<PAGE> 1
As filed with the Securities and Exchange Commission on August 6, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER: 000-23962
BUDGET 401(K)
AND PROFIT SHARING PLAN
125 BASIN STREET
SUITE 210
DAYTONA BEACH, FLORIDA 32114
(Full Title and Address of Plan)
BUDGET GROUP, INC.
125 BASIN STREET
SUITE 210
DAYTONA BEACH, FLORIDA 32114
(Name of Issuer of Securities held Pursuant to Plan
and Address of its Principal Executive Office)
<PAGE> 2
REQUIRED INFORMATION
The following financial statements for the Budget 401(k) and Profit Sharing
Plan are included herein:
1. An audited statement of net assets available for benefits as of the end
of each of the latest two fiscal years of the plan.
2. An audited statement of changes in net assets available for benefits
for the latest fiscal year of the plan.
<PAGE> 3
INDEX TO EXHIBITS
Exhibit No. Description
23.1 Consent of Arthur Andersen LLP
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Budget Group, Inc., as administrator of the Budget 401(k) and Profit Sharing
Plan has caused this annual report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUDGET 401(k) AND PROFIT SHARING PLAN
By: BUDGET GROUP, INC.
By: /s/ Thomas L. Kram
----------------------------------
Thomas L. Kram
Vice President and Controller
Date: August 5, 1999
<PAGE> 5
BUDGET 401(K) AND PROFIT SHARING PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997,
TOGETHER WITH REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Budget Group, Inc.:
We have audited the accompanying statements of net assets available for benefits
of Budget 401(k) and Profit Sharing Plan as of December 31, 1998 and 1997, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 1998. These financial statements and the supplemental
schedules referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment (Schedule I) and loans in default (Schedule III) as of December
31, 1998, and reportable transactions (Schedule II) and non-exempt transactions
(Schedule IV) for the year then ended, are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the statement of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the changes in net assets available
for benefits of each fund. The supplemental schedules and Fund Information have
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Orlando, Florida,
July 9, 1999
<PAGE> 7
BUDGET 401(K) AND PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
------
INVESTMENTS (NOTE 2)
AIM MONEY MARKET FUND $ - $ 300,750
AIM CASH RESERVES SHARES 582,325 -
AIM LTD. MAT. TREASURY FUND 18,364 -
WASHINGTON MUTUAL INV. FUND 898,357 -
FRANKLIN SMALL-CAP GROWTH FUND 799,022 -
ALLIANCE PREMIER GROWTH FUND 23,229 -
AIM CONSTELLATION FUND - 793,620
FRANKLIN EQUITY INCOME FUND - 729,600
TEMPLETON FOREIGN FUND 410,965 420,127
AMERICAN BOND FUND 289,162 254,849
COMMON STOCK FUND 520,454 1,140,410
PARTICIPANT LOANS 37,123 20,435
----------- -----------
TOTAL INVESTMENTS 3,579,001 3,659,791
COMPANY CONTRIBUTIONS RECEIVABLE - 794,138
PARTICIPANT CONTRIBUTIONS RECEIVABLE - 90,505
----------- -----------
Total Assets 3,579,001 4,544,434
LIABILITIES
-----------
CONTRIBUTIONS PAYABLE TO BUDGET
GROUP, INC. SAVINGSPLUS PLAN 222,242 -
EXCESS CONTRIBUTIONS PAYABLE - 88,684
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 3,356,759 $ 4,455,750
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
BUDGET 401(K) AND PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION,
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------------
AIM LTD WASHINGTON FRANKLIN ALLIANCE AIM AIM
MAT. TREASURY MUTUAL INV. SMALL-CAP PREMIER CASH RESERVES CONSTELLATION
FUND FUND GROWTH FUND GROWTH FUND SHARES FUND
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions-
Company $18,028 $106,477 $ 122,118 $ -- $ -- $ --
Participant -- -- -- -- -- 92,290
Return of excess contributions -- -- -- -- -- (21,071)
--------------------------------------------------------------------------------------
Total contributions 18,028 106,477 122,118 -- -- 71,219
--------------------------------------------------------------------------------------
Investment income (loss)-
Interest and dividends 275 76,916 11,665 458 1,821 --
Net appreciation (depreciation) 61 (37,553) (136,936) 3,960 -- 87,787
--------------------------------------------------------------------------------------
Total investment income (loss) 336 39,363 (125,271) 4,418 1,821 87,787
--------------------------------------------------------------------------------------
Total contributions and
investment income (loss) 18,364 145,840 (3,153) 4,418 1,821 159,006
--------------------------------------------------------------------------------------
TRANSFERS TO (FROM) OTHER INVESTMENT
OPTIONS, including participant
loan transactions -- 816,394 850,009 18,811 587,724 (901,845)
--------------------------------------------------------------------------------------
DEDUCTIONS:
Benefit payments -- (63,858) (47,810) -- (7,220) (50,612)
Administrative expenses -- (19) (24) -- -- (169)
--------------------------------------------------------------------------------------
Total deductions -- (63,877) (47,834) -- (7,220) (50,781)
NET INCREASE (DECREASE) 18,364 898,357 799,022 23,229 582,325 (793,620)
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of year -- -- -- -- -- 793,620
--------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $18,364 $898,357 $ 799,022 $23,229 $582,325 $ --
======================================================================================
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------
AIM FRANKLIN
MONEY EQUITY TEMPLETON AMERICAN COMMON
MARKET INCOME FOREIGN BOND STOCK PARTICIPANT
FUND FUND FUND FUND FUND OTHER LOANS TOTAL
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions-
Company $323,798 $ -- $ 76,349 $ 35,439 $ 161,323 (812,559) $ -- $ 30,973
Participant 23,468 74,526 49,152 28,974 60,437 (205,642) -- 123,205
Return of excess contributions (1,412) (19,612) (16,955) (3,836) (78,433) -- -- (141,319)
------------------------------------------------------------------------------------------------
Total contributions 345,854 54,914 108,546 60,577 143,327 (1,018,201) -- 12,859
------------------------------------------------------------------------------------------------
Investment income (loss)-
Interest and dividends 18,269 5,809 45,928 22,464 87 -- 845 184,537
Net appreciation (depreciation) -- 55,645 (71,422) (8,529) (634,474) -- -- (741,461)
------------------------------------------------------------------------------------------------
Total investment income (loss) 18,269 61,454 (25,494) 13,935 (634,387) -- 845 (556,924)
------------------------------------------------------------------------------------------------
Total contributions and
investment income (loss) 364,123 116,368 83,052 74,512 (491,060) (1,018,201) 845 (544,065)
------------------------------------------------------------------------------------------------
TRANSFERS TO (FROM) OTHER INVESTMENT
OPTIONS, including participant
loan transactions (555,687) (811,739) (28,576) 1,585 (7,442) -- 30,766 --
------------------------------------------------------------------------------------------------
DEDUCTIONS:
Benefit payments (109,043) (34,029) (63,431) (41,712) (121,454) -- (14,923) (554,092)
Administrative expenses (143) (200) (207) (72) -- -- -- (834)
----------------------------------------------------------------------------------------------
Total deductions (109,186) (34,229) (63,638) (41,784) (121,454) -- (14,923) (554,926)
NET INCREASE (DECREASE) (300,750) (729,600) (9,162) 34,313 (619,956) (1,018,201) 16,688 (1,098,991)
--
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of year 300,750 729,600 420,127 254,849 1,140,410 795,959 20,435 4,455,750
----------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ -- $ -- $ 410,965 $289,162 $ 520,454 $ (222,242) $ 37,123 $3,356,759
===============================================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 9
BUDGET 401(K) AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 and 1997
1. PLAN DESCRIPTION:
The following description of the Budget 401(k) and Profit Sharing Plan (the
Plan) provides only general information. Participants should refer to the plan
agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all employees of Budget Group,
Inc. (the Company), who have one year of service and are age 21 or older. The
Plan was established effective January 1, 1996, and is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
The Plan was frozen, effective February 28, 1998, with the intention to merge
with the Budget Group, Inc. SavingsPlus Plan in 1999.
On November 3, 1998, the Company adopted an amendment to the Plan document,
thereby adding the employees of Budget Car Sales, Inc. and VPSI, Inc., two
subsidiaries of the Company. The amendment was effective January 1, 1996.
Reclassifications
Certain amounts in the 1997 Statement of Net Assets Available for Benefits have
been reclassified to conform with the current year presentation.
Contributions
Each year, participants may contribute up to 15 percent of pretax annual
compensation, as defined in the Plan, subject to certain limitations under the
Internal Revenue Code (IRC). Participants may rollover amounts from other
qualified defined benefit or defined contribution plans. The Company match is 25
percent of the first 4 percent of compensation that a participant contributes to
the Plan. The company match is invested in the Budget Group, Inc. Stock Fund.
Additional amounts may be contributed at the option of the Company's Board of
Directors. The discretionary profit sharing contribution is allocated based on
the participant's compensation under the permitted disparity limit, in
accordance with IRC section 401(l). The plan allows participants to self direct
the discretionary profit sharing contribution. A discretionary profit sharing
contribution was not made for the 1998 plan year.
Due to an administrative error a portion of the participant contributions of the
Budget SavingsPlus Plan (SavingsPlus Plan) were remitted into the Plan during
the year ended December 31, 1998, and have been recorded as a payable to the
SavingsPlus Plan in the Statements of Net Assets Available for Benefits as of
December 31, 1998. On September 30, 1999, Budget plans to complete a merger of
the Plan into the SavingsPlus Plan upon which this error would be corrected.
Excess Contributions
Excess contributions represent employee contributions and employer matching
contributions that have been determined to be in excess of maximum contribution
levels for certain participants. Employee contributions or vested employer
contributions that are determined to be in excess of maximum contribution
levels are refunded to participants. Non-vested employer contributions that are
determined to be in excess of maximum contribution levels are treated as
forfeitures. During the year ended December 31, 1998, a total of $141,319 of
excess contributions were refunded to participants related to the plan years
ended December 31, 1998 and 1997.
<PAGE> 10
- 2 -
Participant Accounts
Each participant's account is credited with the participant's contribution, the
Company's contributions and plan earnings or losses. Plan earnings or losses are
allocated based on the proportion of each participant's account balance to the
total of all participant account balances.
Vesting
Participants have at all times a fully vested, nonforfeitable interest in each
of their accounts for contributions other than profit-sharing. The vesting
schedule for Company discretionary profit-sharing contributions is as follows:
Less than 3 yrs 0%
3 yrs but less than 4 yrs 20%
4 yrs but less than 5 yrs 40%
5 yrs but less than 6 yrs 60%
6 yrs but less than 7 yrs 80%
7 yrs or more 100%
Benefit Payments
On termination of service due to retirement, death, disability or termination, a
participant may elect to receive either a lump-sum amount equal to the value of
the participant's vested account balance or in installments over a period of
time, as defined in the Plan. A participant who was a participant in the BRAC-OP
Co. 401(k) Salary Savings Plan (BRAC-OP Plan) as of May 20, 1996, and whose
accrued benefit under that plan was merged with the Plan may elect to receive
benefits in the form of a joint and survivor annuity.
Participant Loans
Participants may borrow from their accounts a minimum of $1,000, up to a maximum
equal to the lesser of $50,000 or 50 percent of their account balance. Interest
rates on participant loans are determined based upon a reasonable rate of
interest, approximating prevailing interest rates on bank loans of similar
length of time and repayment terms. A loan is repayable over a period not
extending beyond five years, unless such loan is used to acquire a principal
residence of the participant. Interest rates range from 8.75 percent to 11
percent.
Principal and interest are paid ratably through payroll deductions.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right,
under the Plan, to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA.
Investment Options
In 1997, participants were able to choose among six investment options: AIM
Constellation Fund, AIM Money Market Fund, Franklin Equity Income Fund,
Templeton Foreign Fund, American Bond Fund and Common Stock Fund. During 1998,
the Plan was modified to allow participants to choose among the following
investment options: AIM Limited Maturity Treasury Fund (AIM Ltd. Mat. Treasury
Fund), Washington Mutual Investors Fund (Washington Mutual Inv. Fund), Franklin
Small-Cap Growth Fund, Alliance Premier Growth Fund, AIM Cash Reserves Shares,
Templeton Foreign Fund, American Bond Fund, and Budget Group, Inc. Stock Fund.
Participants may change their elections on a daily basis by using a telephone
access system, except for the Budget Group, Inc. Stock Fund which can only be
changed annually on January 1.
Forfeited Accounts
Forfeitures of Company discretionary profit sharing contributions are used to
reduce Company matching contributions in the next Plan year.
<PAGE> 11
- 3 -
2. SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The accounts of the Plan are maintained on the accrual basis of accounting in
accordance with generally accepted accounting principles.
Investment Valuation and Income Recognition
Securities owned are reflected in the accounts of the Plan at quoted market
value. The fair market value of the Budget Group, Inc. Stock at December 31,
1998 and 1997 was $520,271 and $1,090,910, respectively.
Administrative Expenses
Most administrative expenses are paid by the Company. The Company paid
approximately $117,000 in expenses related to the Plan for the year ended
December 31, 1998.
Benefit Payments
Benefits are recorded when paid.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of net assets available for plan benefits and the
changes in net assets available for plan benefits during the reporting period.
Actual results could differ from those estimates.
3. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for plan
benefits for the year ended December 31, 1998, per the financial
statements to the Form 5500:
Net assets available for plan
benefits per the financial statements $3,356,759
Benefits payable (24,626)
Net assets available for plan -----------
benefits per the Form 5500 $3,332,133
===========
The following is a reconciliation of benefits paid to participants
for the year ended December 31, 1998, per the financial statements
to the Form 5500:
Benefits paid to participants for
financial reporting purposes $ 554,092
Add: Benefits payable at December 31, 1998 24,626
Less: Benefits payable at December 31, 1997 (0)
Benefits paid to participants ----------
per the Form 5500 $ 578,718
===========
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
<PAGE> 12
- 4 -
4. INCOME TAX STATUS:
The Internal Revenue Service (IRS) has determined and informed the Company by a
letter dated June 2, 1998, that the Plan and related trust are designed in
accordance with applicable sections of the IRC.
5. RELATED-PARTY TRANSACTIONS:
The McDonald Money Market Fund is managed by the investment advisor, McDonald &
Company Securities, Inc., a party-in-interest.
6. SUPPLEMENTAL SCHEDULES:
The accompanying schedules of assets held for investment, reportable
transactions, loans in default, and non-exempt transactions are included as
required schedules under ERISA.
<PAGE> 13
SCHEDULE I
BUDGET 401(K) AND PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Market
Cost Value
---------- ----------
<S> <C> <C>
MONEY MARKET FUND:
AIM Cash Reserves Shares $ 582,325 $ 582,325
MUTUAL FUNDS:
AIM Ltd. Mat Treasury Fund 18,303 18,364
Washington Mutual Inv. Fund 931,398 898,357
Franklin Small-Cap Growth Fund 914,906 799,022
Alliance Premier Growth Fund 19,269 23,229
Templeton Foreign Fund 497,576 410,965
American Bond Fund 292,371 289,162
----------
Total mutual funds 2,439,099
----------
COMMON STOCK FUND
Budget Group, Inc. Stock 809,571 520,271
McDonald Money Market Fund* 183 183
----------
Total common stock fund 520,454
----------
PARTICIPANT LOANS (interest rates ranging from 9.25 percent to
11 percent, maximum of five years to maturity, except for loans used
to acquire the principal residence of the participant) 37,123 37,123
----------
Total assets held for investment $3,579,001
==========
</TABLE>
*Managed by the investment advisor, a party-in-interest.
The preceding notes are an integral part of this schedule.
<PAGE> 14
SCHEDULE II
BUDGET 401(K) AND PROFIT SHARING PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Detail of
Acquisitions Detail of Dispositions
------------ ---------------------------------
A series of transactions in excess of 5% of beginning net
assets available for plan benefits Cost Cost Proceeds Gain/(Loss)
- --------------------------------------------------------- ------------ -------- -------- -----------
<S> <C> <C> <C> <C>
MONEY MARKET FUNDS:
AIM Money Market Fund $ 417,208 $717,958 $717,958 $ --
AIM Cash Reserves Shares 589,983 7,658 7,658 --
MUTUAL FUNDS:
AIM Constellation Fund 93,757 881,507 975,164 93,657
Franklin Equity Income Fund 95,874 733,644 881,119 147,475
Templeton Foreign Fund 176,176 118,226 113,916 (4,310)
American Bond Fund 106,808 63,628 63,966 338
Washington Mutual Inv. Fund 1,023,564 92,166 87,654 (4,512)
Franklin Small-Cap Growth Fund 1,026,671 111,765 90,713 (21,052)
COMMON STOCK FUND:
Budget Group, Inc. Stock 278,397 174,837 214,562 39,725
McDonald Money Market Fund* 278,089 278,586 278,586 --
</TABLE>
*Managed by the investment advisor, a party-in-interest.
The preceding notes are an integral part of this schedule.
<PAGE> 15
SCHEDULE III
BUDGET 401(k) AND PROFIT SHARING PLAN
SCHEDULE OF LOANS IN DEFAULT
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Original Amount
Identity Amount Received During
of Obligor Of Loans Year(a) Detailed Description of Loan Amount Overdue(a)
- ------------------ --------- ----------------- ----------------------------- -----------------
<S> <C> <C> <C> <C>
Various plan $10,618 $1,358 Issued from March 26, 1997 $4,059
participants through February 4, 1998;
interest rates ranging from
9.0% to 11.0%.
</TABLE>
(a) Amount includes principal and interest
The preceding notes are an integral part of this schedule.
<PAGE> 16
SCHEDULE IV
BUDGET 401(k) AND PROFIT SHARING PLAN
SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Relationship to Plan, Employer or Transaction Interest
Identity of Party Involved Other Party-In-Interest Description of Transaction Amount Incurred
- --------------------------- --------------------------------- ----------------------------- ------------ --------
<S> <C> <C> <C> <C>
Budget Group, Inc. Employer/Sponsor Contributions not timely remitted $ 100,084.25 $ 27
to the Plan as follows - employee
contributions and loan repayments
for the pay periods in February
were not remitted to the Plan until
March 23, 1998
</TABLE>
The preceding notes are an integral part of this schedule.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report, dated July 9, 1999, included in this Form 11-K
into Budget Group, Inc.'s previously filed Registration Statement File No.
333-04757.
Arthur Andersen LLP
Orlando, Florida
July 30, 1999
