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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
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Commission File No.: 0-23962
BUDGET GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-3227576
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
125 Basin Street, Suite 210, Daytona Beach, FL 32114 (Address of
principal executive offices)
(904) 238-7035
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
27,682,461 shares of common stock were outstanding as of May 11, 1998, comprised
of 25,745,861 shares of the registrant's Class A common stock, par value $0.01,
and 1,936,600 shares of the registrant's Class B common stock, par value $0.01.
The Exhibit Index, filed as a part of this report, appears on page 13.
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INDEX
<TABLE>
<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1998 (unaudited)
and December 31, 1997 3
Consolidated Statements of Operations for the Three Month
Periods Ended March 31, 1998 and 1997 (unaudited) 4
Consolidated Statement of Changes in Stockholders' Equity
for the Three-Month Period Ended March 31, 1998 (unaudited) 5
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended March 31, 1998 and 1997 (unaudited) 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
PART II. Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Default Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
</TABLE>
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BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31,
ASSETS 1998 December 31,
(UNAUDITED) 1997
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<S> <C> <C>
Cash and cash equivalents $ 59,492 $ 161,455
Restricted cash 24,705 282,731
Trade and vehicle receivables, net 279,484 334,018
Vehicle inventory 50,826 46,944
Revenue earning vehicles, net 2,372,014 2,093,304
Property and equipment, net 159,682 147,547
Prepaid expenses and other assets 94,300 91,681
Intangibles, including goodwill, net 534,266 532,228
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Total assets $ 3,574,769 $ 3,689,908
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable $ 2,544,543 $ 2,686,199
Accounts payable, accrued and other liabilities 468,397 434,291
Deferred income taxes 106,515 110,479
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Total liabilities 3,119,455 3,230,969
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STOCKHOLDERS' EQUITY
Common stock 276 274
Additional paid-in-capital 425,714 425,222
Foreign currency translation adjustment (3,175) (2,477)
Retained earnings 32,829 36,250
Treasury stock (330) (330)
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Total stockholders' equity 455,314 458,939
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Total liabilities and stockholders' equity $ 3,574,769 $ 3,689,908
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</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
FOR THE THREE-MONTH PERIODS ENDED MARCH 31,
1998 1997
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<S> <C> <C>
OPERATING REVENUE:
Vehicle rental $ 339,955 $ 62,022
Retail vehicle sales 97,291 53,735
Royalty fees and other 18,739 581
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Total operating revenue 455,985 116,338
OPERATING EXPENSES:
Direct vehicle and operating 46,874 10,649
Depreciation - vehicles 94,096 19,352
Depreciation - non vehicle 4,429 891
Cost of vehicle sales 86,142 45,603
Advertising, promotion and selling 35,623 7,169
Occupancy 32,246 6,214
Personnel 94,790 17,348
General and administrative 22,572 4,563
Merger expenses - pooling 1,595 --
Amortization 3,439 546
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Total operating expenses 421,806 112,335
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Operating income 34,179 4,003
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Other (income) expense:
Vehicle interest 34,421 8,435
Non vehicle interest 8,450 807
Interest income - restricted cash (2,991) (723)
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Total other expense 39,880 8,519
LOSS BEFORE INCOME TAXES (5,701) (4,516)
Benefit for income taxes (2,280) (1,215)
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NET LOSS $ (3,421) $ (3,301)
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NET LOSS PER SHARE:
BASIC AND DILUTED $ (0.12) $ (0.26)
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WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
BASIC AND DILUTED 27,445,000 12,875,000
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</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Foreign
Additional Currency Total
Common Paid-In Translation Retained Treasury Stockholders'
(Dollar amounts in thousands) Stock Capital Adjustment Earnings Stock Equity
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<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $274 $425,222 $(2,477) $36,250 $(330) $ 458,939
Net proceeds from stock options 2 492 494
Foreign currency translation (698) (698)
Net Income (3,421) (3,421)
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Balance at March 31, 1998 $276 $425,714 $(3,175) $32,829 $(330) $ 455,314
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</TABLE>
* See accompanying notes to unaudited consolidated financial statements
5
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BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollar amounts in thousands) FOR THE THREE-MONTH PERIODS ENDED MARCH 31,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,421) $ (3,301)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 101,964 19,589
Deferred income tax benefit (2,280) (2,034)
Changes in operating assets and liabilities
net of effects from acquisitions:
Trade and vehicle receivables, net 54,534 (2,156)
Vehicle inventory (3,882) (5,777)
Prepaid expenses and other assets (2,619) (955)
Accounts payable, accrued and other liabilities 34,106 2,906
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Total adjustments 181,823 11,573
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Net cash provided by operating activities 178,402 8,272
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in restricted cash balance 258,026 17,001
Proceeds from sale of revenue earning vehicles 686,178 93,055
Purchases of revenue earning vehicles (1,061,411) (153,275)
Proceeds from the sale of property and equipment 2,309 3,460
Purchases of property and equipment (18,873) (1,072)
Payment for acquisitions, net of cash acquired (5,477) --
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Net cash used in investing activities (139,248) (40,831)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity transactions, net 494 4
Net increase (decrease) in vehicle obligations (36,757) 31,886
Net decrease in commercial paper (105,595) -
Proceeds from other notes payable 8,993 -
Principal payments on other notes payable (8,297) (13,913)
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Net cash provided by (used in) financing activities (141,162) 17,977
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Effect of exchange rate changes on cash 45 (68)
Net decrease in cash and cash equivalents (101,963) (14,650)
Cash and cash equivalents, beginning of period 161,455 54,009
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Cash and cash equivalents, end of period $ 59,492 $ 39,359
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</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Budget Group,
Inc., (the "Company"), have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
accompanying consolidated financial statements contain all adjustments
(consisting of normal, recurring adjustments) that, in the opinion of
management, are necessary to present fairly the Company's consolidated financial
condition, results of operations and cash flows for the periods presented.
It is suggested that these consolidated financial statements be read in
conjunction with the financial statements and the notes thereto contained in the
Company's Current Report on Form 8-K filed on and dated April 8, 1998. Operating
results for the interim periods are not necessarily indicative of the results
that may be expected for the full year ending December 31, 1998.
Certain amounts in the 1997 financial statements have been reclassified to
conform with the current year presentation.
The Company is engaged in the business of the daily rental of vehicles,
including cars, trucks, passenger vans and recreational vehicles (through both
owned and franchised operations) and the sale of late model used vehicles and
new recreational vehicles. On April 29, 1997, pursuant to stock purchase
agreements entered into on January 13, 1997, the Company completed its
acquisition of Budget Rent a Car Corporation ("BRACC") in a purchase transaction
and changed its name (formerly Team Rental Group, Inc.) to Budget Group, Inc.
Prior to the acquisition (the "BRACC Acquisition"), the Company was the largest
United States franchisee of BRACC. On January 28, 1998, the Company completed
its acquisition of Cruise America, Inc. ("Cruise") in a stock-for-stock merger
accounted for as a pooling of interests. In connection with the merger, the
Company issued 1,623,462 shares of Class A common stock in exchange for all the
outstanding common stock of Cruise. In addition, the Company issued 111,478
options to purchase Class A common stock in exchange for all of the outstanding
options to purchase stock of Cruise.
The accompanying consolidated financial statements have been restated to include
the accounts of Cruise as if the companies had combined at the beginning of the
first period presented. Prior to the merger, Cruise's fiscal year ended on April
30. In recording the business combination, Cruise's prior year financial
statements have been restated to conform with the Company's fiscal year end.
There were no significant transactions between the Company and Cruise prior to
the combination and immaterial adjustments were recorded to conform Cruise's
accounting policies. The results of Cruise included in the consolidated
statements of income are revenues of $3,652 and $13,890 for January 1998 and the
three months ended March 31, 1997, respectively and net losses of $1,836 and
$4,149 for January 1998 and the three months ended March 31, 1997, respectively.
2. ACQUISITIONS
BRACC Acquisition - On January 13, 1997, the Company entered into an agreement
to purchase all of the outstanding shares of BRACC in a purchase transaction.
The cash portion of the purchase price (approximately $275.0 million) was
partially funded through a stock offering. The Company also issued to Ford Motor
Company, 4,500 shares of Series A convertible, non-voting preferred stock, each
share of which was converted into 1,000 shares of the Company's Class A common
stock and sold by Ford Motor Company in a public offering in October 1997. The
common shares underlying the preferred stock had a value of approximately $105.8
million for purposes of determining the purchase price (based on the three day
period beginning on January 12) and $95.2 million at the time of issuance. The
Company also entered into the following debt financing transactions concurrently
with the BRACC Acquisition: (i) $165.0 million of guaranteed senior notes at a
rate of 9.57% maturing in 2007; (ii) $45.0 million of convertible subordinated
notes at a rate of 6.85% maturing in 2007; (iii) a variable-rate commercial
paper vehicle financing facility in the amount of $900.0 million; (iv) a $500.0
million asset-backed note vehicle financing facility maturing in 2001 and 2002,
composed of a senior note in the amount of $472.5 million bearing interest at a
rate of 7.35% and a subordinated note in the amount of $27.5 million bearing
interest at a rate of 7.80%; and (v) a $300.0 million five-year secured working
capital facility bearing interest at an initial rate of 1.75% over LIBOR and
secured primarily by accounts receivable, cash and unencumbered vehicles.
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Acquisition of Premier Car Rental - On July 31, 1997, the Company acquired,
through its wholly owned subsidiary, Premier Car Rental LLC ("Premier"), the
fleet and certain other assets and assumed certain liabilities of Premier Car
Rental, Inc. for approximately $87.2 million consisting of $2.0 million in cash
and the refinancing of approximately $85.2 million of outstanding indebtedness.
Premier operates as its own brand and serves the insurance replacement market.
Acquisition of St. Louis Franchise - In October 1997, the Company purchased the
St. Louis, Missouri Budget franchisee for approximately $9.0 million, consisting
of $1.0 million in cash and $8.0 million in Class A Common Stock. This
franchisee had six locations and a peak fleet of approximately 1,100 vehicles
with revenue of approximately $16.0 million in 1996.
If the acquisitions had occurred at the beginning of the periods presented, the
Company's results of operations would be as shown in the following table. These
unaudited pro forma results are not necessarily indicative of the actual results
of operations that would have occurred had the acquisitions actually been made
at the beginning of the respective periods.
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED MARCH 31, 1998 1997
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(In thousands except per share data)
<S> <C> <C>
Operating revenue 455,985 382,965
Net loss (3,421) (12,469)
Basic and diluted loss per share (0.12) (0.57)
</TABLE>
Acquisition of Ryder TRS Inc. - On March 4, 1998, the Company entered into an
Agreement and Plan of Merger, as amended (the "Merger Agreement"), to acquire
all of the outstanding stock of Ryder TRS Inc. ("Ryder TRS"), based in Denver,
Colorado, for approximately $264,000 of cash, Class A common stock and warrants,
subject to adjustment and the other terms and conditions of the Merger
Agreement. In addition, the Company will assume approximately $266,000 of fleet
debt and $175,000 of other debt. The acquisition will be accounted for under the
purchase method of accounting.
A Special Meeting of Stockholders will be held on May 28, 1997 to vote on a
proposal to increase the number of authorized shares of Class A common stock and
other matters. The increase is required to allow the Company to issue the
maximum number of shares contemplated by the Merger Agreement.
Other 1998 Acquisitions - The Company completed several small acquisitions of
Budget franchises and other related businesses through May 10, 1998. These
acquisitions are not material either individually or in the aggregate and the
Company does not expect them to have a significant impact on its financial
position or full year results of operations. The franchises were primarily
located in Puerto Rico, Canada, Austria, Spain, New Zealand, Arkansas and
California.
3. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income". SFAS No. 130 established new standards for reporting and presenting
comprehensive income and its components in a full set of general purpose
financial statements. The statement is effective for fiscal years beginning
after December 15, 1997. Total comprehensive loss was $4,119 and $3,301 for the
three-month periods ended March 31, 1998 and 1997, respectively.
4. EARNINGS PER SHARE
Diluted net loss per share computed under SFAS No. 128 "Earnings Per Share" is
the same as basic net loss per share due to the anti-dilutive effect (i.e. the
effect of reducing basic net loss per share) of the Company's convertible
securities and stock options.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Prior to the BRACC Acquisition, the Company was the largest Budget franchisee in
the United States and was one of the largest independent retailers of late model
automobiles in the United States. In 1994, the Company embarked on a strategy to
significantly expand its Budget franchise base and to develop a branded retail
car sales operation within its Budget franchise territories. This strategy both
leveraged management's experience and created certain operating efficiencies
between these complementary businesses.
The Company's retail car sales business has grown significantly since the
opening of the Company's first retail car sales facility in November 1994. The
Company added six retail car sales facilities during 1995, with the retail car
sales business producing $42.7 million of revenue for 1995 (representing 28.5%
of the Company's total historical revenue for the year), and added four
facilities during 1996. The retail car sales business produced $134.1 million of
revenue in 1996 (representing 37.5% of the Company's total historical revenue
for the year). The Company's retail car sales business produced $1.3 million of
operating income in 1995 (representing 8.8% of the Company's total operating
income) and $1.9 million of operating income in 1996 (representing 5.3% of the
Company's total operating income). The Company added 15 retail car sales
facilities during 1997, for a total of 26 retail car sales facilities operated
by the Company at December 31, 1997. In 1997, the Company's retail car sales
business had revenue of $240.0 million (representing 18.4% of the Company's
total historical revenue for the year) and an operating loss of $2.4 million
reflecting significant costs to upgrade BRACC locations and to open several new
locations. At December 31, 1996 and 1997, the retail car sales business
represented 8.3% and 2.8% of the Company's total identifiable assets,
respectively.
In April 1997, the Company acquired Budget Rent a Car Corporation. In connection
with that acquisition, the Company changed its name to Budget Group, Inc. For a
further discussion of this transaction, see Notes 1 and 2 to the Company's
financial statements herein.
RESULTS OF OPERATIONS
General Operating Results. The net loss for the first three months of 1998
increased $.1 million to a loss of $3.4 million compared with a loss of $3.3
million in 1997. The net loss per share for the first three months of 1998
improved to $(0.12) per diluted share from $(0.26) per diluted share in 1997.
The loss before income taxes increased $1.2 million for the first three months
of 1998 to $5.7 million from $4.5 million for the first three months of 1997.
Operating Revenues. Vehicle rental revenue increased $277.9 million in the first
three months of 1998 to $340.0 million from $62.0 million in the first three
months of 1997. This increase was due to the acquisition of BRACC which added a
significant number of locations and vehicles to the Company's operations.
Revenue from sales of vehicles increased $43.6 million in the first three months
of 1998 to $97.3 million from $53.7 million in the first three months of 1997.
This increase was due to the addition of the car sales operations of BRACC as
well as new stores opened by the Company. Royalties and other revenues totaled
$18.7 million in the first three months of 1998 and $.6 million in the first
quarter of 1997 and largely represent royalty and other fees from the Company's
franchisees in 1998 as a result of the BRACC Acquisition.
Operating Expenses. Total operating expenses increased $309.5 million in the
first three months of 1998 to $421.8 million from $112.3 million in the first
three months of 1997. These increases were also due to the addition of BRACC's
operations to the Company's operations. The cost of vehicles sold increased
$40.5 million in the first three months of 1998 to $86.1 million from $45.6
million in 1997. This increase is reflective of the car sales revenue growth
with the addition of BRACC car sales locations and new locations opened by the
Company. Amortization expense increased $2.9 million in the first three months
of 1998 to $3.4 million from $0.5 million in the first three months of 1997.
This increase was largely due to intangibles, including goodwill, related to the
acquisition of BRACC.
Other (Income) Expense, net. Interest expense, net of interest income, increased
$31.4 million in the first three months of 1998 to $39.9 million from $8.5
million in the first three months of 1997. This increase was due to the
financing of fleet and other borrowings related to the acquisition of BRACC, net
of investment income due to the increase in cash.
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Provision for income taxes. The income tax benefit increased $1.1 million in the
first three months of 1998 to $2.3 million from $1.2 million for the first three
months of 1997. The tax provision reflects the expected full year effective rate
of 40% which is higher than the statutory rate due to the effects of
non-deductible intangible amortization and the impact of state and local income
taxes net of the federal benefit.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's operations have been funded by cash provided from
operating activities and by financing provided by banks, automobile
manufacturers' captive finance companies, leasing companies and asset-backed
notes. The material terms of the Company's financing facilities are described
below. The Company's existing indebtedness at March 31, 1998 has interest rates
ranging from 5.6% to 10.5%. The Company intends to fund its operations through
asset-backed notes and revolving credit facilities with financial institutions
for fleet financing and working capital, as well as through other similar
facilities and through placements or offerings of additional debt and/or equity
securities.
At March 31, 1998, the Company had borrowed $2.2 billion under asset-backed
notes and a commercial paper facility, which are utilized largely to finance
vehicles eligible for certain manufacturers' vehicle repurchase programs.
Proceeds from the asset-backed notes that are temporarily unutilized for vehicle
financing are maintained in restricted cash accounts with the trustees. The
notes are collateralized by the secured vehicles and the restricted cash
accounts. Rates on asset-backed notes and the commercial paper facility at March
31, 1998 range from 5.6% to 7.8%.
The Company's other vehicle obligations consist of outstanding lines of credit
to purchase rental fleet and retail car sales inventory. Collateralized
available lines of credit at March 31, 1998 consist of $13.0 million for rental
vehicles and $32.8 million for retail car sales inventory with maturity dates
through June 1998. Vehicle obligations are collateralized by revenue earning
vehicles financed under these credit facilities and proceeds from the sale,
lease or rental of rental vehicles and retail car sales inventory. Interest
payments for rental fleet facilities are due monthly at annual interest rates of
8.5% at March 31, 1998. Management expects that vehicle obligations will
generally be repaid within one year from the balance sheet date with proceeds
received from either the repurchase of the vehicles by the manufacturers in
accordance with the terms of the manufacturers' vehicle repurchase programs or
from the sales of the vehicles.
Fleet Financing Facilities
The Company's operations are partially funded by asset-backed notes issued prior
to the BRACC Acquisition under the First, Second and Third Fleet Financing
Facilities. At March 31, 1998, amounts outstanding under these Fleet Financing
Facilities were comprised of $105.7 million of asset-backed notes issued by the
Company's special purpose finance subsidiary, Team Fleet Financing Corporation
("TFFC"), in August 1994 (the "First Fleet Financing Facility"), $15.9 million
of asset-backed notes assumed by the Company in connection with the acquisition
of the Los Angeles, California Budget franchise in October 1995 (the "Second
Fleet Financing Facility") and $176.0 million of asset-backed notes issued by
TFFC in December 1996 (the "Third Fleet Financing Facility"). These facilities
have been principally utilized to finance program vehicles. Proceeds from these
facilities that are temporarily unutilized for vehicle financing are maintained
in restricted cash accounts with the trustee and are not available for other
purposes. The notes issued under these facilities are collateralized by the
financed vehicles and the restricted cash accounts, with the vehicles being
leased to the Company's operating subsidiaries.
The First Fleet Financing Facility is comprised of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 0.75% (6.48% at March 31, 1998). Monthly
principal payments of $16.7 million commence in June 1999 with the last payment
due in November 1999. The subordinated notes included in the First Fleet
Financing Facility require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 1.30% (7.03% at March 31, 1998) and are payable
in full in December 1999.
The Second Fleet Financing Facility is comprised of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 0.60% (6.33% at March 31, 1998). Monthly
principal payments of $4.8 million commenced in November 1997 with the last
payment due in June 1998. The subordinated notes included in the Second Fleet
Financing Facility require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 1.0% (6.73% at March 31, 1998) and are payable
in full in July 1998.
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<PAGE> 11
The Third Fleet Financing Facility is comprised of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
6.65%. Monthly principal payments of $13.8 million commence in 2001 with the
last payment due in 2002. The subordinated notes included in the Third Fleet
Financing Facility require monthly interest payments at an annual rate of 7.10%
and are payable in full in June 2002. Up to $100 million of the Third Fleet
Financing may be used to finance vehicles that are not program vehicles.
The April 1997 Fleet Financings entered into concurrently with the BRACC
Acquisition provide financing for $1.4 billion of vehicles. The April 1997 Fleet
Financings consist of a $900.0 million commercial paper facility and an
additional $500.0 million asset-backed note facility. As of March 31, 1998, the
Commercial Paper Facility has various interest rates, which ranged between 5.55%
and 6.15%. The asset-backed note facility consists of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
7.35%. Monthly principal payments of $39.4 million commence November 2001 with a
final payment due in October 2002. The subordinated notes require monthly
interest payments at an annual rate of 7.80% and are payable in full in November
2002.
Historically, BRACC's operations were partially funded with cash provided by
notes issued by Budget Fleet Finance Corporation (the "BFFC Facility"), which is
a special purpose bankruptcy remote corporation. The Company has continued to
utilize borrowings under the BFFC Facility to fund its operations. The BFFC
Facility consists of $500.0 million of senior notes requiring monthly interest
payments at LIBOR plus 0.50% (6.23% at March 31, 1998). Six monthly principal
payments of $83.3 million commence in April 1999 with the last payment due in
September 1999.
The Debt Placements
Concurrently with the BRACC Acquisition, the Company issued $45.0 million
aggregate principal amounts of Series B Convertible Notes, and BRACC issued
$165.0 million aggregate principal amount of Guaranteed Senior Notes, which are
guaranteed by the Company and certain subsidiaries of the Company. The
Guaranteed Senior Notes bear interest at a rate of 9.57% and mature in 2007. In
addition, the note purchase agreements relating to the Series A Convertible
Notes, which had been issued in December 1996, were amended to extend the
maturity of the Series A Convertible Notes to April 2007 and conform other terms
to the terms of the Series B Convertible Notes. At a conversion price of $20.07
per share, the Series A Convertible Notes are convertible into an aggregate of
3,986,046 shares of Class A Common Stock, bear interest at a rate of 7% and
mature in 2007. At a conversion price of $27.96 per share, the Series B
Convertible Notes are convertible into 1,609,436 shares of Class A Common Stock,
bear interest at a rate of 6.85% and mature in 2007.
April 1997 Working Capital Facility
Also, concurrently with the BRACC Acquisition, BRACC entered into a $300.0
million, five-year secured credit facility (the "April 1997 Working Capital
Facility"), which requires monthly interest payments on the outstanding balance
at a rate based on LIBOR plus 1.75%. This agreement expires in 2002, is secured
primarily by cash, accounts receivable and vehicles and is subject to certain
covenants, the most restrictive of which require the Company to maintain certain
financial ratios and minimum tangible net worth and restrict the payment of cash
dividends. At March 31, 1998, the Company had $258.3 million in letters of
credit outstanding under this facility.
CHANGE IN FINANCIAL CONDITION
Total assets decreased $115.1 million from $3,689.9 million at December 31, 1997
to $3,574.8 million at March 31, 1998. This decrease resulted primarily from
decreases in cash and restricted cash balances to fund the increase in
revenue-earning vehicles of $278.7 million and decrease in notes payable. In
addition, receivables decreased by $54.5 million due to timing of program
vehicle disposal activity which is higher in December than in March.
Total liabilities decreased by $111.5 million from $3,231.0 million at December
31, 1997 to $3,119.5 million at March 31, 1998. This decrease was due to a
decrease in fleet related debt as the utilization of restricted cash more than
offset the increased borrowings due to seasonal fleet increases.
11
<PAGE> 12
INFLATION
The increased acquisition cost of vehicles is the primary inflationary factor
affecting the Company's operations. Many of the Company's other operating
expenses are inflation sensitive, with increases in inflation generally
resulting in increased costs of operations. The effect of inflation-driven cost
increases on the Company's overall operating costs is not expected to be greater
for the Company than for its competitors.
SEASONALITY
Generally, in the vehicle rental industry, revenues increase in the spring and
summer months due to the overall increase in business and leisure travel during
this season. The Company increases the size of its fleet and work force in the
Spring and Summer to accommodate increased rental activity during these periods
and decreases its fleet and work force in the Fall and Winter. However, many of
the Company's operating expenses (such as rent, insurance and administrative
personnel) are fixed and cannot be reduced during the Fall and Winter. The
retail vehicle sales business is subject to seasonal effects, with lower sales
during the winter months.
YEAR 2000 ISSUE
The Company has assessed and continues to assess the impact of the year 2000
("Y2K") on its reporting systems and operations (the "Y2K Issue"). The Y2K Issue
exists because many computer systems and applications currently use two-digit
date fields to designate a year. As the century date occurs, certain date
sensitive systems will recognize the year 2000 as the year 1900 or may not
recognize the date at all. This inability to properly treat or recognize the
year 2000 may cause computer systems and applications to process critical
information incorrectly.
During 1997, the Company recognized approximately $2.2 million in expenses to
modify existing computer Systems and applications and estimates that an
aggregate of approximately $6.7 million will be incurred in 1998 and 1999
specifically for Y2K modification. Approximately $0.8 million was spent in 1998
through March 31. The most significant systems undergoing or to undergo
modifications are the reservation and rental transaction processing Systems. A
failure in these Systems could cause significant disruption in customer service
levels and therefore materially impact the Company's operating results and
financial condition. The Company expects to complete all major modification
efforts by mid-1999.
ENVIRONMENTAL MATTERS
The Company has assessed and continues to assess the impact of environmental
remediation efforts on its operations. The Company's exposure largely relates to
the clean-up and replacement of underground gasoline storage tanks.
During 1997, the Company recognized approximately $.7 million in expenses
related to remediation efforts and estimates that an aggregate of approximately
$3.3 million will be incurred in 1998 and 1999. Approximately $0.4 million was
spent in 1998 through March 31. Based on past experience, management expects
these estimates will be sufficient to satisfy anticipated costs of known
remediation requirements. However, due to factors such as continuing changes in
the environmental laws and regulatory requirements, the availability and
application of technology, the identification of presently unknown remediation
sites and changes in the extent of expected remediation efforts, estimated costs
for future environmental compliance and remediation are subject to uncertainty
and it is difficult to predict the amount or timing of future remediation
requirements.
12
<PAGE> 13
FORWARD LOOKING STATEMENTS
This Form 10-Q and other statements issued or made from time to time by Budget
Group, Inc. or its representatives contain statements which may constitute
"forward looking statements" under the Private Securities Litigation Act of
1995. Those statements include statements regarding the intent, belief or
current expectations of Budget Group, Inc. and members of its management team,
as well as the assumptions on which such statements are based. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties and that
actual results may differ materially from those contemplated by such
forward-looking statements. Important factors currently known to management that
could cause actual results to differ materially from those in forward-looking
statements are set forth in the safe harbor compliance statement for
forward-looking statements included as Exhibit 99.1 and Annex A to the Company's
Annual Report on Form 10-K, and that statement is hereby incorporated by
reference in this Form 10-Q. The Company undertakes no obligation to update or
revise forward-looking statements to reflect changed assumptions, the occurrence
of unanticipated events or changes to future operating results over time.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Not applicable.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
On March 31, 1998 the Company issued 127,889 shares of Class A
common stock to stockholders of Compact Rent a Car, Ltd., the
Budget franchisee located primarily in Montreal, Canada
("Compact") to acquire all of the outstanding stock of
Compact. The Company relied on Section 4(2) of the Securities
Act of 1933 (the "1933 Act") as its exemption from the
registration requirements of the 1933 Act.
During the three months ended March 31, 1998, pursuant to the
exercise of certain outstanding stock options granted under
the Company's stock option plans, the Company issued 39,559
shares of Class A common stock for an aggregate purchase price
of $494,333. These issuances were made in reliance on the
exemption contained in Rule 701 under the 1933 Act.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5 OTHER INFORMATION Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 27 Financial Data Schedules (for SEC use only)
Exhibit 27.1 Period ended March 31, 1998
Exhibit 27.2 Period ended December 31, 1997
Exhibit 27.3 Period ended September 30, 1997
Exhibit 27.4 Period ended June 30, 1997
Exhibit 27.5 Period ended March 31, 1997
Exhibit 27.6 Period ended December 31, 1996
Exhibit 27.7 Period ended September 30, 1996
Exhibit 27.8 Period ended June 30, 1996
Exhibit 27.9 Period ended March 31, 1996
Exhibit 27.10 Period ended December 31, 1995
(b) Reports on Form 8-K
In a Form 8-K dated January 28, 1998 and filed on January 30, 1998, the
Company filed under Item 5 and Item 7, information related to the
Company's acquisition of Cruise America, Inc. in a stock-for-stock
merger.
In a Form 8-K dated March 4, 1998 and filed March 17, 1998, the Company
filed under Item 5 and Item 7 information related to the Company's
pending acquisition of Ryder TRS, Inc.
14
<PAGE> 15
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, thereunto duly authorized.
BUDGET GROUP, INC.
------------------
(Registrant)
Dated: May 14, 1998 By: /s/ Michael Clauer
-----------------------------
Michael Clauer
Chief Financial Officer
Dated: May 14, 1998 By: /s/ Thomas L. Kram
------------------------------
Thomas L. Kram
Vice President, Controller
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 84,197
<SECURITIES> 0
<RECEIVABLES> 279,484
<ALLOWANCES> 0<F1>
<INVENTORY> 2,422,840
<CURRENT-ASSETS> 2,786,521
<PP&E> 159,682
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,574,769
<CURRENT-LIABILITIES> 574,912
<BONDS> 2,544,543
0
0
<COMMON> 276
<OTHER-SE> 455,038
<TOTAL-LIABILITY-AND-EQUITY> 3,574,769
<SALES> 455,985
<TOTAL-REVENUES> 455,985
<CGS> 86,142
<TOTAL-COSTS> 335,664
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,880
<INCOME-PRETAX> (5,701)
<INCOME-TAX> (2,280)
<INCOME-CONTINUING> (3,421)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,421)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS
SCHEDULE HAS BEEN RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE
AMERICA, INC. UNDER THE POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 444,186
<SECURITIES> 0
<RECEIVABLES> 334,018
<ALLOWANCES> 0<F1>
<INVENTORY> 2,140,248
<CURRENT-ASSETS> 2,918,452
<PP&E> 147,547
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,689,908
<CURRENT-LIABILITIES> 543,270
<BONDS> 2,687,699
0
0
<COMMON> 274
<OTHER-SE> 458,665
<TOTAL-LIABILITY-AND-EQUITY> 3,689,908
<SALES> 1,411,436
<TOTAL-REVENUES> 1,411,436
<CGS> 251,068
<TOTAL-COSTS> 989,372
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,397
<INCOME-PRETAX> 55,599
<INCOME-TAX> 25,825
<INCOME-CONTINUING> 29,774
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,774
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.25
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS
BEEN RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC.
UNDER THE POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 532,644
<SECURITIES> 0
<RECEIVABLES> 282,288
<ALLOWANCES> 0<F1>
<INVENTORY> 2,138,188
<CURRENT-ASSETS> 2,953,120
<PP&E> 139,522
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,620,847
<CURRENT-LIABILITIES> 513,488
<BONDS> 2,674,543
0
105,750
<COMMON> 216
<OTHER-SE> 326,850
<TOTAL-LIABILITY-AND-EQUITY> 3,620,847
<SALES> 973,334
<TOTAL-REVENUES> 973,334
<CGS> 173,668
<TOTAL-COSTS> 665,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77,610
<INCOME-PRETAX> 56,728
<INCOME-TAX> 24,572
<INCOME-CONTINUING> 32,156
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,156
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.38
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS BEEN
RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC, UNDER THE
POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 343,509
<SECURITIES> 0
<RECEIVABLES> 235,799
<ALLOWANCES> 0<F1>
<INVENTORY> 2,480,271
<CURRENT-ASSETS> 3,059,579
<PP&E> 143,862
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,732,514
<CURRENT-LIABILITIES> 476,095
<BONDS> 2,853,641
0
105,750
<COMMON> 215
<OTHER-SE> 296,813
<TOTAL-LIABILITY-AND-EQUITY> 3,732,514
<SALES> 448,482
<TOTAL-REVENUES> 448,482
<CGS> 130,270
<TOTAL-COSTS> 307,372
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,868
<INCOME-PRETAX> 2,972
<INCOME-TAX> 1,710
<INCOME-CONTINUING> 1,262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,262
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.07
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE
BALANCE SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS BEEN
RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC. UNDER THE
POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 88,694
<SECURITIES> 0
<RECEIVABLES> 34,348
<ALLOWANCES> 0<F1>
<INVENTORY> 479,842
<CURRENT-ASSETS> 602,884
<PP&E> 29,005
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 721,316
<CURRENT-LIABILITIES> 47,384
<BONDS> 554,856
0
0
<COMMON> 128
<OTHER-SE> 116,948
<TOTAL-LIABILITY-AND-EQUITY> 721,316
<SALES> 116,338
<TOTAL-REVENUES> 116,338
<CGS> 45,603
<TOTAL-COSTS> 66,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,519
<INCOME-PRETAX> (4,516)
<INCOME-TAX> (1,215)
<INCOME-CONTINUING> (3,301)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,301)
<EPS-PRIMARY> (0.26)
<EPS-DILUTED> (0.26)
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE
BALANCE SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS
BEEN RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC.
UNDER THE POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 120,345
<SECURITIES> 0
<RECEIVABLES> 32,192
<ALLOWANCES> 0<F1>
<INVENTORY> 429,983
<CURRENT-ASSETS> 582,520
<PP&E> 28,838
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 700,402
<CURRENT-LIABILITIES> 46,561
<BONDS> 531,396
0
0
<COMMON> 128
<OTHER-SE> 120,317
<TOTAL-LIABILITY-AND-EQUITY> 700,402
<SALES> 447,808
<TOTAL-REVENUES> 447,808
<CGS> 146,513
<TOTAL-COSTS> 253,694
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,749
<INCOME-PRETAX> 12,852
<INCOME-TAX> 5,101
<INCOME-CONTINUING> 7,751
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,751
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.70
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE
BALANCE SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON
THE BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS
BEEN RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC.
UNDER THE POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 31,993
<SECURITIES> 0
<RECEIVABLES> 40,341
<ALLOWANCES> 0<F1>
<INVENTORY> 459,157
<CURRENT-ASSETS> 531,491
<PP&E> 32,546
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 642,401
<CURRENT-LIABILITIES> 51,039
<BONDS> 461,223
0
0
<COMMON> 127
<OTHER-SE> 128,012
<TOTAL-LIABILITY-AND-EQUITY> 642,401
<SALES> 329,863
<TOTAL-REVENUES> 329,863
<CGS> 95,363
<TOTAL-COSTS> 184,827
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,216
<INCOME-PRETAX> 23,457
<INCOME-TAX> 8,004
<INCOME-CONTINUING> 15,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,453
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.50
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS BEEN
RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC. UNDER THE
POOLING OF INTERESTS METHOD OF ACCOUNTING.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 21,641
<SECURITIES> 0
<RECEIVABLES> 26,406
<ALLOWANCES> 0<F1>
<INVENTORY> 460,706
<CURRENT-ASSETS> 508,753
<PP&E> 30,695
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 613,975
<CURRENT-LIABILITIES> 40,881
<BONDS> 500,886
0
0
<COMMON> 89
<OTHER-SE> 70,119
<TOTAL-LIABILITY-AND-EQUITY> 613,975
<SALES> 192,455
<TOTAL-REVENUES> 192,455
<CGS> 60,194
<TOTAL-COSTS> 112,458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,611
<INCOME-PRETAX> 4,192
<INCOME-TAX> 2,236
<INCOME-CONTINUING> 1,956
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,956
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE
BALANCE SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON
THE BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS BEEN
RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC. UNDER THE
POOLING OF INTERESTS METHOD OF ACCOUNTING
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 32,675
<SECURITIES> 0
<RECEIVABLES> 33,487
<ALLOWANCES> 0<F1>
<INVENTORY> 404,676
<CURRENT-ASSETS> 470,838
<PP&E> 25,962
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 573,655
<CURRENT-LIABILITIES> 38,341
<BONDS> 467,896
0
0
<COMMON> 89
<OTHER-SE> 65,329
<TOTAL-LIABILITY-AND-EQUITY> 573,655
<SALES> 76,649
<TOTAL-REVENUES> 76,649
<CGS> 24,396
<TOTAL-COSTS> 47,682
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,816
<INCOME-PRETAX> (2,245)
<INCOME-TAX> (134)
<INCOME-CONTINUING> (2,111)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,111)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS
BEEN RESTATED TO REFLECT THE EFFECT OF THE MERGER WITH CRUISE AMERICA, INC.
UNDER THE POOLING OF INTERESTS METHOD OF ACCOUNTING
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 70,504
<SECURITIES> 0
<RECEIVABLES> 24,740
<ALLOWANCES> 0<F1>
<INVENTORY> 306,669
<CURRENT-ASSETS> 401,913
<PP&E> 22,806
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 486,344
<CURRENT-LIABILITIES> 33,102
<BONDS> 386,514
0
0
<COMMON> 88
<OTHER-SE> 64,640
<TOTAL-LIABILITY-AND-EQUITY> 486,344
<SALES> 239,482
<TOTAL-REVENUES> 239,482
<CGS> 76,848
<TOTAL-COSTS> 139,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,030
<INCOME-PRETAX> 3,179
<INCOME-TAX> 1,467
<INCOME-CONTINUING> 1,712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,712
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
