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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 4, 2000
BUDGET GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-78274 59-3227576
(State or other jurisdiction (Commission File Number) (IRS Employer Identification Number)
of incorporation)
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125 BASIN STREET, SUITE 210
DAYTONA BEACH, FLORIDA 32114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 238-7035
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On January 4, 2000, Budget Group, Inc. (the "Company") issued a press
release announcing restructuring plans to be implemented during 2000. The
Company also announced that it will take restructuring, one-time charges and
other fourth quarter adjustments of $90 to $95 million pre-tax against earnings
to be recorded in the fourth quarter of 1999. A copy of the press release is
attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit No.
99.1 Press release dated January 4, 2000
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Signatures
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.
Date: January 4, 2000
BUDGET GROUP, INC.
By: /s/ Thomas L. Kram
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Thomas L. Kram
Vice President - Controller
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EXHIBIT INDEX
99.1 Press release dated January 4, 2000
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MEDIA CONTACT: FOR IMMEDIATE RELEASE
Kimberly Mulcahy
(630) 955-7672
INVESTOR CONTACT:
Sarah Lewensohn
(630) 955-7602
BUDGET GROUP ANNOUNCES PROGRESS ON RESTRUCTURING EFFORTS;
COMPANY TO TAKE CHARGE IN FOURTH QUARTER
LISLE, ILLINOIS, JANUARY 4, 2000 -- Budget Group, Inc. (NYSE: BD) has announced
significant progress on a number of its recent initiatives. First, Budget has
reached an amicable resolution of its differences with Ford Motor Company,
which is the company's primary source of rental vehicles. This resolution, the
terms of which are confidential, should ensure a mutually beneficial
relationship between Ford and Budget for several years to come. Second, Budget
confirmed that to the extent there are any remaining obligations relating to
its acquisition of Ryder TRS, the company can make all payments in cash rather
than issuing shares of stock.
Budget also disclosed that, in addition to previously announced
initiatives, it will: exit the car sales business; consolidate its Ryder TRS
headquarters and field operations into its North American vehicle rental
division; and sell remaining non-core assets. These measures are part of an
effort to reduce overhead and other expenses by an estimated $100 million
annually.
As a result of these initiatives, the company will take restructuring,
one-time charges and other fourth quarter adjustments of $90-95 million
pre-tax, $60-65 million after-tax, which includes charges associated with the
elimination of approximately 1,000 non-customer service related positions.
Budget also announced that it expects its 1999 fourth quarter earnings from
continuing operations, before the pre-tax charge, to be in line with analysts'
consensus estimates.
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Budget Group Restructure - page 2
FOURTH QUARTER UPDATE:
1) Exit car sales: The company has decided to exit the car sales business as
an owner/operator and transition to a franchiser of used car sales
locations, providing back-office support and services in exchange for
franchise fees. Budget entered into a joint venture to facilitate this
transition, transferring seven locations into the venture. Budget also
sold three locations and closed one other during the quarter.
Currently, the company has 40 royalty paying franchised car sales
locations.
2) Consolidate North American vehicle rental operations: The company closed
its Premier insurance replacement division including its Indianapolis
headquarters, absorbing all functions at its Lisle, Illinois headquarters
and shared services support center in Orlando.
3) Expand European operations: Budget International re-established a critical
part of its European network, opening in 13 key airport locations in
Germany, the second largest rental car market in the world, and
establishing a head office in Frankfurt. At year end, the company operated
118 locations (versus 30 the prior year) in France and 55 (versus 18 the
prior year) in the U.K.
4) Dispose of non-core assets: Budget has received a number of expressions of
interest from both strategic and financial buyers for its principal
non-core assets, VPSI and Cruise America. The company has also expanded
the non-core asset sale list to include certain assets associated with its
car sales business.
"Our focus is on increasing pre-tax margins and returns on capital in
our core car and truck rental operations," said Sandy Miller, Budget Group
Chairman and CEO. "By concentrating our financial and management resources we
can more readily take advantage of cost reduction and revenue improvement
opportunities in our business."
2000 GOALS/MILESTONES:
1) Exit car sales: The company will close its car sales headquarters in
Indianapolis, and transfer five additional used car sales locations to the
joint venture by the end of the first quarter. Budget will sell the
remaining locations during the second and third quarters.
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Budget Group Restructure - page 3
2) Consolidate North American vehicle rental operations: The company will
consolidate Ryder's Denver headquarters, field functions and back-office
staff into Budget's North American vehicle rental operations by year-end.
It will also integrate its Premier Car Rental field operations, convert 99
locations to Budget and close 39 redundant and/or unprofitable locations
in the first quarter.
3) Expand European operations: Budget International will continue the
rebuilding of its network in Germany, adding approximately 150 agency and
licensee locations by year-end.
4) Dispose of non-core assets: The company will continue the orderly
disposition of non-core assets to quickly free up capital while maximizing
value.
"The actions taken in the fourth quarter demonstrate our ability to
execute our restructuring plan," said David Siegel, Budget Group President and
Chief Operating Officer. "We intend to step up the pace of change in our core
business, while exiting remaining non-core businesses in 2000."
Budget Group, Inc. is a global network of transportation related
businesses which includes Budget Rent a Car, the world's third largest car and
truck rental system, and Ryder TRS, the nation's second largest consumer truck
rental company. For more information, visit the company's Web site at
www.budgetgroup.com.
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. Such forward-looking statements include, among others,
those relating to:
- the amount and timing of restructuring, one-time charges, and
other fourth quarter adjustments to be recorded by the
company and the amount of overhead and cost savings to be
realized;
- the timing and effectiveness of the measures expected to be
implemented during 2000, including the sale of non-core
businesses, the disposition of car sales assets, the
consolidation and integration of other operations; and
- expectations for pre-tax earnings from continuing operations
in the fourth quarter of 1999.
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Budget Group Restructure - page 4
Forward-looking statements involve risks, uncertainties and other
factors that could cause the Company's actual future activities and results of
operations to differ materially from those suggested or described in these
statements. The expected restructuring and one-time charges and related
overhead and cost savings, the measures to be implemented during 2000, and the
expectations relating to the results of operations for the fourth quarter of
1999 and 2000 are estimates or expectations based on current assumptions which
management believes to be reasonable at this time. In addition, other risks to
our business include, among others, the following: integration of the Premier
business operations and realignment of the Ryder business operations into
Budget's North American Rental Operations; successful implementation of our car
sales exit strategies; successful disposition of non-core businesses;
seasonality; competition; our potential obligation to make a make-whole
payment; the availability and terms of financing for our business; our
dependence on a principal vehicle supplier; possible changes in manufacturers'
repurchase programs; litigation with a former franchisee; the impact of various
types of regulations; additional risks of international operations; whether our
investments and cost-cutting initiatives will be successful; and our recent
losses. These factors and conditions could be substantially different than we
currently anticipate, and the Company's business could be affected by other
factors, so that the Company's actual future activities and results of
operations may differ materially from the forward-looking statements we have
made in this press release. The Company is not undertaking any obligation to
update these forward-looking statements or risk factors, whether as a result of
new information, future events or otherwise. Additional information concerning
such matters is contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, and other documents subsequently filed by the
Company with the SEC, all of which are available from the Company or the SEC.
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