income (loss).............................. 523 217 (1,853) (1,113)
Other (income) expense:
Vehicle interest expense........................... 232 991 318 1,541
Non-vehicle interest expense (income), net......... (21) 2 -- (19)
------ ------ ------- -------
Total other expense........................... 211 993 318 1,522
Income (loss) before taxes........................... 312 (776) (2,171) (2,635)
Provision (benefit) for income taxes............... 125 (310) (869) (1,054)
------ ------ ------- -------
Net income (loss).................................... $ 187 $ (466) $(1,302) $(1,581)
====== ====== ======= =======
</TABLE>
(b) Reflects the net increase in personnel expense of $1,955 attributable to:
<TABLE>
<S> <C>
Operations of purchased businesses as reflected in note
(a).................................................... $2,292
Reduction relating to salaries and bonuses previously
paid to officers of the
Phoenix Budget franchise.............................. (312)
Reduction resulting from the elimination of a retirement
plan................................................... (25)
------
Net increase in personnel expense.................. $1,955
======
</TABLE>
(c) Reflects the net increase in general and administrative expense of $3,968
attributable to:
<TABLE>
<S> <C>
Operations of purchased businesses as reflected in note
(a).................................................... $ 4,005
Elimination of management fees paid to former
shareholders of ValCar................................. (108)
Royalty payments made by ValCar to BRACC for the right
to use the "Budget" trade name for its retail car sales
facilities during the preacquisition period............ 71
-------
Net increase in general and administrative
expense........................................... $ 3,968
=======
</TABLE>
(d) Reflects the net increase in amortization expense of $90 attributable to:
<TABLE>
<S> <C>
Operations of purchased businesses as reflected in note
(a).................................................... $ 8
Amortization of franchise rights resulting from the
Phoenix Acquisition.................................... 60
Amortization of franchise rights resulting from the
ValCar Acquisition..................................... 22
-------
Net increase in amortization expense............... $ 90
=======
</TABLE>
6
<PAGE> 7
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS -- (CONTINUED)
(AMOUNTS IN THOUSANDS)
(e) Reflects the net decrease in vehicle interest expense of $4,419
attributable to:
<TABLE>
<S> <C>
Operations of purchased businesses as reflected in note
(a).................................................... $ 1,541
Amortization of costs incurred in connection with the
Third Fleet Financing Facility......................... 260
Interest savings due to the refinancing of debt at
reduced interest rates under the Third Fleet Financing
Facility............................................... (6,220)
-------
Net decrease in vehicle interest expense........... $(4,419)
=======
</TABLE>
(f) Reflects the net increase in non-vehicle interest expense of $4,292
attributable to:
<TABLE>
<S> <C>
Operations of purchased businesses as reflected in note
(a).................................................... $ (19)
Interest expense that would have been incurred on
borrowings of $15.0 million to effect the Phoenix
Acquisition............................................ 217
Interest expense incurred on the Series A Convertible
Notes.................................................. 3,901
Amortization of costs incurred in connection with the
issuance of Series A Convertible Notes................. 193
-------
Net increase in non-vehicle interest expense....... $ 4,292
=======
Because the Series A Convertible Notes are unsecured indebtedness,
the entire interest expense is included in non-vehicle interest
expense, even though a portion of the proceeds have been used to fund
the fleet. Based on the average fleet debt outstanding during the
period that could have been funded by the Series A Convertible Notes,
approximately $3,000 of the interest cost incurred is attributable to
funding the fleet.
</TABLE>
(g) Reflects the $929 increase in interest income -- restricted cash earned on
restricted cash balances remaining in TEAM's restricted cash account after
application of the proceeds received from the Third Fleet Financing
Facility, the Series A Convertible Notes and the July 1996 Public Offering
to TEAM's outstanding indebtedness. Under the terms of the Third Fleet
Financing Facility, specified amounts of cash are required to be maintained
in a restricted cash account, with such amounts earning interest at a rate
of 4.5% per annum.
(h) Reflects the elimination of $1,275 in non-recurring financing fees related
to bridge loans that were repaid with the proceeds of the July 1996 Public
Offering and that would not have been incurred on a pro forma basis.
(i) Reflects the elimination of $118 of related party interest due to repayment
of the related party debt.
(j) Reflects the tax effect of the pro forma adjustments, based on an effective
tax rate of approximately 40%.
Adjustments for Budget Acquisition Transactions:
(k) Reflects the elimination of the following transactions between TEAM and
BRACC:
<TABLE>
<S> <C>
Advertising fees paid by TEAM which were recognized as
other revenue by BRACC................................. $2,509
Royalty expenses paid by TEAM which were recognized as
royalty fees by BRACC.................................. 6,241
</TABLE>
Also reflects the elimination of the current year effect of $1,400 royalty
fees recognized by BRACC and $478 royalty expense recognized by TEAM
related to the warrant to purchase shares of Class A Common Stock of TEAM
held by BRACC (the "BRACC Warrant"). See "Description of Capital
Stock -- Warrants."
(l) Reflects the elimination of $16,969 of amortization of BRACC's existing
goodwill and records an increase of $6,893 amortization on the net goodwill
established through purchase accounting adjustments.
(m) Reflects the increase in vehicle interest expense attributable to:
<TABLE>
<S> <C>
Interest expense related to the New Fleet Financings.... $34,381
Amortization of costs incurred in connection with the
New Fleet Financings................................... 1,436
-------
Increase in vehicle interest expense............... $35,817
=======
</TABLE>
7
<PAGE> 8
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS -- (CONTINUED)
(AMOUNTS IN THOUSANDS)
(n) Reflects the decrease in vehicle interest expense attributable to:
<TABLE>
<S> <C>
Interest savings on vehicle debt refinanced through the
New Fleet Financings................................... $34,869
Interest savings on vehicle debt to Ford paid down by
BRACC in connection with
the Budget Acquisition................................ 8,012
-------
Decrease in vehicle interest expense............... $42,881
=======
</TABLE>
(o) In calculating the interest expense adjustments arising from the Budget
Acquisition Transactions, the assumed rates of interest for the new debt
facilities are as follows:
<TABLE>
<CAPTION>
HISTORICAL
WEIGHTED ASSUMED
AVERAGE INTEREST
RATE RATE
---------- --------
<S> <C> <C>
New Fleet Financings --
Commercial Paper Facility............................. 5.43 5.43
Working Capital Facility.............................. 7.84 6.68
</TABLE>
An increase or decrease in the interest rate of one-quarter of one percent
(0.25%) with respect to the pro forma balances on the above debt facilities
would increase or decrease interest expense and income before income taxes
by $818 based on the average outstanding balance of the debt to be
refinanced. The actual rates of interest used to calculate interest expense
for the asset-backed notes included in the New Fleet Financings, the
Guaranteed Senior Notes due 2007 and the Series B Convertible Notes are
7.37%, 9.57% and 6.85%, respectively.
(p) Reflects the increase in non-vehicle interest expense attributable to:
<TABLE>
<S> <C>
Interest expense related to the Debt Placements......... $18,873
Amortization of costs incurred in connection with the
Debt Placements........................................ 401
-------
Increase in non-vehicle interest expense........... $19,274
=======
</TABLE>
(q) Reflects the decrease in non-vehicle interest expense attributable to:
<TABLE>
<S> <C>
Elimination of interest on BRACC indebtedness to Ford
purchased by TEAM through the issuance of Series A
Convertible Preferred Stock............................... $ 7,634
Elimination of interest on working capital debt of $131,692
forgiven by Ford.......................................... 10,330
Elimination of interest on BRACC indebtedness to Ford paid
down by BRACC using the proceeds from BRACC's sale of
newly issued common stock to TEAM......................... 12,698
-------
Decrease in non-vehicle interest expense................ $30,662
=======
</TABLE>
(r) Reflects $108 of interest income -- restricted cash on the $2,400 increase
in restricted cash resulting from the receipt of Ford's funding of the
employee bonus pool to be created in connection with the Budget
Acquisition. See "The Budget Acquisition -- Terms of the Stock Purchase
Agreements -- Special Bonus Program."
(s) Reflects a tax provision resulting in an overall effective rate of
approximately 42% for Budget Group due to the nondeductibility of goodwill
for tax reporting purposes.
(t) Unaudited pro forma earnings per common and common equivalent share data
for Budget Group are calculated using 23,453,786 shares of Common Stock,
which includes the following: (i) 7,500,000 shares of Class A Common Stock
offered hereby and (ii) 4,500,000 shares of Class A Common Stock into which
Ford's Series A Convertible Preferred Stock is convertible. The grant of
approximately 326,000 stock options in connection with the Budget
Acquisition to fund the BRACC employee bonus pool to be created pursuant to
the Stock Purchase Agreements (the "Special Bonus Program"), with an
exercise price equal to the fair market value of TEAM's Class A Common
Stock on the date of grant, will have no dilutive effect on the pro forma
earnings per common and common equivalent share data for Budget Group.
8
<PAGE> 9
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR BUDGET PRO FORMA
HISTORICAL HISTORICAL ACQUISITION BUDGET
TEAM BRACC TRANSACTIONS GROUP
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and short-term investments................. $ 50,490 $ 59,547 $ 2,426(a) $ 112,463
Restricted cash................................. 66,336 -- -- 66,336
Trade and vehicle receivables, net.............. 31,302 202,563 (3,520)(b)(c) 230,345
Accounts receivable, related parties............ 58 -- -- 58
Vehicle inventory............................... 16,413 14,299 -- 30,712
Revenue earning vehicles, net................... 319,257 1,303,975 -- 1,623,232
Property and equipment, net..................... 18,502 114,537 -- 133,039
Franchise rights, net........................... 68,469 -- -- 68,469
Deferred financing fees, net.................... 3,950 1,626 10,900(a) 16,476
Other assets.................................... 10,022 101,622 (739)(b) 110,905
Investment in BRACC............................. -- -- --(a)(d) --
Deferred income taxes........................... -- -- -- --
Intangibles -- net.............................. 2,424 529,946 (275,886)(d)(e) 256,484
-------- ---------- ---------- ----------
Total assets............................. $587,223 $2,328,115 $ (266,819) $2,648,519
======== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Fleet financing facilities...................... $360,120 $1,361,619 $ (176,298)(a) $1,545,441
9.57% Guaranteed Senior Notes due 2007.......... -- -- 165,000(a) 165,000
Convertible Subordinated Notes.................. 80,000 -- 45,000(a) 125,000
Other notes payable............................. 13,989 468,767 (418,218)(a)(e)(f) 64,538
Capital lease obligations....................... 580 -- -- 580
Accounts payable................................ 14,601 61,896 (1,520)(c) 74,977
Deferred income taxes........................... 7,406 -- (7,406)(d) --
Accrued and other liabilities................... 16,526 286,690 (100)(b)(d)(g) 303,116
-------- ---------- ---------- ----------
Total liabilities........................ 493,222 2,178,972 (393,542) 2,278,652
-------- ---------- ---------- ----------
Common stock warrant.............................. 2,000 -- (2,000)(b) --
-------- ---------- ---------- ----------
Mandatory redeemable series X preferred stock..... -- 5,178 (5,178)(a)(d) --
-------- ---------- ---------- ----------
Stockholders' equity
Common stock.................................... 112 -- 86(a)(d) 198
Preferred stock................................. -- -- 105,750(e) 105,750
Additional paid-in capital...................... 89,856 555,439 (383,409))(a)(d)(g) 261,886
Pension liability adjustment.................... -- (12,409) 12,409(d) --
Foreign currency translation adjustment......... -- (7,497) 7,497(d) --
Retained earnings (deficit)..................... 2,363 (391,568) 391,568(d)(f) 2,363
Treasury stock.................................. (330) -- -- (330)
-------- ---------- ---------- ----------
Total stockholders' equity............... 92,001 143,965 133,901 369,867
-------- ---------- ---------- ----------
Total liabilities and stockholders'
equity............................. $587,223 $2,328,115 $ (266,819) $2,648,519
======== ========== ========== ==========
</TABLE>
9
<PAGE> 10
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Adjustments for Budget Acquisition Transactions:
(a) Reflects the cash effects of certain Budget Acquisition Transactions:
<TABLE>
<CAPTION>
CASH
---------
<S> <C>
Investment in BRACC--
Purchase by TEAM of 2,740,000 newly issued shares of BRACC
common stock............................................ $(274,000)
Purchase by TEAM of 2.31 shares of BRACC Series X
Cumulative Preferred Stock from Ford.................... (2)
Receipt of funding from Ford for the Special Bonus
Program................................................. 2,400
Purchase by TEAM of 10,000 outstanding shares of BRACC
common stock............................................ (1,000)
---------
(272,602)
---------
Deferred financing fees--
Reduction in proceeds from Debt Placements for expenses of
issuance proceeds....................................... (3,000)
Payment of costs incurred in connection with the New Fleet
Financings.............................................. (7,900)
---------
(10,900)
---------
Fleet financing facilities--
Repayment of certain BRACC indebtedness to Ford from
proceeds received by BRACC from issuance of common stock
to TEAM................................................. (79,782)
Receipt of proceeds from the New Fleet Financings......... 617,588
Repayment of Ford indebtedness by BRACC from proceeds
received from New Fleet Financings...................... (714,104)
---------
(176,298)
---------
Receipt of gross proceeds from Debt Placements --
9.57% Guaranteed Senior Notes due 2007.................... 165,000
6.85% Convertible Subordinated Notes, Series B, due
2007.................................................... 45,000
Other notes payable--
Repayment of certain BRACC indebtedness to Ford from
proceeds received by BRACC from issuance of common stock
to TEAM................................................. (189,214)
---------
Stockholders' equity--
Sale of 2,740,000 newly issued shares of BRACC common
stock to TEAM........................................... 274,000
Public offering of 7,500,000 shares of TEAM Class A Common
Stock, net of $8,100 of underwriting discounts and
commissions and offering expenses estimated at $800..... 177,616
Redemption of 5,004.15 shares of Series X Cumulative
Preferred Stock of BRACC plus cumulative dividends...... (5,176)
Acquisition advisory fee.................................. (5,000)
---------
441,440
---------
$ 2,426
=========
</TABLE>
(b) Reflects the elimination of the $2,000 BRACC Warrant, including the related
prepaid royalty and unearned revenue balances of $739.
(c) Reflects the elimination of the $1,520 payable and receivable arising from
the royalty fees charged by BRACC to TEAM and amounts arising from fee
sharing arrangements that were unpaid at December 31, 1996.
(d) Reflects the elimination of TEAM's investment in BRACC of $272,602 against
BRACC's fully adjusted stockholders' equity as of December 31, 1996, which
was applied as follows:
<TABLE>
<S> <C>
Preferred stock............................................. $ (2)
Common stock................................................ (27)
Paid-in capital............................................. (829,412)
Accumulated deficit......................................... 283,158
</TABLE>
Additionally, to record the $273,543 reduction in BRACC's intangibles as a
result of certain purchase accounting adjustments, the reduction in the
deferred tax valuation allowance recorded by BRACC of $7,406 due to TEAM's
deferred tax position, and the elimination of $139 of unearned revenue
related to the BRACC Warrant.
(e) Reflects the reduction in BRACC's indebtedness to Ford attributable to the
issuance of 4,500 shares of Series A Convertible Preferred Stock of TEAM.
The fair market value of the debt purchased of $97,313 was determined in
accordance with the terms of the Stock Purchase Agreements and is based on
the underlying value of the 4,500,000 shares of Class A Common Stock into
which
10
<PAGE> 11
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET -- (CONTINUED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
the Series A Convertible Preferred Stock is convertible. Under the Stock
Purchase Agreements, the underlying value of the shares of Class A Common
Stock is determined based on the preceding ten-day average stock price as of
the closing date (assumed to be March 21, 1997 for computational purposes).
However, generally accepted accounting principles that address the
determination of the market value of securities issued in a purchase
business combination require that the value assigned to such securities be
determined using the market price for a reasonable period before and after
the date the terms of the acquisition are agreed to and publicly announced.
Accordingly, the market value of the underlying 4,500,000 shares of Class A
Common Stock for the three-day period surrounding January 13, 1997 (the date
the Budget Acquisition was publicly announced) was used to determine the
value of $105,750 to be assigned to the Series A Convertible Preferred
Stock. The difference between the value assigned to the debt purchased and
the value assigned to the Series A Convertible Preferred Stock will be
treated as an adjustment to goodwill.
(f) Reflects the forgiveness by Ford of $131,692 of indebtedness due from BRACC.
(g) Reflects an accrual of $500 for the estimated costs to register the shares
of Class A Common Stock into which the Series A Convertible Preferred Stock
is convertible.
11
<PAGE> 12
SIGNATURE
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.
BUDGET GROUP, INC.
(Registrant)
Date: May 13, 1997 By: Sanford Miller
-------------------------------------
Sanford Miller
Chairman and Chief Executive Officer
12
<PAGE> 13
EXHIBIT INDEX
2.1 - Common Stock Purchase Agreement, dated as of January
13, 1997, between John J. Nevin and Team Rental
Group, Inc. (incorporated by reference to Exhibit 2.7
of Registration Statement on Form S-1, File No.
333-21691).
2.2 - Budget Stock Purchase Agreement, dated as of January
13, 1997, between Budget Rent a Car Corporation and
Team Rental Group, Inc. (incorporated by reference to
Exhibit 2.8 of Registration Statement on Form S-1,
File No. 333-21691).
2.3 - Preferred Stock Purchase Agreement, dated as of
January 13, 1997, between Ford Motor Company and Team
Rental Group, Inc. (incorporated by reference to
Exhibit 2.9 of Registration Statement on Form S-1,
File No. 333-21691).
23.1 - Consent of KPMG Peat Marwick, LLP.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
Budget Rent a Car Corporation
Lisle, Illinois
We consent to the incorporation by reference in the previously filed
registration statements (Nos. 333-04757 and 33-36774) both on Form S-8 of Team
Rental Group, Inc. of our report dated February 18, 1997, with respect to the
consolidated balance sheets of Budget Rent a Car Corporation and subsidiaries
as of December 31, 1995 and 1996 and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report is incorporated by
reference in the Form 8-K of Budget Group, Inc. (formerly known as Team Rental
Group, Inc.) dated May 13, 1997.
May 13, 1997 KPMG Peat Marwick LLP
Chicago, Illinois
