UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A


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


		For the fiscal year ended December 31, 2002


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.

(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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class: Common Stock, $.01 par value		Name of each exchange on which registered: New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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: Yesx Noo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act): Yesx Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2002, the last business day of the registrant's most recently completed second fiscal quarter was $537,851,210.

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of February 28, 2003 was $401,881,714.

The number of shares outstanding of the registrant’s Common Stock as of February 28, 2003 was 24,671,895.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 29, 2003, are incorporated by reference in Part III.

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DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

FORM 10-K/A

TABLE OF CONTENTS




PART II

ITEM 6.	SELECTED FINANCIAL DATA	4

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	6

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	19

PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K	51

SIGNATURES		52

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 our companies’ customers reside and where our 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 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.

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EXPLANATORY NOTE

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company is filing an amendment on Form 10-K/A in response to comments received from the Staff of the Securities and Exchange Commission regarding our Annual Report on Form 10-K for the fiscal year ended December 31, 2002 that was originally filed on March 18, 2003 (the “Annual Report”).

The specific items amended in the Annual Report are Items 6, 7, 7A and 8 of Part II and Item 15 of Part IV. The changes to Items 6, 7, 7A and 8 delete system-wide vehicle rental revenue from Selected Financial Data, provide additional information in Management’s Discussion and Analysis of Financial Condition and Results of Operations, revise disclosures related to interest rate swaps in the Quantitative and Qualitative Disclosures about Market Risk and provide additional disclosures in the footnotes to the Consolidated Financial Statements. The Exhibit Index in Item 15 is amended to reflect the inclusion of updated certifications of certain executive officers and consent letter from Deloitte & Touche LLP. Please note that we are not restating our financial statements included in the Annual Report.

This Form 10-K/A does not reflect events occurring subsequent to the filing of the original Form 10-K.

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ITEM 6. SELECTED FINANCIAL DATA

Selected Consolidated Financial Data of the Company

The selected consolidated financial data was derived from the audited consolidated financial statements of the Company.


			Years Ended December 31,

			2002		2001		2000		1999		1998

Statements of Operations:
	(In thousands except per share amounts)

Revenues:
	Vehicle rentals		$	897,384	$	821,834	$	844,668	$	736,845	$	654,739
	Vehicle leasing			168,792		162,204		198,686		218,614		202,371
	Fees and services			56,237		56,057		61,166		57,046		51,770
	Other			10,781		10,075		9,850		8,685		9,225

		Total revenues		1,133,194		1,050,170		1,114,370		1,021,190		918,105

Costs and expenses:
	Direct vehicle and operating			403,946		389,917		346,091		311,567		286,643
	Vehicle depreciation and lease charges, net			380,760		365,894		340,448		311,113		305,169
	Selling, general and administrative			177,562		169,599		187,711		190,994		163,256
	Interest expense, net			93,427		92,365		97,703		95,114		88,726
	Amortization of goodwill			-		6,178		5,941		5,842		5,417

		Total costs and expenses		1,055,695		1,023,953		977,894		914,630		849,211

Income before income taxes				77,499		26,217		136,476		106,560		68,894

Income tax expense				30,668		12,380		58,467		46,974		31,229

Net income			$	46,831	$	13,837	$	78,009	$	59,586	$	37,665

Earnings per share:
	Basic		$	1.93	$	0.57	$	3.23	$	2.47	$	1.56
	Diluted		$	1.88	$	0.57	$	3.18	$	2.43	$	1.56

Balance Sheet Data:
	(In thousands)

Revenue-earning vehicles, net			$	1,994,200	$	1,525,553	$	1,522,388	$	1,507,692	$	1,342,066
Total assets			$	3,116,434	$	2,163,692	$	2,100,374	$	2,171,653	$	1,865,300
Total debt			$	2,224,303	$	1,516,733	$	1,424,021	$	1,555,609	$	1,313,799
Stockholders' equity			$	499,481	$	463,321	$	458,139	$	379,127	$	315,914

Note: Certain reclassifications have been made to the 1998 - 2001 financial data to conform to the classifications used in 2002.

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U. S. and Canada


			Years Ended December 31,

			2002		2001		2000		1999		1998

System-wide Data:

Rental locations:

	Company-owned stores			224		193		182		149		139
	Franchisee locations			579		676		765		824		763

		Total rental locations		803		869		947		973		902


Average number of vehicles operated during the period by company- owned stores and franchisees				128,968		130,252		134,475		123,814		111,652

Peak number of vehicles operated during the period by company- owned stores and franchisees				158,758		159,993		162,515		148,832		134,407

Company-owned Stores Data:

Vehicle rental data:
Average number of vehicles operated				69,272		68,696		65,702		59,218		53,983
Number of rental days				21,056,362		20,640,229		20,347,296		18,155,768		16,374,491
Average revenue per day			$	42.62	$	39.82	$	41.52	$	40.58	$	39.99
Monthly average revenue per vehicle			$	1,080	$	997	$	1,071	$	1,037	$	1,011

Vehicle leasing data:
Average number of vehicles leased				30,917		30,087		35,520		38,690		37,709
Average monthly lease revenue per unit			$	455	$	449	$	466	$	471	$	447

Note: Certain reclassifications have been made to the 1998 - 2001 financial and operating data to conform to the classifications used in 2002.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
	RESULTS OF OPERATIONS

General

The Company owns two separate vehicle rental companies, Dollar and Thrifty. They engage in the business of renting vehicles directly to retail and tour customers and providing vehicle leasing and other services to franchisees that rent to customers. The majority of Dollar’s revenue is derived from renting vehicles to customers from company-owned stores, while the majority of Thrifty’s revenue is generated from leasing vehicles and providing services to franchisees.

The Company’s revenues consist of:


	•	Vehicle rentals consists of revenue generated from renting vehicles to customers, including all related charges, through company-owned stores and is recognized as earned on a daily basis under the related rental contracts with customers.


	•	Vehicle leasing consists of revenue generated from leasing vehicles to franchisees, principally under operating leases with fixed monthly payments and is recognized as earned over the lease terms.


	•	Fees and services includes revenue generated from continuing franchise fees and providing reservations, insurance, supplies and other products and services to franchisees and is recognized as earned on a monthly basis.


	•	Other includes revenue generated from franchise sales, parking income, non-vehicle lease income and interest income derived from franchisees and is recognized as earned on a daily or monthly basis, except initial franchise fees, which are recognized upon substantial completion of all material services and conditions of the franchise sale and which coincides with the date of sale and commencement of operations by the franchisee.

The Company’s expenses consist of:


	•	Direct vehicle and operating includes costs related to the rental of revenue-earning vehicles to customers and to the leasing of vehicles to franchisees, such as field personnel expenses, facility expenses, concessions and commissions paid to airport authorities, travel agencies and others, insurance and lease promotion expenses, net of certain incentives received from vehicle manufacturers.


	•	Vehicle depreciation and lease charges, net includes depreciation expense relating to revenue-earning vehicles, net of gains and losses on the disposal of such vehicles, and lease charges for vehicles leased from third parties.


	•	Selling, general and administrative includes expenses including headquarters personnel expenses, advertising and marketing expenses and reservation expenses.


	•	Interest expense, net includes interest expense, net of interest earned on restricted cash, cash and cash equivalents, relating primarily to revenue-earning vehicle financing.


	•	Amortization of goodwill, which as of January 1, 2002, is no longer recorded in order to comply with Statement of Financial Accounting Standards (“SFAS”) No. 142.

The Company’s profitability is primarily a function of the volume and pricing of rental transactions, utilization of the vehicles and the number of vehicles leased to franchisees. Significant changes in the purchase or disposal price of vehicles or interest rates can also have a significant effect on the Company’s profitability, depending on the ability of the Company to adjust pricing and lease rates for these changes. The Company’s business requires significant expenditures for vehicles and consequently, requires substantial liquidity to finance such expenditures.

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In December 2002, the Company announced a new corporate structure which became effective on January 1, 2003. This new structure realigns the Company from a brand structure to a functional structure, combining the management of operations and administrative functions for both Dollar and Thrifty brands. This new structure will facilitate additional cost savings and synergies between the two brands and provide a platform for cost avoidance going forward. During 2002, the Company recognized $0.8 million in severance costs for employees affected by the planned discontinued activities and $1.9 million to write-off obsolete software as a result of implementing the new corporate structure. Management believes that any additional costs to be incurred in 2003 relating to this new corporate structure will be primarily offset by cost savings and therefore is not anticipating any significant cash requirements for the new corporate structure.

The Company is also pursuing an opportunity for internal growth by acquiring certain franchisee locations, generally in the 75 largest volume airports in the U.S. and Canada, or locations where the Company already operates one of its brands corporately and it believes synergies could be achieved by having both brands represented. When the Company acquires a franchised location, certain revenues and expenses are impacted in the consolidated statements of income. The Company will reflect higher vehicle rental revenue and generally a reduction in fees and services revenue and vehicle leasing revenue, which is dependent on the extent to which the acquired franchisee leased vehicles from the Company through its leasing program. The Company will also experience increased direct vehicle and operating expenses and selling, general and administrative expenses. Vehicle depreciation and lease charges, net and interest expense, net, will increase to the extent the Company adds revenue-earning vehicles to the fleet.

As with most companies, the Company must exercise judgment in estimating certain costs included in its results of operations. The more significant items include:

Public liability and property damage – The Company may self-insure or retain a portion of the exposure for losses related to public liability and property damage insurance. The obligation for public liability and property damage represents an estimate of both reported accident claims not yet paid and claims incurred but not yet reported, up to the Company's risk retention level. The Company records public liability and property damage expense on a monthly basis based on rental volume in relation to historical accident claim experience and trends, projections of ultimate losses, expenses, premiums and administrative costs. Management monitors the adequacy of the liability and monthly accrual rates based on the services of an independent third party actuary and internal analysis of the development of the claim reserves, the accident claim history and rental volume. Since the ultimate disposition of the claims is uncertain, the likelihood of materially different results is possible, but the potential volatility of these estimates is reduced due to the frequency of internal reviews and reviews by the third party actuary and significant historical data available for similar claims.

Vehicle depreciation expense – The Company generally purchases 75% to 80% of its vehicles as Program Vehicles for which residual values are determined by depreciation rates that are established and guaranteed by the manufacturers. The remaining 20% to 25% of the Company’s vehicles are purchased without the benefit of a manufacturer residual value guaranty program. For these Non-Program Vehicles, the Company must estimate what the residual values of these vehicles will be at the expected time of disposal to determine monthly depreciation rates by reviewing the projected market value for the vehicles at expected date of disposition and the overall outlook for the used car market. The Company continually evaluates estimated residual values. Differences between actual residual values and those estimated by the Company result in a gain or loss on disposal and are recorded as an adjustment to depreciation expense. The average life of the Non-Program Vehicles is 8 to 10 months and the Company has generally experienced gains on disposal. However, recent declines in used car market prices have resulted in a corresponding decline in these gains. Many factors affect the market value of used cars including increasing use of incentives and zero-percent financing by automobile manufacturers for new vehicles and overall economic conditions. The likelihood that the Company’s estimates could materially change is possible due to the volatility of the used car market.

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Bad debt expense – The Company maintains an allowance for doubtful accounts and charges bad debt expense for estimated losses resulting from the inability of franchisees to make required payments. Management reviews monthly the individual accounts of franchisees with past due balances to determine the likelihood of collectibility and the amount of bad debt expense, if any, required for a particular franchisee. Factors considered include the aging and magnitude of past due amounts, the franchisees’ operating and credit history, market conditions, operating plan and available collateral. The Company records a reserve for the potential amounts owed by its franchisees that will not be collected when the amount of the loss is probable and can be reasonably estimated. Accounts are typically charged off at the point the Company reaches settlement or no longer pursues collection. The likelihood that results may materially differ from amounts estimated is possible due to circumstances outside the franchisees’ or the Company’s control with respect to economic, industry or other external conditions.

The following discussion and analysis provides information that management believes to be relevant to understanding the Company’s consolidated financial condition and results of operations. This discussion should be read in conjunction with the Company’s consolidated financial statements and the related notes thereto included in this report.

Results of Operations

The following table sets forth the percentage of total revenues in the Company’s consolidated statements of income:


			Years Ended December 31,

			2002			2001			2000

Revenues:
	Vehicle rentals			79.2	%		78.3	%		75.8	%
	Vehicle leasing			14.9			15.4			17.8
	Fees and services			5.0			5.3			5.5
	Other			0.9			1.0			0.9

		Total revenues		100.0			100.0			100.0


Costs and expenses:
	Direct vehicle and operating			35.6			37.1			31.1
	Vehicle depreciation and lease charges, net			33.6			34.8			30.6
	Selling, general and administrative			15.7			16.2			16.8
	Interest expense, net			8.3			8.8			8.8
	Amortization of goodwill			-			0.6			0.5

		Total costs and expenses		93.2			97.5			87.8

Income before income taxes				6.8			2.5			12.2

Income tax expense				2.7			1.2			5.2

Net income				4.1	%		1.3	%		7.0	%

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The following table sets forth a breakdown of the Company’s two major sources of revenue:


			Years Ended December 31,

			2002		2001		2000

					(in thousands)
Vehicle rental revenue:
	Dollar		$	780,760	$	756,644	$	802,270
	Thrifty			116,624		65,190		42,398

		Total	$	897,384	$	821,834	$	844,668


Leasing revenue:
	Dollar		$	11,094	$	19,036	$	25,014
	Thrifty			157,698		143,168		173,672

		Total	$	168,792	$	162,204	$	198,686

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

Airline traffic continued to decline in 2002 from the already depressed levels of 2001. Dollar, consistent with the rental car industry, responded by reducing fleet capacity to match lower levels of demand. This reduced capacity allowed for increased industry pricing of approximately 6% to 8% in 2002 over 2001 levels. Additionally, Thrifty continued to transition franchised operations to corporate operations, thus, growing its company-owned store base and associated revenues and profits.

Revenues

Total revenues for the year ended December 31, 2002 increased $83.0 million, or 7.9%, to $1.133 billion compared to $1.050 billion in 2001. The increase in total revenues was due primarily to increases in rental revenue of 9.2% and leasing revenue of 4.1%.

The Company’s vehicle rental revenue for 2002 was $897.4 million, a 9.2% increase from 2001. This increase was due primarily to a $51.4 million increase at Thrifty and a $24.1 million increase at Dollar. The rental revenue growth at Thrifty was the result of a shift of several locations from franchised operations to corporate operations totaling $50.0 million with the remaining $1.4 million attributable to growth in existing corporate stores. The increase in vehicle rental revenue at Dollar was the result of a 7.5% increase in revenue per day totaling $54.6 million, partially offset by a 4.0% decrease in rental days totaling $30.5 million.

Vehicle leasing revenue for 2002 was $168.8 million, a 4.1% increase from 2001. This increase in vehicle leasing revenue reflects an increase of $14.5 million in Thrifty’s leasing revenue and a decrease of $7.9 million in Dollar’s leasing revenue. The overall increase was primarily due to strong growth in Thrifty franchisee leasing volume totaling $31.9 million partially offset by the impact of shifting several locations from franchised operations to corporate operations at both Dollar and Thrifty, which totaled $22.7 million and by a decline of $2.6 million caused by other changes in rate and volume.

Fees and services revenue increased 0.3% to $56.2 million compared to 2001, primarily due to an increase of $3.8 million at Thrifty offset by a decrease of $3.7 million at Dollar.

Expenses

Total expenses increased 3.1% from $1.024 billion in 2001 to $1.056 billion in 2002. This increase was due primarily to a $52.2 million, or 20.5% increase for Thrifty partially offset by a $20.4 million, or 2.6% decrease at Dollar. Total expenses as a percentage of revenue decreased to 93.2% in 2002 from 97.5% in 2001.

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Direct vehicle and operating expenses for 2002 increased $14.0 million, or 3.6%, comprised of a $13.7 million increase at Thrifty and a $0.3 million increase at Dollar. The increase was due to higher costs associated with operating additional corporate stores, costs associated with higher depreciable fleet and transaction levels and higher insurance costs. During 2002, the Company experienced significant increases in quoted market premiums for renewal of its third party insurance coverage resulting from general insurance and industry trends. The Company determined it to be more cost effective to increase its retention of risk of loss for public liability and property damage claims in various amounts up to $1 million per occurrence. This resulted in an increase in self insurance costs of $29.7 million. In addition, insurance premiums correspondingly decreased by $17.9 million due to the Company no longer acquiring third party insurance coverage on claims up to $1 million per occurrence. The Company will continue to evaluate the cost of insurance against retained risk when renewing its various insurance coverages. Bad debt expenses were lower by $13.5 million in 2002 versus 2001 due to improved financial performance of franchisees as a result of improved industry pricing in 2002 and the negative impact of the terrorist attacks on the collectibility of franchisee receivables in 2001, resulting in higher bad debt expense. Other costs associated with the operation of additional corporate stores and higher depreciable fleet and transaction levels increased by $15.7 million. Direct vehicle and operating expenses were 35.6% of revenue for 2002, compared to 37.1% of revenue for 2001.

Net vehicle depreciation expense and lease charges for 2002 increased $14.9 million, or 4.1%, from 2001 consisting of a $28.3 million increase at Thrifty and a $13.4 million decrease at Dollar. Net vehicle depreciation expense increased $24.1 million, or 6.7%, due to a 4.9% increase in depreciable fleet and a 1.7% increase in the average depreciation rate at both Dollar and Thrifty. The disposition of Non-Program Vehicles resulted in a net vehicle gain of $10.2 million in 2002 and $13.8 million in 2001. Lease charges for vehicles leased from third parties decreased $12.8 million primarily due to fewer vehicles leased during 2002. Net vehicle depreciation and lease charges were 33.6% of revenue for 2002, compared to 34.8% of revenue for 2001.

Selling, general and administrative expenses of $177.6 million for 2002 increased from $169.6 million in 2001, comprised primarily of a $6.9 million increase at Thrifty and a $0.6 million increase at Dollar. The higher selling, general and administrative costs were related to bonus and profit sharing expenses in 2002 totaling $10.1 million that were not incurred in 2001 due to weak economic conditions and the impact of September 11. The Company also incurred higher costs of $5.1 million attributable to performance share, deferred compensation and 401(k) plans which were offset by lower salary expense due to employee reductions at corporate headquarters in late 2001. In addition, costs associated with the implementation of the new corporate structure in 2002 include a $1.9 million write-off of software costs that were obsolete as a result of implementing the new corporate structure, severance costs for personnel affected by the announced terminations totaling $0.8 million, expenses incurred for communication with franchisees and corporate operations and training for employees relating to realignment of responsibilities. The increased costs discussed above were offset by overall reductions in various selling, general and administrative categories that individually were not significant totaling $4.8 million. Selling, general and administrative expenses were 15.7% of revenue for 2002, compared to 16.2% of revenue for 2001.

Net interest expense increased $1.1 million, or 1.1%, to $93.4 million in 2002 primarily due to higher average vehicle debt, partially offset by lower interest rates. Net interest expense was 8.3% of revenue for 2002, compared to 8.8% of revenue for 2001.

The tax provision for 2002 was $30.7 million. The effective tax rate of 39.6% for 2002 was lower than the 47.2% in 2001. The decrease in the effective tax rate was due primarily to the change in the relationship between permanent differences, including goodwill amortization, and Canadian operations to income before income taxes. The effective tax rate for 2002 differs from the U.S. statutory tax rate due primarily to state and local taxes.

Operating Results

The Company had income before income taxes of $77.5 million for 2002 as compared to $26.2 million in 2001. This increase was primarily due to a $34.1 million increase at Dollar and a $16.6 million increase at Thrifty.

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Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

The Company’s operating results were negatively impacted in 2001 by the slowing U.S. economy, weaker rental car pricing and the dramatic impact on travel in the aftermath of the September 11 terrorist attacks. In addition to the decline in revenue caused by decreased volume and pricing, the Company experienced lower vehicle utilization, higher bad debt expenses associated with its franchisees, and incurred other expenses associated with right-sizing its cost structure, particularly following September 11, which included severance costs associated with employee reductions and increased costs related to accelerated vehicle returns associated with matching fleet levels to reduced demand.

Revenues

Total revenues for the year ended December 31, 2001 decreased $64.2 million, or 5.8%, to $1.050 billion compared to $1.114 billion in 2000. The decline in total revenues was due to decreases in leasing revenue of 18.4%, fees and services revenue of 8.4% and rental revenue of 2.7%.

The Company’s vehicle rental revenue for 2001 was $821.8 million, a 2.7% decrease from 2000. This decrease was due primarily to a $45.6 million decrease at Dollar, partially offset by a $22.8 million increase at Thrifty. The decline in vehicle rental revenue at Dollar was the result of a 1.5% decrease in rental days totaling $12.1 million combined with a 4.2% decrease in revenue per day totaling $33.5 million. The rental revenue growth at Thrifty was the result of a shift of several locations from franchised operations to corporate operations.

Vehicle leasing revenue for 2001 was $162.2 million, an 18.4% decrease from 2000. This decrease in vehicle leasing revenue reflects a decrease of $30.5 million, or 17.6%, in Thrifty’s leasing revenue and a decrease of $6.0 million, or 23.9% in Dollar’s leasing revenue. This decrease was primarily due to a 15.3% decline in the average lease fleet, reducing revenue by $30.4 million, combined with a 3.6% decline in the average lease rate reducing revenue by $6.1 million. The decline in the average lease fleet includes the impact of shifting locations from franchised to corporate operations resulting in $15.1 million lower revenue and to a shift of vehicles provided to certain franchisees under capital leases which resulted in $6.0 million lower revenue.

Fees and services revenue decreased 8.4% to $56.1 million compared to 2000, primarily due to the shift of locations from franchised operations to corporate operations.

Expenses

Total expenses increased 4.7% from $977.9 million in 2000 to $1.024 billion in 2001. This increase was due primarily to a $19.8 million, or 2.6% increase for Dollar and a $26.7 million, or 11.7% increase at Thrifty. Total expenses as a percentage of revenue rose to 97.5% in 2001 from 87.8% in 2000.

Direct vehicle and operating expenses for 2001 increased $43.8 million, or 12.7%, comprised of a $18.8 million increase at Dollar and a $25.0 million increase at Thrifty. The increase at Dollar was due to an increase of $12.3 million in insurance costs, including a $6.3 million increase in premiums and the effects of a favorable adjustment to insurance reserves recorded in 2000 for $5.1 million. The favorable adjustment was due to improved claims experience in the settlement of existing claims as reflected in an independent actuary’s reserve estimate. The remaining $6.5 million increase at Dollar resulted primarily from vehicle-related expenses, including costs related to accelerated vehicle returns in right-sizing the cost structure, and to costs associated with operating additional corporate stores. At Thrifty, bad debt expense increased $10.6 million due to a slowing U.S. economy, weaker rental car pricing and the dramatic impact on travel in the aftermath of the September 11 terrorist attacks. The remaining $14.4 million was due primarily to higher costs related to the operation of additional corporate stores that were previously operated by franchisees. Direct vehicle and operating expenses were 37.1% of revenue for 2001, compared to 31.1% of revenue for 2000.

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Net vehicle depreciation expense and lease charges for 2001 increased $25.4 million, or 7.5%, from 2000 consisting of a $21.8 million increase at Dollar and a $3.6 million increase at Thrifty. Net vehicle depreciation expense increased $20.7 million, or 6.1%, due to a 7.6% increase in the average depreciation rate at both Dollar and Thrifty, partially offset by a 1.4% decrease in depreciable fleet. The disposition of Non-Program Vehicles resulted in net vehicle gains of $13.8 million in 2001 and $26.1 million in 2000. Lease charges for vehicles leased from third parties decreased $7.6 million due to fewer vehicles leased during 2001. Net vehicle depreciation and lease charges were 34.8% of revenue for 2001, compared to 30.6% of revenue for 2000.

Selling, general and administrative expenses of $169.6 million for 2001 decreased from $187.7 million in 2000, comprised primarily of a $17.5 million decrease at Dollar and a $0.1 million decrease at Thrifty. The lower costs were due to lower personnel related costs totaling $10.7 million, including a reduction of $11.0 million for expenses relating to bonus and profit sharing, deferred compensation and performance share plans, partially offset by $2.5 million in severance costs incurred by the Company in 2001 associated with reductions of headquarters personnel following September 11. In addition the Company had lower sales and marketing costs of $6.5 million and lower other administrative costs in 2001 totaling $0.9 million. Selling, general and administrative expenses were 16.2% of revenue for 2001, compared to 16.8 % of revenue for 2000.

Net interest expense decreased $5.3 million, or 5.5% to $92.4 million in 2001 primarily due to lower interest rates, partially offset by higher average vehicle debt. Net interest expense was 8.8% of revenue for 2001 and 2000.

The tax provision for 2001 was $12.4 million. The effective tax rate of 47.2% for 2001 was higher than the 42.8% in 2000. The increase in the effective tax rate was due primarily to the change in the relationship between permanent differences and Canadian operations to income before income taxes. The effective tax rate differs from the U.S. statutory tax rate due primarily to non-deductible goodwill amortization and state and local taxes.

Operating Results

The Company had income before income taxes of $26.2 million for 2001 as compared to $136.5 million in 2000. This decline was due to a $77.0 million decrease at Dollar and a $33.3 million decrease at Thrifty.

Liquidity and Capital Resources

The Company’s primary uses of liquidity are for the purchase of vehicles for its rental and leasing fleets, non-vehicle capital expenditures, franchisee acquisitions and for working capital. The Company also uses letters of credit or insurance bonds to secure certain commitments related to airport concession agreements, insurance programs, and for other purposes.

The Company’s primary sources of liquidity are cash generated from operations, secured vehicle financing, the Revolving Credit Facility and insurance bonds. Cash generated by operating activities of $624.0 million for 2002 is primarily the result of net income, adjusted for depreciation and favorable tax programs (discussed below), which provided the Company tax refunds in 2002 as well as deferral of tax payments on 2002 earnings to future years. The liquidity necessary for purchasing vehicles is primarily obtained from secured vehicle financing, most of which is asset backed notes, sales proceeds from disposal of used vehicles and cash generated by operating activities. The asset backed notes require varying levels of credit enhancement or overcollateralization, which is provided by a combination of cash, vehicles and letters of credit. These letters of credit are provided under the Company’s Revolving Credit Facility.

-12-

The Company believes that its cash generated from operations, availability under its Revolving Credit Facility, insurance bonding programs and secured vehicle financing programs are adequate to meet its liquidity requirements for the foreseeable future.A portion of the secured vehicle financing is supported by 364-day bank facilities, which are renewable annually. These facilities were renewed in December 2002 and February 2003. A significant portion of the secured vehicle financing consists of asset backed notes, which have varying maturities through 2006. The Company generally issues additional notes each year to replace maturing notes and provide for growth in its fleet. The Company believes the asset backed note market continues to be a viable source of vehicle financing and expects to issue approximately $375 million in additional notes during 2003, partially to replace maturing notes of $273 million. The Company has experienced increases during the last year in the level of credit enhancement or additional collateral required for new asset backed notes, the Conduit Facility and the Commercial Paper Program. These increased requirements have reduced liquidity available for other corporate purposes. The Company believes it has sufficient resources to meet these requirements.

Cash used in investing activities was $1.2 billion. The principal use of cash in investing activities was the purchase of revenue-earning vehicles, which totaled $3.4 billion ($1.9 billion at Dollar and $1.5 billion at Thrifty), which was partially offset by $2.5 billion ($1.5 billion at Dollar and $1.0 billion at Thrifty) in proceeds from the sale of used revenue-earning vehicles. The Company’s need for cash to finance vehicles is highly seasonal and typically peaks in the second and third quarters of the year when fleet levels build to meet seasonal rental demand. Fleet levels are the lowest in the fourth quarter when rental demand is at a seasonal low. The Company expects to continue to fund its revenue-earning vehicles with cash provided from operations and increased secured vehicle financing. The Company also used cash for non-vehicle capital expenditures of $11.4 million. These expenditures consist primarily of airport facility improvements for the Company’s rental locations and investments in information technology equipment and systems. The Company estimates non-vehicle capital expenditures to be approximately $35 million in 2003. In addition, the Company will pursue the acquisition of certain franchisee operations, subject to Revolving Credit Facility restrictions. The Company evaluates franchise operations which it is interested in operating corporately. These operations generally relate to locations in the 75 largest volume airports in the U.S. and Canada or locations where the Company already operates one of its brands corporately and it believes synergies could be achieved by having both brands represented. Future franchisee acquisition expenditures are expected to be financed with cash provided from operations.

Cash received in financing activities was $707.5 million primarily due to the issuance of $350 million in asset backed notes in June 2002, the issuance of $250 million under the asset backed Variable Funding Note Purchase Facility (“the Conduit Facility”) and an increase in the net daily issuance of commercial paper totaling approximately $180 million, partially reduced by the maturity of asset backed notes totaling $170 million.

In March of 2002, Congress passed the Job Creation and Worker Assistance Act of 2002 (“the Act”), which includes a provision allowing bonus depreciation on certain depreciable assets acquired after September 10, 2001 and before September 11, 2004, which significantly increases the amount of tax basis depreciation that can be claimed on the Company’s tax return. Also, during 2002, the Company utilized a like-kind exchange program for its vehicles whereby tax basis gains on disposal of eligible revenue-earning vehicles are deferred (the “Like-Kind Exchange Program”). To qualify for Like-Kind Exchange Program treatment, the Company exchanges (through a qualified intermediary) vehicles being disposed of with vehicles being purchased allowing the Company to carry-over the tax basis of vehicles sold to replacement vehicles, with certain adjustments.

The Company estimates the Act will effectively eliminate the payment of cash income taxes through 2004 and will allow it to carry back these benefits to obtain refunds of taxes paid in prior years, of which approximately $43.2 million was received in 2002. The Act improves the Company’s liquidity position by increasing cash and cash equivalents due to significantly reduced cash required for tax payments and from refunds of taxes paid in prior years. The Company estimates the Like-Kind Exchange Program will extend the period in which it will not pay cash income taxes beyond 2004, when the bonus depreciation provision included in the Act expire. The Like-Kind Exchange Program will also significantly increase the amount of cash and investments restricted for the purchase of replacement vehicles, especially during seasonally reduced fleet periods. During seasonally low fleet periods, the Company will carry higher restricted cash balances and maintain higher debt as compared to prior periods as a result of utilizing the Like-Kind Exchange Program. At December 31, 2002, restricted cash and investments totaled $334.8 million, increasing $286.8 million for the year ended December 31, 2002. Restricted cash and investments are restricted for the acquisition of revenue-earning vehicles and other specified uses as defined under the asset backed note program, the Canadian fleet securitization partnership program and the Like-Kind Exchange Program.

-13-

The Company has various commitments primarily related to long-term debt, commercial paper and short-term borrowings outstanding for vehicle purchases, airport concession fee and operating lease commitments related to airport and other facilities, and vehicle purchases. The Company expects to fund these commitments with cash generated from operations, sales proceeds from disposal of used vehicles and continuation of asset backed note issuances as existing notes mature. The following table provides details regarding the Company’s contractual cash obligations and other commercial commitments subsequent to December 31, 2002:


			Payments due or commitment expiration by period

			(In thousands)
			Total		2003		2004		2005		2006		2007		Beyond 5 Years
Contractual cash obligations:
	Long-term debt (1)		$	1,379,614	$	273,364	$	269,036	$	603,881	$	233,333	$	-	$	-
	Commercial paper outstanding (1)			308,634		308,634		-		-		-		-		-
	Other short-term borrowings (1)			536,790		536,790		-		-		-		-		-

		Subtotal - Vehicle debt and obligations		2,225,038		1,118,788		269,036		603,881		233,333		-		-

	Operating lease commitments			115,055		22,096		17,224		13,912		11,070		9,875		40,878
	Airport concession fee commitments			182,650		35,789		27,407		24,953		20,186		17,102		57,213
	Vehicle purchase commitments			710,419		710,419		-		-		-		-		-

		Total contractual cash obligations	$	3,233,162	$	1,887,092	$	313,667	$	642,746	$	264,589	$	26,977	$	98,091

Other commercial commitments:
		Letters of credit	$	171,189	$	107,189	$	27,375	$	36,625	$	-	$	-	$	-

(1) Further discussion of long - term debt, commercial paper outstanding and short - term borrowings is described below and in Note 9 of the Notes to Consolidated Financial Statements. Amounts exclude related discounts, where applicable.

Asset Backed Notes

The asset backed note program is comprised of $1.38 billion in asset backed notes with maturities ranging from 2003 to 2006. Borrowings under the asset backed notes are secured by eligible vehicle collateral and bear interest at fixed rates ranging from 4.77% to 7.10% on $1.17 billion, including certain floating rate notes swapped to fixed rates, and at floating rates on $208.4 million ranging from LIBOR plus 0.64% to LIBOR plus 1.05%. Proceeds from the asset backed notes that are temporarily not utilized for financing vehicles and certain related receivables are maintained in restricted cash and investment accounts, which were approximately $329.4 million at December 31, 2002.

In June 2002, Rental Car Finance Corp. issued $350 million of asset backed notes (the “2002 Series Notes”) to replace maturing asset backed notes and provide additional vehicle financing capacity. The 2002 Series Notes are floating rate notes that have a term of three years. In conjunction with the issuance of the 2002 Series Notes, the Company also entered into an interest rate swap agreement to convert one-half of this floating rate debt to a fixed rate.

Conduit Facility

In April 2002 and August 2002, additional banks entered into the existing $275 million Conduit Facility increasing the facility to $375 million. In December 2002, the Conduit Facility was renewed at a reduced capacity of $250 million. In March 2003, the size of the Conduit Facility is expected to increase to $275 million to match increased fleet levels as an existing bank is anticipated to increase its commitment. Proceeds are used for financing of vehicle purchases and for periodic refinancing of asset backed notes. The Conduit Facility generally bears interest at market-based commercial paper rates and is renewed annually.

-14-

Commercial Paper Program and Liquidity Facility

At December 31, 2002, the Company’s commercial paper program (the “Commercial Paper Program”) had a maximum capacity of $589 million supported by a $522 million, 364-day liquidity facility (the “Liquidity Facility”). Borrowings under the Commercial Paper Program are secured by eligible vehicle collateral and bear interest at market-based commercial paper rates. At December 31, 2002, the Company had $308.0 million in commercial paper outstanding under the Commercial Paper Program. The Commercial Paper Program and the Liquidity Facility are renewable annually. The Commercial Paper Program peaked in size during the third quarter of 2002 when it reached $369.7 million to support the seasonal increase in vehicle fleet.

The Commercial Paper Program was renewed for a 364-day period effective February 24, 2003, at a maximum capacity of $554 million, backed by a renewal of the Liquidity Facility totaling $485 million.

Vehicle Debt and Obligations

Thrifty has financed its Canadian vehicle fleet through a five-year fleet securitization program which began in February 1999. Under this program, Thrifty can obtain vehicle financing up to CND$150 million funded through a bank commercial paper conduit. At December 31, 2002, Thrifty had approximately CND$92.7 million (US$59.0 million) funded under this program.

Vehicle manufacturer and bank lines of credit provided $384 million in capacity at December 31, 2002, an increase of approximately $192 million from December 31, 2001. Borrowings of $227.8 million were outstanding under these lines at December 31, 2002. These lines of credit are secured by the vehicles financed under these facilities and renewable annually.

Revolving Credit Facility

The Company has a $215 million senior secured, revolving credit facility (the “Revolving Credit Facility”) which is used to provide cash for operating activities with a working capital sublimit of $70 million and letters of credit. This facility expires August 2, 2005. The availability of funds under the Revolving Credit Facility is subject to the Company’s continued compliance with certain covenants, including a covenant that sets the maximum amount the Company can spend annually on the acquisition of non-vehicle capital assets, and certain financial covenants including a minimum net worth, a minimum level of adjusted EBITDA, a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum interest coverage ratio and the restriction of cash dividends and share repurchases. The Company is in compliance with all covenants. In early 2003, the Company completed an amendment of the Revolving Credit Facility affecting a financial covenant, which also included limiting expenditures for non-vehicle capital assets and franchisee acquisitions if certain covenant levels are not maintained. At December 31, 2002, the Company had letters of credit outstanding under the Revolving Credit Facility of approximately $168.2 million and no working capital borrowings. The Company has increased the use of letters of credit to support insurance programs, interest rate swaps and asset backed vehicle financing programs.

Debt Servicing Requirements

The Company will continue to have substantial debt and debt service requirements under its financing arrangements. As of December 31, 2002, the Company’s total consolidated debt and other obligations were approximately $2.2 billion, substantially all of which was secured debt for the purchase of vehicles. The majority of the Company’s vehicle debt is issued by special purpose finance entities as described herein all of which are fully consolidated into the Company financial statements. The Company has scheduled annual principal payments of approximately $1.1 billion in 2003, $269 million in 2004, $604 million in 2005 and $233 million in 2006.

The Company intends to use cash generated from operations and from the sale of vehicles for debt service and, subject to restrictions under its debt instruments, to make capital investments. The Company has historically repaid its debt and funded its capital investments (aside from growth in its rental fleet) with cash provided from operations and from the sale of vehicles. The Company has funded growth in its vehicle fleet by incurring additional secured vehicle debt and cash generated from operations. The Company expects to incur additional debt from time to time to the extent permitted under the terms of its debt instruments.

The Company has significant requirements for bonds and letters of credit to support its insurance programs and airport concession obligations. At December 31, 2002, various insurance companies had issued approximately $45.4 million in bonds to secure these obligations.

-15-

Interest Rate Risk

The Company’s results of operations depend significantly on prevailing levels of interest rates because of the large amount of debt it incurs to purchase vehicles. In addition, the Company is exposed to increases in interest rates because a portion of its debt bears interest at floating rates. The Company estimates that, in 2003, approximately 45% of its average debt will bear interest at floating rates. The amount of the Company’s financing costs affects the amount Dollar, Thrifty and their franchisees must charge their customers to be profitable. See Note 9 of Notes to Consolidated Financial Statements.

Inflation

The increased acquisition cost of vehicles is the primary inflationary factor affecting the Company. Many of the Company’s other operating expenses are also expected to increase with inflation. Management does not expect that the effect of inflation on the Company’s overall operating costs will be greater for the Company than for its competitors.

New Accounting Standards

In June 2001, the Financial Accounting Standards Board (“FASB”) approved the issuance of SFAS No. 141, “Business Combinations”, and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also specifies the types of acquired intangible assets that are required to be recognized and reported separately from goodwill and those acquired intangible assets that are required to be included in goodwill. Effective January 1, 2002, SFAS No. 142 requires that goodwill no longer be amortized, but instead tested for impairment at least annually. SFAS No. 142 also requires recognized intangible assets to be amortized over their respective estimated useful lives and reviewed for impairment. Any recognized intangible asset determined to have an indefinite useful life will not be amortized, but instead tested for impairment in accordance with the standard until its life is determined to no longer be indefinite.

The Company adopted the provisions of SFAS No. 141 and SFAS No. 142 as required on January 1, 2002, with the exception of the earlier adoption of the requirement to use the purchase method of accounting for all business combinations initiated after June 30, 2001. On January 1, 2002, the Company ceased amortization of goodwill. During the first quarter of 2002, the Company completed its transitional goodwill impairment test in accordance with SFAS No. 142 for each reporting unit and determined that goodwill was not impaired. Additionally, during the second quarter, the Company completed the annual impairment test of goodwill for 2002 and concluded goodwill was not impaired. The Company will complete the annual impairment test on goodwill during the second quarter of each year unless circumstances arise that require more frequent testing.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company adopted the provisions of SFAS No. 143 as required on January 1, 2003. Adoption of SFAS No. 143 is not expected to have a material effect on the consolidated financial statements of the Company.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which was effective for fiscal years beginning after December 15, 2001. The Company adopted the provisions of SFAS No. 144 as required on January 1, 2002. This standard had no effect on the Company’s consolidated financial statements upon adoption.

-16-

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This statement supersedes Emerging Issues Task Force (“EITF”) No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” Under this statement, a liability or a cost associated with a disposal or exit activity is recognized at fair value when the liability is incurred rather than at the date of an entity’s commitment to an exit plan as required under EITF No. 94-3. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early adoption permitted. The Company adopted the provisions of SFAS No. 146 as required on January 1, 2003. Adoption of SFAS No. 146 is not expected to have a material effect on the consolidated financial statements of the Company.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates on the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees that it has issued. It also requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of the interpretation are applicable on a prospective basis to guarantees issued or modified beginning in 2003. The disclosure requirements are effective for interim or annual financial statements beginning on December 31, 2002.

-17-

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The table below provides information about the Company’s market sensitive financial instruments and constitutes a “forward-looking statement.” The Company’s primary market risk exposure is changing interest rates, primarily in the United States. The Company manages interest rates through use of a combination of fixed and floating rate debt and interest rate swap agreements (refer to Item 8., Note 10 to the consolidated financial statements). All items described are non-trading and are stated in U.S. Dollars. Because a portion of the Company’s debt is denominated in Canadian dollars, its carrying value is impacted by exchange rate fluctuations. The fair value of the interest rate swaps is calculated using projected market interest rates over the term of the related debt instruments as provided by the counter parties.


Expected Maturity Dates as of December 31, 2002	2003				2004			2005			2006			Total		Fair Value December 31, 2002

(in thousands)

Debt:				��

Vehicle debt and obligations - floating rates (1)	$	805,875			$	-		$	477,802		$	233,333		$	1,517,010	$	1,516,424

Weighted Average interest rates		2.45	%			-			4.33	%		4.90	%

Vehicle debt and obligations - fixed rates	$	251,095			$	269,036		$	126,079			-		$	646,210	$	661,655

Weighted Average interest rates		6.40	%			6.22	%		6.67	%		-

Vehicle debt and obligations - Canadian dollar denominated	$	61,818			$	-		$	-		$	-		$	61,818	$	61,818

Weighted Average interest rates		3.11	%			-			-			-

Interest Rate Swaps:

Variable to Fixed	$	-			$	-		$	291,667		$	233,333		$	525,000	$	566,988
Average pay rate									5.28	%		6.04	%
Average receive rate									3.72	%		4.40	%

(1) Floating rate vehicle debt and obligations include the $350 million Series 2001 Notes and $175 million relating to the Series 2002 Notes swapped from floating interest rates to fixed interest rates.


Expected Maturity Dates as of December 31, 2001	2002			2003			2004			2005			2006			Total		Fair Value December 31, 2001

(in thousands)

Debt:

Vehicle debt and obligations - floating rates (1)	$	260,031		$	22,269		$	-		$	127,802		$	233,333		$	643,435	$	643,204

Weighted Average interest rates		3.05	%		5.57	%		-			6.75	%		6.80	%

Vehicle debt and obligations - fixed rates	$	171,786		$	251,200		$	269,092		$	126,079		$	-		$	818,157	$	834,914

Weighted Average interest rates		6.46	%		6.40	%		6.22	%		6.67	%		-

Vehicle debt and obligations - Canadian dollar denominated	$	55,651		$	-		$	-		$	-		$	-		$	55,651	$	55,651

Weighted Average interest rates		2.83	%		-			-			-			-

Interest Rate Swaps:

Variable to Fixed	$	-		$	-		$	-		$	116,667		$	233,333		$	350,000	$	361,264
Average pay rate											6.04	%		6.04	%
Average receive rate											6.20	%		6.30	%

(1) Floating rate vehicle debt and obligations include the $350 million Series 2001 Notes swapped from a floating interest rate to a fixed interest rate.

Interest rate sensitivity – Based on the Company’s level of floating rate debt, including Canadian floating rate vehicle debt, at December 31, 2002 and 2001, a 50 basis point fluctuation in interest rates would have an approximate $8.0 million and $3.5 million impact on the Company’s expected results of operations for each respective year. In 2002 the Company has higher floating rate debt and higher restricted cash levels due to the implementation of the Like-Kind Exchange Program (see Liquidity and Capital Resources), thus, impacting the Company’s sensitivity to floating rate debt.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS’ REPORT

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

We have audited the accompanying consolidated balance sheets of Dollar Thrifty Automotive Group, Inc. and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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, such consolidated financial statements present fairly, in all material respects, the financial position of Dollar Thrifty Automotive Group, Inc. and subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Notes 2 and 8 to the consolidated financial statements, the Company changed its method of accounting for goodwill and other intangible assets effective January 1, 2002 due to adopting Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

/s/ DELOITTE & TOUCHE LLP

Tulsa, Oklahoma
February 28, 2003

-19-

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(In Thousands Except Per Share Data)


			2002		2001		2000
REVENUES:
	Vehicle Rentals		$	897,384	$	821,834	$	844,668
	Vehicle leasing			168,792		162,204		198,686
	Fees and services			56,237		56,057		61,166
	Other			10,781		10,075		9,850

		Total revenues		1,133,194		1,050,170		1,114,370

COSTS AND EXPENSES:
	Direct vehicle and operating			403,946		389,917		346,091
	Vehicle depreciation and lease charges, net			380,760		365,894		340,448
	Selling, general and administrative			177,562		169,599		187,711
	Interest expense, net of interest income of $4,975, $6,570 and $9,288			93,427		92,365		97,703
	Amortization of goodwill			-		6,178		5,941

		Total costs and expenses		1,055,695		1,023,953		977,894

INCOME BEFORE INCOME TAXES				77,499		26,217		136,476

INCOME TAX EXPENSE				30,668		12,380		58,467

NET INCOME			$	46,831	$	13,837	$	78,009


Earnings per share:
	Basic		$	1.93	$	0.57	$	3.23

	Diluted		$	1.88	$	0.57	$	3.18

See notes to consolidated financial statements.

-20-

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2002 AND 2001

(In Thousands Except Share and Per Share Data)



		2002			2001
ASSETS:
Cash and cash equivalents		$	143,485		$	37,532
Restricted cash and investments			334,849			48,090
Receivables, net			249,912			197,224
Prepaid expenses and other assets			59,785			64,946
Revenue-earning vehicles, net			1,994,200			1,525,553
Property and equipment, net			92,181			100,587
Income taxes receivable			61,314			8,149
Software, net			15,381			16,552
Goodwill, net			165,327			165,059

		$	3,116,434		$	2,163,692

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Accounts payable		$	53,660		$	25,741
Accrued liabilities			164,847			112,626
Deferred income tax liability			134,637			22,132
Public liability and property damage			39,506			23,139
Vehicle debt and obligations			2,224,303			1,516,733

	Total liabilities		2,616,953			1,700,371

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 24,599,890 and 24,310,816, respectively			246			243
Additional capital			717,081			708,962
Accumulated deficit			(190,787	)		(237,618	)
Accumulated other comprehensive loss			(27,059	)		(8,266	)

	Total stockholders’ equity		499,481			463,321

		$	3,116,434		$	2,163,692

See notes to consolidated financial statements.

-21-

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(In Thousands Except Share and Per Share Data)


				Common Stock $.01 Par Value				Additional			Accumulated			Accumulated Other Comprehensive			Treasury Stock							Total Stockholders'
				Shares		Amount		Capital			Deficit			Income (Loss)				Shares			Amount			Equity

BALANCE, JANUARY 1, 2000					24,158,429	$	242	$	709,040		$	(329,464	)	$	(691	)			-		$	-		$	379,127
	Issuance of common shares for director compensation				2,164		-		40			-			-				-			-			40
	Stock option transactions				31,300		-		582			-			-				-			-			582
	Performance share incentive plan				-		-		658			-			-				-			-			658
	Comprehensive income:
		Net income			-		-		-			78,009			-				-			-			78,009
		Foreign currency translation			-		-		-			-			(277	)			-			-			(277	)

	Total comprehensive income				-		-		-			78,009			(277	)			-			-			77,732

BALANCE, DECEMBER 31, 2000					24,191,893		242		710,320			(251,455	)		(968	)			-			-			458,139
	Issuance of common shares for director compensation				3,828		-		60			-			-				-			-			60
	Issuance of common shares for 401(k) company match				12,562		-		162			-			-				-			-			162
	Stock option transactions				102,074		1		2,035			-			-				-			-			2,036
	Performance share incentive plan:
		Purchase of common stock for the treasury			-		-		-			-			-				(167,241	)		(3,615	)		(3,615	)
		Issuance of common stock in settlement of vested performance shares:
			Common stock		459		-		-			-			-				-			-			-
			Treasury stock transferred to deferred compensation plan		-		-		(3,615	)		-			-				167,241			3,615			-
	Comprehensive income:
		Net income			-		-		-			13,837			-				-			-			13,837
		Interest rate swap			-		-		-			-			(6,758	)			-			-			(6,758	)
		Foreign currency translation			-		-		-			-			(540	)			-			-			(540	)

	Total comprehensive income				-		-		-			13,837			(7,298	)			-			-			6,539

BALANCE, DECEMBER 31, 2001					24,310,816		243		708,962			(237,618	)		(8,266	)			-			-			463,321
	Issuance of common shares for director compensation				3,320		-		67			-			-				-			-			67
	Issuance of common shares for 401(k) company match				80,116		1		1,589			-			-				-			-			1,590
	Stock option transactions				205,638		2		3,925			-			-				-			-			3,927
	Performance share incentive plan				-		-		2,538			-			-				-			-			2,538
	Comprehensive income:
		Net income			-		-		-			46,831			-				-			-			46,831
		Interest rate swap			-		-		-			-			(18,855	)			-			-			(18,855	)
		Foreign currency translation			-		-		-			-			62				-			-			62

	Total comprehensive income				-		-		-			46,831			(18,793	)			-			-			28,038

BALANCE, DECEMBER 31, 2002					24,599,890	$	246	$	717,081		$	(190,787	)	$	(27,059	)			-		$	-		$	499,481

See notes to consolidated financial statements.

-22-

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(In Thousands)


					2002			2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	46,831		$	13,837		$	78,009
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation:
			Vehicle depreciation			382,883			358,741			338,039
			Non-vehicle depreciation			14,418			13,581			11,658
		Net gains from disposition of revenue-earning vehicles				(10,244	)		(13,752	)		(26,084	)
		Amortization				4,418			9,823			9,450
		Writedown of software				1,929			-			-
		Common stock option transactions				-			40			112
		Performance share incentive plan				2,538			-			658
		Net losses from sale of property and equipment				193			-			-
		Provision for losses on receivables				8,258			21,790			11,925
		Deferred income taxes				124,375			12,810			8,168
		Change in assets and liabilities, net of acquisitions:
			Income taxes payable/receivable			(53,165	)		(8,149	)		10,573
			Receivables			25,087			21,216			(17,011	)
			Prepaid expenses and other assets			10,675			(1,129	)		(9,275	)
			Accounts payable and accrued liabilities			49,247			(45,930	)		(4,146	)
			Public liability and property damage			16,367			(12,230	)		(23,414	)
			Other			179			(367	)		30

				Net cash provided by operating activities		623,989			370,281			388,692

CASH FLOWS FROM INVESTING ACTIVITIES:
	Revenue-earning vehicles:
		Purchases				(3,401,914	)		(2,815,783	)		(2,533,661	)
		Proceeds from sales				2,474,798			2,410,068			2,169,222
	Net change in restricted cash and investments					(286,759	)		(17,330	)		113,911
	Property, equipment and software:
		Purchases				(11,410	)		(32,256	)		(33,657	)
		Proceeds from sales				36			483			232
	Acquisition of businesses, net of cash acquired					(261	)		(2,271	)		(10,097	)

				Net cash used in investing activities		(1,225,510	)		(457,089	)		(294,050	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Vehicle debt and obligations:
		Proceeds				6,559,751			7,667,314			3,288,480
		Payments				(5,852,312	)		(7,574,773	)		(3,420,307	)
	Issuance of common shares					5,584			2,218			470
	Purchase of common stock for the treasury					-			(3,615	)		-
	Financing issue costs					(5,549	)		(5,297	)		(2,292	)

				Net cash provided by (used in) financing activities		707,474			85,847			(133,649	)

CHANGE IN CASH AND CASH EQUIVALENTS						105,953			(961	)		(39,007	)
CASH AND CASH EQUIVALENTS:
	Beginning of year					37,532			38,493			77,500

	End of year				$	143,485		$	37,532		$	38,493


												(Continued)

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(In Thousands)


			2002			2001		2000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	Cash paid for/(refund of):
		Income taxes to taxing authorities	$	(41,236	)	$	7,125	$	39,285

		Interest	$	93,348		$	94,244	$	102,027

SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
	Issuance of common stock for director compensation		$	67		$	60	$	40

	Receivables from capital lease of vehicles to franchisees		$	86,007		$	57,963	$	38,472

	Deferred income on capital lease of vehicles to franchisees		$	177		$	401	$	409

	Acquisition of franchises		$	-		$	422	$	804


									(Concluded)

See notes to consolidated financial statements.

-23-

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

1. BASIS OF PRESENTATION

Dollar Thrifty Automotive Group, Inc. (“DTG”) is the successor to Pentastar Transportation Group, Inc. Prior to December 23, 1997, DTG was a wholly owned subsidiary of Chrysler Corporation, now known as DaimlerChrysler Corporation (such entity and its subsidiaries and members of its affiliated group are hereinafter referred to as “DaimlerChrysler”). On December 23, 1997, DTG completed an initial public offering of all its outstanding common stock owned by DaimlerChrysler together with additional shares issued by DTG.

DTG’s significant wholly owned subsidiaries include Dollar Rent A Car Systems, Inc., which was renamed DTG Operations, Inc. on December 2, 2002 in connection with DTG’s reorganization, which was effective January 1, 2003 (Note 17), Thrifty, Inc., Rental Car Finance Corp. (“RCFC”) and Dollar Thrifty Funding Corp. (“DTFC”). DTG Operations, Inc. is herein referred to as “Dollar” for reporting purposes since this legal entity operated as “Dollar” for each of the three years presented. Thrifty, Inc. is the parent company to Thrifty Car Sales and Thrifty Rent-A-Car System, Inc., which is the parent company to Thrifty Canada Ltd. (“TCL”) (individually and collectively referred to as “Thrifty”). Dollar and Thrifty were acquired in 1990 and 1989, respectively. The acquisitions were accounted for using the purchase method of accounting and the purchase prices were allocated to the assets acquired and liabilities assumed based on their estimated fair values, which are reflected in the accompanying consolidated financial statements. RCFC and DTFC are special purpose financing entities, which were formed in 1995 and 1998, respectively, and are appropriately consolidated with DTG and subsidiaries. RCFC and DTFC are each separate legal entities whose assets are not available to satisfy any claims of creditors of DTG or any of its other subsidiaries. The term the “Company” is used to refer to DTG and subsidiaries, individually or collectively, as the context may require. Intercompany accounts and transactions have been eliminated in consolidation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Dollar and Thrifty are engaged in the business of the daily rental of vehicles to business and leisure customers through company-owned stores and in the business of leasing vehicles to their franchisees for use in the daily vehicle rental business throughout the United States and Canada. Dollar and Thrifty are also involved in selling vehicle rental franchises worldwide and providing sales and marketing, reservations, data processing systems, insurance and other services to their franchisees. RCFC and DTFC provide vehicle financing services to Dollar and Thrifty.

Estimates - - The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates.

Cash and Cash Equivalents - Cash and cash equivalents include cash on hand and on deposit, including highly liquid investments with initial maturities of three months or less.

Restricted Cash and Investments - Restricted cash and investments are restricted for the acquisition of vehicles and other specified uses under the rental car asset backed note indenture and other agreements (Note 9). These funds are primarily held in a highly rated money market fund with investments primarily in government and corporate obligations with a dollar-weighted average maturity not to exceed 60 days, as permitted by the indenture. Restricted cash and investments are excluded from cash and cash equivalents. Interest earned on restricted cash and investments was $3,200,000, $3,531,000 and $3,624,000, for 2002, 2001 and 2000, respectively.

-24-

Allowance for Doubtful Accounts - An allowance for doubtful accounts is generally established during the period in which receivables are recorded. The allowance is maintained at a level deemed appropriate based on loss experience and other factors affecting collectibility.

Financing Issue Costs - Financing issue costs related to vehicle debt and the Revolving Credit Facility are deferred and amortized to interest expense over the term of the related debt using the effective interest method.

Revenue-Earning Vehicles - Revenue-earning vehicles are stated at cost, net of related discounts. The Company generally purchases 75% to 85% of its vehicles for which residual values are determined by depreciation rates that are established and guaranteed by the manufacturers (“Program Vehicles”). The remaining 15% to 25% of the Company’s vehicles are purchased without the benefit of a manufacturer residual value guaranty program (“Non-Program Vehicles”). For these Non-Program Vehicles, the Company must estimate what the residual values of these vehicles will be at the expected time of disposal to determine monthly depreciation rates. The Company continually evaluates estimated residual values. Differences between actual residual values and those estimated by the Company result in a gain or loss on disposal and are recorded as an adjustment to depreciation expense. Depreciation rates generally range from approximately 0.67% to 3.10% per month.

Property and Equipment - Property and equipment are recorded at cost and are depreciated or amortized using principally the straight-line basis over the estimated useful lives of the related assets. Estimated useful lives range from ten to thirty years for buildings and improvements and three to seven years for furniture and equipment. Leasehold improvements are amortized over the lives of the related leases.

Software - Software is recorded at cost and is amortized using the straight-line method primarily over five years. The remaining useful life of all software is evaluated annually to assess whether events and circumstances warrant a revision to the remaining amortization period.

Goodwill - The excess of acquisition costs over the fair value of net assets acquired is recorded as goodwill. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” goodwill is no longer amortized but instead tested for impairment at least annually (Note 8). Prior to the adoption of SFAS No. 142 on January 1, 2002, goodwill was amortized using the straight-line method over forty and twenty year periods.

Long-Lived Assets- The Company reviews the value of long-lived assets, including software, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable based upon estimated future cash flows. In connection with the planned reorganization (Note 17), Thrifty recorded a writeoff of $1,929,000 in 2002 for certain software costs, which will not be utilized.

Accounts Payable - Disbursements in excess of bank balances of $16,713,000 and $13,740,000 are included in accounts payable at December 31, 2002 and 2001, respectively.

Derivative Instruments -The Company uses SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and its amendments which establish accounting and reporting standards for derivative instruments and for hedging activities. It requires that all derivatives be recognized as either assets or liabilities in the statement of financial position and be measured at fair value. In June 2002 and March 2001, the Company entered into interest rate swap agreements, which qualify for hedge accounting treatment under SFAS No. 133 (Note 10).

-25-

Public Liability and Property Damage- Provisions for public liability and property damage on self-insured claims are made by charges primarily to direct vehicle and operating expense. Accruals for such charges are based upon actuarially determined evaluations of estimated ultimate liabilities on reported and unreported claims, prepared on at least an annual basis by an independent actuary. Historical data related to the amount and timing of payments for self-insured claims is utilized in preparing the actuarial evaluations. The accrual for public liability and property damage claims is discounted based upon the independently prepared, actuarially determined estimated timing of payments to be made in the future. Management reviews the actual timing of payments as compared with the annual actuarial estimate of timing of payments and has determined that there have been no material differences in the timing of payments for each of the three years in the period ended December 31, 2002.

Foreign Currency Translation - Foreign assets and liabilities are translated using the exchange rate in effect at the balance sheet date, and results of operations are translated using an average rate for the period. Translation adjustments are accumulated and reported as a component of stockholders’ equity and comprehensive income.

Income Statement Presentation - The Company has not separately disclosed the costs and expenses related to its Company-owned and franchised operations that correspond with the Company’s revenue-generating activities such as vehicle rental and vehicle leasing reflected in the Consolidated Statements of Income since certain of such costs and expenses have not been separately identified in the Company’s financial systems and it is not practicable to separate or disclose them in a reasonable and consistent manner.

Revenue Recognition - Revenues from vehicle rentals are recognized as earned on a daily basis under the related rental contracts with customers. Revenues from leasing vehicles to franchisees are principally under operating leases with fixed monthly payments and are recognized as earned over the lease terms. Revenues from fees and services include providing sales and marketing, reservations, information systems and other services to franchisees. Revenues from these services are generally based on a percentage of franchisee rental revenue or upon providing reservations and are recognized as earned on a monthly basis. Initial franchise fees, which are recorded to other revenues, are recognized upon substantial completion of all material services and conditions of the franchise sale, which coincides with the date of sale and commencement of operations by the franchisee.

Advertising Costs - Advertising costs are primarily expensed as incurred. The Company incurred advertising expense of $28,074,000, $28,781,000 and $30,166,000, for 2002, 2001 and 2000, respectively.

Thrifty’s primary advertising is conducted by an unconsolidated affiliated entity, Thrifty Rent-A-Car System, Inc. National Advertising Committee (“Thrifty National Ad”) in which Thrifty has no ownership or control. Thrifty made payments of $4,154,000, $3,447,000 and $2,983,000 in 2002, 2001 and 2000, respectively, to Thrifty National Ad to support funding of advertising campaigns, which are included in advertising costs. Thrifty also received reimbursement from Thrifty National Ad for administrative services such as information technology and accounting services, totaling $2,565,000, $2,757,000 and $2,647,000 during 2002, 2001 and 2000, respectively, which are recorded as offsets to selling, general and administrative expense. The scope and related charges for these services are negotiated on an annual basis between the Company’s management and designated franchisee members of Thrifty National Ad.

-26-

Environmental Costs- The Company’s operations include the storage of gasoline in underground storage tanks at certain company-owned stores. Liabilities incurred in connection with the remediation of accidental fuel discharges are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated.

Income Taxes - U.S. operating results are included in the Company’s consolidated U.S. income tax returns. The Company has provided for income taxes on its separate taxable income or loss and other tax attributes. Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. A valuation allowance is recorded for deferred income tax assets when management determines it is more likely than not that such assets will not be realized.

Earnings Per Share- Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is based on the combined weighted average number of common shares and common share equivalents outstanding which include, where appropriate, the assumed exercise of options. In computing diluted EPS, the Company has utilized the treasury stock method.

Stock-Based Compensation- The Company accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Compensation cost for stock options, if any, is measured as the excess of the quoted market price of the Company’s stock at the date of grant over the amount the grantee must pay to acquire the stock. Compensation cost for shares issued under performance share plans is recorded based upon the current market value of the Company’s stock at the end of each period. The Company has provided the disclosure only requirements of SFAS No. 123, “Accounting for Stock-Based Compensation,” through December 31, 2002.

Effective January 1, 2003, the Company adopted the provisions of SFAS No. 123 changing from the intrinsic value-based method to the fair value-based method of accounting for stock-based compensation, electing the prospective treatment option, which will require recognition as compensation expense for all future employee awards granted, modified or settled as allowed under SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” an amendment of SFAS No. 123.

-27-

The following table provides pro forma results as if the fair value-based method had been applied to all outstanding and unvested awards, including stock options and performance shares, in each period presented (in thousands):


		December 31,

		2002			2001			2000

Net income, as reported		$	46,831		$	13,837		$	78,009

Add: compensation expense related to performance shares included in reported net income, net of related tax effects			1,533			-			376

Deduct: compensation expense related to stock options granted prior to January 1, 2003 and performance shares determined under fair value-based method for all awards, net of related tax effects			(4,207	)		(2,286	)		(2,917	)

Pro forma net income		$	44,157		$	11,551		$	75,468


Earnings per share:
	Basic, as reported	$	1.93		$	0.57		$	3.23

	Basic, pro forma	$	1.82		$	0.48		$	3.12

	Diluted, as reported	$	1.88		$	0.57		$	3.18

	Diluted, pro forma	$	1.77		$	0.47		$	3.08




		December 31,

		2002			2001			2000

Risk-free interest rate		4.46	%		4.33	%		5.96	%

Expected volatility		54.57	%		56.43	%		37.50	%

Weighted-average expected life of awards		5 years			6 years			5 years

Dividend payments		-			-			-

-28-

New Accounting Standards- In June 2001, the Financial Accounting Standards Board (“FASB”) approved the issuance of SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also specifies the types of acquired intangible assets that are required to be recognized and reported separately from goodwill and those acquired intangible assets that are required to be included in goodwill. Effective January 1, 2002, SFAS No. 142 requires that goodwill no longer be amortized, but instead tested for impairment at least annually. SFAS No. 142 also requires recognized intangible assets to be amortized over their respective estimated useful lives and reviewed for impairment. Any recognized intangible asset determined to have an indefinite useful life will not be amortized, but instead tested for impairment in accordance with the standard until its life is determined to no longer be indefinite.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company adopted the provisions of SFAS No. 143 as required on January 1, 2003. Adoption of SFAS No. 143 is not expected to have a material effect on the consolidated financial statements of the Company.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This statement supersedes Emerging Issues Task Force (“EITF”) No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” Under this statement, a liability or a cost associated with a disposal or exit activity is recognized at fair value when the liability is incurred rather than at the date of an entity’s commitment to an exit plan as required under EITF No. 94-3. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early adoption permitted. Since the Company formally communicated the reorganization plans in December 2002 (Note 17), the Company applied the provisions of EITF No. 94-3 rather than electing to early adopt SFAS No. 146. Differences in accounting treatment between these two standards were not material as it related to the Company’s reorganization. The Company adopted the provisions of SFAS No. 146 as required on January 1, 2003. Adoption of SFAS No. 146 is not expected to have a material effect on the consolidated financial statements of the Company.

-29-

Reclassifications - - Certain reclassifications have been made to the 2001 and 2000 consolidated financial statements to conform to the classifications used in 2002.

3. ACQUISITIONS

During 2002, Thrifty acquired certain assets and assumed certain liabilities of thirty-one locations from former franchisees, the largest being the Boston, Denver, Baltimore and Washington, D.C. airport locations. Additionally, Dollar acquired certain assets and assumed certain liabilities from a former franchisee in Louisville, Kentucky. During 2001, Thrifty acquired certain assets and assumed certain liabilities of nineteen locations from four former franchisees, the largest being the Dallas and San Francisco airport locations. During 2000, Dollar acquired certain assets and assumed certain liabilities of eleven locations from three former franchisees, the largest being the San Antonio, Atlanta and Memphis airport locations. Total cash paid, net of cash acquired, for these acquisitions was $261,000, $2,271,000 and $10,097,000 in 2002, 2001 and 2000, respectively. Each of these transactions has been accounted for using the purchase method of accounting and operating results of the acquirees from the dates of acquisition, which are not material in each year presented, are included in the consolidated statements of income of the Company.

4. RECEIVABLES

Receivables consist of the following:


	December 31,

	2002			2001
	(In thousands)
Trade accounts receivable	$	103,577		$	91,623
Notes receivable		7,485			6,662
Financing receivables, net		67,845			44,227
Due from DaimlerChrysler		90,534			78,967

		269,441			221,479
Less: Allowance for doubtful accounts		(19,529	)		(24,255	)

	$	249,912		$	197,224

Trade accounts and notes receivable include primarily amounts due from franchisees and tour operators arising from billings under standard credit terms for services provided in the normal course of business and amounts due from the sale of revenue-earning vehicles. Notes receivable are generally issued to certain franchisees at current market interest rates with varying maturities and are generally guaranteed by franchisees.

Financing receivables arise from direct financing and sales-type leases of vehicles with franchisees. These receivables principally have terms up to one year and are collateralized by the vehicles. Direct financing and sales-type lease receivables are presented net of unearned income of $619,000 and $628,000 at December 31, 2002 and 2001, respectively.

Due from DaimlerChrysler is comprised primarily of amounts due under various guaranteed residual, buyback, incentive and promotion programs, which are paid according to contract terms and are generally received within 60 days.

-30-

5. REVENUE-EARNING VEHICLES

Revenue-earning vehicles consist of the following:


	December 31,

	2002			2001
	(In thousands)
Revenue-earning vehicles	$	2,193,258		$	1,694,467
Less accumulated depreciation		(199,058	)		(168,914	)

	$	1,994,200		$	1,525,553

Dollar and Thrifty entered into U.S. vehicle supply agreements with DaimlerChrysler, which commenced with the 1997 model year and expired in July 2001. In June 2000, the Company entered into a new vehicle supply agreement with DaimlerChrysler, which enabled the Company to acquire revenue-earning vehicles beginning with the 2002 model year through the 2006 model year. In October 2002, the Company finalized a new vehicle supply agreement (the “VSA”) with DaimlerChrysler. The VSA enables the Company to acquire revenue-earning vehicles through the 2007 model year. Under the VSA, the Company is required to purchase at least 75% of its vehicles from DaimlerChrysler until a certain minimum level is reached, of which 80% will be Program Vehicles and 20% will be Non-Program Vehicles. Under the terms of the VSA, Dollar and Thrifty will advertise and promote DaimlerChrysler products exclusively, and the Company will receive promotional payments from DaimlerChrysler for each model year. Purchases of revenue-earning vehicles from DaimlerChrysler were $2,820,480,000, $2,499,355,000 and $2,290,430,000 during 2002, 2001 and 2000, respectively.

Vehicle acquisition terms provide for guaranteed residual values in the U.S. or buybacks in Canada on the majority of vehicles, under specified conditions. Guaranteed residual and buyback payments provide the Company sufficient proceeds on disposition of revenue-earning vehicles to realize the carrying value of these vehicles. Payments received are included in proceeds from sales of revenue-earning vehicles and applied against the related receivables reflected in Due from DaimlerChrysler within Receivables, net on the balance sheet (Note 4). Additionally, the Company receives promotional payments and other incentives primarily related to the disposal of revenue-earning vehicles, which amounts are reflected as offsets to direct vehicle and operating expense in the statements of income. Promotional payments are primarily amortized on the straight-line basis over the respective model year to which the promotional payments relate and are recorded in Due from DaimlerChrysler as earned. The Company also receives interest reimbursement for Program Vehicles while at auction and for certain delivery related interest costs, which amounts are reflected as offsets in interest expense, net. The aggregate amount of payments received from DaimlerChrysler for guaranteed residual value program payments, promotional payments, interest reimbursement and other incentives totaled $559,696,000, $474,602,000 and $395,694,000 in 2002, 2001 and 2000, respectively, of which a substantial portion of the payments relate to the Company’s guaranteed residual value program and are included in Due from DaimlerChrysler within Receivables, net on the balance sheet. Buyback payments received from the Canadian subsidiary of DaimlerChrysler were $80,197,000, $78,749,000 and $81,222,000 in 2002, 2001 and 2000, respectively, which are included in Due from DaimlerChrysler within Receivables, net on the balance sheet.

The Company acquires some vehicles from other manufacturers, the majority of which are subject to guaranteed buyback at established values by the manufacturers. Rent expense for vehicles leased from other vehicle manufacturers and third parties under operating leases was $8,121,000, $20,905,000 and $28,493,000 for 2002, 2001 and 2000, respectively, and is included in vehicle depreciation and lease charges, net. Amounts due over the next three years for vehicles under operating leases with terms greater than one year total $6,438,000.

-31-

6. PROPERTY AND EQUIPMENT

Major classes of property and equipment consist of the following:


	December 31,

	2002			2001
	(In thousands)
Land	$	13,748		$	13,744
Buildings and improvements		17,543			17,273
Furniture and equipment		58,278			56,406
Leasehold improvements		77,938			76,811
Construction in progress		5,872			5,974

		173,379			170,208
Less accumulated depreciation and amortization		(81,198	)		(69,621	)

	$	92,181		$	100,587

7. SOFTWARE


	December 31,

	2002			2001
	(In thousands)
Software	$	31,064		$	28,880
Less accumulated amortization		(15,683	)		(12,328	)

	$	15,381		$	16,552

The aggregate amortization expense recognized for software was $4,381,000, $3,251,000, and $2,740,000 for the years ended December 31, 2002, 2001 and 2000, respectively. The estimated aggregate amortization expense for each of the next five years is as follows: $4,700,000, $4,200,000, $3,000,000, $2,200,000 and $700,000.

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8. GOODWILL

The changes in the carrying amount of goodwill for the year ended December 31, 2002, are as follows (in thousands):


	Reporting Units

	Dollar		Thrifty		Total


Balance as of January 1, 2002	$	132,365	$	32,694	$	165,059
Goodwill through acquisitions during year		50		205		255
Effect of change in rates used for foreign currency translation		-		13		13

Balance as of December 31, 2002	$	132,415	$	32,912	$	165,327

The following table provides the comparable effects of adoption of SFAS No. 142 (in thousands, except per share data):


		For the Year Ended December 31,

		2002			2001			2000

Reported net income			$	46,831		$	13,837		$	78,009
Add back: goodwill amortization, net of income tax expense				-			5,577			5,497

Adjusted net income			$	46,831		$	19,414		$	83,506

Basic earnings per share:
	Reported net income		$	1.93		$	0.57		$	3.23
	Goodwill amortization, net of income tax expense			-			0.23			0.23

Adjusted net income			$	1.93		$	0.80		$	3.46

Diluted earnings per share:
	Reported net income		$	1.88		$	0.57		$	3.18
	Goodwill amortization, net of income tax expense			-			0.23			0.22

Adjusted net income			$	1.88		$	0.80		$	3.40

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9. VEHICLE DEBT AND OBLIGATIONS

Vehicle debt and obligations consist of the following (in thousands):


				December 31,

				2002			2001

	Asset backed notes:
		2002 Series notes		$	350,000		$	-
		2001 Series notes			350,000			350,000
		1999 Series notes			250,000			250,000
		1997 Series notes			429,614			600,000

					1,379,614			1,200,000
			Discounts on asset backed notes		(149	)		(279	)

			Asset backed notes, net of discount		1,379,465			1,199,721
	Conduit Facility				250,000			-
	Commercial paper, net of discount of $586 and $231				308,048			128,271
	Other vehicle debt				227,834			137,299
	Limited partner interest in limited partnership				58,956			51,442

Total vehicle debt and obligations				$	2,224,303		$	1,516,733

Asset Backed Notesare comprised of rental car asset backed notes issued by RCFC in June 2002 (the “2002 Series notes”), March 2001 (the “2001 Series notes”), April 1999 (the “1999 Series notes”) and December 1997 (the “1997 Series notes”).

The 2002 Series notes are floating rate notes with an interest rate of LIBOR plus 0.64% (2.07% at December 31, 2002). In conjunction with the issuance of the 2002 Series notes, the Company entered into an interest rate swap agreement (Note 10) to convert one-half of this floating rate debt to a fixed rate of 4.77%.

The 2001 Series notes are floating rate notes that were converted to a fixed rate of 6.04% by entering into an interest rate swap agreement (Note 10) in conjunction with the issuance of the notes.

The 1999 Series notes are comprised of fixed rate notes, with rates ranging from 5.9% to 7.1%.

The 1997 Series notes are comprised of $396,210,000 and $566,596,000 of fixed rate notes in 2002 and 2001, respectively, with rates ranging from 6.45% to 6.70% and $33,404,000 of floating rate notes with interest at rates ranging from LIBOR plus 0.95% to LIBOR plus 1.05% (2.39% to 2.49% at December 31, 2002 and 2.89% to 2.99% at December 31, 2001).

The assets of RCFC, including revenue-earning vehicles related to the asset backed notes, restricted cash and investments, and certain receivables related to revenue-earning vehicles, are available to satisfy the claims of its creditors. At December 31, 2001, letters of credit totaling $11,424,000 issued on behalf of DaimlerChrysler also served as collateral for the asset backed notes. These letters of credit expired on December 23, 2002 and were replaced with letters of credit under the Revolving Credit Facility. Dollar and Thrifty lease vehicles from RCFC under the terms of a master lease and servicing agreement. The asset backed note indentures also provide for additional credit enhancement through over collateralization of the vehicle fleet or other letters of credit and maintenance of a liquidity reserve. RCFC is in compliance with the terms of the indentures.

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The asset backed notes mature from 2003 through 2006 and are generally subject to repurchase on any payment date subject to a prepayment penalty.

Conduit Facility -In April 2002 and August 2002, additional banks entered into the asset backed Variable Funding Note Purchase Facility (the “Conduit”) increasing its financing capacity from $275,000,000 to $375,000,000. In December 2002, the Conduit was renewed through December 2003 at a reduced capacity of $250,000,000. Proceeds are used for financing of vehicle purchases and for periodic refinancing of asset backed notes. The Conduit generally bears interest at market-based commercial paper rates (1.68% at December 31, 2002). At December 31, 2002, the Company had $250,000,000 outstanding under the Conduit (Note 19). There were no borrowings outstanding under this facility at December 31, 2001.

Commercial Paperrepresents borrowings under a$589,000,000 Commercial Paper Program as a part of the existing asset backed note program. Proceeds are used for financing of vehicle purchases and for periodic refinancing of asset backed notes. Concurrently with the establishment of the Commercial Paper Program, DTFC also entered into a 364-day, $522,000,000 Liquidity Facility to support the Commercial Paper Program. The Liquidity Facility provides the Commercial Paper Program with an alternative source of funding if DTFC is unable to refinance maturing commercial paper by issuing new commercial paper. Commercial paper bears interest at rates ranging from 1.43% to 1.47% at December 31, 2002 and 1.85% to 2.05% at December 31, 2001 and matures within 45 days of December 31, 2002 (Note 19).

Other Vehicle Debtincludes various lines of credit that are collateralized by the related vehicles, including up to $290,000,000 from vehicle manufacturers at December 31, 2002, which was increased from $140,000,000 in 2001, and $94,400,000 in capacity from U.S. and Canadian banks at December 31, 2002, and was increased from $52,600,000 in 2001. These lines of credit bear interest at varying rates based on LIBOR, prime or commercial paper rates. The weighted average variable interest rate for these lines of credit was 4.67% and 4.20% at December 31, 2002 and 2001, respectively. All lines of credit are renewable annually.

Limited Partner Interest in Limited Partnership - TCL has a partnership agreement (the “Partnership Agreement”) with an unrelated bank’s conduit (the “Limited Partner”). This transaction included the creation of a limited partnership (TCL Funding Limited Partnership, the “Partnership”). TCL is the General Partner in the Partnership. The Partnership Agreement has a five-year term, subject to extension, with the purpose to purchase, own, lease and rent vehicles throughout Canada. The Limited Partner has committed to funding approximately CND$150,000,000 (approximately US$95,400,000 at December 31, 2002) to the Partnership, which is funded through issuance and sale of notes in the Canadian commercial paper market.

TCL, as General Partner, is allocated the remainder of the partnership net income after distribution of the income share of the Limited Partner, which amounted to $1,872,000, $2,863,000 and $3,510,000 for the years ended December 31, 2002, 2001 and 2000, respectively, and is included in interest expense. Due to the nature of the relationship between TCL and the Partnership, the accounts of the Partnership are appropriately consolidated with the Company. The Partnership Agreement requires the maintenance of certain letters of credit and contains various restrictive covenants. TCL was in compliance with all such covenants and requirements at December 31, 2002.

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Expected repayments of vehicle debt and obligations outstanding at December 31, 2002 are as follows:


	2003		2004		2005		2006
	(In Thousands)

Asset backed notes	$	273,364	$	269,036	$	603,881	$	233,333
Conduit Facility		250,000		-		-		-
Commercial paper		308,634		-		-		-
Other vehicle debt		227,834		-		-		-
Limited partner interest		58,956		-		-		-

Total	$	1,118,788	$	269,036	$	603,881	$	233,333

Revolving Credit Facility

The Company has a five-year, $215,000,000 Senior Secured Revolving Credit Facility (the “Revolver”) that expires August 2005. The Revolver originally provided sublimits up to $190,000,000 for letters of credit and up to $70,000,000 for working capital borrowings. As of December 31, 2002, the Company is required to pay a 0.375% commitment fee on the unused available line, a 2.00% letter of credit fee on the aggregate amount of outstanding letters of credit and a 0.125% letter of credit issuance fee. Interest rates on loans under the Revolver are, at the option of the Company, based on the prime, federal funds or Eurodollar rates and are payable quarterly. The Revolver is collateralized by a first priority lien on substantially all material non-vehicle assets of the Company. The Revolver contains various restrictive covenants, including maintenance of certain financial ratios consisting of minimum net worth, adjusted EBITDA, fixed charge, leverage and interest coverage ratios and the restriction of cash dividends and share repurchases. The Company is in compliance with all covenants. In December 2002, the Company amended the Revolver to increase the sublimit for letters of credit from $190 million to $215 million, while retaining the $70 million sublimit on working capital borrowings and the total Revolver commitment of $215 million. In early 2003, the Company completed an amendment of the Revolver affecting a financial covenant, which also included limiting expenditures for non-vehicle capital assets and franchisee acquisitions if certain covenant levels are not maintained. The Company had letters of credit of $168,168,000 and $60,294,000 and no working capital borrowings outstanding under the Revolver at December 31, 2002 and 2001, respectively.

10. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to market risks, such as changes in interest rates. Consequently, the Company manages the financial exposure as part of its risk management program, by striving to reduce the potentially adverse effects that the potential volatility of the financial markets may have on the Company’s operating results. During March 2001, the Company entered into an interest rate swap agreement (the “2001 Swap”) to adjust the variable interest rate on $350 million of asset backed notes to a fixed interest rate. The Swap, which terminates in April 2006, constitutes a cash flow hedge and continues to satisfy the criteria for hedge accounting. During June 2002, the Company entered into an interest rate swap agreement (the “2002 Swap”) to convert the variable interest rate on $175 million of asset backed notes to a fixed interest rate. The 2002 Swap, which terminates in August 2005, also constitutes a cash flow hedge and satisfies the criteria for hedge accounting. The Company reflects these swaps in its statement of financial position as liabilities at fair market value, which was approximately $41,988,000 and $11,264,000 at December 31, 2002 and 2001, respectively. The Company recorded the related loss of $18,855,000 for 2002 and $6,758,000 for 2001, which is net of income taxes, in total comprehensive income on the statement of stockholders’ equity. Deferred gains and losses are recognized in operations as an adjustment to interest expense over the same period in which the related interest payments being hedged are recognized. The Company is unable to reasonably estimate the net amount of the existing deferred income or loss at December 31, 2002 that is expected to be reclassified into operations within the next twelve months.

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11. STOCKHOLDERS’ RIGHTS PLAN

On July 23, 1998, the Company adopted a stockholders’ rights plan. The rights were issued on August 3, 1998, to stockholders of record on that date, and will expire on August 3, 2008, unless earlier redeemed, exchanged or amended by the Board of Directors.

The plan provides for the issuance of one right for each outstanding share of the Company’s common stock. Upon the acquisition by a person or group of 15% or more of the Company’s outstanding common stock, the rights generally will become exercisable and allow the stockholder, other than the acquiring person or group, to acquire common stock at a discounted price.

The plan also includes an exchange option after the rights become exercisable. The Board of Directors may effect an exchange of part or all of the rights, other than rights that have become void, for shares of the Company’s common stock for each right. The Board of Directors may redeem all rights for $.01 per right, generally at any time prior to the rights becoming exercisable.

The issuance of the rights had no dilutive effect on the number of common shares outstanding and did not affect earnings per share.

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12. EARNINGS PER SHARE

The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted EPS is shown below:


		For the Year Ended December 31,

		2002			2001			2000
		(In Thousands, Except Share and Per Share Data)
Net Income			$	46,831		$	13,837		$	78,009

Basic EPS:
	Weighted average common shares			24,274,985			24,103,838			24,168,250

Basic EPS			$	1.93		$	0.57		$	3.23

Diluted EPS:
	Weighted average common shares			24,274,985			24,103,838			24,168,250

Shares contingently issuable:
	Stock options			287,212			195,197			184,909
	Performance awards			120,000			-			167,593
	Shares held for compensation plans			164,759			157,205			-
	Director compensation shares deferred			47,425			31,303			18,710

Shares applicable to diluted				24,894,381			24,487,543			24,539,462

Diluted EPS			$	1.88		$	0.57		$	3.18

Options to purchase 1,048,300, 2,136,046 and 2,223,028 shares of common stock were outstanding at December 31, 2002, 2001 and 2000, respectively, but were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares.

13. EMPLOYEE BENEFIT PLANS

Employee Benefit Plans

The Company sponsors a retirement savings plan that incorporates the salary reduction provisions of Section 401(k) of the Internal Revenue Code and covers substantially all employees of the Company meeting specific age and length of service requirements. Effective January 1, 2002, the Company announced a suspension of the matching of employee contributions to the 401(k) plan. However, due to improved operating performance, the Company reinstated the matching provisions in December 2002 and retroactively matched 100% up to 6% of the employee’s eligible compensation, subject to statutory limitations, of which 50% is in cash and 50% is in company stock. The Company stock match is immediately available for transfer or sale at the employee’s discretion. Employee contributions were matched in cash by the Company to the extent of 75% up to 6% of the employee’s eligible compensation in 2001, and 50% up to 6% in 2000. Contributions expensed by the Company totaled $4,066,000, $2,933,000 and $2,264,000 in 2002, 2001 and 2000, respectively.

-38-

For 2003, the Company expects to continue to match 100% up to 6% of the employee’s eligible compensation of which 50% will be in cash and 50% in company stock.

Included in accrued liabilities at December 31, 2002 and 2001 is $2,038,000 and $2,892,000, respectively, for employee health claims, which are self-insured by the Company. The accrual includes amounts for incurred and incurred but not reported claims.

The Company has bonus and profit sharing plans for all employees based on company performance. Expense related to these plans was $14,835,000 in 2002 and $11,260,000 in 2000. No expense was recorded in 2001 relating to these plans.

Deferred Compensation and Retirement Plans

The Company has deferred compensation and retirement plans providing key executives with the opportunity to defer compensation, including related investment income. Under the deferred compensation plan, the Company contributes up to 7% of participant cash compensation. Participants become fully vested under both the deferred compensation and retirement plans after five years of service. The total of participant deferrals in the deferred compensation and retirement plans, which are reflected in accrued liabilities, was $18,336,000 and $17,375,000 as of December 31, 2002 and 2001, respectively. Expense related to these plans totaled $2,166,000, $735,000 and $2,140,000 in 2002, 2001 and 2000, respectively.

Long-Term Incentive Plan

The Company has a long-term incentive plan (“LTIP”) for employees and non-employee directors under which the Human Resources and Compensation Committee of the Board of Directors of the Company is authorized to provide for grants in the form of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, performance share awards and other stock-based incentive awards. The exercise prices for nonqualified stock options are equal to the fair market value of the Company’s common stock at the date of grant, except for the initial grant, which was made at the initial public offering price. The options vest in three equal annual installments commencing on the first anniversary of the grant date and have a term not exceeding ten years from the date of grant. In May 2000, an additional 2,400,000 shares were approved by the shareholders for issuance under the LTIP. At December 31, 2002, the Company’s common stock outstanding authorized for issuance under the LTIP was 4,859,989 shares, with a share addition provision that allows for the number of shares reserved to increase by 10% of any newly issued shares.

Performance share awards are granted to Company officers and certain key employees. Such awards established a target number of shares that vest in three equal annual installments commencing on the first anniversary of the grant date. The number of performance shares ultimately earned is expected to range from zero to 200% of the target award, depending on the level of corporate performance each year against annual profit targets. Any performance share installments not earned as of a given anniversary date are forfeited. Performance shares earned are delivered based upon vesting of the grant, provided the grantee is then employed by the Company. Values of the performance shares earned will be recognized as compensation expense over the period the shares are earned. The Company recognized compensation costs of $2,538,000 in 2002 and $658,000 in 2000, for performance share awards. During 2001, there were no performance shares earned and, thus, no compensation expense recognized. On January 31, 2001, performance shares earned in 1998, 1999 and 2000, net of forfeitures, totaling approximately 168,000 shares vested and were settled through the purchase of common stock for the treasury totaling $3,615,000. These shares were ultimately transferred to the deferred compensation plan by the Company for the benefit of the employees.

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The status of the Company’s stock option plan is summarized below:


					Weighted
		Number of			Average
		Shares			Exercise
		(In Thousands)			Price

Outstanding at December 31, 1999			2,037		$	18.02

Granted			714			19.29
Exercised			(31	)		12.29
Canceled			(45	)		18.40

Outstanding at December 31, 2000			2,675			18.42

Granted			706			12.29
Exercised			(102	)		17.38
Canceled			(71	)		18.35

Outstanding at December 31, 2001			3,208			17.10

Granted			40			23.20
Exercised			(206	)		16.95
Canceled			(17	)		16.76

Outstanding at December 31, 2002			3,025		$	17.20

Options exercisable at:
	December 31, 2002		2,345		$	17.96
	December 31, 2001		1,948		$	18.21
	December 31, 2000		1,497		$	18.63

Accounting for Stock-Based Compensation

As stated in Note 2, the Company followed the intrinsic value approach prescribed in APB Opinion No. 25 in accounting for its employee stock plans through December 31, 2002 and has provided the disclosure-only provisions of SFAS No. 123. If the Company had elected to recognize compensation cost based on the fair value of the options granted at the grant date as prescribed by SFAS No. 123, net income for 2002, 2001 and 2000 would have been reduced from the amounts as reported of $46,831,000, $13,837,000 and $78,009,000 to the pro forma amounts of $44,157,000, $11,551,000 and $75,468,000, respectively. Diluted earnings per share as reported of $1.88, $0.57 and $3.18 would have been reduced to the pro forma amounts of $1.77, $0.47 and $3.08 for 2002, 2001 and 2000, respectively.

The pro forma amounts noted reflect the portion of the estimated fair value of awards earned in 2002, 2001 and 2000 based on the vesting period of the options.

-40-

The Black-Scholes option valuation model was used to estimate the fair value of the options at the date of grant for purposes of the pro forma amounts noted. The following assumptions were used for 2002: weighted-average expected life of the awards of five years, volatility factor of 54.57% and risk-free interest rate of 4.46%. The following assumptions were used for 2001: weighted-average expected life of the awards of six years, volatility factor of 56.43% and risk-free interest rate of 4.33%. The following assumptions were used for 2000: weighted-average expected life of the awards of five years, volatility factor of 37.5% and risk-free interest rate of 5.96%. There were no dividend payments made in 2002, 2001 or 2000. Based on this model, the weighted-average fair value of options granted during 2002, 2001 and 2000 was $12.02, $6.96 and $8.13 per share, respectively.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock volatility. Because the Company’s employee stock options have characteristics significantly different from traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the employee stock options.

The following table summarizes information regarding fixed stock options that were outstanding at December 31, 2002:


	Options Outstanding						Options Exercisable

			Weighted-Average		Weighted-				Weighted-
Range of	Number		Remaining		Average		Number		Average
Exercise	Outstanding		Contractual Life		Exercise		Exercisable		Exercise
Prices	(In Thousands)		(In Years)		Price		(In Thousands)		Price

$10.50 - $12.8750		954		7.83	$	11.13		524	$	10.87
$15.25 - $19.6875		1,023		7.35		19.21		815		19.18
$20.50 - $23.90		1,048		5.34		20.75		1,006		20.65

$10.50 - $23.90		3,025		6.81	$	17.20		2,345	$	17.96

Under certain circumstances, including a change of control of DTG, the options outstanding would be exercisable immediately.

-41-

14. INCOME TAXES

Income tax expense consists of the following:


		Year Ended December 31,

		2002			2001			2000
		(In Thousands)

Current:
	Federal	$	(93,989	)	$	(2,737	)	$	40,235
	State and local		(63	)		1,745			9,580
	Foreign		345			562			484

			(93,707	)		(430	)		50,299
Deferred:
	Federal		104,750			12,637			6,597
	State and local		19,625			173			1,571

			124,375			12,810			8,168

		$	30,668		$	12,380		$	58,467

Foreign losses before income taxes were approximately $2,519,000 and $965,000 in 2001 and 2000, respectively.

Deferred tax assets and liabilities consist of the following:


			December 31,

			2002			2001
			(In Thousands)

Deferred tax assets:
	Public liability and property damage		$	13,901		$	7,777
	Allowance for doubtful accounts and notes receivable			6,492			7,544
	Other accrued liabilities			23,154			21,659
	Federal and state NOL credits and carryforwards			67,358			2,997
	Interest rate swap			16,376			4,506
	Canadian NOL carryforwards			4,092			4,751
	Canadian depreciation			1,657			2,618
	Other Canadian temporary differences			3,609			2,658

				136,639			54,510
	Valuation allowance			(9,358	)		(10,027	)

		Total	$	127,281		$	44,483

Deferred tax liabilities:
	Depreciation		$	256,473		$	61,342
	Other			5,445			5,273

		Total	$	261,918		$	66,615

-42-

The Company has net operating loss carryforwards available in certain states to offset future state taxable income. At December 31, 2002, the Company has federal net operating loss carryforwards of approximately $136,000,000 available to offset future taxable income in the U.S., which expire after 2017. At December 31, 2002, TCL has net operating loss carryforwards of approximately $10,635,000 available to offset future taxable income in Canada, which expire through 2008. Valuation allowances have been established for the total estimated future tax effect of the Canadian net operating losses and other deferred tax assets, since management believes it is more likely than not that such benefits will not be realized.

The Company’s effective tax rate differs from the maximum U.S. statutory income tax rate. The following summary reconciles taxes at the maximum U.S. statutory rate with recorded taxes:


			Year Ended December 31,

			2002				2001					2000

			Amount		Percent		Amount			Percent		Amount		Percent
			(Amounts in Thousands)

Tax expense computed at the maximum U.S. statutory rate			$	27,125	35.0	%	$	9,176		35.0	%	$	47,767	35.0	%
Difference resulting from:
	Goodwill amortization			-	-			1,717		6.6			1,717	1.3
	State and local taxes, net of federal income tax benefit			3,110	4.0			1,247		4.8			7,188	5.3
	Foreign losses			-	-			882		3.3			364	0.2
	Foreign taxes			345	0.5			562		2.1			484	0.4
	Other			88	0.1			(1,204	)	(4.6	)		947	0.6

		Total	$	30,668	39.6	%	$	12,380		47.2	%	$	58,467	42.8	%

15. CONCENTRATION OF CREDIT RISK AND FAIR VALUE INFORMATION

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of restricted cash and investments and trade receivables. The Company limits its exposure on restricted cash and investments by investing in highly rated funds. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer base and their dispersion across different geographic areas.

The following estimated fair values of financial instruments have been determined by the Company using available market information and valuation methodologies.

Cash and Cash Equivalents, Restricted Cash and Investments, Receivables, Accounts Payable, Accrued Liabilitiesand Public Liability and Property Damage - The carrying amounts of these items are a reasonable estimate of their fair value.

Vehicle Debt and Obligations - The fair value of floating-rate debt, which includes amounts subject to an interest rate swap from floating-rate debt to fixed-rate debt, approximates the carrying value as these instruments are at current market interest rates. At December 31, 2002, the fair value of the asset backed notes with fixed interest rates was greater than the carrying value by approximately $15,445,000.

Letters of Credit - The estimated fair value of these items was $302,000 and $260,000 at December 31, 2002 and 2001, respectively.

-43-

16. COMMITMENTS AND CONTINGENCIES

��	Concessions and Operating Leases

The Company has certain concession agreements principally with airports throughout the United States and Canada. Typically, these agreements provide airport terminal counter space in return for a minimum rent. In many cases, the Company’s subsidiaries are also obligated to pay insurance and maintenance costs and additional rents generally based on revenues earned at the location. Certain of the airport locations are operated by franchisees who are obligated to make the required rent and concession fee payments under the terms of their franchise arrangements with the Company’s subsidiaries.

The Company’s subsidiaries operate from various leased premises under operating leases with terms up to 25 years. Some of the leases contain renewal options.

Expenses incurred under operating leases and concessions were as follows:


			Year Ended December 31,

			2002				2001				2000
			(In Thousands)

Rent				$	25,157			$	25,386			$	21,824
Concession expenses:
	Minimum fees				43,799				37,601				33,824
	Contingent fees				23,752				24,093				28,251

					92,708				87,080				83,899

Less sublease rental income					(1,687	)			(1,617	)			(2,081	)

		Total		$	91,021			$	85,463			$	81,818

Future minimum rentals and fees under noncancelable operating leases and the Company’s obligations for minimum airport concession fees at December 31, 2002 are presented in the following table. Concession fees-franchisee locations presented are required to be paid by franchisees under terms of sublease agreements.


	Concession Fees

	Company-
	Owned		Franchisee		Operating
	Stores		Locations		Leases			Total
	(In Thousands)

2003	$	34,375	$	1,414	$	22,096		$	57,885
2004		26,001		1,406		17,224			44,631
2005		24,548		405		13,912			38,865
2006		19,859		327		11,070			31,256
2007		16,789		313		9,875			26,977
Thereafter		54,881		2,332		40,878			98,091

		176,453		6,197		115,055			297,705
Less sublease rental income		-		-		(2,048	)		(2,048	)

	$	176,453	$	6,197	$	113,007		$	295,657

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Public Liability and Property Damage

During 2002, the Company re-evaluated its insurance coverages on the majority of its operations and became self-insured for public liability and property damage claims up to certain policy limits. For 2001 and 2000, the majority of the Company’s operations had first dollar coverage from insurance carriers, subject to certain policy limits, for public liability and property damage claims. Prior to this insurance coverage, the Company was self-insured or had policy deductibles up to certain limits. The accrual for public liability and property damage includes amounts for incurred and incurred but not reported losses. Such liabilities are necessarily based on actuarially determined estimates and management believes that the amounts accrued are adequate. At December 31, 2002 and 2001, these amounts have been discounted at 2.0% and 3.7%, (assumed risk free rate), respectively, based upon the actuarially determined estimated timing of payments to be made in future years. Discounting resulted in reducing the accrual for public liability and property damage by $1,244,000 and $1,542,000 at December 31, 2002 and 2001, respectively. Estimated future payments of public liability and property damage as of December 31, 2002 are as follows (in thousands):


2003	$	16,215
2004		8,876
2005		5,761
2006		3,885
2007		2,424
Thereafter		3,589

Aggregate undiscounted public liability and property damage		40,750
Effect of discounting		(1,244	)

	$	39,506

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Contingencies

Various claims and legal proceedings have been asserted or instituted against the Company, including some purporting to be class actions, and some which demand large monetary damages or other relief which could result in significant expenditures. Litigation is subject to many uncertainties and the outcome of individual matters is not predictable with assurance. The Company is also subject to potential liability related to environmental matters. The Company establishes reserves for litigation and environmental matters when the loss is probable and reasonably estimable. It is reasonably possible that the final resolution of some of these matters may require the Company to make expenditures, in excess of established reserves, over an extended period of time and in a range of amounts that cannot be reasonably estimated. The term “reasonably possible” is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than likely. Although the final resolution of any such matters could have a material effect on the Company’s consolidated operating results for the particular reporting period in which an adjustment of the estimated liability is recorded, the Company believes that any resulting liability should not materially affect its consolidated financial position.

Other

The Company is party to a data processing services agreement which requires payments totaling $5,618,000 in 2003, $5,373,000 in 2004 and $1,012,000 in 2005. Additionally, the Company has a telecommunications contract which will require payments totaling $5,040,000 through February 2004.

In addition to the letters of credit described in Note 9, the Company had letters of credit totaling $3,021,000 and $1,741,000 at December 31, 2002 and 2001, respectively. The Company may also provide guarantees on behalf of franchisees to support compliance with airport concession bids. Non-performance of the obligation by the franchisee would trigger the obligation of the Company. As of December 31, 2002 and 2001, respectively, these guarantee obligations totaled $995,000 and $862,000 with expiration dates through 2004 and 2002, respectively.

At December 31, 2002, the Company had outstanding vehicle purchase commitments of approximately $710,419,000.

17. BUSINESS SEGMENTS

The Company had two reportable segments: Dollar and Thrifty. These reportable segments were strategic business units that offered different products and services. They were managed separately based on the fundamental differences in their operations. Dollar operated company-owned stores located at major airports and derived the majority of its revenues by providing rental vehicles and services directly to rental customers. Thrifty operated primarily through franchisees serving both the airport and local markets, and it derived the majority of its revenues from franchising fees and services including vehicle leasing.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates segment performance based on profit and loss from operations before income taxes.

In December 2002, the Company announced a new corporate operating structure which became effective January 1, 2003. This new structure will realign the Company from a brand structure to a functional structure combining the management of operations and administrative functions for both the Dollar and Thrifty brands. Due to the realignment, the Company will no longer report Dollar and Thrifty as operating segments. Consistent with the new structure, management will make business and operating decisions on an overall company basis. Financial results will not be available by brand.

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Included in the consolidated financial statements are the following amounts relating to geographic locations:


		Year Ended December 31,

		2002		2001		2000
		(In Thousands)

Revenues:
	United States	$	1,080,734	$	1,000,176	$	1,064,941
	Foreign countries		52,460		49,994		49,429

		$	1,133,194	$	1,050,170	$	1,114,370


Long-lived assets:
	United States	$	268,866	$	278,316	$	267,489
	Foreign countries		4,023		3,882		3,561

		$	272,889	$	282,198	$	271,050

Revenues are attributed to geographic regions based on the location of the transaction. Long-lived assets include property and equipment, software and goodwill.

Information by industry segment is set forth below:


Year Ended
December 31, 2002	Dollar		Thrifty		Other			Consolidated
	(In Thousands)

Revenues from external customers	$	809,395	$	323,283	$	516		$	1,133,194
Interest expense, net (a)		56,008		37,955		(536	)		93,427
Depreciation and amortization, net		245,110		145,249		1,309			391,668
Income before income taxes		60,137		16,826		536			77,499

Segment assets	$	1,603,083	$	1,053,286	$	460,065		$	3,116,434
Expenditures for segment assets	$	1,954,797	$	1,458,188	$	339		$	3,413,324


Year Ended
December 31, 2001	Dollar		Thrifty		Other			Consolidated
	(In Thousands)

Revenues from external customers	$	795,604	$	254,511	$	55		$	1,050,170
Interest expense, net (a)		58,664		33,701		-			92,365
Depreciation and amortization, net		250,070		117,205		1,118			368,393
Income before income taxes		25,995		222		-			26,217

Segment assets	$	1,294,697	$	746,533	$	122,462		$	2,163,692
Expenditures for segment assets	$	1,725,867	$	1,120,010	$	2,162		$	2,848,039

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Year Ended
December 31, 2000	Dollar		Thrifty		Other		Consolidated
	(In Thousands)

Revenues from external customers	$	852,796	$	261,069	$	505	$	1,114,370
Interest expense, net (a)		62,116		35,585		2		97,703
Depreciation and amortization, net		223,224		109,024		815		333,063
Income before income taxes		103,024		33,452		-		136,476

Segment assets	$	1,325,775	$	688,048	$	86,551	$	2,100,374
Expenditures for segment assets	$	1,590,521	$	975,819	$	978	$	2,567,318

(a) Management primarily uses net interest, not the gross interest revenue and expense amounts, in assessing segment performance.

18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of the quarterly operating results during 2002 and 2001 follows:


						Income						Basic			Diluted
			Operating			(Loss)			Net			Earnings			Earnings
			Income			Before			Income			(Loss)			(Loss)
	Revenues		(Loss)			Income Taxes			(Loss)			Per Share			Per Share
	(In Thousands Except Per Share Amounts)
2002
First Quarter	$	242,757	$	40,902		$	21,056		$	12,133		$	0.50		$	0.49
Second Quarter		302,468		52,199			28,767			17,540			0.72			0.70
Third Quarter		337,668		61,086			34,020			21,207			0.87			0.85
Fourth Quarter		250,301		16,739			(6,344	)		(4,049	)		(0.17	)		(0.16	)

Total year	$	1,133,194	$	170,926		$	77,499		$	46,831		$	1.93		$	1.88


2001
First Quarter	$	251,154	$	38,185		$	17,015		$	9,209		$	0.38		$	0.38
Second Quarter		290,326		46,936			21,847			12,417			0.52			0.50
Third Quarter		307,947		43,123			14,656			6,038			0.25			0.25
Fourth Quarter		200,743		(3,484	)		(27,301	)		(13,827	)		(0.57	)		(0.57	)

Total year	$	1,050,170	$	124,760		$	26,217		$	13,837		$	0.57		$	0.57

Operating income in the table above represents pre-tax income before interest and goodwill amortization in 2001.

During the fourth quarter of 2002, the Company announced its new corporate operating structure, which included severance costs of approximately $0.8 million for personnel in locations where operations would cease, fees relating to amending the Company’s Revolving Credit Facility of $0.6 million and additional costs for communication with franchisees and corporate operations and training for employees relating to realignment of responsibilities which approximates $0.5 million. Additionally, as a result of the change in structure, the Company recorded a $1.9 million write-off of certain software, which will not be utilized.

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During the fourth quarter of 2001, the Company’s financial results were significantly impacted from reduced air travel following the terrorist attacks of September 11, thus, negatively impacting the Company’s revenues. In addition to reduced revenues, the Company experienced additional costs and expenses relating to a reduction in personnel of approximately $2.5 million, fees relating to amending the Company’s Revolving Credit Facility of $1.0 million and increased vehicle costs for reducing the fleet levels to match the significant decline in consumer demand.

19. SUBSEQUENT EVENTS

The Commercial Paper Program was renewed for a 364-day period effective February 24, 2003, at a maximum capacity of $554 million backed by a renewal of the Liquidity Facility, in the amount of $485 million.

RCFC is in the process of finalizing a Private Placement Memorandum to offer $375 million of asset backed notes (the “2003 Series notes”) that is expected to close in March 2003 to replace existing asset backed notes which mature over the next four years.

In March 2003, the Conduit is expected to increase from $250 million to $275 million as an existing bank is anticipated to increase its commitment.

******

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SCHEDULE II
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

YEAR ENDED DECEMBER 31, 2002, 2001 AND 2000


	Balance at		Additions						Balance at
	Beginning		Charged to						End of
	of Year		Income			Deductions			Year
	(In Thousands)

2002

Allowance for doubtful accounts	$	24,255	$	8,258		$	(12,984	)	$	19,529

Public liability and property damage	$	23,139	$	34,548		$	(18,181	)	$	39,506

Valuation allowance for deferred tax assets	$	10,027	$	(669	)	$	-		$	9,358

2001

Allowance for doubtful accounts	$	25,428	$	21,790		$	(22,963	)	$	24,255

Public liability and property damage	$	35,369	$	4,868		$	(17,098	)	$	23,139

Valuation allowance for deferred tax assets	$	9,955	$	72		$	-		$	10,027

2000

Allowance for doubtful accounts	$	17,768	$	11,925		$	(4,265	)	$	25,428

Public liability and property damage	$	58,783	$	(2,770	)	$	(20,644	)	$	35,369

Valuation allowance for deferred tax assets	$	9,990	$	(35	)	$	-		$	9,955

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a)	Documents filed as a part of this report


(1)	All Financial Statements. The response to this portion of Item 15 is submitted as a separate section herein under Part II, Item 8 - Financial Statements and Supplementary Data.


(2)	Financial Statement Schedules. Schedule II - Valuation and Qualifying Accounts - Years Ended December 31, 2002, 2001 and 2000 is set forth under Part II, Item 8 - Financial Statements and Supplementary Data. All other schedules are omitted because they are not applicable or the information is shown in the financial statements or notes thereto.


(3)	Index of Exhibits


Exhibit No.				Description


23.20				Consent of Deloitte & Touche LLP regarding DTG’s Forms S-8 Registration No. 333-79603, Registration No. 333-89189, Registration No. 333-33144, Registration No. 333-33146 and Registration No. 333-50800

31.5				Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.6				Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.5				Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.6				Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: December 18, 2003

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

		By:	/s/ STEVEN B. HILDEBRAND
		Name:	Steven B. Hildebrand
		Title:	Executive Vice President, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

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INDEX TO EXHIBITS


Exhibit No.				Description

23.20				Consent of Deloitte & Touche LLP regarding DTG’s Forms S-8 Registration No. 333-79603, Registration No. 333-89189, Registration No. 333-33144, Registration No. 333-33146 and Registration No. 333-50800

31.5				Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.6				Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.5				Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.6				Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Dollar Thrifty Automotive Inactive 10-K/A2002 FY Annual report (amended)

FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

EXPLANATORY NOTE

ITEM 6. SELECTED FINANCIAL DATA

General

Results of Operations

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

Revenues

Expenses

Operating Results

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

Revenues

Expenses

Operating Results

Liquidity and Capital Resources

Asset Backed Notes

Conduit Facility

Commercial Paper Program and Liquidity Facility

Vehicle Debt and Obligations

Revolving Credit Facility

Debt Servicing Requirements

Interest Rate Risk

Inflation

New Accounting Standards

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS’ REPORT

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

1. BASIS OF PRESENTATION

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. ACQUISITIONS

4. RECEIVABLES

5. REVENUE-EARNING VEHICLES

6. PROPERTY AND EQUIPMENT

7. SOFTWARE

8. GOODWILL

9. VEHICLE DEBT AND OBLIGATIONS

10. DERIVATIVE FINANCIAL INSTRUMENTS

11. STOCKHOLDERS’ RIGHTS PLAN

12. EARNINGS PER SHARE

13. EMPLOYEE BENEFIT PLANS

14. INCOME TAXES

15. CONCENTRATION OF CREDIT RISK AND FAIR VALUE INFORMATION

16. COMMITMENTS AND CONTINGENCIES

17. BUSINESS SEGMENTS

18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

19. SUBSEQUENT EVENTS

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

SIGNATURES

INDEX TO EXHIBITS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000