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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) November 23, 1998
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Budget Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-78274 59-3227576
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
125 Basin Street, Suite 210, Daytona Beach, FL 32114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 238-7035
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Former name or former address, if changed since last report: N/A
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ITEM 5. OTHER EVENTS
On November 23, 1998, Budget Group, Inc. issued a press release announcing
that its earnings for the fourth quarter of fiscal year 1998 will fall below
expected levels and analysts' consensus estimates. A copy of the press release
is attached hereto as Exhibit 99.1 and is incorporated herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
<TABLE>
<CAPTION>
Reference
Number Description of Exhibit
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<S> <C>
99.1 Press Release dated November 23, 1998
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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: November 24, 1998 By: /s/ THOMAS L. KRAM
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Thomas L. Kram
Vice President - Controller
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EXHIBIT 99.1
Budget Rent a Car Corporation
World Headquarters
BUDGET News Release
CONTACT: Scott White For Immediate Release
Executive Vice President,
Corporate Development
Budget Group, Inc.
630/955-7600
BUDGET GROUP LOWERS EARNINGS EXPECTATIONS
FOR FOURTH QUARTER AND 1999
DAYTONA BEACH, FL, NOVEMBER 23, 1998 -- Budget Group, Inc. (NYSE:BD) today
announced that its fourth quarter earnings will fall below expected levels and
analysts' consensus estimates. The company anticipates a net loss for the
quarter prior to restructuring and one-time items to be between $32 million and
$36 million, or a loss of 88 cents to 99 cents per share, based on 36.5 million
basic shares outstanding. In addition, the company is taking cost reduction
actions which are expected to result in after tax restructuring and
non-recurring item charges of approximately $20 million, or approximately 55
cents per share, in the fourth quarter. For full year 1998, earnings excluding
one-time and extraordinary items are expected to be between $1.02 and $1.13 per
share, based on 34.5 million diluted shares outstanding.
The company's Budget Rent a Car (BRAC) subsidiary is facing lower than
expected earnings as a result of costs associated with its continuing efforts
to improve operations, less than expected same-market transaction growth and
higher operating expenses related to the rollout of new marketing and service
initiatives. Operating margins are lower while business begins to build at new
BRAC locations and as recently acquired franchise operations are integrated
into corporate operations. Earlier this month, BRAC restructured its field
sales organization to eliminate redundancies, step up its commercial sales
effort and re-enter the tour business. In addition, BRAC is moving its credit
card processing to the company's financial services center in Orlando.
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Budget Group 4Q98 Expectations - page 2
European BRAC operations have been adversely impacted by the loss of
revenues and royalty fees from BRAC's former franchisee in Germany, Sixt AG,
since BRAC ceased delivery of reservations to Sixt in October. Efforts to
rebuild the Budget system in Germany are under way, and the company anticipates
incurring start-up costs associated with opening corporate locations in key
German markets during the fourth quarter.
Earnings at Budget Car Sales have been negatively impacted by rapid
store growth. The company has slowed expansion plans for Budget Car Sales
locations to allow management to focus on improving the performance of
locations that have not been able to meet its car sales business model.
Due to delays in development of a new point-of-sale system, Ryder TRS
is incurring additional costs of approximately $5 million in the fourth quarter
to maintain its current system provided and supported by Ryder Systems, Inc.
The new system will be brought on-line during the first quarter of 1999.
Management continues to take actions to consolidate Budget One-Way Truck
operations from Dallas to Ryder TRS in Denver.
Results for the fourth quarter and full year 1998 are expected to be
announced in late February of 1999.
The company preliminarily anticipates 1999 diluted earnings per share
to be between $1.80 and $2.00. These estimates could be affected by risk
factors that have been described in the company's SEC filings, as described
below, and could be further negatively impacted depending on the outcome of the
dispute between BRAC and its terminated German licensee.
Sandy Miller, Budget Group Chairman and CEO said, "We are continuing
to progress in our efforts to improve the operations of our Budget Rent a Car
subsidiary and to consolidate functions among Budget Group companies. We remain
committed to delivering earnings growth for our shareholders and are taking the
necessary steps to improve the profitability of our operating divisions and
build on the strengths of our great Budget and Ryder brands."
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Budget Group 4Q98 Expectations - page 3
Budget Group, Inc. is a global network of vehicle rental and sales
companies operating in three principal segments: Car Rental, Truck Rental and
Car Sales. In Car Rental, Budget Group, through subsidiary companies and their
franchisees, operates Budget Rent a Car Corporation, the world's third largest
car and truck rental system, and Premier Car Rental, the nation's third largest
company serving the insurance replacement market. The company also operates Van
Pool Services, the U.S. leader in commuter van pooling services, and Budget
Airport Parking, a system of airport parking units located adjacent to Budget
Rent a Car facilities in select locations. In Truck Rental, Budget Group
operates Ryder TRS, the nation's second largest consumer truck rental company;
Budget Truck Rental, the third largest consumer truck rental company; and
Cruise America, the largest recreational vehicle rental and sales company in
North America. In Car Sales, Budget Group operates Budget Car Sales, one of the
leading independent retailers of late model vehicles in the U.S. with both new
and used car dealerships.
Statements made in this press release that are not historical in
nature may include "forward-looking statements" within the meaning of the
federal securities laws. It is important to note that these statements involve
a number of risks, uncertainties and other factors that could cause Budget
Group, Inc.'s actual results to differ materially from those projected in such
forward-looking statements. Additional information concerning such matters is
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and other documents subsequently filed by the Company with
the SEC, all of which are available from the SEC.
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