UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 33-80271
ALAMO RENT-A-CAR, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-1465528
---------------------------------------- ------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
110 Tower, 110 S.E. 6th Street
Fort Lauderdale, Florida 33301
---------------------------------------- ------------------
(Address of principal executive offices) (Zip code)
(954) 522-0000
(Registrant's telephone number, including area code)
See Table of Co-Registrants Below.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of November 1, 1996, each corporate registrant had outstanding 980 shares of
common stock, par value $1.00 per share, except for Green Corn, Inc. which had
326.67 shares of common stock, par value $0.10 per share.
Table of Co-Registrants(1)
State or Other
Jurisdication of IRS Employer
Incorporation or Identification
Name Organization Number
---- ------------ ------
Alamo Rent-A-Car (Belgium), Inc. Florida 65-0489368
Alamo Rent-A-Car (Canada), Inc. Florida 65-0568278
DKBERT Assoc. Florida 59-1946177
(General Partnership)
Green Corn, Inc. Florida 59-1694750
Guy Salmon USA, Inc. Florida 65-0200221
Guy Salmon USA, Ltd. Florida 65-0200220
(Limited Partnership)
Territory Blue, Inc. Florida 65-0579364
Tower Advertising Group, Inc. Florida 65-0163142
(1) Address, including zip code, and 110 Tower
telephone number, including area code, 110 S.E. 6th Street
of principal executive offices of Fort Lauderdale, Florida 33301
Co-Registrants (954) 522-0000
ALAMO RENT-A-CAR, INC.
Table of Contents
Form 10-Q for the Quarterly Period
Ended September 30, 1996
PART I FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Combined Condensed Financial Statements:
Balance Sheets - September 30, 1996 and December 31, 1995 1
Statements of Operations - Three and Nine Months Ended
September 30, 1996 and 1995 2
Statements of Cash Flows - Nine Months ended September 30,
1996 and 1995 3
Combining Condensed Financial Statements:
Balance Sheets - September 30, 1996 and December 31, 1995 4
Statements of Operations - Three Months ended September
30, 1996 and 1995 6
Statements of Operations - Nine Months ended September 30,
1996 and 1995 8
Statements of Cash Flows - Nine Months Ended September 30,
1996 and 1995 10
Notes to Combined and Combining Condensed Financial
Statements 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 26
PART II OTHER INFORMATION
Item 1. Legal Proceedings 29
Item 2. Changes in Securities 29
Item 3. Defaults upon Senior Securities 29
Item 4. Submission of Matters to a Vote of Security Holders 29
Item 5. Other Information 29
Item 6. Exhibits and Reports on Form 8-K 29
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combined Condensed Balance Sheets
(In thousands)
September 30, December 31,
Assets 1996 1995
---- ----
(Unaudited) (Audited)
Cash and cash equivalents $ 35,289 $ 11,953
Investments 59,160 62,626
Receivables:
Trade, less allowance for doubtful
accounts of $3,897 and $5,214 in
1996 and 1995, respectively 100,666 67,418
Vehicle 141,605 94,408
Notes, mortgages and other due
from affiliates 5,468 2,409
Other 12,631 7,775
----------- ----------
260,370 172,010
----------- ----------
Revenue earning vehicles, net 2,201,583 1,478,409
Property and equipment, net 215,800 213,985
Other assets 103,007 61,762
----------- ----------
$ 2,875,209 $2,000,745
=========== ==========
Liabilities and Equity
Notes payable and lines of credit
secured by revenue earning vehicles $ 2,254,703 $1,546,122
Estimated auto liability claims 125,761 112,448
Accounts payable to affiliates 3,892 1,677
Accounts payable 136,793 116,374
Other debt 233,606 137,266
Accrued expenses 50,552 11,050
Customer deposits 9,462 9,843
----------- ----------
Total liabilities 2,814,769 1,934,780
----------- ----------
Minority interest (deficiency in assets) (259) --
Equity:
Common stock 5 5
Additional paid-in capital 9,494 9,494
Retained earnings and partners' capital 48,885 53,881
Cumulative translation adjustment 2,315 2,585
----------- ----------
Total equity 60,699 65,965
----------- ----------
$ 2,875,209 $2,000,745
=========== ==========
The accompanying notes are an integral part of these financial statements.
-1-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combined Condensed Statements of Operations
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------- --------------
1996 1995 1996 1995
---- ---- ---- ----
Revenue:
Vehicle rentals $ 469,680 $ 426,429 $ 1,170,360 $ 1,065,501
Interest 1,577 690 3,551 3,537
Revenue from affiliates 428 -- 1,053 --
Other 1,432 804 2,784 1,868
--------- --------- ----------- -----------
473,117 427,923 1,177,748 1,070,906
--------- --------- ----------- -----------
Costs and expenses:
Vehicle depreciation 129,286 118,532 325,144 300,436
Vehicle interest 37,589 35,846 93,153 97,073
Vehicle leases 9,554 21,814 19,208 52,884
Selling, general and administrative 265,681 227,412 712,410 635,274
Other interest 6,493 3,335 18,279 8,800
Minority interest in net loss of
consolidated subsidiaries -- (827) (653) (1,988)
--------- --------- ----------- -----------
448,603 406,112 1,167,541 1,092,479
--------- --------- ----------- -----------
Net income (loss) $ 24,514 $ 21,811 $ 10,207 $ (21,573)
========= ========= =========== ===========
The accompanying notes are an integral part of these financial statements.
-2-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
--------------------------
1996 1995
---- ----
Cash flows from operating activities $ 341,499 $ 301,834
----------- -----------
Cash flows from investing activities:
Cash received from sale of revenue
earning vehicles 1,281,044 1,580,650
Cash paid to suppliers of revenue
earning vehicles (2,376,575) (1,961,988)
Sale of investments 3,466 22,252
Capital expenditures (19,629) (27,185)
Proceeds from sale of property and equipment 3,112 855
----------- -----------
Net cash used in investing activities (1,108,582) (385,416)
----------- -----------
Cash flows from financing activities:
Proceeds from revenue earning vehicle financing 2,427,356 2,002,832
Principal payments on revenue earning
vehicle financing (1,717,883) (1,933,683)
Proceeds from other debt 104,529 52,812
Principal payments on other debt (8,240) (28,732)
Dividends and distributions (15,203) (11,258)
Contributions -- 1,108
----------- -----------
Net cash provided by financing activities 790,559 83,079
----------- -----------
Effect of exchange rate changes on cash (140) 1,887
----------- -----------
Net increase in cash and cash equivalents 23,336 1,384
Cash and cash equivalents at beginning of period 11,953 15,698
----------- -----------
Cash and cash equivalents at end of period $ 35,289 $ 17,082
=========== ===========
Supplemental disclosures:
Interest paid $ 99,405 $ 95,657
=========== ===========
Income tax payments $ 399 $ 930
=========== ===========
The accompanying notes are an integral part of these financial statements.
-3-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Balance Sheets
(Unaudited)
(In thousands)
September 30, 1996
Alamo
GUSA Affiliated
Assets Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- ---------- ------------ --------
Cash and cash equivalents $ 28,406 $ 45 $ 4,866 $ 1,972 $ -- $ 35,289
Investments 59,160 -- -- -- -- 59,160
Receivables:
Trade, less allowance for
doubtful accounts of
$2,127, $-0-, $1,656 and
$114 for Alamo, DKBERT,
GUSA, Ltd., and Alamo
Affiliated Companies,
respectively 72,728 -- 26,610 1,328 -- 100,666
Vehicle 117,427 -- 23,200 978 -- 141,605
Notes, mortgages and other due from
affiliates 74,649 1,858 4,745 7,586 (83,370) 5,468
Other 7,454 273 2,332 2,604 (32) 12,631
---------- --------- --------- -------- ----------- -----------
272,258 2,131 56,887 12,496 (83,402) 260,370
---------- --------- --------- -------- ----------- -----------
Revenue earning vehicles, net 1,992,653 -- 191,741 17,189 -- 2,201,583
Property and equipment, net 78,799 132,221 3,464 1,316 -- 215,800
Other assets 81,798 2,019 18,992 851 (653) 103,007
---------- --------- --------- -------- ----------- -----------
$2,513,074 $ 136,416 $ 275,950 $ 33,824 $ (84,055) $ 2,875,209
========== ========= ========= ======== =========== ===========
Liabilities and Equity
Notes payable and lines of credit secured
by revenue earning vehicles $2,025,747 $ -- $ 208,381 $ 20,575 $ -- $ 2,254,703
Mortgages and notes payable to affiliates -- 1,666 4,283 2,232 (8,181) --
Estimated auto liability claims 122,743 -- 2,817 201 -- 125,761
Accounts payable to affiliates 4,289 -- 60,911 11,807 (73,115) 3,892
Accounts payable 119,140 1,140 16,782 2,791 (3,060) 136,793
Other debt 97,800 118,948 16,858 -- -- 233,606
Accrued expenses 45,765 2,710 2,014 1,155 (1,092) 50,552
Customer deposits 8,534 -- 736 192 -- 9,462
---------- --------- --------- -------- ----------- -----------
Total liabilities 2,424,018 124,464 312,782 38,953 (85,448) 2,814,769
---------- --------- --------- -------- ----------- -----------
Minority interest (deficiency in assets) -- -- (140) 156 (275) (259)
Equity:
Common stock 1 -- -- 4 -- 5
Additional paid-in capital 9,568 -- -- 2,102 (2,176) 9,494
Retained earnings and partners' capital 79,487 11,952 (39,007) (7,455) 3,908 48,885
Cumulative translation adjustment -- -- 2,315 64 (64) 2,315
---------- --------- --------- -------- ----------- -----------
Total equity 89,056 11,952 (36,692) (5,285) 1,668 60,699
---------- --------- --------- -------- ----------- -----------
$2,513,074 $ 136,416 $ 275,950 $ 33,824 $ (84,055) $ 2,875,209
========== ========= ========= ======== =========== ===========
The accompanying notes are an integral part of these financial statements.
-4-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Balance Sheets
(Audited)
(In thousands)
December 31, 1995
Alamo
GUSA Affiliated
Assets Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ --------
Cash and cash equivalents $ 5,987 $ 586 $3,777 $ 1,603 $ -- $ 11,953
Investments 62,626 -- -- -- -- 62,626
Receivables:
Trade, less allowance for
doubtful accounts of
$1,423, $-0-, $3,692 and
$99 for Alamo, DKBERT, GUSA
Ltd., and Alamo Affiliated
Companies, respectively 42,004 -- 24,770 644 -- 67,418
Vehicle 78,619 -- 15,494 295 -- 94,408
Notes, mortgages and other due from
affiliates 21,960 680 7,128 1,772 (29,131) 2,409
Other 6,586 211 480 498 -- 7,775
---------- --------- --------- -------- ----------- ----------
149,169 891 47,872 3,209 (29,131) 172,010
---------- --------- --------- -------- ----------- ----------
Revenue earning vehicles, net 1,327,572 -- 145,541 5,296 -- 1,478,409
Property and equipment, net 73,504 134,789 4,487 1,205 -- 213,985
Other assets 40,155 2,683 19,458 948 (1,482) 61,762
---------- --------- --------- -------- ----------- ----------
$1,659,013 $ 138,949 $ 221,135 $ 12,261 $ (30,613) $2,000,745
========== ========= ========= ======== =========== ==========
Liabilities and Equity
Notes payable and lines of credit secured
by revenue earning vehicles $1,346,651 $ -- $ 193,936 $ 5,535 $ -- $1,546,122
Mortgages and notes payable to
affiliates -- 8,815 4,827 16 (13,658) --
Estimated auto liability claims 110,334 -- 2,079 35 -- 112,448
Accounts payable to affiliates 5,354 3,938 1,931 6,977 (16,523) 1,677
Accounts payable 88,302 2,435 23,467 2,203 (33) 116,374
Other debt 8,700 109,128 19,438 -- -- 137,266
Accrued expenses 8,543 836 1,183 488 -- 11,050
Customer deposits 8,446 1,928 808 142 (1,481) 9,843
---------- --------- --------- -------- ----------- ----------
Total liabilities 1,576,330 127,080 247,669 15,396 (31,695) 1,934,780
---------- --------- --------- -------- ----------- ----------
Minority interest (deficiency in assets) -- -- 119 156 (275) --
Equity:
Common stock 1 -- -- 4 -- 5
Additional paid-in capital 9,568 -- -- 2,102 (2,176) 9,494
Retained earnings and partners'
capital 73,114 11,869 (29,326) (5,309) 3,533 53,881
Cumulative translation adjustment -- -- 2,673 (88) -- 2,585
---------- --------- --------- -------- ----------- ----------
Total equity 82,683 11,869 (26,653) (3,291) 1,357 65,965
---------- --------- --------- -------- ----------- ----------
$1,659,013 $ 138,949 $ 221,135 $ 12,261 $ (30,613) $2,000,745
========== ========= ========= ======== =========== ==========
The accompanying notes are an integral part of these financial statements.
-5-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Statements of Operations
(Unaudited)
(In thousands)
Three Months Ended September 30, 1996
-------------------------------------------------------------
Alamo
GUSA Affiliated
Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ -------
Revenue:
Vehicle rentals $421,689 $ -- $ 44,279 $ 3,827 $ (115) $469,680
Interest 1,358 -- 58 3 158 1,577
Revenue from affiliates -- 4,478 23 6,225 (10,298) 428
Other -- 471 1,006 199 (244) 1,432
-------- ------- -------- -------- --------- --------
423,047 4,949 45,366 10,254 (10,499) 473,117
-------- ------- -------- -------- --------- --------
Costs and expenses:
Vehicle depreciation 118,645 -- 9,769 872 -- 129,286
Vehicle interest 34,628 -- 2,783 178 -- 37,589
Vehicle leases 7,213 -- 1,971 370 -- 9,554
Selling, general and administrative 231,626 1,861 33,299 9,600 (10,705) 265,681
Other interest 3,695 2,909 (371) 114 146 6,493
-------- ------- -------- -------- --------- --------
395,807 4,770 47,451 11,134 (10,559) 448,603
-------- ------- -------- -------- --------- --------
Net income (loss) $ 27,240 $ 179 $ (2,085) $ (880) $ 60 $ 24,514
======== ======= ======== ======== ========= ========
The accompanying notes are an integral part of these financial statements.
-6-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Statements of Operations
(Unaudited)
(In thousands)
Three Months Ended September 30, 1995
----------------------------------------------------------------
Alamo
GUSA Affiliated
Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ --------
Revenue:
Vehicle rentals $388,766 $ -- $ 37,662 $ 2,974 $ (2,973) $ 426,429
Interest 2,125 (8) 32 8 (1,467) 690
Revenue from affiliates -- 3,622 (146) 156 (3,632) --
Other -- 149 1,236 1,006 (1,587) 804
-------- -------- -------- ------- --------- ---------
390,891 3,763 38,784 4,144 (9,659) 427,923
-------- -------- -------- ------- --------- ---------
Costs and expenses:
Vehicle depreciation 109,553 -- 8,646 333 -- 118,532
Vehicle interest 32,326 -- 3,381 139 -- 35,846
Vehicle leases 19,658 -- 1,825 331 -- 21,814
Selling, general and administrative 203,499 1,767 27,948 3,840 (9,642) 227,412
Other interest 822 2,485 291 (27) (236) 3,335
Minority interest in net loss of
consolidated subsidiaries -- -- (827) -- -- (827)
-------- -------- -------- ------- --------- ---------
365,858 4,252 41,264 4,616 (9,878) 406,112
-------- -------- -------- ------- --------- ---------
Net income (loss) $ 25,033 $ (489) $ (2,480) $ (472) $ 219 $ 21,811
======== ======== ======== ======= ========= =========
The accompanying notes are an integral part of these financial statements.
-7-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Statements of Operations
(Unaudited)
(In thousands)
Nine Months Ended September 30, 1996
----------------------------------------------------------------------
Alamo
GUSA Affiliated
Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ --------
Revenue:
Vehicle rentals $1,054,778 $ -- $ 107,889 $ 7,969 $ (276) $ 1,170,360
Interest 6,155 -- 287 7 (2,898) 3,551
Revenue from affiliates -- 13,416 2,104 20,171 (34,638) 1,053
Other -- 793 1,252 739 -- 2,784
---------- -------- --------- -------- ----------- -----------
1,060,933 14,209 111,532 28,886 (37,812) 1,177,748
---------- -------- --------- -------- ----------- -----------
Costs and expenses:
Vehicle depreciation 305,025 -- 18,425 1,694 -- 325,144
Vehicle interest 85,339 -- 7,479 335 -- 93,153
Vehicle leases 14,328 -- 3,972 908 -- 19,208
Selling, general and administrative 625,748 5,114 89,525 27,300 (35,277) 712,410
Other interest 9,571 8,879 2,465 274 (2,910) 18,279
Minority interest in net loss of
consolidated subsidiaries -- -- (653) -- -- (653)
---------- -------- --------- -------- ----------- -----------
1,040,011 13,993 121,213 30,511 (38,187) 1,167,541
---------- -------- --------- -------- ----------- -----------
Net income (loss) $ 20,922 $ 216 $ (9,681) $ (1,625) $ 375 $ 10,207
========== ======== ========= ======== =========== ===========
The accompanying notes are an integral part of these financial statements.
-8-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Statements of Operations
(Unaudited)
(In thousands)
Nine Months Ended September 30, 1995
----------------------------------------------------------------------
Alamo
GUSA Affiliated
Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ --------
Revenue:
Vehicle rentals $ 966,815 $ -- $ 96,312 $ 5,347 $ (2,973) $ 1,065,501
Interest 6,396 `158 91 22 (3,130) 3,537
Revenue from affiliates -- 11,800 (146) 824 (12,478) --
Other -- 468 4,472 1,439 (4,511) 1,868
--------- -------- --------- -------- ----------- -----------
973,211 12,426 100,729 7,632 (23,092) 1,070,906
--------- -------- --------- -------- ----------- -----------
Costs and expenses:
Vehicle depreciation 281,382 -- 18,458 596 -- 300,436
Vehicle interest 90,848 -- 6,062 163 -- 97,073
Vehicle leases 46,953 -- 5,091 840 -- 52,884
Selling, general and administrative 566,089 4,937 79,179 6,767 (21,698) 635,274
Other interest 2,571 7,422 706 -- (1,899) 8,800
Minority interest in net loss of
consolidated subsidiaries -- -- (1,988) -- -- (1,988)
--------- -------- --------- -------- ----------- -----------
987,843 12,359 107,508 8,366 (23,597) 1,092,479
--------- -------- --------- -------- ----------- -----------
Net income (loss) $ (14,632) $ 67 $ (6,779) $ (734) $ 505 $ (21,573)
========= ======== ========= ======== =========== ===========
The accompanying notes are an integral part of these financial statements.
-9-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended September 30, 1996
-----------------------------------------------------------------------
Alamo
GUSA Affiliated
Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ --------
Cash flows from operating activities $ 351,115 $ (2,790) $ 2,124 $ (1,801) $ (7,149) $ 341,499
----------- -------- --------- -------- -------- -----------
Cash flows from investing activities:
Cash received from sale of revenue
earning vehicles 1,065,035 -- 208,837 7,172 -- 1,281,044
Cash paid to suppliers of revenue
earning vehicles (2,073,949) -- (280,862) (21,764) -- (2,376,575)
Sale of investments 3,466 -- -- -- -- 3,466
Capital expenditures (16,463) (2,248) (625) (293) -- (19,629)
Proceeds from sale of property and
equipment 1,123 1,959 30 -- -- 3,112
----------- -------- --------- -------- -------- -----------
Net cash used in investing
activities (1,020,788) (289) (72,620) (14,885) -- (1,108,582)
----------- -------- --------- -------- -------- -----------
Cash flows from financing activities:
Proceeds from revenue earning vehicle
financing 2,070,753 -- 333,924 22,679 -- 2,427,356
Principal payments on revenue earning
vehicle financing (1,391,657) -- (318,894) (7,332) -- (1,717,883)
Proceeds from other debt 90,000 12,500 2,029 -- -- 104,529
Principal payments on other debt (900) (2,680) (4,660) -- -- (8,240)
Advances from affiliates 848 -- 62,403 2,292 (65,543) --
Payments to affiliates (62,403) (7,149) (3,140) -- 72,692 --
Dividends and distributions (14,549) (133) -- (521) -- (15,203)
----------- -------- --------- -------- -------- -----------
Net cash provided by financing
activities 692,092 2,538 71,662 17,118 7,149 790,559
----------- -------- --------- -------- -------- -----------
Effect of exchange rate changes on cash -- -- (77) (63) -- (140)
----------- -------- --------- -------- -------- -----------
Net increase (decrease) in cash and cash
equivalents 22,419 (541) 1,089 369 -- 23,336
Cash and cash equivalents at beginning of
period 5,987 586 3,777 1,603 -- 11,953
----------- -------- --------- -------- -------- -----------
Cash and cash equivalents at end of period $ 28,406 $ 45 $ 4,866 $ 1,972 $ -- $ 35,289
=========== ======== ========= ======== ======== ===========
Supplemental disclosures:
Interest paid $ 82,532 $ 12,626 $ 8,231 $ 335 $ (4,319) $ 99,405
=========== ======== ========= ======== ======== ===========
Income tax payments $ 399 $ -- $ -- $ -- $ -- $ 399
=========== ======== ========= ======== ======== ===========
The accompanying notes are an integral part of these financial statements
-10-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Combining Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended September 30, 1995
--------------------------------------------------------------------------
Alamo
GUSA Affiliated
Alamo DKBERT Ltd. Companies Eliminations Combined
----- ------ ---- --------- ------------ --------
Cash flows from operating activities $ 291,619 $ 3,970 $ 2,855 $ (656) $ 4,046 $ 301,834
----------- -------- --------- ------- -------- -----------
Cash flows from investing activities:
Cash received from sale of revenue
earning vehicles 1,450,104 -- 127,917 2,629 -- 1,580,650
Cash paid to suppliers of revenue
earning vehicles (1,736,356) -- (219,531) (8,678) 2,577 (1,961,988)
Sale of investments 19,496 2,756 -- -- -- 22,252
Capital expenditures (19,398) (6,171) (862) (877) 123 (27,185)
Proceeds from sale of property and
equipment 437 418 -- -- -- 855
----------- -------- --------- ------- -------- -----------
Net cash used in investing
activities (285,717) (2,997) (92,476) (6,926) 2,700 (385,416)
----------- -------- --------- ------- -------- -----------
Cash flows from financing activities:
Proceeds from revenue earning vehicle
financing 1,764,370 -- 229,609 8,853 -- 2,002,832
Principal payments on revenue earning
vehicle financing (1,765,183) -- (164,128) (4,372) -- (1,933,683)
Proceeds from other debt -- 52,812 -- 16 (16) 52,812
Principal payments on other debt (1,880) (24,181) (2,550) (6) (115) (28,732)
Advances from affiliates 25,214 4,118 32,305 3,879 (65,516) --
Payments to affiliates (25,489) (31,591) (1,423) -- 58,503 --
Dividends and distributions (8,007) (1,897) -- (1,353) (1) (11,258)
Contributions 900 -- -- 208 -- 1,108
----------- -------- --------- ------- -------- -----------
Net cash provided by (used in)
financing activities (10,075) (739) 93,813 7,225 (7,145) 83,079
----------- -------- --------- ------- -------- -----------
Effect of exchange rate changes on cash -- -- 1,463 25 399 1,887
----------- -------- --------- ------- -------- -----------
Net increase (decrease) in cash and cash
equivalents (4,173) 234 5,655 (332) -- 1,384
Cash and cash equivalents at beginning of
period 6,598 466 6,400 2,234 -- 15,698
----------- -------- --------- ------- -------- -----------
Cash and cash equivalents at end of period $ 2,425 $ 700 $ 12,055 $ 1,902 $ -- $ 17,082
=========== ======== ========= ======= ======== ===========
Supplemental disclosures:
Interest paid $ 83,203 $ 6,966 $ 7,270 $ 124 $ (1,906) $ 95,657
=========== ======== ========= ======= ======== ===========
Income tax payments $ 930 $ -- $ -- $ -- $ -- $ 930
=========== ======== ========= ======= ======== ===========
The accompanying notes are an integral part of these financial statements.
-11-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
(1) Summary of Significant Accounting Policies
(a) Interim Financial Statements and Basis of Presentation
The accompanying condensed financial statements include the accounts of the
following entities, each entity affiliated with each other as a result of
common ownership and common management: (i) Alamo Rent-A-Car, Inc. and
Affiliate (Alamo), (ii) DKBERT, Assoc., (DKBERT), (iii) Guy Salmon USA,
Ltd. and Subsidiaries (GUSA Ltd.), and (iv) Alamo Rent-A-Car (Belgium),
Inc. (Alamo Belgium), Alamo Rent-A-Car (Canada), Inc. (Alamo Canada), Green
Corn, Inc. (Green Corn), Guy Salmon (USA), Inc. (GUSA Inc.), Territory
Blue, Inc. (Territory Blue), and Tower Advertising Group, Inc. (Tower)
(collectively, the Alamo Affiliated Companies). The combined and combining
financial statements of each of the above entities (collectively referred
to as the "Companies") include the accounts of the Companies and their
respective majority-owned subsidiaries. All significant intercompany
accounts and transactions are eliminated in combination. The following is a
description of the financial statements included in the accompanying
combined and combining financial statements:
(i) The consolidated financial statements of Alamo and Alamo Funding, L.P.
(AFL). Alamo has a 99 percent limited partnership interest in AFL and
AFL's 1 percent general partner is a corporation owned by the
shareholders of Alamo. All significant intercompany balances and
transactions have been eliminated in consolidation. Alamo is engaged
in the car rental business throughout the United States, primarily on
a daily or weekly basis. AFL provides financing to Alamo for the
financing or refinancing of revenue earning vehicles. AFL and Alamo
have separate corporate existences and separate financial conditions
and records. The assets of AFL will be available only to satisfy the
claims of its creditors and will not be available to any creditors of
Alamo or its other affiliates.
(ii) The financial statements of DKBERT, a Florida partnership, which owns
and leases real property. DKBERT is economically dependent on Alamo
for rental income sufficient to service its indebtedness.
(iii)The consolidated financial statements of GUSA Ltd., a Florida limited
partnership and the holding company for certain European car rental
affiliates of Alamo. The subsidiaries of GUSA Ltd. are (i) Alamo
Rent-A-Car (UK) Limited, which conducts operations in the United
Kingdom; (ii) Alamo Rent-A-Car, AG, Zurich which conducts Swiss
operations; (iii) Alamo Autovermietung GmbH, which conducts German
operations; and (iv) Alamo Rent-A-Car (Vienna) GmbH, organized April
1995 and closed April 1996. All significant intercompany balances and
transactions have been eliminated in consolidation. GUSA Ltd. and its
subsidiaries are economically dependent on Alamo for administrative
support and working capital required to supplement its cash flow needs
and to provide interim funding for capital expenditures.
(iv) The combined financial statements of the Alamo Affiliated Companies,
as follows: (i) Alamo Belgium which conducts car rental operations in
Belgium; (ii) Alamo Canada which conducts car rental operations in
Canada; (iii) Green Corn, an entity with limited assets; (iv) GUSA
Inc., which owns 79% of Alamo Rent-A-Car B.V. which conducts car
rental operations in The Netherlands and also
-12-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
owns a minority interest in GUSA Ltd.; (v) Territory Blue, a
management company which contracts with certain employees of Alamo and
offers management services to certain other entities; and (vi) Tower,
which provides advertising services to Alamo. The combined financial
statements include the accounts of the Alamo Affiliated Companies and
their majority-owned subsidiaries. Minority interest represents GUSA
Ltd.'s 21% ownership in Alamo Rent-A-Car B.V. All significant
intercompany accounts and transactions are eliminated in combination.
The Alamo Affiliated Companies are economically dependent on Alamo for
administrative support and working capital required to supplement
their cash flow needs and to provide interim funding for capital
expenditures.
The accompanying unaudited combined and combining condensed financial
statements have been prepared by the Companies in accordance with the
accounting policies described in the 1995 Annual Report and should be read
in conjunction with the combined financial statements and notes which
appear in that report. These statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all normal recurring adjustments considered necessary for a fair
presentation have been included.
(b) Reclassifications
Certain reclassifications have been made to the 1995 financial statements
to conform to the presentation used in 1996.
(2) Revenue Earning Vehicles
Revenue earning vehicles consist of the following (in thousands):
Alamo
GUSA Affiliated
Alamo Ltd. Companies Combined
----- ---- --------- --------
As of September 30, 1996
Revenue earning vehicles $ 2,228,650 $ 212,207 $ 18,383 $ 2,459,240
Less accumulated
depreciation (235,997) (20,466) (1,194) (257,657)
----------- --------- ----------- -----------
$ 1,992,653 $ 191,741 $ 17,189 $ 2,201,583
=========== ========= =========== ===========
As of December 31, 1995
Revenue earning vehicles $ 1,539,814 $ 156,113 $ 6,018 $ 1,701,945
Less accumulated
depreciation (212,242) (10,572) (722) (223,536)
----------- --------- ----------- -----------
$ 1,327,572 $ 145,541 $ 5,296 $ 1,478,409
=========== ========= =========== ===========
-13-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
(3) Notes Payable and Lines of Credit Secured By Revenue Earning Vehicles
Notes payable and lines of credit secured by revenue earning vehicles
consist of the following (in thousands):
September 30, December 31,
1996 1995
Alamo ---- ----
Amounts under $750 million revolving
credit agreement and predecessor
agreements with termination date of
June 30, 1999; secured by eligible
vehicle collateral and vehicle
receivable balances; interest at
formulas based on prime, Federal funds
or LIBOR at Alamo's discretion $ 576,995 $ 19,393
Amounts under $580 million loan
agreement with termination date of June
10, 1997; secured by eligible vehicle
collateral and vehicle receivable
balances; interest based on market
dictated commercial paper rates 576,232 579,001
Senior secured notes payable with
interest at fixed rates ranging from
5.58% to 7.08% with various maturity
dates and amounts as follows: December
15, 1996 - $133 million; December 15,
1997 - $25 million; December 15, 1998 -
$113 million; December 15, 2000 - $94
million; and, December 15, 2003 - $80.5
million; secured by eligible vehicle
collateral and vehicle receivable
balances 445,500 445,500
Amounts under $250 million loan
agreement with termination date of
September 19, 1997; secured by eligible
vehicle collateral and vehicle
receivable balances; interest based on
market dictated commercial paper rates 246,982 236,357
Amounts under $175 million revolving
credit agreement and predecessor
agreements with termination date of
December 1, 1997; secured by eligible
vehicle collateral and vehicle
receivable balances; interest at
formulas based on prime or LIBOR at
Alamo's discretion 134,000 -
Amounts to be financed after period end
under various revolving credit
agreements 46,038 66,400
----------- -----------
Alamo subtotal 2,025,747 1,346,651
----------- -----------
-14-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
September 30, December 31,
1996 1995
GUSA Ltd. ---- ----
Amounts under various uncommitted
revolving lease facilities with
financing institutions in Great
Britain; secured by eligible vehicle
collateral; interest based on an as
quoted basis dictated by market
competition; no stated expiration
dates, reviewed annually $ 167,998 $ 157,088
Amounts under deutsche mark (DM) 27.5
million credit agreement; secured by
eligible vehicle collateral and vehicle
receivable balances; interest based on
LIBOR; termination date, February 1997 17,351 -
Amounts under DM 23.0 million revolving
credit agreement with various maturity
dates; secured by eligible vehicle
collateral and certain real property;
interest ranging from 3.8% - 9.0% 13,100 11,368
Amounts under DM term loan and
predecessor agreements; secured by
eligible vehicle collateral and vehicle
receivable balances; interest based on
FIBOR plus 125 basis points or ICM rate
plus 150 basis points - 14,139
Other, including amounts to be financed
after period end, under various
revolving lease facilities 9,932 11,341
----------- -----------
GUSA Ltd. subtotal 208,381 193,936
----------- -----------
Alamo Affiliated Companies
Amounts under Belgium franc (BEF)
155.52 million credit facility; secured
by eligible vehicle collateral; interest
at Brussels Interbank offered rate plus
110 basis points; termination date,
June 1997; guaranteed by Alamo 4,326 1,946
Amounts under Canadian dollar C$20.0 million
credit agreement; secured by eligible
vehicle collateral; interest at Agent's
Bankers Acceptances plus 62.5 basis
points; termination date, June 1998;
guaranteed by Alamo 11,791 3,539
Other, including amounts to be financed
after period end, under various
revolving credit agreements 4,458 50
----------- -----------
Alamo Affiliated Companies subtotal 20,575 5,535
----------- -----------
Combined $ 2,254,703 $ 1,546,122
=========== ===========
-15-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
(4) Other Debt
Other debt consists of the following (in thousands):
September 30, December 31,
1996 1995
Alamo ---- ----
11 3/4% Senior Notes due 2006, interest
payable semi-annually on January 31 and
July 31 of each year, commencing July
31, 1996; unsecured $ 90,000 $ -
Note payable to bank with interest at a
formula based on LIBOR or prime paid
quarterly; secured by a building;
principal payable in quarterly
installments beginning March 1996 and
based on the balance outstanding at
that date, due December 2003 7,800 8,700
--------- ---------
Alamo subtotal 97,800 8,700
--------- ---------
DKBERT
Mortgages payable to GMAC and
predecessor agreements with interest at
9.193%; payable in monthly
installments, due July 2005; secured by
real property; guaranteed by Alamo 108,169 107,840
11 3/4% Senior Notes due 2006, interest
payable semi-annually on January 31 and
July 31 of each year, commencing July
31, 1996; unsecured 10,000 -
Mortgages payable to bank with interest
at 0.75% over prime; variable principal
payments due December 2000; secured by
real property; guaranteed by Alamo 779 934
Other mortgages payable - 354
--------- ---------
DKBERT subtotal 118,948 109,128
--------- ---------
-16-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
September 30, December 31,
1996 1995
---- ----
GUSA LTD.
Term loan agreement with bank, interest
at LIBOR plus 125 basis points, payable
monthly; principal payable in quarterly
installments of $331,000, due January
1999; secured by non-vehicle equipment,
trade receivables and leasehold
improvements 3,295 $ 4,285
Amounts under Great Britain pound (GBP)
10 million revolving credit commitment
to expire December 21, 1996; interest
based on Sterling LIBOR plus 125 basis
points or base rate plus 125 basis
points; secured by non-vehicle
equipment and leaseholds 13,563 11,431
Note payable to minority shareholder of
combined affiliate, paid April 1996 - 3,722
--------- ---------
GUSA Ltd. subtotal 16,858 19,438
--------- ---------
Combined $ 233,606 $ 137,266
========= =========
The 11 3/4% Senior Notes due 2006 (the "Senior Notes") were issued by the
entities described in Note 1 (the "Issuers") in connection with a registration
statement on Form S-1 with the Securities and Exchange Commission. The Senior
Notes are unsecured, joint and several obligations of each of the Issuers and
rank pari passu in right of payment with all existing and future debt (as
defined) of the Issuers. The Senior Notes are effectively subordinated to all
existing and future secured indebtedness of each of the Issuers.
-17-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
(5) Condensed Financial Information of Alamo Affiliated Companies
The following table summarizes condensed financial statements of the
Alamo Affiliated Companies (in thousands):
Balance Sheets:
As of September 30, 1996
-------------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Assets:
Cash and cash equivalents $ 955 $ 701 $ 45 $ 264 $ -- $ 7 $ 1,972
Receivables, net 722 3,235 79 1,087 4,248 3,125 12,496
Revenue earning vehicles, net 3,451 8,926 -- 4,812 -- -- 17,189
Property and equipment, net 34 1,108 -- 101 -- 73 1,316
Other assets 166 199 -- 362 107 17 851
-------- -------- ------- ------- ------ ------- --------
$ 5,328 $ 14,169 $ 124 $ 6,626 $4,355 $ 3,222 $ 33,824
======== ======== ======= ======= ====== ======= ========
Liabilities and Equity:
Notes payable and lines of credit
secured by revenue earning
vehicles $ 4,326 $ 11,791 $ -- $ 4,458 $ -- $ -- $ 20,575
Accounts payable to affiliates 845 3,253 -- 4,263 3,308 2,370 14,039
Accounts payable 462 716 -- 850 -- 763 2,791
Accrued expenses and customer
deposits 84 346 161 8 922 27 1,548
-------- -------- ------- ------- ------ ------- --------
5,717 16,106 161 9,579 4,230 3,160 38,953
-------- -------- ------- ------- ------ ------- --------
Minority interest -- -- -- 156 -- -- 156
Equity (deficit) (389) (1,937) (37) (3,109) 125 62 (5,285)
-------- -------- ------- ------- ------ ------- --------
$ 5,328 $ 14,169 $ 124 $ 6,626 $4,355 $ 3,222 $ 33,824
======== ======== ======= ======= ====== ======= ========
-18-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
As of December 31, 1995
------------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Assets:
Cash and cash equivalents $ 597 $ 283 $ 451 $ 289 $ -- $ (17) $ 1,603
Receivables, net 874 118 381 783 -- 1,053 3,209
Revenue earning vehicles, net 2,044 3,211 -- 41 -- -- 5,296
Property and equipment, net 37 1,018 -- 113 -- 37 1,205
Other assets 131 206 -- 611 -- -- 948
------- ------- ------ ------- ------ -------- --------
$ 3,683 $ 4,836 $ 832 $ 1,837 $ -- $ 1,073 $ 12,261
======= ======= ====== ======= ====== ======== ========
Liabilities and Equity:
Notes payable and lines of credit
secured by revenue earning
vehicles $ 1,946 $ 3,589 $ -- $ -- $ -- $ -- $ 5,535
Accounts payable to affiliates 1,187 1,887 -- 3,319 -- 600 6,993
Accounts payable 420 214 -- 598 -- 971 2,203
Accrued expenses and customer
deposits 166 107 287 105 -- -- 665
------- ------- ------ ------- ------ -------- --------
3,719 5,797 287 4,022 -- 1,571 15,396
------- ------- ------ ------- ------ -------- --------
Minority interest -- -- -- 156 -- -- 156
Equity (deficit) (36) (961) 545 (2,341) -- (498) (3,291)
------- ------- ------ ------- ------ -------- --------
$ 3,683 $ 4,836 $ 832 $ 1,837 $ -- $ 1,073 $ 12,261
======= ======= ====== ======= ====== ======== ========
-19-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
Statements of Operations:
Three months ended September 30, 1996
-----------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Revenue:
Vehicle rentals $ 508 $ 2,147 $ -- $ 1,172 $ -- $ -- $ 3,827
Revenue from affiliates 25 206 -- -- 3,610 2,384 6,225
Interest and other revenue -- -- 3 199 -- -- 202
------- ------- ------ ------- ------- ------- --------
533 2,353 3 1,371 3,610 2,384 10,254
------- ------- ------ ------- ------- ------- --------
Costs and expenses:
Vehicle depreciation 160 675 -- 37 -- -- 872
Vehicle interest 17 161 -- -- -- -- 178
Vehicle leases (6) -- -- 376 -- -- 370
Selling, general and administrative
and other interest 646 1,588 3 1,197 4,021 2,259 9,714
------- ------- ------ ------- ------- ------- --------
817 2,424 3 1,610 4,021 2,259 11,134
------- ------- ------ ------- ------- ------- --------
Net income (loss) $ (284) $ (71) $ -- $ (239) $ (411) $ 125 $ (880)
======= ======= ====== ======= ======= ======= ========
Three months ended September 30, 1995
-----------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Revenue:
Vehicle rentals $ 560 $ 1,189 $ -- $ 1,225 $ -- $ -- $ 2,974
Revenue from affiliates -- -- (31) (171) -- 358 156
Interest and other revenue (36) -- 99 (66) -- 1,017 1,014
------- ------- ------ ------- ------- ------- --------
524 1,189 68 988 -- 1,375 4,144
------- ------- ------ ------- ------- ------- --------
Costs and expenses:
Vehicle depreciation 81 234 -- 18 -- -- 333
Vehicle interest 57 82 -- -- -- -- 139
Vehicle leases -- -- -- 331 -- -- 331
Selling, general and administrative
and other interest
419 987 -- 1,202 -- 1,205 3,813
------- ------- ------ ------- ------- ------- --------
557 1,303 -- 1,551 -- 1,205 4,616
------- ------- ------ ------- ------- ------- --------
Net income (loss) $ (33) $ (114) $ 68 $ (563) $ -- $ 170 $ (472)
======= ======= ====== ======= ======= ======= ========
-20-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
Nine months ended September 30, 1996
-----------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Revenue:
Vehicle rentals $ 1,330 $ 3,729 $ -- $ 2,910 $ -- $ -- $ 7,969
Revenue from affiliates 111 764 (150) -- 11,674 7,772 20,171
Interest and other revenue -- -- 7 718 -- 21 746
------- ------- ------ ------- ------- ------- --------
1,441 4,493 (143) 3,628 11,674 7,793 28,886
------- ------- ------ ------- ------- ------- --------
Costs and expenses:
Vehicle depreciation 323 1,252 -- 119 -- -- 1,694
Vehicle interest 45 290 -- -- -- -- 335
Vehicle leases -- 3 -- 905 -- -- 908
Selling, general and administrative
and other interest 1,436 3,934 31 3,504 11,550 7,119 27,574
------- ------- ------ ------- ------- ------- --------
1,804 5,479 31 4,528 11,550 7,119 30,511
------- ------- ------ ------- ------- ------- --------
Net income (loss) $ (363) $ (986) $ (174) $ (900) $ 124 $ 674 $ (1,625)
======= ======= ====== ======= ======= ======= ========
Nine months ended September 30, 1995
-----------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Revenue:
Vehicle rentals $ 1,313 $ 1,379 $ -- $ 2,655 $ -- $ -- $ 5,347
Revenue from affiliates -- -- -- -- -- 824 824
Interest and other revenue -- -- 113 298 -- 1,050 1,461
------- ------- ------ ------- ------- ------- --------
1,313 1,379 113 2,953 -- 1,874 7,632
------- ------- ------ ------- ------- ------- --------
Costs and expenses:
Vehicle depreciation 221 312 -- 63 -- -- 596
Vehicle interest 57 106 -- -- -- -- 163
Vehicle leases -- -- -- 840 -- -- 840
Selling, general and administrative
and other interest 1,100 1,447 47 2,898 -- 1,275 6,767
------- ------- ------ ------- ------- ------- --------
1,378 1,865 47 3,801 -- 1,275 8,366
------- ------- ------ ------- ------- ------- --------
Net income (loss) $ (65) $ (486) $ 66 $ (848) $ -- $ 599 $ (734)
======= ======= ====== ======= ======= ======= ========
-21-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
Statements of Cash Flows:
Nine months ended September 30, 1996
---------------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Cash flows from operating activities $ (152) $ (29) $ 1 $(1,829) $ -- $ 208 $(1,801)
------- -------- ----- ------- -------- ------- --------
Cash flows from investing activities:
Cash received from sale of revenue
earning vehicles 3,504 3,654 -- 14 -- -- 7,172
Cash paid to suppliers of revenue
earning vehicles (5,490) (11,231) -- (5,043) -- -- (21,764)
Capital expenditures (7) (198) -- (18) -- (70) (293)
------- -------- ----- ------- -------- ------- --------
Net cash used in investing
activities (1,993) (7,775) -- (5,047) -- (70) (14,885)
------- -------- ----- ------- -------- ------- --------
Cash flows from financing activities:
Proceeds from revenue earning vehicle
financing 5,319 12,782 -- 4,578 -- -- 22,679
Principal payments on revenue earning
vehicle financing (2,774) (4,558) -- -- -- -- (7,332)
Advances from affiliate -- -- -- 2,292 -- -- 2,292
Dividends and distributions -- -- (407) -- -- (114) (521)
------- -------- ----- ------- -------- ------- --------
Net cash provided by (used in)
financing activities 2,545 8,224 (407) 6,870 -- (114) 17,118
------- -------- ----- ------- -------- ------- --------
Effect of exchange rate changes on cash (42) (2) -- (19) -- -- (63)
------- -------- ----- ------- -------- ------- --------
Net increase (decrease) in cash and
cash equivalents 358 418 (406) (25) -- 24 369
Cash and cash equivalents at beginning
of period 597 283 451 289 -- (17) 1,603
------- -------- ----- ------- -------- ------- --------
Cash and cash equivalents at end of
period $ 955 $ 701 $ 45 $ 264 $ -- $ 7 $ 1,972
======= ======== ===== ======= ======== ======= ========
-22-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
Nine months ended September 30, 1995
--------------------------------------------------------------------
Alamo Alamo Green GUSA Territory
Belgium Canada Corn Inc. Blue Tower Combined
------- ------ ---- ---- ---- ----- --------
Cash flows from operating activities $ 381 $ (572) $ 69 $ (547) $ -- $ 13 $ (656)
------- ------- ------- ------- --------- ------- -------
Cash flows from investing activities:
Cash received from sale of revenue
earning vehicles 2,545 -- -- 84 -- -- 2,629
Cash paid to suppliers of revenue
earning vehicles (3,890) (4,537) -- (251) -- -- (8,678)
Capital expenditures (18) (817) -- (42) -- -- (877)
------- ------- ------- ------- --------- ------- -------
Net cash used in investing
activities (1,363) (5,354) -- (209) -- -- (6,926)
------- ------- ------- ------- --------- ------- -------
Cash flows from financing activities:
Proceeds from revenue earning
vehicle financing 4,335 4,518 -- -- -- -- 8,853
Principal payments on revenue
earning vehicle financing (4,027) (345) -- -- -- -- (4,372)
Proceeds from other debt, net of
payments -- -- -- 10 -- -- 10
Advances from affiliates 1,311 1,604 -- 873 -- 91 3,879
Dividends and distributions -- -- (16) -- -- (1,337) (1,353)
Contributions -- 200 8 -- -- -- 208
------- ------- ------- ------- --------- ------- -------
Net cash provided by (used
in) financing activities 1,619 5,977 (8) 883 -- (1,246) 7,225
------- ------- ------- ------- --------- ------- -------
Effect of exchange rate changes on
cash 16 7 -- 2 -- -- 25
------- ------- ------- ------- --------- ------- -------
Net increase (decrease) in cash and
cash equivalents 653 58 61 129 -- (1,233) (332)
Cash and cash equivalents at
beginning of period 50 -- 429 87 -- 1,668 2,234
------- ------- ------- ------- --------- ------- -------
Cash and cash equivalents at end of
period $ 703 $ 58 $ 490 $ 216 $ -- $ 435 $ 1,902
======= ======= ======= ======= ========= ======= =======
-23-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
(6) Supplemental Financial Data (in thousands):
European
Operating Combined
Issuers (1) Subsidiaries(2) Eliminations Issuers
----------- --------------- ------------ -------
Balance Sheet:
September 30, 1996
Assets $ 2,626,061 $ 276,661 $ (27,513) $ 2,875,209
=========== ========= =========== ===========
Liabilities $ 2,565,330 $ 299,888 $ (50,449) $ 2,814,769
Minority interest -- (259) -- (259)
Equity 60,731 (22,968) 22,936 60,699
----------- --------- ----------- -----------
$ 2,626,061 $ 276,661 $ (27,513) $ 2,875,209
=========== ========= =========== ===========
December 31, 1995
Assets $ 1,805,783 $ 250,334 $ (55,372) $ 2,000,745
=========== ========= =========== ===========
Liabilities $ 1,732,611 $ 264,096 $ (61,927) $ 1,934,780
Equity 73,172 (13,762) 6,555 65,965
----------- --------- ----------- -----------
$ 1,805,783 $ 250,334 $ (55,372) $ 2,000,745
=========== ========= =========== ===========
Income Statement and Cash Flows:
Nine months ended
September 30, 1996
Revenue $ 1,066,674 $ 114,423 $ (3,349) $ 1,177,748
Net income (loss) 23,840 (9,394) (4,239) 10,207
Cash flows from operating activities 304,736 44,157 (7,394) 341,499
September 30, 1995
Revenue $ 969,155 $ 104,033 $ (2,282) $ 1,070,906
Net income (loss) (22,837) (4,695) 5,959 (21,573)
Cash flows from operating activities 295,480 2,308 4,046 301,834
(1) Represents the entities which are the issuers of the Senior Notes - referred
to in note 4.
(2) Represents the European operating subsidiaries of certain of the issuers.
-24-
ALAMO RENT-A-CAR, INC. AND AFFILIATES
Notes to Combined and Combining Condensed Financial Statements
Unaudited
(7) Subsequent Event
On November 6, 1996, the Companies entered into a definitive agreement for
the merger or acquisition of the Companies and certain affiliated entities
by Republic Industries, Inc. The completion of the transaction, which is
valued at $625 million, is subject to customary conditions, including the
receipt of all required regulatory approvals and the obtaining of certain
consents or waivers with respect to certain outstanding indebtedness. The
transaction is expected to be accounted for under the pooling of interests
method of accounting. There is no assurance that the transaction will be
completed.
-25-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Combined Results of Operations
Revenue. Total revenue for the three months ended September 30, 1996 increased
11% to $473 million from $428 million in the same quarter of 1995. On a year to
date basis, total revenue increased $107 million, or 10%, to $1,178 million
versus $1,071 million for the same period in 1995. Revenue increases generated
by the Companies' United States rental operations accounted for approximately
71% and 82% of the increase in the third quarter and year to date periods,
respectively, as compared to 1995. Rental volume and average daily rental rates
improved over the comparable 1995 periods, driven by increases in air passenger
deplanements in the traditional tourist destinations of Florida, Hawaii and
California. However, the rate of increase in rental volume experienced during
the 1996 third quarter as compared to the same quarter of 1995 was below the
rate experienced during the second quarter of 1996 versus the second quarter of
the prior year.
Costs and Expenses. Total costs and expenses for the three months ended
September 30, 1996 increased 10% to $449 million from the $406 million incurred
in the third quarter of 1995. As a percentage of total revenues, total costs and
expenses remained constant at 95% for both the third quarters of 1996 and 1995.
Total costs and expenses for the nine month period increased $75 million, or 7%,
over 1995 but declined as a percentage of revenues from 102% to 99%.
Vehicle related costs and expenses (depreciation, leasing and interest) were
each individually impacted by a decision to operate a greater percentage of
owned versus leased vehicles in 1996. In the aggregate, these expenses totaled
$176 million for both the third quarters of 1996 and 1995. On a year to date
basis, these expenses decreased $13 million or 3% compared to the first nine
months of the prior year. As a percentage of revenues, this category decreased
from over 41% in both the three and nine month periods of 1995 to 37% in 1996.
These improvements were due to various elements of the Companies' cost reduction
plan, including a less expensive fleet mix and slightly lower interest rates.
Selling, general and administrative costs increased $38 million, or 17%, for the
third quarter and $77 million, or 12%, for the nine months over the comparable
periods in 1995. These increases were due primarily to revenue and/or volume
related expenses such as commissions, airport fees and auto maintenance. As a
percentage of revenues, this expense category increased from 53% for the third
quarter of 1995 to 56% for the same quarter of 1996. On a year-to-date basis,
selling, general and administrative expenses as a percentage of total revenues
rose from 59% in 1995 to 60% in 1996.
Other interest increased by $3.2 million and $9.5 million for the three and nine
month periods, respectively, due primarily to the Senior Notes issued during the
first quarter of 1996.
The minority interest in the net loss of the Companies' German operation, shown
as a credit to total costs and expenses, declined from $2.0 million for the
first nine months of 1995 to $653,000 for the same period in 1996. This
reduction was the result of the finalization of the German acquisition, whereby
the former owner's share in the acquired entity was reduced from 25% as reported
in 1995 to 16% in 1996. In addition, the limit of 1996 loss contributions of DM
960,000 per the Minority Interest Shareholder Agreement was met by the end of
the second quarter.
Net Results. As a result of the factors discussed above, the Company reported
combined net income of $24.5 million in the third quarter of 1996, a $2.7
million increase over the $21.8 million of net income reported for the 1995
third quarter, primarily attributable to Alamo. For the nine month period, 1996
net income totalled $10.2 million, a $31.8 million improvement over the same
period of 1995. The improvement in the nine-month period ended September 30,
1996 was primarily due to increased net income from Alamo of $35.6 million, over
the same period in 1995, partially offset by an increase in the net loss of
GUSA, Ltd. of $2.9 million over the same period in 1995.
-26-
Capital Resources and Liquidity
Net cash provided by operating activities for the nine months ended September
30, 1996 increased $39.7 million, or 13%, to $341.5 million from $301.8 million
in the comparable period of 1995. The excess of cash received from rentals over
cash paid to vendors was the primary factor in the overall increase consistent
with the net earnings improvement noted above.
Net cash used in investing activities increased to $1,108.6 million in the first
nine months of 1996, up $723.2 million from the $385.4 million used in the same
period of 1995. The increase was due primarily to the growth in vehicle
inventories required as a result of anticipated demand. In addition, an increase
in the average holding period of vehicle inventories contributed to the decline
in cash received from the sale of vehicles as compared to the first nine months
of 1995.
Net cash provided by financing activities for the first nine months of 1996
increased $707.5 million to $790.6 million as compared to the first nine months
of the prior year due primarily to borrowings associated with the increase in
vehicle inventories consistent with the above mentioned revenue increases. In
addition, principal payments on debt secured by revenue earning vehicles
decreased from the first nine months of 1995 as a result of the increase in the
average holding period of vehicles as mentioned above, partially offset by the
temporary pay down of vehicle debt from proceeds of the issuance of the Senior
Notes.
The Companies use interest rate swaps in the management of their interest rate
risk. At September 30, 1996, the Companies had approximately $1,809.2 million of
floating rate indebtedness, of which $325 million had interest rate protection
agreements maturing through the year 2000. A substantial increase in interest
rates could materially adversely affect the Companies' ability to service their
debt obligations.
The aggregate amount of the Companies' indebtedness fluctuates as a result of
the seasonal aspects of its business, with levels of indebtedness generally
higher during the second and third quarters and lower in the first and fourth.
At September 30, 1996, the Companies had $2,488.3 million in total indebtedness,
of which $2,254.7 million represented secured indebtedness for the purchase of
vehicles, versus $1,683.4 million and $1,546.1 million, respectively, at
December 31, 1995.
The Companies had $181.2 million of capacity available under their vehicle
financing facilities at September 30, 1996. The Companies believe that their
cash on hand, cash provided by operations, and available borrowings under their
revolving credit facilities will adequately provide for their working capital,
debt service and capital expenditure requirements for at least the next twelve
months.
Recent Developments
On November 6, 1996, the Companies entered into a definitive agreement for the
merger or acquisition of the Companies and certain affiliated entities by
Republic Industries, Inc. The completion of the transaction, which is valued at
$625 million, is subject to customary conditions, including the receipt of all
required regulatory approvals and the obtaining of certain consents or waivers
with respect to certain outstanding indebtedness. The transaction is expected to
be accounted for under the pooling of interests method of accounting. There is
no assurance that the transaction will be completed.
-27-
Seasonality
The industry in which the Companies operate, particularly the leisure travel
segment, is highly seasonal. The Companies' third quarter, which includes the
peak summer travel months, has historically been the strongest quarter of the
year. During the peak season the Companies increase their fleet and workforce to
accommodate increased rental activity. As a result, any occurrence that disrupts
travel patterns during the summer period could have a material adverse effect on
the Companies' annual performance. The Companies' first quarter is generally its
weakest, when there is limited leisure family travel and a greater potential for
adverse weather conditions. Many of the Companies' operating expenses such as
rent, general insurance and administrative personnel are fixed and cannot be
reduced during periods of decreased rental demand.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934. These forward-looking statements are
based largely on the Companies' expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the Companies' control.
Actual results could differ materially from these forward-looking statements as
a result of, among other factors, changes in manufacturers' repurchase programs,
the Companies' leverage and restrictive covenants, competitive pressures in the
rental industry, dependence on the air travel industry, seasonality, regulation
and risks relating to the European operations. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this report will in fact transpire.
-28-
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Exhibit
4.1. Assignment, Assumption and Modification Agreement, dated as
of September 20, 1996, by and among Gotham Funding
Corporation, Banner Receivables Corporation, Alamo
Rent-A-Car, Inc., The Bank of Tokyo-Mitsubishi, Ltd., New
York Branch, and Bank of Tokyo-Mitsubishi Trust Company.
27.1. Financial Data Schedule
(b) Reports on Form 8-K
Not applicable.
-29-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALAMO RENT-A-CAR, INC.
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALAMO RENT-A-CAR (BELGIUM), INC.
Dated: November 12, 1996 By: /s/ Frank A. Armstrong
----------------------------
Frank A. Armstrong
President
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
(Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALAMO RENT-A-CAR (CANADA), INC.
Dated: November 12, 1996 By: /s/ Roger H. Ballou
----------------------------
Roger H. Ballou
Vice Chairman of the Board
(Principal Executive Officer)
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
Vice Chairman of the Board
(Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DKBERT ASSOC.
Dated: November 12, 1996 By: /s/ Michael S. Egan
----------------------------
Michael S. Egan,
a general Partner
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
(Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREEN CORN, INC.
Dated: November 12, 1996 By: /s/ Michael S. Egan
----------------------------
Michael S. Egan,
Chairman of the Board
and President
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
(Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUY SALMON USA, INC.
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
President
(Duly Authorized Officer and
Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUY SALMON USA, LTD.
By: GUY SALMON USA, INC.
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
President
(Duly Authorized Officer and
Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TERRITORY BLUE, INC.
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOWER ADVERTISING GROUP, INC.
Dated: November 12, 1996 By: /s/ Roger H. Ballou
----------------------------
Roger H. Ballou
President
(Duly Authorized Officer)
Dated: November 12, 1996 By: /s/ D. Keith Cobb
----------------------------
D. Keith Cobb
(Principal Financial Officer)
Exhibit Index
Exhibit
Number Exhibit
------ -------
4.1. Assignment, Assumption and Modification Agreement, dated as of
September 20, 1996, by and among Gotham Funding Corporation,
Banner Receivables Corporation, Alamo Rent-A-Car, Inc., The Bank
of Tokyo-Mitsubishi, Ltd., New York Branch, and Bank of
Tokyo-Mitsubishi Trust Company.
27.1. Financial Data Schedule