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, 2005
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from______________to______________
Commission file number 1-13647
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
| 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 Exchange Act): Yes x No o
The number of shares outstanding of the registrant’s Common Stock as of April 29, 2005 was 25,143,334.
| Page |
| PART I - FINANCIAL INFORMATION |
| ITEM | 1. FINANCIAL STATEMENTS | 3 |
| ITEM | 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF |
| FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 18 |
| ITEM | 3. QUANTITATIVE AND QUALITATIVE |
| DISCLOSURES ABOUT MARKET RISK | 25 |
| ITEM | 4. CONTROLS AND PROCEDURES | 25 |
| PART II - OTHER INFORMATION |
| ITEM | 1. LEGAL PROCEEDINGS | 26 |
| ITEM | 2. UNREGISTERED SALES OF EQUITY SECURITIES |
| AND USE OF PROCEEDS | 26 |
| ITEM | 6. EXHIBITS | 27 |
| SIGNATURES | 28 |
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; natural hazards or catastrophes; incidents of terrorism; airline travel patterns; changes in capital availability or cost; costs and other terms related to the acquisition and disposition of automobiles; systems or communications failures; costs of conducting business and changes in structure or operations; and certain regulatory and environmental matters and litigation risks. Should one or more of these risks or uncertainties, among others, materialize, actual results could vary 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 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 (the “Company”) as of March 31, 2005, and the related condensed consolidated statements of income and of cash flows for the three-month periods ended March 31, 2005 and 2004. These interim financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). 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 standards of the Public Company Accounting Oversight Board (United States), 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 reviews, 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 standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for the year then ended (not presented herein); and in our report dated March 14, 2005, we expressed an unqualified opinion on those consolidated financial statements, which opinion includes an explanatory paragraph regarding the Company's adoption of Financial Accounting Standards Board Interpretation No. 46(R), Consolidation of Variable Interest Entities. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
Tulsa, Oklahoma
May 6, 2005
3
| Three Months | |||||||||||||
| Ended March 31, | |||||||||||||
| (Unaudited) | |||||||||||||
| 2005 | 2004 | ||||||||||||
REVENUES: |
|||||||||||||
Vehicle rentals |
$ | 312,953 | $ | 265,345 | |||||||||
Vehicle leasing |
14,526 | 17,768 | |||||||||||
Fees and services |
12,276 | 12,134 | |||||||||||
Other |
3,045 | 3,461 | |||||||||||
Total revenues |
342,800 | 298,708 | |||||||||||
COSTS AND EXPENSES: |
|||||||||||||
Direct vehicle and operating |
190,677 | 156,565 | |||||||||||
Vehicle depreciation and lease charges, net |
53,587 | 69,199 | |||||||||||
Selling, general and administrative |
54,855 | 47,547 | |||||||||||
Interest expense, net of interest income |
19,494 | 19,209 | |||||||||||
Total costs and expenses |
318,613 | 292,520 | |||||||||||
INCOME BEFORE INCOME TAXES |
24,187 | 6,188 | |||||||||||
INCOME TAX EXPENSE |
11,212 | 3,431 | |||||||||||
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE |
12,975 |
2,757 |
|||||||||||
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE |
- |
3,730 |
|||||||||||
NET INCOME |
$ | 12,975 | $ | 6,487 | |||||||||
BASIC EARNINGS PER SHARE: |
|||||||||||||
Income before cumulative effect of
a change in accounting principle |
$ | 0.52 | $ | 0.11 | |||||||||
Cumulative effect of a change in accounting
principle |
- | 0.15 | |||||||||||
Net income |
$ | 0.52 | $ | 0.26 | |||||||||
DILUTED EARNINGS PER SHARE: |
|||||||||||||
Income before cumulative effect of a
change in accounting principle |
$ | 0.49 | $ | 0.11 | |||||||||
Cumulative effect of a change in accounting
principle |
- | 0.14 | |||||||||||
Net income |
$ | 0.49 | $ | 0.25 | |||||||||
See notes to condensed consolidated financial statements.
4
| March 31, | December 31, | ||||||||||||
| 2005 | 2004 | ||||||||||||
| (Unaudited) | |||||||||||||
ASSETS: |
|||||||||||||
Cash and cash equivalents |
$ | 183,545 | $ | 204,453 | |||||||||
Restricted cash and investments |
103,437 | 455,215 | |||||||||||
Receivables, net |
174,519 | 194,552 | |||||||||||
Prepaid expenses and other assets |
101,395 | 90,030 | |||||||||||
Revenue-earning vehicles, net |
2,581,285 | 2,267,982 | |||||||||||
Property and equipment, net |
104,880 | 105,335 | |||||||||||
Income taxes receivable |
3,757 | 3,757 | |||||||||||
Software and other intangible assets, net |
22,004 | 20,020 | |||||||||||
Goodwill |
279,914 | 279,907 | |||||||||||
| $ | 3,554,736 | $ | 3,621,251 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||||
LIABILITIES: |
|||||||||||||
Accounts payable |
$ | 49,014 | $ | 63,109 | |||||||||
Accrued liabilities |
149,207 | 163,214 | |||||||||||
Deferred income tax liability |
219,253 | 202,857 | |||||||||||
Public liability and property damage |
92,532 | 88,176 | |||||||||||
Vehicle debt and obligations |
2,416,724 | 2,500,426 | |||||||||||
Total liabilities |
2,926,730 | 3,017,782 | |||||||||||
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; 26,472,668 and 25,910,030 issued, respectively, and 25,228,268 and 25,039,730 outstanding, respectively |
265 | 259 | |||||||||||
Additional capital |
760,666 | 748,261 | |||||||||||
Accumulated deficit |
(107,182 | ) | (120,157 | ) | |||||||||
Accumulated other comprehensive income (loss) |
8,363 | (2,688 | ) | ||||||||||
Treasury stock, at cost (1,244,400 and 870,300 shares, respectively) |
(34,106 | ) | (22,206 | ) | |||||||||
Total stockholders’ equity |
628,006 | 603,469 | |||||||||||
| $ | 3,554,736 | $ | 3,621,251 | ||||||||||
See notes to condensed consolidated financial statements.
5
| Three Months | |||||||||||||||||||
| Ended March 31, | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| 2005 | 2004 | ||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||||||||||||||
Net income |
$ | 12,975 | $ | 6,487 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||||||
Depreciation: |
|||||||||||||||||||
Vehicle depreciation |
67,666 | 68,746 | |||||||||||||||||
Non-vehicle depreciation |
5,034 | 4,040 | |||||||||||||||||
Net gains from disposition of revenue-earning vehicles |
(16,395 | ) | (2,829 | ) | |||||||||||||||
Amortization |
1,386 | 1,405 | |||||||||||||||||
Performance share incentive plan |
555 | 109 | |||||||||||||||||
Net losses from sale of property and equipment |
52 | - | |||||||||||||||||
Provision for losses on receivables |
1,004 | 592 | |||||||||||||||||
Deferred income taxes |
12,126 | 2,543 | |||||||||||||||||
Change in assets and liabilities, net of acquisitions: |
|||||||||||||||||||
Receivables |
20,135 | 23,605 | |||||||||||||||||
Prepaid expenses and other assets |
(9,240 | ) | (11,735 | ) | |||||||||||||||
Accounts payable and accrued liabilities |
(9,587 | ) | (17,218 | ) | |||||||||||||||
Public liability and property damage |
4,356 | 4,104 | |||||||||||||||||
Other |
(131 | ) | (39 | ) | |||||||||||||||
Net cash provided by operating activities |
89,936 | 79,810 | |||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||||||||||||||
Revenue-earning vehicles: |
|||||||||||||||||||
Purchases |
(1,351,803 | ) | (1,067,153 | ) | |||||||||||||||
Proceeds from sales |
986,123 | 936,026 | |||||||||||||||||
Net change in restricted cash and investments |
351,778 | 181,431 | |||||||||||||||||
Property, equipment and software: |
|||||||||||||||||||
Purchases |
(5,844 | ) | (5,003 | ) | |||||||||||||||
Proceeds from sales |
2 | - | |||||||||||||||||
Acquisition of businesses, net of cash acquired |
(2,800 | ) | (3,426 | ) | |||||||||||||||
Net cash provided by (used in) investing activities |
(22,544 | ) | 41,875 | ||||||||||||||||
| (Continued) | |||||||||||||||||||
6
| Three Months | |||||||||||||||||||
| Ended March 31, | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| 2005 | 2004 | ||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||||||||||||||
Vehicle debt and obligations: |
|||||||||||||||||||
Proceeds |
1,094,097 | 2,295,094 | |||||||||||||||||
Payments |
(1,177,799 | ) | (2,415,983 | ) | |||||||||||||||
Issuance of common shares |
8,918 | 5,941 | |||||||||||||||||
Purchase of common stock for the treasury |
(11,900 | ) | (3,802 | ) | |||||||||||||||
Financing issue costs |
(1,616 | ) | (10 | ) | |||||||||||||||
Net cash used in financing activities |
(88,300 | ) | (118,760 | ) | |||||||||||||||
CHANGE IN CASH AND CASH
EQUIVALENTS |
(20,908 | ) | 2,925 | ||||||||||||||||
CASH AND CASH
EQUIVALENTS: |
|||||||||||||||||||