UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

                                                               For the quarterly period ended June 30, 2005

OR

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

                                                              For the transition period from______________to______________

Commission file number 1-13647

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation or organization) 73-1356520
(I.R.S. Employer
Identification No.)

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

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

     Indicate by check mark whether the registrant  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and  (2) has been subject to such filing requirements for the past 90 days:   Yes x  No o

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

     The number of shares outstanding of the registrant’s Common Stock as of July 29, 2005 was 25,377,089.

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

FORM 10-Q

CONTENTS

	Page
PART I  -   FINANCIAL INFORMATION
ITEM  1.    FINANCIAL STATEMENTS	3
ITEM  2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM  3.    QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK	27
ITEM  4.    CONTROLS AND PROCEDURES	28
PART II  -   OTHER INFORMATION
ITEM  1.    LEGAL PROCEEDINGS	28
ITEM  2.    UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS	28
ITEM  4.    SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS	29
ITEM  6.    EXHIBITS	30
SIGNATURES	31

FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

Some of the statements contained herein under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Dollar Thrifty Automotive Group, Inc. believes such forward-looking statements are based upon reasonable assumptions, such statements are not guarantees of future performance and certain factors could cause results to differ materially from current expectations. These factors include: price and product competition; economic and competitive conditions in markets and countries where the companies’ customers reside and where the companies and their franchisees operate; natural hazards or catastrophes; incidents of terrorism; airline travel patterns; changes in capital availability or cost; costs and other terms related to the acquisition and disposition of automobiles; systems or communications failures; costs of conducting business and changes in structure or operations; and certain regulatory and environmental matters and litigation risks. Should one or more of these risks or uncertainties, among others, materialize, actual results could vary from those estimated, anticipated or projected. Dollar Thrifty Automotive Group, Inc. undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Dollar Thrifty Automotive Group, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and subsidiaries (the “Company”) as of June 30, 2005, and the related condensed consolidated statements of income for the three-month and six-month periods ended June 30, 2005 and 2004 and cash flows for the six-month periods ended June 30, 2005 and 2004. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for the year then ended (not presented herein); and in our report dated March 14, 2005, we expressed an unqualified opinion on those consolidated financial statements, which opinion includes an explanatory paragraph regarding the Company's adoption of Financial Accounting Standards Board Interpretation No. 46(R), Consolidation of Variable Interest Entities. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Tulsa, Oklahoma

August 9, 2005

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DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(In Thousands Except Per Share Data)

			Three Months						Six Months
			Ended June 30,						Ended June 30,
				(Unaudited)
			2005			2004			2005			2004
REVENUES:
	Vehicle rentals			$	335,562		$	317,040		$	648,515		$	582,385
	Vehicle leasing				15,311			20,709			29,837			38,477
	Fees and services				12,454			14,949			24,730			27,083
	Other				4,349			2,242			7,394			5,703
		Total revenues			367,676			354,940			710,476			653,648
COSTS AND EXPENSES:
	Direct vehicle and operating				209,934			180,083			400,611			336,648
	Vehicle depreciation and lease charges, net				54,236			64,785			107,823			133,984
	Selling, general and administrative				60,129			56,253			114,984			103,800
	Interest expense, net of interest income				23,518			23,038			43,012			42,247
		Total costs and expenses			347,817			324,159			666,430			616,679
INCOME BEFORE INCOME TAXES					19,859			30,781			44,046			36,969
INCOME TAX EXPENSE					8,513			12,873			19,725			16,304
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE					11,346			17,908			24,321			20,665
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE					-			-			-			3,730
NET INCOME				$	11,346		$	17,908		$	24,321		$	24,395
BASIC EARNINGS PER SHARE:
	Income before cumulative effect of a change in accounting principle			$	0.45		$	0.72		$	0.97		$	0.83
	Cumulative effect of a change in accounting principle				-			-			-			0.15
	Net income			$	0.45		$	0.72		$	0.97		$	0.98
DILUTED EARNINGS PER SHARE:
	Income before cumulative effect of a change in accounting principle			$	0.43		$	0.68		$	0.92		$	0.79
	Cumulative effect of a change in accounting principle				-			-			-			0.14
	Net income			$	0.43		$	0.68		$	0.92		$	0.93

See notes to condensed consolidated financial statements.

4

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2005 AND DECEMBER 31, 2004

(In Thousands Except Share and Per Share Data)

		June 30,			December 31,
		2005			2004
		(Unaudited)
ASSETS:
Cash and cash equivalents		$	184,809		$	204,453
Restricted cash and investments			102,067			455,215
Receivables, net			215,516			194,552
Prepaid expenses and other assets			102,674			90,030
Revenue-earning vehicles, net			3,051,966			2,267,982
Property and equipment, net			106,971			105,335
Income taxes receivable			2,472			3,757
Software and other intangible assets, net			22,944			20,020
Goodwill			279,834			279,907
		$	4,069,253		$	3,621,251
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable		$	101,422		$	63,109
Accrued liabilities			152,812			163,214
Deferred income tax liability			219,897			202,857
Public liability and property damage			101,741			88,176
Vehicle debt and obligations			2,856,513			2,500,426
	Total liabilities		3,432,385			3,017,782
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $.01 par value: Authorized 10,000,000 shares; none outstanding			-			-
Common stock, $.01 par value: Authorized 50,000,000 shares; 26,900,190 and 25,910,030 issued, respectively, and 25,367,390 and 25,039,730 outstanding, respectively			269			259
Additional capital			773,362			748,261
Accumulated deficit			(95,836	)		(120,157	)
Accumulated other comprehensive income (loss)			3,184			(2,688	)
Treasury stock, at cost (1,532,800 and 870,300 shares, respectively)			(44,111	)		(22,206	)
	Total stockholders’ equity		636,868			603,469
		$	4,069,253		$	3,621,251

See notes to condensed consolidated financial statements.

5

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(In Thousands)

					Six Months
					Ended June 30,
					(Unaudited)
					2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	24,321		$	24,395
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation:
			Vehicle depreciation			136,218			139,368
			Non-vehicle depreciation			10,055			8,432
		Net gains from disposition of revenue-earning vehicles				(32,752	)		(12,983	)
		Amortization				2,766			2,798
		Performance share incentive plan				2,604			1,753
		Provision for losses on receivables				1,308			1,288
		Deferred income taxes				18,832			14,360
		Change in assets and liabilities, net of acquisitions:
			Income taxes receivable			1,285			-
			Receivables			(21,166	)		(10,522	)
			Prepaid expenses and other assets			(6,985	)		(8,989	)
			Accounts payable and accrued liabilities			38,559			22,622
			Public liability and property damage			13,565			10,823
			Other			(344	)		(66	)
				Net cash provided by operating activities		188,266			193,279
CASH FLOWS FROM INVESTING ACTIVITIES:
	Revenue-earning vehicles:
		Purchases				(2,620,553	)		(2,296,359	)
		Proceeds from sales				1,732,007			1,471,402
	Net change in restricted cash and investments					353,148			466,089
	Property, equipment and software:
		Purchases				(15,592	)		(11,142	)
		Proceeds from sales				767			25
	Acquisition of businesses, net of cash acquired					(3,451	)		(45,897	)
				Net cash used in investing activities		(553,674	)		(415,882	)
									(Continued)

6

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(In Thousands)

					Six Months
					Ended June 30,
					(Unaudited)
					2005			2004
CASH FLOWS FROM FINANCING ACTIVITIES:
	Vehicle debt and obligations:
		Proceeds				2,128,067			3,582,150
		Payments				(1,771,935	)		(3,401,733	)
	Issuance of common shares					16,705			7,863
	Purchase of common stock for the treasury					(21,905	)		(7,564	)
	Financing issue costs					(5,168	)		(9,240	)
				Net cash provided by financing activities		345,764			171,476
CHANGE IN CASH AND CASH EQUIVALENTS						(19,644	)		(51,127	)
CASH AND CASH EQUIVALENTS:
	Beginning of period					204,453			192,006
	End of period				$	184,809		$	140,879
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
	Receivables from capital lease of vehicles to franchisees				$	1,106		$	7,240
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	Cash paid for (refund of):
			Income taxes to (from) taxing authorities		$	(376	)	$	1,941
			Interest		$	44,692		$	42,468

See notes to condensed consolidated financial statements.

7

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts of Dollar Thrifty Automotive Group, Inc. (“DTG”) and its subsidiaries. DTG’s significant wholly owned subsidiaries include DTG Operations, Inc., Thrifty, Inc., Dollar Rent A Car, Inc., Rental Car Finance Corp. (“RCFC”) and Dollar Thrifty Funding Corp. Thrifty, Inc. is the parent company to Thrifty Rent-A-Car System, Inc., which is the parent company to Dollar Thrifty Automotive Group Canada Inc. (“DTG Canada”). Beginning March 31, 2004, Thrifty Rent-A-Car System, Inc. National Advertising Committee (“Thrifty National Ad”) was consolidated in the financial statements of DTG under the provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as amended in December 2003 (“FIN 46(R)”), an interpretation of Accounting Research Bulletin No. 51 (Note 15). The term the “Company” is used to refer to DTG and subsidiaries, individually or collectively, as the context may require.

The accounting policies set forth in Note 2 to the consolidated financial statements contained in the Form 10-K filed with the Securities and Exchange Commission on March 14, 2005 have been followed in preparing the accompanying condensed consolidated financial statements.

The condensed consolidated financial statements and notes thereto for interim periods included hereinhave notbeen audited by an independent registered public accounting firm. The condensed consolidated financial statements and notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the Company’sopinion, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods have been made. Results for interim periods are not necessarily indicative of results for a full year.

2. ACQUISITIONS

During the six months ended June 30, 2005, the Company acquired certain assets and assumed certain liabilities relating to nine locations from former Thrifty franchisees in Jacksonville, Melbourne and Cape Canaveral, Florida; San Jose, California and Baton Rouge and New Orleans, Louisiana. Total cash paid during the six months ended June 30, 2005, net of cash acquired for acquisitions, was $3.5 million.

Beginning January 1, 2005, the Company adopted the provisions of Emerging Issues Task Force (“EITF”) No. 04-1, “Accounting for Preexisting Relationships between the Parties to a Business Combination” (“EITF 04-1”).EITF 04-1 affirms that a business combination between two parties that have a preexisting relationship should be accounted for as a multiple element transaction. This includes determining how the cost of the combination should be allocated after considering the assets and liabilities that existed between the parties prior to the combination. Adoption of EITF 04-1 impacted the way in which the Company accounts for certain business combination transactions through establishing identifiable intangibles, other than goodwill, such as reacquired franchise rights through the Company’s acquisitions of franchisee operations. For the six months ended June 30, 2005, the Company recognized an unamortized intangible asset

8

for reacquired franchise rights totaling $2.3 million (Note 7). The Company did not recognize any goodwill related to these transactions.

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 individually and collectively not material to amounts presented for the three months and six months ended June 30, 2005, are included in the condensed consolidated statements of income of the Company.

3. VEHICLE DEPRECIATION AND LEASE CHARGES, NET

Vehicle depreciation and lease charges includes the following (in thousands):

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2005		2004		2005		2004
Depreciation of revenue-earning vehicles, net	$	52,195	$	60,468	$	103,466	$	126,385
Rents paid for vehicles leased		2,041		4,317		4,357		7,599
	$	54,236	$	64,785	$	107,823	$	133,984

4. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is based on the combined weighted average number of common shares and dilutive potential common shares outstanding which include, where appropriate, the assumed exercise of options. In computing diluted earnings per share, the Company has utilized the treasury stock method.

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The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share (“EPS”) is shown below (in thousands, except share and per share data):

		Three Months						Six Months
		Ended June 30,						Ended June 30,
		2005			2004			2005			2004
Income before cumulative effect of a change in accounting principle			$	11,346		$	17,908		$	24,321		$	20,665
Basic EPS:
	Weighted average common shares			25,061,135			25,045,211			25,055,929			24,999,251
Basic EPS			$	0.45		$	0.72		$	0.97		$	0.83
Diluted EPS:
	Weighted average common shares			25,061,135			25,045,211			25,055,929			24,999,251
Shares contingently issuable:
	Stock options			369,338			452,540			410,874			463,701
	Performance awards			703,145			578,787			596,728			557,229
	Shares held for compensation plans			182,424			173,030			180,522			180,250
	Director compensation shares deferred			136,949			102,639			135,182			100,558
Shares applicable to diluted				26,452,991			26,352,207			26,379,235			26,300,989
Diluted EPS			$	0.43		$	0.68		$	0.92		$	0.79

For the three months and six months ended June 30, 2005 and 2004, all options to purchase shares of common stock were included in the computation of diluted earnings per share because no exercise price was greater than the average market price of the common shares.

5. STOCK-BASED COMPENSATION

Beginning January 1, 2003, the Company accounted for stock-based compensation plans using the fair value-based method prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), and elected the prospective treatment option, which requires 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” ("SFAS No. 148"), an amendment of SFAS No. 123. Compensation cost for stock options and performance share and restricted stock awards is recognized based on the fair value of the awards granted at the grant date.

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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, performance share and restricted stock awards, using the Black-Scholes option valuation model for each of the 2004 periods presented (in thousands, except per share data):

		Three Months			Six Months
		Ended			Ended
		June 30, 2004			June 30, 2004
Net income, as reported		$	17,908		$	24,395
Add: compensation expense related to performance share and restricted stock awards included in reported net income, net of related tax effects			986			1,051
Deduct: compensation expense related to stock options granted prior to January 1, 2003 and performance share and restricted stock awards determined under fair value-based method for all awards, net of related tax effects			(1,058	)		(1,194	)
Pro forma net income		$	17,836		$	24,252
Earnings per share:
	Basic, as reported	$	0.72		$	0.98
	Basic, pro forma	$	0.71		$	0.97
	Diluted, as reported	$	0.68		$	0.93
	Diluted, pro forma	$	0.68		$	0.92

At the end of 2004, all stock options became fully vested. Therefore, the disclosure of the pro forma results as if the fair value-based methods of SFAS No. 123 had been applied is not presented for the three months and six months ended June 30, 2005. All performance share and restricted stock awards are accounted for using the fair value-based method in accordance with SFAS No. 123 for the 2005 and 2004 periods.

No stock options were granted after January 1, 2003. The assumptions used to calculate compensation expense relating to the 2002 stock option awards included in the pro forma results presented in the table above were as follows: weighted-average expected life of the awards of five years, volatility factor of 54.57%, risk-free interest rate of 4.46% and no dividend payments.

The Company will adopt SFAS No. 123(R), “Share-Based Payment,” (“SFAS No. 123(R)”) as required on January 1, 2006 (Note 15).

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6. RECEIVABLES

Receivables consist of the following (in thousands):

	June 30,			December 31,
	2005			2004
Trade accounts receivable	$	111,236		$	103,269
Notes receivable		1,486			1,910
Financing receivables, net		4,367			5,035
Due from DaimlerChrysler		60,398			88,110
Fair value of interest rate swap		1,473			-
Other vehicle manufacturer receivables		52,118			12,371
		231,078			210,695
Less: Allowance for doubtful accounts		(15,562	)		(16,143	)
	$	215,516		$	194,552

Trade accounts and notes receivable include primarily amounts due from rental customers, 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 by certain franchisees at current market interest rates with varying maturities and are generally personally 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.

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.

Fair value of interest rate swap represents the fair market value on interest rate swap agreements (Note 10).

Other vehicle manufacturer receivables include primarily amounts due under guaranteed residual, buyback and incentive programs, which are paid according to contract terms and are generally received within 60 days.

7. SOFTWARE AND OTHER INTANGIBLE ASSETS

Software and other intangible assets consist of the following (in thousands):

	June 30,			December 31,
	2005			2004
Amortized intangible assets
Software and other intangible assets	$	48,507		$	44,867
Less accumulated amortization		(27,849	)		(24,847	)
		20,658			20,020
Unamortized intangible assets
Reacquired franchise rights		2,286			-
Total software and other intangible assets	$	22,944		$	20,020

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As discussed in Note 2, the Company adopted the provisions of EITF 04-1 on January 1, 2005. In applying the provisions of EITF 04-1 to the acquisitions completed during the six months ended June 30, 2005, the Company established an unamortized separately identifiable intangible asset, referred to as reacquired franchise rights. Intangible assets with indefinite useful lives, such as reacquired franchise rights, are not amortized, but are subject to impairment testing annually, or more frequently if events and circumstances indicate there may be an impairment. Intangible assets with finite useful lives are amortized over their respective useful lives.

8. GOODWILL

The Company has elected to perform the annual impairment test on goodwill during the second quarter of each year, unless circumstances arise that require more frequent testing. During the second quarter of 2005, the Company completed the annual impairment test of goodwill and concluded goodwill was not impaired.

The changes in the carrying amount of goodwill for the six months ended June 30, 2005 are as follows (in thousands):

Balance as of January 1, 2005	$	279,907
Goodwill through acquisitions or purchase price adjustments during the year		64
Effect of change in rates used for foreign currency translation		(137	)
Balance as of June 30, 2005	$	279,834

9. VEHICLE DEBT AND OBLIGATIONS

Vehicle debt and obligations as of June 30, 2005 and December 31, 2004 consist of the following

(in thousands):

			June 30,			December 31,
			2005			2004
Asset backed notes:
	2005 Series notes		$	400,000		$	-
	2004 Series notes			500,000			500,000
	2003 Series notes			375,000			375,000
	2002 Series notes			116,666			350,000
	2001 Series notes			350,000			350,000
	1999 Series notes			-			26,667
	1997 Series notes			34,815			110,548
				1,776,481			1,712,215
		Discounts on asset backed notes		(46	)		(1	)
		Asset backed notes, net of discount		1,776,435			1,712,214
Conduit facility				375,000			350,000
Commercial paper, net of discount of $1,218 and $467				387,764			155,573
Other vehicle debt				182,170			174,594
Limited partner interest in limited partnership				135,144			108,045
Total vehicle debt and obligations			$	2,856,513		$	2,500,426

On March 30, 2005, the Company renewed its Variable Funding Note Purchase Facility (the "Conduit Facility") for another 364-day period and increased the capacity from $350 million to $375 million.

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On March 30, 2005, the Company renewed its Commercial Paper Program for another 364-day period at a maximum size of $640 million backed by a renewal of the Liquidity Facility in the amount of $560 million.

On April 5, 2005, a bank line of credit for vehicles was renewed for another year and increased from $97 million to $100 million.

On April 21, 2005, RCFC issued $400 million of five-year asset backed notes (the “2005 Series Notes”) to replace maturing asset backed notes and provide for growth in the Company’s fleet. The 2005 Series Notes consist of $110 million 4.59% fixed rate notes and $290 million floating rate notes at LIBOR plus 0.17%. In conjunction with the issuance of the 2005 Series Notes, the Company also entered into interest rate swap agreements to convert $190 million of the floating rate debt to fixed rate debt at a 4.58% interest rate.

On June 21, 2005, DTG Canada (the "General Partner") renewed its existing partnership agreement (the "Partnership Agreement") with an unrelated bank's conduit (the "Limited Partner") and increased the maximum available funding to CND $300 million (approximately US $245 million). The Partnership Agreement expires on May 31, 2010.

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. The Company has entered into interest rate swap agreements, in conjunction with each related new asset backed note issuance in 2001 through 2005, to convert variable interest rates on a total of $1.5 billion in asset backed notes to fixed interest rates. These swaps, which have termination dates through June 2010, constitute cash flow hedges and satisfy the criteria for hedge accounting. The Company reflects these swaps in its statement of financial position at fair market value, which were assets, included in receivables, of approximately $1.5 million at June 30, 2005, and were liabilities, included in accrued liabilities, of approximately $8.8 million at December 31, 2004. The Company recorded the related income of $6.3 million, which is net of income taxes, in total comprehensive income for the six-month period ended June 30, 2005 (Note 11). Deferred gains and losses are recognized in earnings as an adjustment to interest expense over the same period in which the related interest payments being hedged are recognized to earnings. Based on projected market interest rates, the Company estimates that approximately $1.1 million of net deferred loss will be reclassified into earnings within the next twelve months.

11. COMPREHENSIVE INCOME

Comprehensive income is comprised of the following (in thousands):

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2005			2004			2005			2004
Net income	$	11,346		$	17,908		$	24,321		$	24,395
Interest rate swap adjustment		(4,999	)		15,250			6,279			12,392
Foreign currency translation adjustment		(180	)		(248	)		(407	)		(418	)
Comprehensive income	$	6,167		$	32,910		$	30,193		$	36,369

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12. INCOME TAXES

The Company has provided for income taxes in the U.S. and in Canada based on taxable income or loss and other tax attributes separately for each jurisdiction. The Company has established tax provisions separately for U.S. taxable income and Canadian losses, for which no income tax benefit was recorded. 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.

For the three months and six months ended June 30, 2005, the effective tax rate of 42.9% and 44.8%, respectively, differed from the U.S. statutory rate due primarily to the state and local taxes, losses relating to DTG Canada for which no benefit was recorded due to full valuation allowance and, beginning April 1, 2004, the consolidation of Thrifty National Ad’s operating results into the Company’s operating results due to the adoption of FIN 46(R). Thrifty National Ad files its tax returns under the provisions applicable to a trust, thus, there is no income tax effect for its profits and losses.

13. SHARE REPURCHASE PROGRAM

In July 2003, the Company announced that its Board of Directors had authorized spending up to $30 million to repurchase the Company's shares of common stock over a two-year period in the open market or in privately negotiated transactions. In December 2004, the Company expanded the share repurchase program by authorizing spending up to $100 million for share repurchases through December 2006. During the six months ended June 30, 2005, the Company repurchased 662,500 shares under its $100 million share repurchase program at an average price of $33.06 per share, totaling $21.9 million. Since the stock repurchase program began in 2003, the Company has repurchased 1,532,800 shares at an average price of $28.78 per share, totaling $44.1 million, all of which were made in open market transactions.

14. COMMITMENTS AND CONTINGENCIES

Guarantees

The Company may provide guarantees, including certain letters of credit or performance bonds, 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 June 30, 2005, there were no guarantees outstanding.

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.

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15. NEW ACCOUNTING STANDARDS

Beginning January 1, 2005, the Company adopted the provisions of EITF 04-1. EITF 04-1 affirms that a business combination between two parties that have a preexisting relationship should be accounted for as a multiple element transaction. This includes determining how the cost of the combination should be allocated after considering the assets and liabilities that existed between the parties prior to the combination. Adoption of EITF 04-1 impacted and will continue to impact the way in which the Company accounts for certain business combination transactions by establishing identifiable intangibles, other than goodwill, such as reacquired franchise rights through the Company’s acquisitions of franchisee operations (Notes 2 and 7).

In December 2004, the FASB issued SFAS No. 123(R), which is a revision of SFAS No. 123. This revised statement establishes accounting standards for all transactions in which an entity exchanges its equity instruments for goods and services focusing primarily on accounting for transactions with employees and carrying forward prior guidance for share-based payments for transactions with non-employees.

SFAS No. 123(R) eliminates the intrinsic value measurement method of accounting in Accounting Principles Board Opinion 25 and generally requires measuring the cost of the employee services received in exchange for an award of equity instruments based on the fair value of the award on the date of the grant. The standard requires grant date fair value to be estimated using either an option-pricing model which is consistent with the terms of the award or a market observed price, if such a price exists. Such costs must be recognized over the period during which an employee is required to provide service in exchange for the award. The standard also requires estimating the number of instruments that will ultimately be issued, rather than accounting for forfeitures as they occur.

The effective date of SFAS No. 123(R) is the first fiscal year beginning after June 15, 2005 and the Company expects to adopt SFAS No. 123(R) effective January 1, 2006. SFAS No. 123(R) permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS No. 123(R) for all share-based payments granted after that date, and based on the requirements of SFAS No. 123 for all unvested awards granted prior to the effective date of SFAS No. 123(R). Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on pro forma disclosures made in accordance with SFAS No. 123. The Company plans to adopt the “modified prospective” method under SFAS No. 123(R) as required on January 1, 2006 and does not anticipate the adoption to have a material effect on the consolidated financial statements of the Company.

The Company had previously adopted the provisions of SFAS No. 123 beginning January 1, 2003 changing from the intrinsic value-based method to the fair value-based method of accounting for stock-based compensation and 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, an amendment of SFAS No. 123.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities," as amended in December 2003, which is now referred to as FIN 46(R). FIN 46(R) requires existing unconsolidated variable interest entities (“VIE’s”) to be consolidated by their primary beneficiaries if that company is subject to a majority of the risk of loss, if any, from the VIE’s activities, or entitled to receive a majority of the entity’s residual returns, or both. The Company believes that its involvement with Thrifty National Ad qualifies Thrifty National Ad as a VIE with the Company representing the primary beneficiary. Consequently, Thrifty National Ad was consolidated in the Company’s financial statements for the quarter ended March 31, 2004. The fair value of the net assets of Thrifty National Ad of approximately $3.7 million at March 31, 2004, was recorded as a cumulative effect of a change in accounting principle in the Company’s

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condensed consolidated statements of income. Beginning April 1, 2004, the Company began consolidating the operating results of Thrifty National Ad with its operating results. Thrifty National Ad is established for the limited purpose of collecting and disbursing funds for advertising and promotion programs for the benefit of the Thrifty Car Rental corporate and franchisee network. Thrifty National Ad files its tax returns under the provisions applicable to a trust. Accordingly, there is no tax effect on the cumulative effect of the change in accounting principle or on subsequent profits or losses. The Company’s estimated maximum exposure to loss as a result of its continuing involvement with Thrifty National Ad is expected to be minimal as expenditures are managed by Thrifty National Ad based on receipts. The Company also evaluated its franchisee network as potential VIE’s subject to possible consolidation. The Company determined that its franchisees met the FIN 46(R) definition of a business; however, the Company did not provide more than half of each franchisees’ equity or other financial support, among other qualifying conditions. Therefore, the Company believes that its franchisees do not qualify as VIE’s under FIN 46(R) and are not required to be consolidated into the Company’s financial statements.

16. SUBSEQUENT EVENTS

On July 8, 2005, an existing bank line of credit for vehicles was increased from $100 million to $136 million.

*******

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

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

			Three Months						Six Months
			Ended June 30,						Ended June 30,
			(Percentage of Revenue)
			2005			2004			2005			2004
REVENUES:
	Vehicle rentals			91.3	%		89.3	%		91.3	%		89.1	%
	Vehicle leasing			4.2			5.8			4.2			5.9
	Fees and services			3.4			4.2			3.5			4.1
	Other			1.1			0.7			1.0			0.9
		Total revenues		100.0			100.0			100.0			100.0
COSTS AND EXPENSES:
	Direct vehicle and operating			57.1			50.7			56.4			51.5
	Vehicle depreciation and lease charges, net			14.8			18.3			15.2			20.5
	Selling, general and administrative			16.3			15.8			16.2			15.9
	Interest expense, net of interest income			6.4			6.5			6.0			6.4
		Total costs and expenses		94.6			91.3			93.8			94.3
INCOME BEFORE INCOME TAXES				5.4			8.7			6.2			5.7
INCOME TAX EXPENSE				2.3			3.7			2.8			2.5
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE				3.1			5.0			3.4			3.2
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE				0.0			0.0			0.0			0.5
NET INCOME				3.1	%		5.0	%		3.4	%		3.7	%

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The following table sets forth certain selected operating data of the Company:

	Three Months							Six Months
	Ended June 30,							Ended June 30,
					%							%
U.S. and Canada	2005		2004		Change			2005		2004		Change
(Company-Owned Stores) Vehicle Rental Data:   (includes new stores)
Average number of vehicles operated		114,913		103,775		10.7%			108,504		94,312		15.0%
Number of rental days		8,778,176		8,068,147		8.8%			16,514,641		14,753,523		11.9%
Vehicle utilization		83.9%		85.4%		(1.5)p.p.			84.1%		86.0%		(1.9)p.p.
Average revenue per day	$	38.23	$	39.30		(2.7%	)	$	39.27	$	39.47		(0.5%	)
Monthly average revenue per vehicle	$	973	$	1,018		(4.4%	)	$	996	$	1,029		(3.2%	)
Same Store Vehicle Rental Data:   (excludes new stores)
Average number of vehicles operated		106,578		103,775		2.7%			98,629		94,312		4.6%
Number of rental days		8,109,429		8,068,147		0.5%			14,928,440		14,753,523		1.2%
Vehicle Leasing Data:
Average number of vehicles leased		12,288		17,988		(31.7%	)		11,925		16,938		(29.6%	)
Monthly average revenue per vehicle	$	415	$	384		8.1%		$	417	$	379		10.0%

Three Months Ended June 30, 2005 Compared with Three Months Ended June 30, 2004

During the three months ended June 30, 2005, business and leisure travel improved, which has resulted in an increase in industry rental demand; however, the Company’s growth was negatively impacted by its decision to change to non-preferred status with Expedia. Additionally, revenue per day declined by 2.7% due to highly competitive industry conditions. The Company’s revenue growth achieved during the quarter related primarily to volume resulting from franchise acquisitions.

Operating Results

The Company had income of $19.9 million before income taxes for the second quarter of 2005, as compared to $30.8 million in the second quarter of 2004. The operating results for the second quarter of 2005 were negatively impacted by lower revenue per day and higher direct vehicle and operating costs.

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Revenues
		Three Months
		Ended June 30,				$ Increase/			% Increase/
		2005		2004		(decrease)			(decrease)
		(in millions)
	Vehicle rentals	$	335.6	$	317.1	$	18.5			5.8%
	Vehicle leasing		15.3		20.7		(5.4	)		(26.1%	)
	Fees and services		12.5		15.0		(2.5	)		(16.7%	)
	Other		4.3		2.2		2.1			94.0%
	Total revenues	$	367.7	$	355.0	$	12.7			3.6%
	Vehicle rental metrics:
	Number of rental days		8,778,176		8,068,147		710,029			8.8%
	Average revenue per day	$	38.23	$	39.30	$	(1.07	)		(2.7%	)
	Vehicle leasing metrics:
	Average number of vehicles leased		12,288		17,988		(5,700	)		(31.7%	)
	Average monthly lease revenue per unit	$	415	$	384	$	31			8.1%

Vehicle rental revenue for the second quarter of 2005 increased 5.8%, due to an 8.8% increase in rental days totaling $27.7 million, partially offset by a 2.7% decrease in revenue per day totaling $9.2 million. Vehicle rental revenue grew by 7.3% due to franchisee acquisitions that had not yet annualized and greenfield locations, partially offset by a 1.5% decrease in same store revenue.

Vehicle leasing revenue for the second quarter of 2005 decreased 26.1%, due to a 31.7% decrease in the average lease fleet totaling $6.5 million, partially offset by an 8.1% increase in the average lease rate totaling $1.1 million. The decline in volume was due to fewer vehicles leased to franchisees, which is primarily attributable to the shift of several locations from franchised operations to corporate operations.

Fees and services revenue decreased 16.7%, primarily due to lower revenues from franchisees due to the shift of several locations from franchised operations to corporate operations.

Other revenue increased by $2.1 million primarily due to an increase in the market value of investments in the Company’s deferred compensation and retirement plans of $1.0 million in the second quarter of 2005. The revenue is attributable to mark to market valuation of the corresponding investments and is offset by a corresponding amount in selling, general and administrative expenses and, therefore, has no impact on net income.

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Expenses
		Three Months
		Ended June 30,				$ Increase/			% Increase/
		2005		2004		(decrease)			(decrease)
		(in millions)
	Direct vehicle and operating	$	209.9	$	180.1	$	29.8			16.6%
	Vehicle depreciation and lease charges, net		54.2		64.8		(10.6	)		(16.3%	)
	Selling, general and administrative		60.2		56.3		3.9			6.9%
	Interest expense, net of interest income		23.5		23.0		0.5			2.1%
	Total expenses	$	347.8	$	324.2	$	23.6			7.3%

Direct vehicle and operating expenses for the second quarter of 2005 increased $29.8 million due to higher fleet and transaction levels and to cost increases. This overall increase is comprised primarily of increases in vehicle related costs of $13.7 million, personnel related expenses of $9.4 million, facility and airport concession expenses of $4.7 million and commissions of $0.3 million. Direct vehicle and operating expenses were 57.1% of revenue for the second quarter of 2005, compared to 50.7% in the second quarter of 2004.

Net vehicle depreciation and lease charges for the second quarter of 2005 decreased $10.6 million, which includes net vehicle gains from the disposition of non-program vehicles. Net vehicle gains were $16.4 million for the second quarter of 2005 compared to $10.2 million for the second quarter of 2004, due to a higher level of non-program vehicles in 2005, lower acquisition costs and to a strong used car market. Lease charges, for vehicles leased from third parties, decreased $2.3 million due to a decrease in the number of vehicles leased. Vehicle depreciation expenses decreased $2.1 million due to an 8.6% decrease in average depreciation rate, partially offset by a 6.2% increase in depreciable fleet. Net vehicle depreciation expense and lease charges were 14.8% of revenue for the second quarter of 2005, compared to 18.3% in the second quarter of 2004.

Selling, general and administrative expenses for the second quarter of 2005 increased $3.9 million due to a $2.3 million increase in personnel related costs and a $0.9 million increase in sales and marketing costs primarily attributable to the increase in transaction volume. Additionally, the market value of investments in the Company’s deferred compensation and retirement plans increased $1.0 million in the second quarter of 2005, which is offset in other revenue. Selling, general and administrative expenses were 16.3% of revenue for the second quarter of 2005, compared to 15.8% in the second quarter of 2004.

Net interest expense for the second quarter of 2005 increased $0.5 million due to an increase in average vehicle debt, partially offset by a decrease in the effective interest rate. Net interest expense was 6.4% of revenue for the second quarter of 2005, compared to 6.5% in the second quarter of 2004.

The income tax provision for the second quarter of 2005 was $8.5 million. The effective income tax rate for the second quarter of 2005 was 42.9% compared to 41.8% for the second quarter of 2004. This increase in the effective tax rate was due primarily to lower U.S. pretax earnings in relationship to Canadian pretax losses. The Company reports taxable income for the U.S. and Canada in separate tax jurisdictions and establishes provisions separately for each jurisdiction. On a separate, domestic basis, the U.S. effective tax rate approximates the statutory tax rate including the effect of state income taxes. However, no income tax benefit was recorded for Canadian losses in 2004 and 2005, thus, increasing the consolidated effective tax rate compared to the U.S. effective tax rate.

Interim reporting requirements for applying separate, annual effective income tax rates to U.S. and Canadian operations, combined with the seasonal impact of Canadian operations, will cause significant variations in the Company’s quarterly consolidated effective income tax rates.

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Six Months Ended June 30, 2005 Compared with Six Months Ended June 30, 2004

During the first half of 2005, business and leisure travel improved, which has resulted in an increase in rental demand. The Company achieved revenue growth largely from volume related to franchise acquisitions, although revenue per day declined by 0.5% due to highly competitive industry conditions. The revenue growth combined with lower vehicle costs resulted in higher profits in the first half of 2005 as compared to the first half of 2004.

Operating Results

The Company had income of $44.0 million before income taxes for the first half of 2005, as compared to income before income taxes and cumulative effect of a change in accounting principle of $37.0 million in the first half of 2004. The cumulative effect of the change in accounting principle recorded in the first quarter of 2004 was $3.7 million. This change in accounting principle relates to the adoption of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as amended in December 2003 (“FIN 46(R)”), an interpretation of Accounting Research Bulletin No. 51, by the Company effective March 31, 2004.

Revenues
		Six Months
		Ended June 30,				$ Increase/			% Increase/
		2005		2004		(decrease)			(decrease)
		(in millions)
	Vehicle rentals	$	648.5	$	582.4	$	66.1			11.4%
	Vehicle leasing		29.8		38.5		(8.7	)		(22.5%	)
	Fees and services		24.8		27.1		(2.3	)		(8.7%	)
	Other		7.4		5.7		1.7			29.7%
	Total revenues	$	710.5	$	653.7	$	56.8			8.7%
	Vehicle rental metrics:
	Number of rental days		16,514,641		14,753,523		1,761,118			11.9%
	Average revenue per day	$	39.27	$	39.47	$	(0.20	)		(0.5%	)
	Vehicle leasing metrics:
	Average number of vehicles leased		11,925		16,938		(5,013	)		(29.6%	)
	Average monthly lease revenue per unit	$	417	$	379	$	38			10.0%

Vehicle rental revenue for the first half of 2005 increased 11.4%, due to an 11.9% increase in rental days totaling $69.4 million, partially offset by a 0.5% decrease in revenue per day totaling $3.3 million. Vehicle rental revenue grew by 10.0% due to franchisee acquisitions that had not yet annualized and greenfield locations and by 1.4% from same store revenue.

Vehicle leasing revenue for the first half of 2005 decreased 22.5%, due to a 29.6% decrease in the average lease fleet totaling $11.4 million, partially offset by a 10.0% increase in the average lease rate totaling $2.7 million. The decline in volume was due to fewer vehicles leased to franchisees, which is primarily attributable to the shift of several locations from franchised operations to corporate operations.

Fees and services revenue decreased 8.7% due to lower revenues received from franchisees as the result of a shift of several locations from franchised operations to corporate operations. This decrease was partially offset by $1.6 million of additional fees and services revenue related to the first quarter of 2005 impact of consolidating Thrifty National Ad beginning April 1, 2004.

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Expenses
		Six Months
		Ended June 30,				$ Increase/			% Increase/
		2005		2004		(decrease)			(decrease)
		(in millions)
	Direct vehicle and operating	$	400.6	$	336.7	$	63.9			19.0%
	Vehicle depreciation and lease charges, net		107.8		134.0		(26.2	)		(19.5%	)
	Selling, general and administrative		115.0		103.8		11.2			10.8%
	Interest expense, net of interest income		43.0		42.2		0.8			1.8%
	Total expenses	$	666.4	$	616.7	$	49.7			8.1%

Direct vehicle and operating expenses for the first half of 2005 increased $63.9 million due to higher fleet and transaction levels and to cost increases. This overall increase is comprised primarily of increases in vehicle related costs of $22.3 million, personnel related expenses of $20.5 million, facility and airport concession expenses of $13.5 million and commissions of $1.9 million. Direct vehicle and operating expenses were 56.4% of revenue for the first half of 2005, compared to 51.5% in the first half of 2004.

Net vehicle depreciation and lease charges for the first half of 2005 decreased $26.2 million, which includes net vehicle gains from the disposition of non-program vehicles. Net vehicle gains were $32.8 million for the first half of 2005 compared to $13.0 million for the first half of 2004, due to a higher level of non-program vehicles in 2005, lower acquisition costs and to a strong used car market. Lease charges, for vehicles leased from third parties, decreased $3.2 million due to a decrease in the number of vehicles leased. Vehicle depreciation expenses decreased $3.2 million due to an 11.0% decrease in average depreciation rate, partially offset by a 9.8% increase in depreciable fleet. Net vehicle depreciation expense and lease charges were 15.2% of revenue for the first half of 2005, compared to 20.5% in the first half of 2004.

Selling, general and administrative expenses for the first half of 2005 increased $11.2 million due to a $4.2 million increase in personnel related costs and a $2.5 million increase in sales and marketing costs primarily attributable to the increase in transaction volume. Additionally, expenses related to performance based compensation plans increased $1.7 million. The first half of 2005 results include $1.8 million of additional cost relating to the consolidation of Thrifty National Ad beginning April 1, 2004. Selling, general and administrative expenses were 16.2% of revenue for the first half of 2005, compared to 15.9% in the first half of 2004.

Net interest expense for the first half of 2005 increased $0.8 million due to an increase in average vehicle debt, partially offset by a decrease in the effective interest rate. Net interest expense was 6.0% of revenue for the first half of 2005, compared to 6.4% in the first half of 2004.

The income tax provision for the first half of 2005 was $19.7 million. The effective income tax rate for the first half of 2005 was 44.8% compared to 44.1% for the first half of 2004. This increase in the effective tax rate was due primarily to higher U.S. pretax earnings in relationship to Canadian pretax losses. The Company reports taxable income for the U.S. and Canada in separate tax jurisdictions and establishes provisions separately for each jurisdiction. On a separate, domestic basis, the U.S. effective tax rate approximates the statutory tax rate including the effect of state income taxes. However, no income tax benefit was recorded for Canadian losses in 2004 and 2005, thus, increasing the consolidated effective tax rate compared to the U.S. effective tax rate.

Interim reporting requirements for applying separate, annual effective income tax rates to U.S. and Canadian operations, combined with the seasonal impact of Canadian operations, will cause significant variations in the Company’s quarterly consolidated effective income tax rates.

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Outlook

The Company expects continued growth in travel during 2005. Airline passenger enplanements, a key driver of vehicle rental demand, have increased from prior year levels. Industry vehicle rental pricing continues to be highly competitive, although early third quarter year over year trends are better than the second quarter. The Company expects vehicle manufacturers will reduce vehicle sales to the rental car industry for the 2006 model year and will increase industry vehicle costs. These cost increases would begin to impact the industry in the fourth quarter of 2005 with a more significant impact in 2006.

Effective May 1, 2005, the Company decided to no longer participate as a supplier in the preferred partner program with Expedia, a third party Internet provider from whom the Company receives reservations, which has resulted in a significant reduction in reservations from this provider. The Company has since made significant progress in increasing the number of reservations from its lower cost reservation channels, particularly its two branded Web sites, dollar.com and thrifty.com. For the full year of 2004, Expedia-generated rentals represented approximately seven percent of the Company’s total revenue and approximately 11 percent of the Company’s non-tour reservations.

Seasonality

The Company’s business is subject to seasonal variations in customer demand, with the summer vacation period representing the peak season for vehicle rentals. During the peak season, the Company increases its rental 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 annual performance of the Company. The first and fourth quarters for the Company’s rental operations are generally the weakest, when there is limited leisure travel and a greater potential for adverse weather conditions. Many of the operating expenses such as rent, general insurance and administrative personnel are fixed and cannot be reduced during periods of decreased rental demand.

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, share repurchases and for working capital. The Company uses letters of credit to support asset backed vehicle financing programs. 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 (hereinafter defined) and insurance bonds. Cash generated by operating activities of $188.3 million for the six months ended June 30, 2005, was primarily the result of net income, adjusted for depreciation. The liquidity necessary for purchasing vehicles was 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 are provided by a combination of cash, vehicles and letters of credit. These letters of credit are provided under the Company’s Revolving Credit Facility.

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 significant portion of the secured vehicle financing consists of asset backed notes. 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.

Cash used in investing activities was $553.7 million during the six months ended June 30, 2005. The principal use of cash in investing activities was the purchase of revenue-earning vehicles, which totaled $2.6 billion, partially offset by $1.7 billion in proceeds from the sale of used revenue-earning vehicles and the reduction in restricted cash and investments of $0.4 billion during the six months ended June 30, 2005, due to increases in the rental fleet. 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. The Company expects to continue to fund its revenue-earning vehicles with cash provided from operations and increased secured vehicle financing. Restricted cash and investments, which totaled $102.1 million at June 30, 2005, 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 program and a like-kind exchange program. The Company also used cash for non-

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vehicle capital expenditures of $15.6 million during the first half of 2005. These expenditures consist primarily of airport facility improvements for the Company’s rental locations and investments in information technology equipment and systems. The Company also used $3.5 million of cash, net of assets acquired and liabilities assumed, for franchisee acquisitions during the first half of 2005. These expenditures were financed with cash provided from operations.

Cash provided by financing activities was $345.8 million for the six months ended June 30, 2005 primarily due to the issuance of an additional $400.0 million in asset backed notes, a $232.2 million net increase in commercial paper, a $25.0 million increase in the Conduit Facility, a $34.7 million increase in all other vehicle debt categories and stock options exercises totaling $16.7 million. These increases were partially offset by the maturity of asset backed notes totaling $335.8 million and share repurchases totaling $21.9 million under the share repurchase program.

The Company has significant requirements for bonds and letters of credit to support its insurance programs and airport concession commitments. At June 30, 2005, the insurance companies had issued $45.3 million in bonds to secure these obligations.

Asset Backed Notes

The asset backed note program at June 30, 2005 was comprised of $1.78 billion in asset backed notes with maturities ranging from 2005 to 2010. Borrowings under the asset backed notes are secured by eligible vehicle collateral. Asset backed notes totaling $1.61 billion bear interest at fixed rates ranging from 3.64% to 6.70%, including certain floating rate notes swapped to fixed rates. Asset backed notes totaling $169 million bear interest at floating rates ranging from LIBOR plus 0.17% to LIBOR plus 1.05%. On April 21, 2005, RCFC issued an additional $400 million of floating rate asset backed notes with a term of five years. In conjunction with the asset backed note issuance, the Company also entered into interest rate swap agreements to convert $190 million of the floating rate debt to fixed rate debt at a 4.58% interest rate.

Conduit Facility

Effective March 30, 2005, the Conduit Facility was renewed for another 364-day period and increased to $375 million from $350 million.

Commercial Paper Program and Liquidity Facility

On March 30, 2005, the Company renewed its commercial paper program (the “Commercial Paper Program”) for another 364-day period at a maximum size of $640 million backed by a renewal of the Liquidity Facility in the amount of $560 million. At June 30, 2005, the Company had $387.8 million in commercial paper outstanding under the Commercial Paper Program.

Vehicle Debt and Obligations

Vehicle manufacturer and bank lines of credit provided $390.0 million in capacity at June 30, 2005. The Company had $182.2 million in borrowings outstanding under these lines at June 30, 2005. All lines of credit are collateralized by the related vehicles. On July 8, 2005, an existing bank line of credit was increased by $36 million, thus, increasing the overall capacity provided on these lines.

The Company finances its Canadian vehicle fleet through a fleet securitization program. Under this program, DTG Canada can obtain vehicle financing funded through a bank commercial paper conduit. On June 21, 2005, the Company renewed the Canadian fleet securitization program to May 31, 2010 and increased the capacity from CND $235 million to CND $300 million. At June 30, 2005, DTG Canada had approximately CND $165.5 million (US $135.1 million) funded under this program.

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Revolving Credit Facility

The Company has a $300 million five-year, senior secured, revolving credit facility (the "Revolving Credit Facility") that expires on April 1, 2009. The Revolving Credit Facility permits letter of credit usage up to $300 million and working capital borrowing up to $100 million. The availability of funds under the Revolving Credit Facility is subject to the Company's 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 maximum leverage ratio, a minimum fixed charge coverage ratio and a limitation on cash dividends and share repurchases. As of June 30, 2005, the Company is in compliance with all covenants. The Company had letters of credit outstanding under the Revolving Credit Facility of approximately $155.8 million and no working capital borrowings at June 30, 2005.

New Accounting Standards

Beginning January 1, 2005, the Company adopted the provisions of Emerging Issues Task Force ("EITF") No. 04-1, "Accounting for Preexisting Relationships between the Parties to a Business Combination" ("EITF 04-1"). EITF 04-1 affirms that a business combination between two parties that have a preexisting relationship should be accounted for as a multiple element transaction. This includes determining how the cost of the combination should be allocated after considering the assets and liabilities that existed between the parties prior to the combination. Adoption of EITF 04-1 impacted and will continue to impact the way in which the Company accounts for certain business combination transactions by establishing identifiable intangibles, other than goodwill, such as reacquired franchise rights through the Company’s acquisitions of franchisee operations (Notes 2 and 7).

In December 2004, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment” ("SFAS No. 123(R)”), which is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123”). This revised statement establishes accounting standards for all transactions in which an entity exchanges its equity instruments for goods and services focusing primarily on accounting for transactions with employees and carrying forward prior guidance for share-based payments for transactions with non-employees.

SFAS No. 123(R) eliminates the intrinsic value measurement method of accounting in Accounting Principles Board Opinion 25 and generally requires measuring the cost of the employee services received in exchange for an award of equity instruments based on the fair value of the award on the date of the grant. The standard requires grant date fair value to be estimated using either an option-pricing model which is consistent with the terms of the award or a market observed price, if such a price exists. Such costs must be recognized over the period during which an employee is required to provide service in exchange for the award. The standard also requires estimating the number of instruments that will ultimately be issued, rather than accounting for forfeitures as they occur.

The effective date of SFAS No. 123(R) is the first fiscal year beginning after June 15, 2005 and the Company expects to adopt SFAS No. 123(R) effective January 1, 2006. SFAS No. 123(R) permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS No. 123(R) for all share-based payments granted after that date, and based on the requirements of SFAS No. 123 for all unvested awards granted prior to the effective date of SFAS No. 123(R). Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on pro forma disclosures made in accordance with SFAS No. 123. The Company plans to adopt the “modified prospective” method under SFAS No. 123(R) as required on January 1, 2006 and does not anticipate the adoption to have a material effect on the consolidated financial statements of the Company.

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The Company had previously adopted the provisions of SFAS No. 123 beginning January 1, 2003 changing from the intrinsic value-based method to the fair value-based method of accounting for stock-based compensation and 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" ("SFAS No. 148"), an amendment of SFAS No. 123.

In January 2003, the FASB issued Interpretation No. 46 "Consolidation of Variable Interest Entities," as amended in December 2003, which is now referred to as FIN 46(R). FIN 46(R) requires existing unconsolidated variable interest entities (“VIE’s”) to be consolidated by their primary beneficiaries if that company is subject to a majority of the risk of loss, if any, from the VIE’s activities, or entitled to receive a majority of the entity’s residual returns, or both. The Company believes that its involvement with Thrifty National Ad qualifies Thrifty National Ad as a VIE with the Company representing the primary beneficiary. Consequently, Thrifty National Ad was consolidated in the Company’s financial statements for the quarter ended March 31, 2004. The fair value of the net assets of Thrifty National Ad of approximately $3.7 million at March 31, 2004, was recorded as a cumulative effect of a change in accounting principle in the Company’s condensed consolidated statements of income. Beginning April 1, 2004, the Company began consolidating the operating results of Thrifty National Ad with its operating results. Thrifty National Ad is established for the limited purpose of collecting and disbursing funds for advertising and promotion programs for the benefit of the Thrifty Car Rental corporate and franchisee network. Thrifty National Ad files its tax returns under the provisions applicable to a trust. Accordingly, there is no tax effect on the cumulative effect of the change in accounting principle or on subsequent profits or losses. The Company’s estimated maximum exposure to loss as a result of its continuing involvement with Thrifty National Ad is expected to be minimal as expenditures are managed by Thrifty National Ad based on receipts. The Company also evaluated its franchisee network as potential VIE’s subject to possible consolidation. The Company determined that its franchisees met the FIN 46(R) definition of a business; however, the Company did not provide more than half of each franchisees’ equity or other financial support, among other qualifying conditions. Therefore, the Company believes that its franchisees do not qualify as VIE’s under FIN 46(R) and are not required to be consolidated into the Company’s financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following information about the Company’s market sensitive financial instruments 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. 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. However, this foreign currency risk is mitigated by the underlying collateral which is the Canadian fleet. 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.

Based on the Company’s level of floating rate debt (excluding notes with floating interest rates swapped into fixed rates) at June 30, 2005, a 50 basis point fluctuation in interest rates would have an approximate $6.0 million impact on the Company’s expected pretax income on an annual basis. This impact on pretax income is reduced by earnings from cash and cash equivalents and restricted cash and investments, which are invested on a short-term basis and subject to fluctuations in interest rates. At June 30, 2005, cash and cash equivalents totaled $184.8 million and restricted cash and investments totaled $102.1 million. The Company estimates that, for 2005, approximately 45% of its average debt will bear interest at floating rates.

At June 30, 2005, there were no significant changes in the Company’s quantitative disclosures about market risk compared to December 31, 2004, which is included under Item 7A of the Company’s most recent Form 10-K, except for the addition of the derivative

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financial instrument noted in Note 9 to the condensed consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

a) Evaluation of disclosure controls and procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms. The disclosure controls and procedures are also designed with the objective of ensuring such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing the disclosure controls and procedures, the Company’s management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the quarter covered by this report. Based on that evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level.

b) Changes in internal controls

There has been no change in the Company's internal control over financial reporting during the six months ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against the Company and its subsidiaries. Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings could be decided unfavorably to the Company or the subsidiaries involved. Although the amount of liability with respect to these matters cannot be ascertained, potential liability is not expected to materially affect the consolidated financial position or results of operations of the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a) Recent Sales of Unregistered Securities

None.

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b) Use of Proceeds

None.

c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

					Total Number of		Maximum
					Shares Purchased		Dollar Value of
	Total Number		Average		as Part of Publicly		Shares that May Yet
	of Shares		Price Paid		Announced Plans		Be Purchased under
Period	Purchased		Per Share		or Programs		the Plans or Programs
April 1, 2005 - April 30, 2005		95,000	$	33.29		95,000	$	62,732,000
May 1, 2005 - May 31, 2005		142,400	$	34.71		142,400	$	57,790,000
June 1, 2005 - June 30, 2005		51,000	$	37.27		51,000	$	55,889,000
Total		288,400				288,400

In July 2003, the Company announced that its Board of Directors had authorized spending up to $30 million to repurchase the Company’s shares of common stock over a two-year period in the open market or in privately negotiated transactions. In December 2004, the Company expanded the share repurchase program by authorizing spending up to $100 million for share repurchases through December 2006. All share repurchases through June 30, 2005 have been made in open market transactions.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

[a] On May 20, 2005, the 2005 Annual Meeting of Stockholders of the Company was held. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management’s director nominees.

[b] The Company’s stockholders elected Molly Shi Boren, Thomas P. Capo, Maryann N. Keller, The Hon. Edward C. Lumley, Gary L. Paxton, John C. Pope, John P. Tierney and Edward L. Wax to serve as directors of the Company until the next Annual Meeting of Stockholders or until their successors have been duly elected and shall qualify.

[c] The votes cast by the Company’s stockholders for the election of directors listed in paragraph (b), as determined by the final report of the inspectors, are set forth below:

		NUMBER OF VOTES
	NOMINEE	FOR		WITHHELD
Molly Shi Boren			24,576,809		55,587
Thomas P. Capo			24,580,617		51,779
Maryann N. Keller			24,566,648		65,748
The Hon. Edward C. Lumley			23,760,876		871,520
Gary L. Paxton			24,581,108		51,288
John C. Pope			24,367,339		265,057
John P. Tierney			24,578,425		53,971
Edward L. Wax			24,578,158		54,238

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The Company’s stockholders voted on the following proposals:

Proposal 1 – Election of Directors. See paragraphs (b) and (c) above.

Proposal 2 – Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for 2005 year. A proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for 2005 was adopted, with 24,141,541 votes cast for, 481,401 votes cast against and 9,454 votes withheld.

Proposal 3 – Approval of the Amended and Restated Long-Term Incentive Plan of the Company. A proposal to approve the amendment and restatement of the Long-Term Incentive Plan of the Company was adopted, with 22,041,231 votes cast for, 659,184 votes cast against, 24,964 votes withheld and 1,907,017 broker non-votes.

ITEM 6. EXHIBITS

[a] Index of Exhibits

15.17	Letter from Deloitte & Touche LLP regarding interim financial information
31.19	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.20	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.19	Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.20	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 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.

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

August 9, 2005	By:	/s/ GARY L. PAXTON
		Gary L. Paxton
		President, Chief Executive Officer and Principal
		Executive Officer

August 9, 2005	By:	/s/ STEVEN B. HILDEBRAND
		Steven B. Hildebrand
		Senior Executive Vice President, Chief Financial
		Officer, Principal Financial Officer and Principal
		Accounting Officer

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