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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 September 30, 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 October 31, 2003 was 24,775,397.

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
  
 
16
 
 
  
ITEM 3.
  
QUANTITATIVE AND QUALITATIVE
  
 
 
 
  
 
  
DISCLOSURES ABOUT MARKET RISK
  
 
24
 
 
  
ITEM 4.
  
CONTROLS AND PROCEDURES
  
 
24
 
PART II  -
  
OTHER INFORMATION
  
 
 
 
 
  
ITEM 1.
  
LEGAL PROCEEDINGS
  
 
25
 
 
  
ITEM 5.
  
OTHER INFORMATION
  
 
25
 
 
  
ITEM 6.
  
EXHIBITS AND REPORTS ON FORM 8-K
  
 
25
 
SIGNATURES
  
 
  
 
27
 

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; airline 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 condensed consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and subsidiaries as of September 30, 2003, and the related condensed consolidated statements of income for the three-month and nine-month periods ended September 30, 2003 and 2002, and the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2003 and 2002. These interim 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 condensed consolidated interim 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.


/s/ DELOITTE & TOUCHE LLP      

Tulsa, Oklahoma
November 10, 2003

 
 
 
 
 
 
 
 
 
 
 
 
 
 

3

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

(In Thousands Except Per Share Data)
                                             
            Three Months     Nine Months  
            Ended September 30,             Ended September 30,  
           
   
 
              (Unaudited)     
            2003   2002     2003   2002  
           
 
   
 
 
REVENUES:
                                  
 
Vehicle rentals
   $ 308,691     $ 268,019       $ 750,762     $ 703,498  
 
Vehicle leasing
     41,863       52,653         120,531       127,960  
 
Fees and services
     15,372       15,408         43,235       43,892  
 
Other
     4,525       1,588         10,505       7,543  
 
  
   
     
   
 
   
Total revenues
     370,451       337,668         925,033       882,893  
 
  
   
     
   
 
COSTS AND EXPENSES:
                                  
 
Direct vehicle and operating
     148,129       122,958         358,897       319,655  
 
Vehicle depreciation and lease charges, net
     110,790       109,821         309,146       274,613  
 
Selling, general and administrative
     51,694       43,803         141,490       134,438  
 
Interest expense, net of interest income
     24,765       27,066         66,542       70,344  
 
  
   
     
   
 
   
Total costs and expenses
     335,378       303,648         876,075       799,050  
 
  
   
     
   
 
INCOME BEFORE INCOME TAXES
     35,073       34,020         48,958       83,843  
 
INCOME TAX EXPENSE
     13,709       12,813         20,671       32,963  
 
  
   
     
   
 
NET INCOME
   $ 21,364     $ 21,207       $ 28,287     $ 50,880  
 
  
   
     
   
 
EARNINGS PER SHARE:
                                  
 
Basic
   $ 0.87     $ 0.87       $ 1.16     $ 2.10  
 
  
   
     
   
 
 
Diluted
   $ 0.84     $ 0.85       $ 1.12     $ 2.05  
 
  
   
     
   
 

See notes to condensed consolidated financial statements.

 
 
 
 
 
 
 
 
 
 
 
 

4

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

(In Thousands Except Share and Per Share Data)
                           
               September 30,       December 31,   
              2003     2002  
             
   
 
              (Unaudited)        
ASSETS:
                
Cash and cash equivalents
   $    141,801     $ 143,485  
Restricted cash and investments
     410,614       334,849  
Receivables, net
     188,825       249,912  
Prepaid expenses and other assets
     73,058       59,785  
Revenue-earning vehicles, net
     2,387,937       1,994,200  
Property and equipment, net
     93,563       92,181  
Income taxes receivable
     39,266       61,314  
Software and other intangible assets, net
     14,287       15,381  
Goodwill
     196,814       165,327  
             
   
 
         
 
   $ 3,546,165     $ 3,116,434  
             
   
 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
 
LIABILITIES:
                
Accounts payable
   $ 39,884     $ 53,660  
Accrued liabilities
     184,694       164,847  
Deferred income tax liability
     154,705       134,637  
Public liability and property damage
     53,153       39,506  
Vehicle debt and obligations
     2,581,977       2,224,303  
             
   
 
       
Total liabilities
       3,014,413       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;
24,780,319 and 24,599,890 issued, respectively, and
24,698,119 and 24,599,890 outstanding, respectively
     248       246  
Additional capital
     721,887       717,081  
Accumulated deficit
     (162,500 )     (190,787 )
Accumulated other comprehensive loss
     (25,940 )     (27,059 )
Treasury stock, at cost (82,200 shares)
     (1,943 )     -  
             
   
 
       
Total stockholders’ equity
       531,752       499,481  
 
  
   
 
         
 
   $ 3,546,165     $ 3,116,434  
             
   
 

See notes to condensed consolidated financial statements.

5

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

(In Thousands)
                                       
                        Nine Months  
                        Ended September 30,  
                       
 
                        (Unaudited)  
                        2003     2002  
                       
   
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                        
 
Net income
         $           28,287     $ 50,880  
 
Adjustments to reconcile net income to net cash provided by
operating activities:
                      
   
Depreciation:
                      
     
Vehicle depreciation
           301,522       279,016  
     
Non-vehicle depreciation
           11,231       10,843  
   
Net (gains)/losses from disposition of revenue-earning vehicles
           2,693       (10,386 )
   
Amortization
           3,994       3,305  
   
Performance share incentive plan
           2,413       1,931  
   
Net losses from sale of property and equipment
           91       132  
   
Provision for losses on receivables
           4,677       6,391  
   
Deferred income taxes
           20,462       120,494  
   
Change in assets and liabilities, net of acquisitions:
                      
     
Income taxes payable/receivable
           22,048       (45,529 )
     
Receivables
           94,948       67,684  
     
Prepaid expenses and other assets
           (7,716 )     3,259  
     
Accounts payable and accrued liabilities
           2,735       52,550  
     
Public liability and property damage
           13,647       14,550  
     
Other
           836       64  
                     
   
 
     
Net cash provided by operating activities
           501,868       555,184  
                     
   
 
 
                        
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
 
Revenue-earning vehicles:
                      
   
Purchases
           (2,762,386 )     (2,725,625 )
   
Proceeds from sales
           2,049,171       1,688,062  
 
Net change in restricted cash and investments
           (75,765 )     (306,898 )
 
Property, equipment and software:
                      
   
Purchases
           (12,694 )     (4,235 )
   
Proceeds from sales
           34       35  
 
Acquisition of businesses, net of cash acquired
           (29,553 )     (38 )
                     
   
 
     
Net cash used in investing activities
           (831,193 )     (1,348,699 )
                     
   
 
 
                        
 
                        
 
                        
 
                        
 
                        
 
                        
 
 
                   (Continued)  

 

6

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

(In Thousands)
                                       
                        Nine Months  
                        Ended September 30,  
                       
 
                        (Unaudited)  
                        2003     2002  
                       
   
 
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
 
Vehicle debt and obligations:
                      
   
Proceeds
             4,075,539       5,668,265