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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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, 2003

OR

     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 1-13647

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

(Exact name of registrant as specified in its charter)
     
Delaware
(State or other jurisdiction
of incorporation or organization)		   73-1356520
(I.R.S. Employer
Identification No.)

5330 East 31st Street, Tulsa, Oklahoma 74135
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code:   (918) 660-7700

 

     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 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 o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act):   Yes x  No o

     The number of shares outstanding of the registrant’s Common Stock as of April 30, 2003 was 24,689,007.

1

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

FORM 10-Q

CONTENTS
                  
                Page
               
PART I   -
  
FINANCIAL INFORMATION
  
 
 
 
 
  
ITEM 1.
  
FINANCIAL STATEMENTS
  
 
3
 
 
  
ITEM 2.
  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
 
 
15
 
 
  
ITEM 3.
  
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
  
 
 
20
 
 
  
ITEM 4.
  
CONTROLS AND PROCEDURES
  
 
20
 
PART II  -
  
OTHER INFORMATION
  
 
 
 
 
  
ITEM 1.
  
LEGAL PROCEEDINGS
  
 
21
 
 
  
ITEM 6.
  
EXHIBITS AND REPORTS ON FORM 8-K
  
 
21
 
SIGNATURES
  
 
  
 
23
 
CERTIFICATIONS
  
 
  
 
24

FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

          Some of the statements contained herein under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Dollar Thrifty Automotive Group, Inc. believes such forward-looking statements are based upon reasonable assumptions, such statements are not guarantees of future performance and certain factors could cause results to differ materially from current expectations. These factors include: price and product competition; economic and competitive conditions in markets and countries where the companies’ customers reside and where the companies and their franchisees operate; air travel patterns; changes in capital availability or cost; costs and other terms related to the acquisition and disposition of automobiles; costs of conducting business and changes in structure or operations; and certain regulatory and environmental matters. Should one or more of these risks or uncertainties, among others, materialize, actual results could vary materially from those estimated, anticipated or projected. Dollar Thrifty Automotive Group, Inc. 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.

 
 
 
 
 
 
 
 
 

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



INDEPENDENT ACCOUNTANTS’ REPORT

To the Board of Directors and Stockholders of
Dollar Thrifty Automotive Group, Inc.:

We have reviewed the accompanying consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and subsidiaries as of March 31, 2003, and the related consolidated statements of income and cash flows for the three-month periods ended March 31, 2003 and 2002. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and subsidiaries as of December 31, 2002, and the related consolidated statements of income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 28, 2003, we expressed an unqualified opinion on those consolidated financial statements.


DELOITTE & TOUCHE LLP

Tulsa, Oklahoma
April 24, 2003

 
 
 
 
 
 
 
 
 
 
 
 
 
 

3

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2003 AND 2002

(In Thousands Except Per Share Data)
                           
              Three Months  
              Ended March 31,  
             
 
              (Unaudited)  
              2003     2002  
             
   
 
REVENUES:
                
 
Vehicle rentals
   $ 198,358     $ 195,533  
 
Vehicle leasing
     37,224       31,798  
 
Fees and services
     13,546       13,093  
 
Other
     1,355       2,333  
             
   
 
       
Total revenues
     250,483       242,757  
             
   
 
 
COSTS AND EXPENSES:
                
 
Direct vehicle and operating
     98,583       87,634  
 
Vehicle depreciation and lease charges, net
     88,830       72,209  
 
Selling, general and administrative
     42,090       42,012  
 
Interest expense, net of interest income
     19,269       19,846  
             
   
 
       
Total costs and expenses
     248,772       221,701  
             
   
 
INCOME BEFORE INCOME TAXES
     1,711       21,056  
 
INCOME TAX EXPENSE
     1,117       8,923  
             
   
 
NET INCOME
   $ 594     $ 12,133  
             
   
 
EARNINGS PER SHARE:
                
 
Basic
   $ 0.02     $ 0.50  
             
   
 
 
Diluted
   $ 0.02     $ 0.49  
             
   
 

See notes to consolidated financial statements.

 
 
 
 
 
 
 
 
 
 

4

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002

(In Thousands Except Share and Per Share Data)
                           
                March 31,       December 31,  
              2003     2002  
             
   
 
              (Unaudited)        
ASSETS:
                
Cash and cash equivalents
   $ 76,080     $ 143,485  
Restricted cash and investments
     419,393       334,849  
Receivables, net
     191,076       249,912  
Prepaid expenses and other assets
     70,627       59,785  
Revenue-earning vehicles, net
     2,004,946       1,994,200  
Property and equipment, net
     92,119       92,181  
Income taxes receivable
     63,698       61,314  
Software, net
     15,060       15,381  
Goodwill, net
     171,904       165,327  
             
   
 
         
 
   $ 3,104,903     $ 3,116,434  
             
   
 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
 
LIABILITIES:
                
Accounts payable
   $ 34,167     $ 53,660  
Accrued liabilities
     155,569       164,847  
Deferred income tax liability
     134,145       134,637  
Public liability and property damage
     43,143       39,506  
Vehicle debt and obligations
     2,238,780       2,224,303  
             
   
 
       
Total liabilities
       2,605,804       2,616,953  
             
   
 
 
                
COMMITMENTS AND CONTINGENCIES
                
 
STOCKHOLDERS’ EQUITY:
                
Preferred stock, $.01 par value:
Authorized 10,000,000 shares; none outstanding
    -       -  
Common stock, $.01 par value:
Authorized 50,000,000 shares; issued and outstanding
24,680,930 and 24,599,890, respectively
     247       246  
Additional capital
     717,836       717,081  
Accumulated deficit
     (190,193 )     (190,787 )
Accumulated other comprehensive loss
     (28,791 )     (27,059 )
             
   
 
       
Total stockholders’ equity
       499,099       499,481  
 
  
   
 
         
 
   $ 3,104,903     $ 3,116,434  
             
   
 

See notes to consolidated financial statements.

 

5

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002

(In Thousands)
                                       
                        Three Months  
                        Ended March 31,  
                       
 
                        (Unauditied)  
                           2003        2002  
                       
   
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                        
 
Net income
         $ 594     $ 12,133  
 
Adjustments to reconcile net income to net cash provided by
operating activities:
                      
   
Depreciation:
                      
     
Vehicle depreciation
                     88,500       74,344  
     
Non-vehicle depreciation
           3,671       3,610  
   
Net gains from disposition of revenue-earning vehicles
           (1,256 )     (4,116 )
   
Amortization
           1,190       1,020  
   
Performance share incentive plan
           35       632  
   
Provision for losses on receivables
           1,449       2,085  
   
Deferred income taxes
           1,024       18,188  
   
Change in assets and liabilities, net of acquisitions:
                      
     
Income taxes payable/receivable
           (2,384 )     7,043  
     
Receivables
           75,721       39,209  
     
Prepaid expenses and other assets
           (6,845 )     (1,510 )
     
Accounts payable and accrued liabilities
           (32,657 )     9,768  
     
Public liability and property damage
           3,637       2,244  
     
Other
           554       (5 )
                     
   
 
     
Net cash provided by operating activities
           133,233       164,645  
                     
   
 
 
                        
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
 
Revenue-earning vehicles:
                      
   
Purchases
           (931,454 )     (1,065,867 )
   
Proceeds from sales
           815,170       661,211  
 
Net change in restricted cash and investments
           (84,544 )     38,242  
 
Property, equipment and software:
                      
   
Purchases
           (4,026 )     (1,330 )
   
Proceeds from sales
           4       -  
 
Acquisition of businesses, net of cash acquired
           (7,069 )     -  
                     
   
 
     
Net cash used in investing activities
           (211,919 )     (367,744 )
                     
   
 
 
                        
 
                        
 
                        
 
                        
 
                        
 
                        
 
 
                   (Continued)  

 

6

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002

(In Thousands)
                                       
                        Three Months  
                        Ended March 31,  
                       
 
                        (Unauditied)  
                        2003     2002  
                       
   
 
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
 
Vehicle debt and obligations:
                      
   
Proceeds
             2,139,034       814,140  
   
Payments
           (2,124,578 )     (576,893 )
 
Issuance of common shares
           721       268  
 
Financing issue costs
           (3,896 )     (1,876 )
                     
   
 
     
Net cash provided by financing activities
           11,281       235,639  
                     
   
 
CHANGE IN CASH AND CASH EQUIVALENTS
             (67,405 )     32,540  
 
                        
CASH AND CASH EQUIVALENTS:
                        
 
Beginning of period
           143,485       37,532  
                     
   
 
 
End of period
         $ 76,080     $ 70,072  
                     
   
 
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
                        
 
Receivables from capital lease of vehicles to franchisees
         $ 18,334     $ 29,950  
                     
   
 
 
Deferred income on capital leases of vehicles to franchisees
         $ -     $ 68