<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 19, 1998
-------------
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: N/A
-----
<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 1 on Form 8-K/A to the Current Report on Form 8-K
(June 19, 1998) of Budget Group, Inc. (the "Registrant" or the "Company")
amends and restates in its entirety Item 7(b) solely to file the pro forma
financial statements required by Item 7(b).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information.
The following pro forma financial information is filed
herewith:
Pro Forma Consolidated Statement of Operations for
the three month period ended March 31,1998
(Unaudited).
Pro Forma Consolidated Balance Sheet at March 31,
1998 (Unaudited).
Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1997 (Unaudited).
-2-
<PAGE> 3
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: July 2, 1998 By: /s/ ROBERT L. APRATI
-------------------------------------
Robert L. Aprati
Executive Vice President, General
Counsel and Secretary
<PAGE> 4
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Pro Forma Consolidated Balance Sheet is based on the unaudited
historical financial statements of Budget Group, Inc. ("Budget"), after
restatement for the 1998 pooling of interests with Cruise America, Inc.
("Cruise America"), and Ryder TRS, Inc. ("Ryder TRS") as of March 31, 1998,
adjusted to give effect to the merger of Budget and Ryder (the "Ryder TRS
Acquisition Transaction" or the "Merger") and various changes in Budget's
capital structure that occurred concurrently with the Merger (the
"Recapitalization Transactions") as if they had occurred as of March 31,
1998. The Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1997, is based on the historical financial statements of Budget,
after restatement for the 1998 pooling of interests with Cruise America, and
Ryder TRS for the year ended December 31, 1997, and of Budget Rent a Car
Corporation ("BRACC") for the period from January 1, 1997, through April 29,
1997, adjusted to give effect to the Ryder TRS Acquisition Transaction, the
acquisition of BRACC (the "Budget Acquisition Transactions", collectively, the
"Acquisitions") and the Recapitalization Transactions as if they had occurred on
January 1, 1997. The Pro Forma Consolidated Statement of Operations for the
three month period ended March 31, 1998, is based on the unaudited historical
financial statements of Budget, after restatement for the 1998 pooling of
interests with Cruise America, and Ryder TRS for the three month period ended
March 31, 1998, adjusted to give effect to the Ryder TRS Acquisition Transaction
and the Recapitalization Transactions as if they had occurred on January 1,
1998.
The Ryder TRS Acquisition Transaction consists of the purchase of the
Ryder TRS Common Stock through the issuance of 3,455,206 shares of Budget Class
A Common Stock, the payment of $125 million in cash and the issuance of
warrants to purchase Budget Class A Common Stock, the value of which is capped
at $19 million. In addition, Budget agreed to pay Ryder TRS stockholders a
make-whole payment, the amount of which will depend on the performance of
Budget Class A Common Stock following the Merger.
The Budget Acquisition Transactions consist of the following: (i) the
BRACC acquisition, including the repayment, purchase and forgiveness of certain
indebtedness and the necessary purchase accounting and elimination entries;
(ii) the sale of 8,625,000 shares of Budget Class A Common Stock by Budget in a
public offering in April 1997 (the "Public Offering") and the application of
the net proceeds thereof; (iii) the private placement (the "Debt Placements")
of $45 million aggregate principal amount of Convertible Notes and $165
million aggregate principal amount of 9.57% Guaranteed Senior Notes due 2007
(the "Guaranteed Senior Notes") and the application of the net proceeds
thereof; and (iv) the April 1997 credit facilities for fleet financings (the
"April 1997 Fleet Financings") with an aggregate commitment of $1.4 billion
and the application of the net proceeds thereof and the repayment of certain of
BRACC's outstanding indebtedness to Ford Motor Company from the net proceeds
thereof. The BRACC acquisition has been accounted for using the purchase
method of accounting.
The Recapitalization Transactions consist of the following: (i) the
amendment and restatement of Budget's existing $300 million secured revolving
credit facility to increase such facility to $550 million; (ii) the conversion
of $80 million of convertible subordinated notes (the "Series A Convertible
Notes") into 4,305,814 shares of Budget Class A Common Stock, including 319,768
shares issued in lieu of interest payments which the holders of the convertible
subordinated notes will forego as a result of early conversion; (iii) the
redemption of the Guaranteed Senior Notes; (iv) the tender acceptance for $175
million of the Ryder TRS 10% Senior Subordinated Notes due 2006; (v) the
issuance, by a subsidiary of Budget, of 6,000,000 shares of remarketable term
income deferrable equity securities ("HIGH TIDES" or "Company-Obligated
Mandatorily Redeemable Preferred Securities") and the application of the net
proceeds thereof; (vi) the private placement of $1.1 billion of medium term
notes (the "TFFC-98 Notes") and the application of the net proceeds thereof; and
(vii) the write-off of loan costs related to converted or retired debt.
The Pro Forma Consolidated Financial Statements do not purport to
represent what Budget's results of operations or financial condition would have
been had the Acquisitions and the Recapitalization Transactions actually
occurred on the dates indicated or to predict Budget's results of operations
of 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 Budget, after restatement for the 1998 pooling of interests with
Cruise America, and Ryder TRS and the notes thereto.
The Pro Forma Consolidated Financial Statements have been prepared
using the purchase method of accounting, whereby the total cost of the Merger
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 Merger. 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 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 Acquisitions, the
Recapitilization Transactions and the implementation of Budget's business
strategy.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Three-Month Period Ended March 31, 1998
(Amounts In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Adjustments For Pro Forma
Historical Ryder TRS Budget Group Adjustments For
Budget Historical Acquisition For The Ryder TRS Recapitalization Pro Forma
Group Ryder TRS Transaction Acquisition Transactions Budget Group
--------- --------- -------------- ----------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue:
Vehicle rental revenue $ 339,955 $ 104,933 $ - $ 444,888 $ - $ 444,888
Retail vehicle sales revenue 97,291 - - 97,291 - 97,291
Royalty fees and other 18,739 - - 18,739 - 18,739
--------- --------- ----------- ---------- -------- ----------
Total operating revenue 455,985 104,933 - 560,918 - 560,918
--------- --------- ----------- ---------- -------- ----------
Operating costs and expenses:
Depreciation - vehicle 94,096 19,964 985 (a) 115,045 - 115,045
Costs of retail vehicle sales 86,142 - - 86,142 - 86,142
Operating expense 173,910 39,265 - 213,175 - 213,175
Selling, general and administrative expense 58,195 52,414 (213)(b) 110,396 - 110,396
Merger expenses - pooling 1,595 - - 1,595 - 1,595
Amortization and non-vehicle depreciation 7,868 4,890 1,948 (c) 14,706 - 14,706
--------- --------- ----------- ---------- -------- ----------
Total operating costs and expenses 421,806 116,533 2,720 541,059 - 541,059
--------- --------- ----------- ---------- -------- ----------
Operating income (loss) 34,179 (11,600) (2,720) 19,859 - 19,859
--------- --------- ----------- ---------- -------- ----------
Interest expense 39,880 8,465 - 48,345 (4,974)(e), (f) 43,371
--------- --------- ----------- ---------- -------- ----------
Income (loss) before taxes (5,701) (20,065) (2,720) (28,486) 4,974 (23,512)
Provision (benefit) for income taxes (2,280) (7,725) (316)(d) (10,321) 110 (d) (10,211)
Minority interest in income of subsidiary - - - - 4,688 (g) 4,688
--------- --------- ----------- ---------- -------- ----------
Net income (loss) $ (3,421) $ (12,340) $ (2,404) $ (18,165) $ 176 $ (17,989)
========= ========= =========== ========== ======== ==========
WASO - basic 27,445 30,900 35,258
========= ========== ==========
Basic EPS $ (0.12) $ (0.59) $ (0.51)
========= ========== ==========
WASO - diluted 27,445 30,900 35,258
========= ========== ==========
Diluted EPS $ (0.12) $ (0.59) $ (0.51)
========= ========== ===========
</TABLE>
<PAGE> 5
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Three-Month Period Ended March 31, 1998
(Amounts In Thousands)
(Unaudited)
<TABLE>
<S> <C> <C>
(a) Reflects an increase of $985 in vehicle depreciation expense attributable
to the fair market value adjustment to revenue earning vehicles.
(b) Reflects the elimination of management fees of $213 incurred by Ryder under
an agreement terminated in connection with the Merger.
(c) Reflects the elimination of $1,006 in amortization of Ryder's existing
intangibles and records an increase in amortization of $2,954 on the net
intangibles established through purchase accounting adjustments.
(d) Reflects a tax provision attributable to the combined group on a pro forma
basis.
(e) Reflects the decrease in interest expense attributable to:
Elimination of interest on Series A Convertible Notes due to conversion $ 1,400
Elimination of interest on the Guaranteed Senior Notes 3,948
Elimination of interest on Ryder TRS's 10% Senior Subordinated Notes due 2006 4,375
Interest savings on Budget's commercial paper facility partially refinanced through
the issuance of the TFFC-98 Notes 9,403
Interest savings on Ryder TRS's commercial paper facility refinanced through the
issuance of the TFFC-98 Notes 3,786
Elimination of amortization of loan costs on retired debt 621
Reflects interest income on average restricted cash balance generated through the
issuance of the TFFC-98 Notes -
--------
Decrease in interest expense $ 23,533
========
(f) Reflects the increase in interest expense attributable to:
Interest expense related to the TFFC-98 Notes $ 16,956
Amortization of costs incurred in connection with the TFFC-98 Notes and
the increase in the secured revolving credit facility 640
Amortization of costs incurred in connection with the issuance of the High Tides 81
Reduction in interest income due to increased utilization of existing medium term notes 882
--------
Increase in interest expense $ 18,559
========
(g) Reflects the accrual of distributions on the High Tides.
</TABLE>
<PAGE> 6
PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1998
(Amounts In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Adjustments Pro Forma
For Ryder TRS Budget Group
Historical Historical Acquisition For The Ryder
Budget Group Ryder TRS Transaction Trs Acquisition
------------ --------- ----------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 59,492 $ (11,753) $ (135,000) (a) $ (87,261)
Restricted cash 24,705 7,060 -- 31,765
Trade and vehicle receivables 279,484 18,287 -- 297,771
Vehicle inventory 50,826 -- -- 50,826
Revenue earning vehicles 2,372,014 470,339 19,700 (b) 2,862,053
Property and equipment 159,682 8,920 -- 168,602
Prepaid expenses and other assets 94,300 35,524 -- 129,824
Intangibles 534,266 46,833 166,787 (b) 747,886
----------- --------- ----------- -----------
$ 3,574,769 $ 575,210 $ 51,487 $ 4,201,466
=========== ========= =========== ===========
LIABILITIES
Notes payable $ 2,544,543 $ 410,503 $ -- $ 2,955,046
A/P, A/E and other liabilities 468,397 95,856 -- 564,253
Deferred income taxes 106,515 (21,138) 8,470 (b) 93,847
----------- --------- ----------- -----------
3,119,455 485,221 8,470 3,613,146
----------- --------- ----------- -----------
REDEEMABLE CLASS C COMMON STOCK -- 775 (775) (c) --
----------- --------- ----------- -----------
COMPANY-OBLIGATED MANDATORILY
REDEEMABLE PREFERRED SECURITIES -- -- -- --
----------- --------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock - Ryder -- 1 (1) (c) --
Common stock - Class A 257 -- 35 (d) 292
Common stock - Class B 19 -- -- 19
Additional paid-in capital 425,714 123,208 9,763 (c),(d) 558,685
Foreign currency translation adjustment (3,175) -- -- (3,175)
Retained earnings (deficit) 32,829 (33,995) 33,995 (c) 32,829
Treasury stock (330) -- -- (330)
----------- --------- ----------- -----------
455,314 89,214 43,792 588,320
----------- --------- ----------- -----------
$ 3,574,769 $ 575,210 $ 51,487 $ 4,201,466
=========== ========= =========== ===========
<CAPTION>
Adjustments For Pro Forma
Recapitalization Budget
Transactions Group
---------------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 75,987 (e) $ (11,274)
Restricted cash -- 31,765
Trade and vehicle receivables -- 297,771
Vehicle inventory -- 50,826
Revenue earning vehicles -- 2,862,053
Property and equipment -- 168,602
Prepaid expenses and other assets 3,450 (e),(f),(g) 133,274
Intangibles -- 747,886
--------- -----------
$ 79,437 $ 4,280,903
========= ===========
LIABILITIES
Notes payable $(227,440) (e),(h) $ 2,727,606
A/P, A/E and other liabilities 500 (g) 564,753
Deferred income taxes (32,903) (f),(h),(i) 60,944
--------- -----------
(259,843) 3,353,303
--------- -----------
REDEEMABLE CLASS C COMMON STOCK -- --
--------- -----------
COMPANY-OBLIGATED MANDATORILY
REDEEMABLE PREFERRED SECURITIES 300,000 (e) 300,000
--------- -----------
STOCKHOLDERS' EQUITY
Common stock - Ryder -- --
Common stock - Class A 43 (h) 335
Common stock - Class B -- 19
Additional paid-in capital 88,591 (h) 647,276
Foreign currency translation adjustment -- (3,175)
Retained earnings (deficit) (49,354) (e),(f), (16,525)
(h),(i)
Treasury stock -- (330)
--------- -----------
39,280 627,600
--------- -----------
$ 79,437 $ 4,280,903
========= ===========
</TABLE>
<PAGE> 7
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
As Of March 31, 1998
(Amounts In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Adjustments for Ryder TRS Acquisition Transaction:
<S> <C> <C>
(a) Reflects the decrease in cash attributable to:
Cash paid in connection with Merger $ (125,000)
Acquisition advisory fee paid to Questor (10,000)
----------
$ (135,000)
==========
(b) Reflects the increase in intangibles from the Merger calculated as follows:
Purchase price-
Cash paid $ 125,000
Value of Budget Class A Common Stock issued 133,006
Acquisition advisory fee 10,000
----------
Total purchase price 268,006
Less: Fair market value of net tangible assets acquired (1) (54,386)
----------
Intangibles recorded on acquisition 213,620
Write-off of intangible assets previously recorded by Ryder (46,833)
----------
Net increase in intangible assets $ 166,787
==========
(1) Fair market value of net assets of Ryder acquired was determined as follows:
Historical net $ 43,156
Fair market value adjustment to revenue earning vehicles 19,700
Deferred income taxes due to purchase accounting (8,470)
----------
$ 54,386
==========
(c) Reflects the elimination of the Redeemable Class C Common Stock and equity
accounts of Ryder as follows:
Redeemable Class C Common Stock $ (775)
==========
Common stock $ (1)
==========
Additional paid-in capital $ (123,208)
==========
Retained earnings (deficit) $ 33,995
==========
(d) Reflects the increase in Common Stock and additional paid-in capital
attributable to the following:
Common Stock:
Issuance of 3,455 shares of Budget Class A Common Stock at a par value of $.01 per share $ 35
==========
Additional paid-in capital:
Value of 3,455 shares of Budget Class A Common Stock issued in the Merger, less
the $35 related to the par value $ 113,971
Guaranteed appreciation of Budget Class A Common Stock issued 19,000
----------
$ 132,971
==========
</TABLE>
<PAGE> 8
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET - (Continued)
As Of March 31, 1998
(Amounts In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Adjustments for Recapitalization Transactions:
<S> <C> <C>
(e) Reflects the cash effects of certain Refinancing Transactions:
Deferred financing fees-
Reduction in proceeds from TFFC-98 Notes $ (7,028)
Reduction in proceeds from HIGH TIDES (9,750)
Payment of costs incurred in connection with the amendment and
restatement of the secured revolving credit facility (4,795)
----------
(21,573)
----------
Notes payable-
Receipt of proceeds from TFFC-98 1,100,000
Redemption of the Guaranteed Senior Notes (165,000)
Tender offer for 10% Senior Subordinated Notes due 2006 (175,000)
Repayment of the Ryder TRS commercial paper facility (241,587)
Repayment of a portion of the Budget commercial paper facility (665,853)
----------
(147,440)
----------
Company-Obligated Mandatorily Redeemable Preferred Securities-
Receipt of proceeds 300,000
----------
Retained earnings (deficit)-
Make-whole payment made in connection with the redemption of the Guaranteed
Senior Notes (25,887)
Premium payment made in connection with the tender for the 10% Senior Subordinated
Notes due 2006 (29,113)
----------
(55,000)
----------
$ 75,987
==========
(f) Reflects the write-off of $18,623 of loan costs related to various debt
instruments retired in connection with the Recapitalization Transactions, net
of the tax benefit of $7,449.
(g) Reflects a $500 increase in accrued expenses for the estimated
registration costs of the High Tides issued by a subsidiary of Budget.
(h) Reflects the conversion of the $80 million of Series A Convertible
Notes as follows:
Common Stock:
Issuance of 4,306 shares of Budget Class A Common Stock at a par value of $.01 per share $ 43
==========
Additional paid-in capital:
Value of 3,986 shares of Budget Class A Common Stock issued upon conversion of the
Series A Convertible Notes, less the $40 related to the par value $ 79,960
Value of 320 shares of Budget Class A Common Stock issued in lieu of interest payments
which the holders of the Series A Convertible Notes will forego, less the $3 related to
the par value 8,631
----------
$ 88,591
==========
Retained earnings (deficit):
Charge related to additional 320 shares to be issued in lieu of interest payments which
the holders of the Series A Convertible Notes will forego, net of the tax benefit of $3,454 $ (5,180)
==========
</TABLE>
<PAGE> 9
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET - (Continued)
As Of March 31, 1998
(Amounts In Thousands, Except Per Share Amounts)
(Unaudited)
(i) Reflects the tax benefit of $22,000 of the make-whole payment made in
connection with the redemption of the Guaranteed Senior Notes and the
premium payment made in connection with the tender for the 10% Senior
Subordinated Notes due 2006.
<PAGE> 10
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
(Amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Adjustments Adjustments for
Historical Historical BRACC for Budget Ryder TRS
Budget through Budget Acquisition Historical Acquisition
Group Acquisition (a) Transactions Ryder TRS Transaction
---------- --------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C>
Operating revenue:
Vehicle rental revenue $1,070,436 $ 311,945 $ -- $ 545,720 $ --
Retail vehicle sales revenue 289,111 29,146 -- -- --
Royalty fees and other 51,889 23,132 (3,656)(b) -- --
---------- ------------ -------- --------- --------
Total operating revenue 1,411,436 364,223 (3,656) 545,720 --
---------- ------------ -------- --------- --------
Operating costs and expenses:
Depreciation - vehicle 292,112 89,019 -- 99,361 3,940 (j)
Costs of retail vehicle sales 251,068 25,691 -- -- --
Operating expense 500,297 168,965 (2,439)(b) 191,537 --
Selling, general and administrative expense 173,433 58,556 (1,217)(b) 225,850 (850)(k)
Amortization and non-vehicle depreciation 23,530 14,416 (1,578)(c) 12,810 6,911(l)
---------- ------------ -------- --------- --------
Total operating costs and expenses 1,240,440 356,647 (5,234) 529,558 10,001
---------- ------------ -------- --------- --------
Operating income 170,996 7,576 1,578 16,162 (10,001)
---------- ------------ -------- --------- --------
Interest expense 115,397 40,922 (5,348)(d)(e)(f) 39,178 --
---------- ------------ -------- (g)(h) --------- --------
Income (loss) before taxes 55,599 (33,346) 6,926 (23,016) (10,001)
Provision (benefit) for income taxes 25,825 (6,669) (5,514)(i) (8,861) (1,264)(i)
Minority interest in income of subsidiary -- -- -- -- --
---------- ------------ -------- --------- --------
Net income (loss) $ 29,774 $ (26,677) $ 12,440 $ (14,155) $ (8,737)
========== ============ ======== ========= ========
WASO - basic 20,112
==========
Basic EPS $ 1.48
==========
WASO - diluted 27,863
==========
Diluted EPS $ 1.25
==========
<CAPTION>
Pro Forma
Budget Group Adjustments for
for the Recapitalization Pro Forma
Acquisitions Transactions Budget Group
------------ ---------------- ------------
<S> <C> <C> <C>
Operating revenue:
Vehicle rental revenue $ 1,928,101 $ -- $ 1,928,101
Retail vehicle sales revenue 318,257 -- 318,257
Royalty fees and other 71,365 -- 71,365
----------- ------- -----------
Total operating revenue 2,317,723 -- 2,317,723
----------- ------- -----------
Operating costs and expenses:
Depreciation - vehicle 484,432 -- 484,432
Costs of retail vehicle sales 276,759 -- 276,759
Operating expense 858,360 -- 858,360
Selling, general and administrative expense 455,772 -- 455,772
Amortization and non-vehicle depreciation 56,089 -- 56,089
----------- ------- -----------
Total operating costs and expenses 2,131,412 -- 2,131,412
----------- ------- -----------
Operating income 186,311 -- 186,311
----------- ------- -----------
Interest expense 190,149 (21,032)(m)(n) 169,117
----------- ------- -----------
Income (loss) before taxes (3,838) 21,032 17,194
Provision (benefit) for income taxes 3,517 879(i) 4,396
Minority interest in income of subsidiary -- 18,750(o) 18,750
----------- ------- -----------
Net income (loss) $ (7,355) $ 1,403 $ (5,952)
=========== ======= ===========
WASO - basic 26,379 30,944
=========== ===========
Basic EPS $ (0.28) $ (0.19)
=========== ===========
WASO - diluted 26,379 30,944
=========== ===========
Diluted EPS $ (0.28) $ (0.19)
=========== ===========
</TABLE>
<PAGE> 11
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For The Year Ended December 31, 1997
(Amounts In Thousand)
(Unaudited)
<TABLE>
<S> <C>
(a) Reflects the inclusion of the operations of BRACC from January 1, 1997 to April 29, 1997, the date
of the Budget Acquisition.
(b) Reflects the elimination of the following transactions between TEAM and BRACC:
Advertising fees paid by TEAM which were recognized as other revenue
by BRACC.................................................................... $ 1,217
Royalty expenses paid by TEAM which were recognized as royalty fees
by BRACC.................................................................... 1,700
Also reflects the elimination of the current period effect of $739 royalty fees recognized by BRACC
and $739 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").
(c) Reflects the elimination of $5,824 of amortization of BRACC's existing goodwill and records an
increase of $4,246 amortization on the net goodwill and other intangible assets recorded through
purchase accounting adjustments.
(d) Reflects the increase in vehicle interest expense attributable to:
Interest expense related to the April 1997 Fleet Financings........................... $17,899
Amortization of costs incurred in connection with certain of the April 1997 Fleet
Financings....................................................................... 384
-------
Increase in vehicle interest expense........................................ $18,283
=======
(e) Reflects the decrease in vehicle interest expense attributable to:
Interest savings on vehicle debt refinanced through the April 1997 Fleet
Financings....................................................................... $17,696
Interest savings on vehicle debt to Ford paid down by BRACC in connection with
the Budget Acquisition........................................................... 1,832
-------
Decrease in vehicle interest expense........................................ $19,528
=======
(f) Reflects the decrease in non-vehicle interest expense attributable to:
Interest expense related to the Debt Placements....................................... $ 6,205
Amortization of costs incurred in connection with certain of the April 1997 Fleet
Financings and the Debt Placements............................................... 487
-------
Increase in non-vehicle interest expense................................... $ 6,692
=======
</TABLE>
<PAGE> 12
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS - (Continued)
For The Year Ended December 31, 1997
(Amounts In Thousands)
(Unaudited)
<TABLE>
<S> <C> <C>
(g) Reflects the decrease in non-vehicle interest expense attributable to:
Elimination of interest on BRACC indebtedness to Ford purchased by TEAM
through the issuance of Series A Convertible Preferred Stock of TEAM ................................ $ 2,478
Elimination of interest on working capital debt of $134,136 forgiven by Ford........................... 3,353
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................................................................................................. 4,928
---------
Decrease in non-vehicle interest expense........................................................... $ 10,759
=========
(h) Reflects $36 of interest income -- restricted cash on the $2,400 increase in restricted cash resulting
from the receipt of Ford's funding of the special bonus program implemented in connection with the
Budget Acquisition.
(i) Reflects a tax provision attributable to the combined group on a pro forma basis.
(j) Reflects an increase of $3,940 in vehicle depreciation expense attributable to the fair market value
adjustment to revenue earning vehicles.
(k) Reflects the elimination of management fees of $850 incurred by Ryder under an agreement
terminated in connection with the Merger.
(l) Reflects the elimination of $4,023 in amortization of Ryder's existing intangibles and records an
increase in amortization of $10,934 on the net intangibles established through purchase accounting
adjustments.
(m) Reflects the decrease in interest expense attributable to:
Elimination of interest on Series A Convertible Notes due to conversion $ 5,600
Elimination of interest on the Guaranteed Senior Notes 15,791
Elimination of interest on Ryder TRS's 10 % Senior Subordinated Notes due 2006 17,500
Interest savings on Budget's commercial paper facility partially refinanced through the
issuance of the TFFC-98 Notes 30,819
Interest savings on Ryder TRS's commercial paper facility refinanced through the
issuance of the TFFC-98 Notes 7,244
Elimination of amortization of loan costs on retired debt 2,486
Reflects interest income on average restricted cash balance generated through the
issuance of the TFFC-98 Notes 12,300
---------
Decrease in interest expense $ 91,740
=========
(n) Reflects the increase in interest expense attributable to:
Interest expense related to the TFFC-98 Notes $ 67,823
Amortization of costs incurred in connection with the TFFC-98 Notes and
the increase in the secured revolving credit facility 2,560
Amortization of costs incurred in connection with the issuance of the High Tides 325
---------
Increase in interest expense $ 70,708
=========
(o) Reflects the accrual of distributions on the High Tides
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