FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dx8q3F8QQAIxuyj+PESlqRnx5oZaHloahj0L/esY483kxBLiXK6qphQdDQrqn5rp CSzU4vgMA+GFy5unL9XvUg== 0001049108-05-000407.txt : 20051104 0001049108-05-000407.hdr.sgml : 20051104 20051104170258 ACCESSION NUMBER: 0001049108-05-000407 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051104 DATE AS OF CHANGE: 20051104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOLLAR THRIFTY AUTOMOTIVE GROUP INC CENTRAL INDEX KEY: 0001049108 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTO RENTAL & LEASING (NO DRIVERS) [7510] IRS NUMBER: 731356520 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13647 FILM NUMBER: 051181050 BUSINESS ADDRESS: STREET 1: 5330 EAST 31ST STREET CITY: TULSA STATE: OK ZIP: 74135 BUSINESS PHONE: 9186607700 MAIL ADDRESS: STREET 1: 5330 EAST 31ST STREET CITY: TULSA STATE: OK ZIP: 74135 10-Q 1 form10q093005.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, 2005


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

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

The number of shares outstanding of the registrant’s Common Stock as of October 31, 2005 was 25,360,088.

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

29

           ITEM 5.    OTHER INFORMATION

29

           ITEM 6.    EXHIBITS

30

SIGNATURES

31

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; access to reservation distribution channels; 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.

PART I – FINANCIAL INFORMATION

Table of Contents

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 September 30, 2005, and the related condensed consolidated statements of income for the three-month and nine-month periods ended September 30, 2005 and 2004 and of cash flows for the nine-month periods ended September 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 the 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 report 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

November 4, 2005

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(In Thousands Except Per Share Data)

	(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
REVENUES: Vehicle rentals	$	419,145	$	377,989	$	1,067,660	$	960,374
Vehicle leasing		19,630		24,688		49,467		63,165
Fees and services		14,778		16,384		39,508		43,467
Other		3,193		2,085		10,587		7,788

Total revenues		456,746		421,146		1,167,222		1,074,794


COSTS AND EXPENSES: Direct vehicle and operating		230,539		205,832		631,150		542,480
Vehicle depreciation and lease charges, net		92,430		88,033		200,253		222,017
Selling, general and administrative		61,486		60,487		176,470		164,287
Interest expense, net of interest income		26,978		26,280		69,990		68,527

Total costs and expenses		411,433		380,632		1,077,863		997,311

INCOME BEFORE INCOME TAXES		45,313		40,514		89,359		77,483

INCOME TAX EXPENSE		16,918		15,480		36,643		31,784

INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE		28,395		25,034		52,716		45,699

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE		-		-		-		3,730

NET INCOME	$	28,395	$	25,034	$	52,716	$	49,429

BASIC EARNINGS PER SHARE: Income before cumulative effect of a change in accounting principle	$	1.13	$	1.00	$	2.10	$	1.83
Cumulative effect of a change in accounting principle		-		-		-		0.15

Net income	$	1.13	$	1.00	$	2.10	$	1.98

DILUTED EARNINGS PER SHARE: Income before cumulative effect of a change in accounting principle	$	1.07	$	0.96	$	2.00	$	1.74
Cumulative effect of a change in accounting principle		-		-		-		0.14

Net income	$	1.07	$	0.96	$	2.00	$	1.88

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2005 AND DECEMBER 31, 2004

(In Thousands Except Share and Per Share Data)


		September 30,			December 31,
		2005			2004

		(Unaudited)
ASSETS:
Cash and cash equivalents		$	278,782		$	204,453
Restricted cash and investments			416,978			455,215
Receivables, net			231,014			194,552
Prepaid expenses and other assets			96,209			90,030
Revenue-earning vehicles, net			2,755,238			2,267,982
Property and equipment, net			105,256			105,335
Income taxes receivable			2,373			3,757
Software and other intangible assets, net			24,835			20,020
Goodwill			280,184			279,907

		$	4,190,869		$	3,621,251

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Accounts payable		$	63,088		$	63,109
Accrued liabilities			178,963			163,214
Deferred income tax liability			242,144			202,857
Public liability and property damage			104,020			88,176
Vehicle debt and obligations			2,925,187			2,500,426

	Total liabilities		3,513,402			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; 26,910,289 and 25,910,030 issued, respectively, and 25,358,689 and 25,039,730 outstanding, respectively			269			259
Additional capital			775,274			748,261
Accumulated deficit			(67,441	)		(120,157	)
Accumulated other comprehensive income (loss)			14,083			(2,688	)
Treasury stock, at cost (1,551,600 and 870,300 shares, respectively)			(44,718	)		(22,206	)

	Total stockholders’ equity		677,467			603,469

		$	4,190,869		$	3,621,251

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(In Thousands)


					Nine Months
					Ended September 30,

					(Unaudited)
					2005			2004

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	52,716		$	49,429
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation:
			Vehicle depreciation			229,021			226,639
			Non-vehicle depreciation			15,290			13,158
		Net gains from disposition of revenue-earning vehicles				(35,890	)		(17,787	)
		Amortization				4,523			4,111
		Performance share incentive plan				4,267			4,068
		Net (gains)/losses from sale of property and equipment				(174	)		237
		Provision for losses on receivables				2,345			1,848
		Deferred income taxes				35,448			29,427
		Change in assets and liabilities, net of acquisitions:
			Income taxes receivable			1,384			-
			Receivables			(21,607	)		(11,605	)
			Prepaid expenses and other assets			(787	)		(8,626	)
			Accounts payable and accrued liabilities			23,038			12,969
			Public liability and property damage			15,844			22,959
			Other			1,216			683

				Net cash provided by operating activities		326,634			327,510


CASH FLOWS FROM INVESTING ACTIVITIES:
	Revenue-earning vehicles:
		Purchases				(3,139,082	)		(2,815,495	)
		Proceeds from sales				2,457,599			2,116,503
	Net change in restricted cash and investments					38,237			252,804
	Property, equipment and software:
		Purchases				(22,675	)		(18,202	)
		Proceeds from sales				3,266			34
	Acquisition of businesses, net of cash acquired					(3,593	)		(50,240	)

				Net cash used in investing activities		(666,248	)		(514,596	)







									(Continued)

November 4, 2005

/s/ STEVEN B. HILDEBRAND

Steven B. Hildebrand

Senior Executive Vice President, Chief Financial

Officer, Principal Financial Officer and Principal

Accounting Officer

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(In Thousands)


					Nine Months
					Ended September 30,

					(Unaudited)
					2005			2004

CASH FLOWS FROM FINANCING ACTIVITIES:
	Vehicle debt and obligations:
		Proceeds				3,841,528			4,143,320
		Payments				(3,416,771	)		(3,936,365	)
	Issuance of common shares					16,877			8,490
	Purchase of common stock for the treasury					(22,512	)		(11,722	)
	Financing issue costs					(5,179	)		(9,272	)

				Net cash provided by financing activities		413,943			194,451

CHANGE IN CASH AND CASH EQUIVALENTS						74,329			7,365

CASH AND CASH EQUIVALENTS:
	Beginning of period					204,453			192,006

	End of period				$	278,782		$	199,371

SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
	Receivables from capital lease of vehicles to franchisees				$	1,106		$	13,317

	Purchases of property, equipment and software included in
			accounts payable and accrued liabilities		$	2,262		$	-

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	Cash paid for (refund of):
			Income taxes to (from) taxing authorities		$	(178	)	$	2,357

			Interest		$	73,437		$	68,715

See notes to condensed consolidated financial statements.

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 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 herein have not been 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’s opinion, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim periods have been made. Results for interim periods are not necessarily indicative of results for a full year.

2.	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.

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			Nine Months
		Ended			Ended
		September 30, 2004			September 30, 2004

Net income, as reported		$	25,034		$	49,429

Add: compensation expense related to performance share and restricted stock awards included in reported net income, net of related tax effects			1,389			2,440

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			(1,423	)		(2,617	)

Pro forma net income		$	25,000		$	49,252

Earnings per share:
	Basic, as reported	$	1.00		$	1.98

	Basic, pro forma	$	1.00		$	1.97

	Diluted, as reported	$	0.96		$	1.88

	Diluted, pro forma	$	0.95		$	1.88

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 nine months ended September 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).

3.	ACQUISITIONS

During the nine months ended September 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 for acquisitions during the nine months ended September 30, 2005, net of cash acquired, was $3.6 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 nine months ended September 30, 2005, the Company recognized an unamortized intangible asset 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 nine months ended September 30, 2005, are included in the condensed consolidated statements of income of the Company.

4.	VEHICLE DEPRECIATION AND LEASE CHARGES, NET

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Depreciation of revenue-earning vehicles, net	$	89,665	$	82,467	$	193,131	$	208,852
Rents paid for vehicles leased		2,765		5,566		7,122		13,165

	$	92,430	$	88,033	$	200,253	$	222,017

5.	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.

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						Nine Months
		Ended September 30,						Ended September 30,

		2005			2004			2005			2004

Income before cumulative effect of a change in accounting principle			$	28,395		$	25,034		$	52,716		$	45,699

Basic EPS:
	Weighted average common shares			25,189,893			24,952,426			25,101,071			24,983,528


Basic EPS			$	1.13		$	1.00		$	2.10		$	1.83


Diluted EPS:
	Weighted average common shares			25,189,893			24,952,426			25,101,071			24,983,528

Shares contingently issuable:
	Stock options			280,457			388,240			367,406			437,912
	Performance awards			639,544			575,491			611,050			563,322
	Shares held for compensation plans			182,574			172,980			181,213			177,809
	Director compensation shares deferred			139,639			106,334			136,686			102,468

Shares applicable to diluted				26,432,107			26,195,471			26,397,426			26,265,039

Diluted EPS			$	1.07		$	0.96		$	2.00		$	1.74

For the three months and nine months ended September 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.

6.	RECEIVABLES

Receivables consist of the following (in thousands):


	September 30,			December 31,
	2005			2004

Trade accounts receivable	$	130,960		$	103,269
Notes receivable		1,399			1,910
Financing receivables, net		3,632			5,035
Due from DaimlerChrysler		94,872			88,110
Fair value of interest rate swap		16,094			-
Other vehicle manufacturer receivables		1,358			12,371

		248,315			210,695
Less: Allowance for doubtful accounts		(17,301	)		(16,143	)

	$	231,014		$	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):


	September 30,			December 31,
	2005			2004

Amortized intangible assets
Software and other intangible assets	$	51,929		$	44,867
Less accumulated amortization		(29,380	)		(24,847	)

		22,549			20,020
Unamortized intangible assets
Reacquired franchise rights		2,286			-

Total software and other intangible assets	$	24,835		$	20,020

As discussed in Note 3, 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 nine months ended September 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 its annual impairment test of goodwill and concluded goodwill was not impaired.

The changes in the carrying amount of goodwill for the nine months ended September 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		213

Balance as of September 30, 2005	$	280,184

9.	VEHICLE DEBT AND OBLIGATIONS

Vehicle debt and obligations as of September 30, 2005 and December 31, 2004 consist of the following (in thousands):


			September 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			-			350,000
	2001 Series notes			350,000			350,000
	1999 Series notes			-			26,667
	1997 Series notes			-			110,548

				1,625,000			1,712,215
		Discounts on asset backed notes		(44	)		(1	)

		Asset backed notes, net of discount		1,624,956			1,712,214
Conduit Facility				375,000			350,000
Commercial paper, net of discount of $2,137 and $467				538,825			155,573
Other vehicle debt				188,018			174,594
Limited partner interest in limited partnership				198,388			108,045

Total vehicle debt and obligations			$	2,925,187		$	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.

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. Subsequently, on July 8, 2005, this line of credit was increased to $136 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 $258 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 $1.4 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 consolidated balance sheet at fair market value, which were assets, included in receivables, of approximately $16.1 million at September 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 $15.2 million, which is net of income taxes, in total comprehensive income for the nine-month period ended September 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 $3.6 million of net deferred gain will be reclassified into net income within the next twelve months.

11.

COMPREHENSIVE INCOME

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

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005		2004
Net income	$	28,395	$	25,034		$	52,716	$	49,429

Interest rate swap adjustment, net of tax		8,920		(5,656	)		15,199		6,736
Foreign currency translation adjustment		1,979		1,333			1,572		915

Comprehensive income	$	39,294	$	20,711		$	69,487	$	57,080

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 nine months ended September 30, 2005, the effective tax rate of 37.3% and 41.0%, respectively, differed from the U.S. statutory rate due primarily to the state and local taxes, financial results of DTG Canada 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 three months ended September 30, 2005, the Company repurchased 18,800 shares at an average price of $32.29 per share, totaling $0.6 million. During the nine months ended September 30, 2005, the Company repurchased 681,300 shares at an average price of $33.04 per share, totaling $22.5 million. Since the stock repurchase program began in 2003, the Company has repurchased 1,551,600 shares at an average price of $28.82 per share, totaling $44.7 million, all of which were made in open market transactions.

During the third quarter of 2005, the Company suspended the share repurchase program. This suspension will remain in effect until the Company determines that it is appropriate to restart such program.

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 September 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.

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 3 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 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 November 1, 2005, the Company acquired the operations of the Thrifty franchisee in Albuquerque and Santa Fe, New Mexico.

*******

Table of Contents

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						Nine Months
			Ended September 30,						Ended September 30,

			(Percentage of Revenue)

			2005			2004			2005			2004

REVENUES:
	Vehicle rentals			91.8	%		89.8	%		91.5	%		89.4	%
	Vehicle leasing			4.3			5.9			4.2			5.9
	Fees and services			3.2			3.9			3.4			4.0
	Other			0.7			0.4			0.9			0.7

		Total revenues		100.0			100.0			100.0			100.0


COSTS AND EXPENSES:
	Direct vehicle and operating			50.5			48.9			54.1			50.5
	Vehicle depreciation and lease charges, net			20.2			20.9			17.2			20.6
	Selling, general and administrative			13.5			14.4			15.1			15.3
	Interest expense, net of interest income			5.9			6.2			5.9			6.4

		Total costs and expenses		90.1			90.4			92.3			92.8

INCOME BEFORE INCOME TAXES				9.9			9.6			7.7			7.2

INCOME TAX EXPENSE				3.7			3.7			3.2			2.9

INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE				6.2			5.9			4.5			4.3

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE				0.0			0.0			0.0			0.3

NET INCOME				6.2	%		5.9	%		4.5	%		4.6	%

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


	Three Months							Nine Months
	Ended September 30,							Ended September 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		130,115		118,933		9.4%			115,787		102,578		12.9%
Number of rental days		10,392,740		9,306,217		11.7%			26,907,381		24,059,740		11.8%
Vehicle utilization		86.8%		85.1%		1.7 p.p.			85.1%		85.6%		(0.5) p.p.
Average revenue per day	$	40.33	$	40.62		(0.7%	)	$	39.68	$	39.92		(0.6%	)
Monthly average revenue per vehicle	$	1,074	$	1,059		1.4%		$	1,025	$	1,040		(1.4%	)

Same Store Vehicle Rental Data: (excludes new stores)

Average number of vehicles operated		121,790		118,933		2.4%			106,434		102,578		3.8%
Number of rental days		9,735,085		9,306,217		4.6%			24,663,525		24,059,740		2.5%

Vehicle Leasing Data:

Average number of vehicles leased		14,900		21,394		(30.4%	)		12,928		18,434		(29.9%	)
Monthly average revenue per vehicle	$	439	$	385		14.0%		$	425	$	381		11.5%

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

During the three months ended September 30, 2005, business and leisure travel improved, which has resulted in an increase in industry rental demand. The Company achieved strong revenue growth during the quarter related to volume from franchise acquisitions and existing corporate stores. Revenue per day declined by 0.7% due to highly competitive industry conditions. The revenue growth combined with improved vehicle utilization and lower insurance costs resulted in higher profits in the three months ended September 30, 2005 as compared to the three months ended September 30, 2004.

Operating Results

The Company had income of $45.3 million before income taxes for the third quarter of 2005, as compared to $40.5 million in the third quarter of 2004.

Revenues


	Three Months
	Ended September 30,				$ Increase/			% Increase/
	2005		2004		(decrease)			(decrease)

	(in millions)

Vehicle rentals	$	419.2	$	378.0	$	41.2			10.9%
Vehicle leasing		19.6		24.7		(5.1	)		(20.5%	)
Fees and services		14.8		16.4		(1.6	)		(9.8%	)
Other		3.1		2.0		1.1			53.1%

Total revenues	$	456.7	$	421.1	$	35.6			8.5%


Vehicle rental metrics:
Number of rental days		10,392,740		9,306,217		1,086,523			11.7%
Average revenue per day	$	40.33	$	40.62	$	(0.29	)		(0.7%	)

Vehicle leasing metrics:
Average number of vehicles leased		14,900		21,394		(6,494	)		(30.4%	)
Average monthly lease revenue per unit	$	439	$	385	$	54			14.0%

Vehicle rental revenue for the third quarter of 2005 increased 10.9%, due to an 11.7% increase in rental days totaling $44.2 million, partially offset by a 0.7% decrease in revenue per day totaling $3.0 million. Vehicle rental revenue grew 6.6% due to franchisee acquisitions that had not yet annualized and greenfield locations and also grew 4.3% due to same store revenue.

Vehicle leasing revenue for the third quarter of 2005 decreased 20.5%, due to a 30.4% decrease in the average lease fleet totaling $7.5 million, partially offset by a 14.0% increase in the average lease rate totaling $2.4 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 9.8%, primarily due to lower revenues from franchisees as the result of a shift of several locations from franchised operations to corporate operations.

Expenses


	Three Months
	Ended September 30,				$ Increase/		% Increase/
	2005		2004		(decrease)		(decrease)

	(in millions)

Direct vehicle and operating	$	230.5	$	205.8	$	24.7		12.0%
Vehicle depreciation and lease charges, net		92.4		88.0		4.4		5.0%
Selling, general and administrative		61.5		60.5		1.0		1.7%
Interest expense, net of interest income		27.0		26.3		0.7		2.7%

Total expenses	$	411.4	$	380.6	$	30.8		8.1%

Direct vehicle and operating expenses for the third quarter of 2005 increased $24.7 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 $13.9 million, personnel related expenses of $6.3 million, facility and airport concession expenses of $5.0 million and commissions of $1.3 million. Expenses incurred from Hurricane Katrina relating to vehicle and property damage totaled $1.7 million. Offsetting the increases in direct vehicle and operating expenses was a $4.1 million decrease in insurance reserves during the quarter to reflect the current actuarial estimates. This reduction is due to favorable developments in claims history and to a change in the vicarious liability law, which imposes liability on vehicle owners for acts by vehicle drivers. The "Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users", referred to as the "Highway Bill", which was signed into law on August 10, 2005, removed unlimited vicarious liability for vehicle rental and leasing companies, limiting the Company's exposure to state minimum financial responsibility amounts. The change in the vicarious liability law also allowed the Company to reduce automobile liability accrual rates during the quarter by $1.7 million. Direct vehicle and operating expenses were 50.5% of revenue for the third quarter of 2005, compared to 48.9% in the third quarter of 2004.

Net vehicle depreciation and lease charges, which includes net vehicle gains from the disposition of non-program vehicles, increased $4.4 million for the third quarter of 2005. Vehicle depreciation increased $5.5 million due to a 5.5% increase in depreciable fleet and a 0.8% increase in the average depreciation rate. Net vehicle gains from the disposition of non-program vehicles were $3.1 million for the third quarter of 2005 compared to $4.8 million for the third quarter of 2004. Lease charges, for vehicles leased from third parties, decreased $2.8 million due to a decrease in the number of vehicles leased. Net vehicle depreciation expense and lease charges were 20.2% of revenue for the third quarter of 2005, compared to 20.9% in the third quarter of 2004.

Selling, general and administrative expenses for the third quarter of 2005 increased $1.0 million primarily due to a $1.0 million increase in personnel related costs and increases in various other general and administrative expenses, partially offset by a decrease in sales and marketing costs. Selling, general and administrative expenses were 13.5% of revenue for the third quarter of 2005, compared to 14.4% in the third quarter of 2004.

Net interest expense for the third quarter of 2005 increased $0.7 million. This increase was primarily due to a $2.4 million increase related to higher average vehicle debt, partially offset by a $1.3 million decrease related to a lower effective interest rate. Net interest expense was 5.9% of revenue for the third quarter of 2005, compared to 6.2% in the third quarter of 2004.

The income tax provision for the third quarter of 2005 was $16.9 million. The effective income tax rate for the third quarter of 2005 was 37.3% compared to 38.2% for the third quarter of 2004. 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.

Nine Months Ended September 30, 2005 Compared with Nine Months Ended September 30, 2004

During the nine months ended September 30, 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 0.6% due to highly competitive industry conditions. The revenue growth combined with lower vehicle costs resulted in higher profits in the nine months ended September 30, 2005 as compared to the same period in 2004.

Operating Results

The Company had income of $89.4 million before income taxes for the nine months ended September 30, 2005, as compared to income before income taxes and cumulative effect of a change in accounting principle of $77.5 million in the nine months ended September 30, 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


	Nine Months
	Ended September 30,				$ Increase/			% Increase/
	2005		2004		(decrease)			(decrease)

	(in millions)

Vehicle rentals	$	1,067.7	$	960.4	$	107.3			11.2%
Vehicle leasing		49.5		63.2		(13.7	)		(21.7%	)
Fees and services		39.5		43.5		(4.0	)		(9.1%	)
Other		10.5		7.7		2.8			35.9%

Total revenues	$	1,167.2	$	1,074.8	$	92.4			8.6%


Vehicle rental metrics:
Number of rental days		26,907,381		24,059,740		2,847,641			11.8%
Average revenue per day	$	39.68	$	39.92	$	(0.24	)		(0.6%	)

Vehicle leasing metrics:
Average number of vehicles leased		12,928		18,434		(5,506	)		(29.9%	)
Average monthly lease revenue per unit	$	425	$	381	$	44			11.5%

Vehicle rental revenue for the nine months ended September 30, 2005 increased 11.2%, due to an 11.8% increase in rental days totaling $113.7 million, partially offset by a 0.6% decrease in revenue per day totaling $6.4 million. Vehicle rental revenue grew 8.7% due to franchisee acquisitions that had not yet annualized and greenfield locations and also grew 2.5% due to same store revenue.

Vehicle leasing revenue for the nine months ended September 30, 2005 decreased 21.7%, due to a 29.9% decrease in the average lease fleet totaling $18.9 million, partially offset by an 11.5% increase in the average lease rate totaling $5.2 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 9.1% 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.

Expenses


	Nine Months
	Ended September 30,				$ Increase/			% Increase/
	2005		2004		(decrease)			(decrease)

	(in millions)

Direct vehicle and operating	$	631.1	$	542.5	$	88.6			16.3%
Vehicle depreciation and lease charges, net		200.3		222.0		(21.7	)		(9.8%	)
Selling, general and administrative		176.5		164.3		12.2			7.4%
Interest expense, net of interest income		70.0		68.5		1.5			2.1%

Total expenses	$	1,077.9	$	997.3	$	80.6			8.1%

Direct vehicle and operating expenses for the nine months ended September 30, 2005 increased $88.6 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 $31.8 million, personnel related expenses of $26.8 million, facility and airport concession expenses of $18.5 million and commissions of $3.2 million. Direct vehicle and operating expenses were 54.1% of revenue for the nine months ended September 30, 2005, compared to 50.5% in the same period in 2004.

Net vehicle depreciation and lease charges for the nine months ended September 30, 2005 decreased $21.7 million, which includes net vehicle gains from the disposition of non-program vehicles. Net vehicle gains were $35.9 million for the nine months ended September 30, 2005 compared to $17.8 million for the nine months ended September 30, 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 $6.0 million due to a decrease in the number of vehicles leased. Vehicle depreciation expenses increased $2.4 million due to an 8.2% increase in depreciable fleet, partially offset by a 6.6% decrease in average depreciation rate. Net vehicle depreciation expense and lease charges were 17.2% of revenue for the nine months ended September 30, 2005, compared to 20.6% in the same period in 2004.

Selling, general and administrative expenses for the nine months ended September 30, 2005 increased $12.2 million due to a $6.8 million increase in personnel related costs, including a $1.6 million increase in performance based compensation plans. Additionally, sales and marketing costs increased $0.9 million and various other general and administrative expenses increased. The results for the nine months ended September 30, 2005 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 15.1% of revenue for the nine months ended September 30, 2005, compared to 15.3% in the same period in 2004.

Net interest expense for the nine months ended September 30, 2005 increased $1.5 million. This increase was primarily due to a $5.4 million increase related to higher average vehicle debt, partially offset by a $3.7 million decrease related to a lower effective interest rate. Net interest expense was 5.9% of revenue for the nine months ended September 30, 2005, compared to 6.4% in the same period in 2004.

The income tax provision for the nine months ended September 30, 2005 was $36.6 million. The effective income tax rate for the nine months ended September 30, 2005 and 2004 was 41.0%. 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.

Outlook

Vehicle manufacturers are expected to reduce vehicle sales to the rental car industry and have significantly increased industry vehicle costs for the 2006 model year. These cost increases will begin to impact the industry in the fourth quarter of 2005 with a more significant impact in 2006. Industry vehicle rental pricing continues to be highly competitive; although, the Company has seen early indications of increased pricing in many of its locations. Additionally, the favorable impact on the Company's pretax income of the law change to remove unlimited vicarious liability for vehicle rental and leasing companies is estimated to be $12 million to $14 million annually.

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 both cash and 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 $326.6 million for the nine months ended September 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 and insurance bonding programs are adequate to meet its liquidity requirements for 2005 and 2006. Additionally, the Company believes its secured vehicle financing programs are adequate to meet its liquidity requirements for 2005; however, for 2006, the Company will need to obtain additional vehicle debt to refinance amortizing vehicle debt and to finance additional fleet growth. A significant portion of the secured vehicle financing consists of asset backed notes. The Company believes the asset backed note market continues to be a viable source of vehicle financing.

Cash used in investing activities was $666.2 million during the nine months ended September 30, 2005. The principal use of cash in investing activities was the purchase of revenue-earning vehicles, which totaled $3.1 billion, partially offset by $2.5 billion in proceeds from the sale of used revenue-earning vehicles during the nine months ended September 30, 2005. 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 $417.0 million at September 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-vehicle capital expenditures of $22.7 million during the nine months ended September 30, 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 $3.6 million of cash, net of assets acquired and liabilities assumed, for franchisee acquisitions during the nine months ended September 30, 2005. These expenditures were financed with cash provided from operations.

Cash provided by financing activities was $413.9 million for the nine months ended September 30, 2005 primarily due to the issuance of an additional $400.0 million in asset backed notes, a $383.3 million net increase in commercial paper, a $25.0 million increase in the Conduit Facility, a $103.8 million increase in all other vehicle debt categories and stock options exercises totaling $16.9 million. These increases were partially offset by the maturity of asset backed notes totaling $487.2 million and share repurchases totaling $22.5 million under the share repurchase program. The net increase in vehicle debt is seasonal and coincides with increases in the Company’s fleet.

The Company has significant requirements for bonds and letters of credit to support its insurance programs and airport concession commitments. At September 30, 2005, the insurance companies had issued $37.2 million in bonds to secure these obligations.

Asset Backed Notes

The asset backed note program at September 30, 2005 was comprised of $1.63 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 $1.53 billion bear interest at fixed rates ranging from 3.64% to 6.04%, including certain floating rate notes swapped to fixed rates. Asset backed notes totaling $100 million bear interest at a floating rate of LIBOR plus 0.17%. 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 September 30, 2005, the Company had $538.8 million in commercial paper outstanding under the Commercial Paper Program.

Vehicle Debt and Obligations

On July 8, 2005, an existing bank line of credit was increased by $36.0 million, thus, increasing the overall capacity provided on these lines. Vehicle manufacturer and bank lines of credit provided $436.0 million in capacity at September 30, 2005. The Company had $188.0 million in borrowings outstanding under these lines at September 30, 2005. All lines of credit are collateralized by the related vehicles.

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 September 30, 2005, DTG Canada had approximately CND $230.6 million (US $198.4 million) funded under this program.

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 September 30, 2005, the Company is in compliance with all covenants. The Company had letters of credit outstanding under the Revolving Credit Facility of approximately $146.6 million and no working capital borrowings at September 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 3 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.

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.

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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 September 30, 2005, a 50 basis point fluctuation in interest rates would have an approximate $7.0 million impact on the Company’s expected pretax income on an annual basis. This impact on pretax income would be 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 September 30, 2005, cash and cash equivalents totaled $278.8 million and restricted cash and investments totaled $417.0 million.

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

Table of Contents

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 as of the end of the quarter covered by this report.

b)	Changes in internal controls

There has been no change in the Company's internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Table of Contents

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 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.

Table of Contents

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a)	Recent Sales of Unregistered Securities

None.

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

July 1, 2005 - July 31, 2005		-	$	-		-	$	55,889,000

August 1, 2005 - August 31, 2005		-	$	-		-	$	55,889,000

September 1, 2005 - September 30, 2005		18,800	$	32.29		18,800	$	55,282,000

Total		18,800				18,800

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 September 30, 2005 have been made in open market transactions.

Table of Contents

ITEM 5.

OTHER INFORMATION

The Company has established the date for its next Annual Meeting of Stockholders, which will be held on May 18, 2006.

Table of Contents

ITEM 6.

EXHIBITS

[a]	Index of Exhibits

10.80

Amendment Number 1 to Amended and Restated Employment Continuation Plan for Key Employees of Dollar Thrifty Automotive Group, Inc., which became effective September 28, 2005

15.19

Letter from Deloitte & Touche LLP regarding interim financial information

31.21	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.22	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.21	Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.22	Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Table of Contents

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.

November 4, 2005	By:	/s/ GARY L. PAXTON
		Gary L. Paxton
		President, Chief Executive Officer and Principal
		Executive Officer

EX-10 2 exhibit1080.htm

EXHIBIT 10.80

AMENDMENT NUMBER 1 TO

AMENDED AND RESTATED EMPLOYMENT CONTINUATION PLAN

FOR KEY EMPLOYEES OF

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.

This Amendment dated September 28, 2005 (this “Amendment”) is attached to and made a part of that certain Amended and Restated Employment Continuation Plan for Key Employees of Dollar Thrifty Automotive Group, Inc. (“DTAG”) dated April 21, 2004 (the “Plan”).

This Amendment shall amend the Plan as follows:

1. The references to the Salary grades of E25, E24 or E23 in the second line of Section 3n. shall be amended to refer to the Salary grades of 42, 41 or 40.

2. The first paragraph of Section 4c. of the Plan is hereby amended to read as follows:

c. A Key Employee who is listed on Annex A will be eligible for Employment Continuation Compensation if, within two years after the occurrence of a Change in Control: . . .

3. The word “three” in the second line of Section 4d. of the Plan is hereby amended to read “two”.

All other provisions of the Plan remain as stated in the Plan.

These actions were approved by the Human Resources and Compensation Committee of the Board of Directors of DTAG at its meeting held as of the date first written above.

EX-15 3 exhibit1519.htm

EXHIBIT 15.19

November 4, 2005

Dollar Thrifty Automotive Group, Inc.

5330 East 31^st Street

Tulsa, Oklahoma

We have made a review, in accordance with the standards of the Public Company Accounting Oversight Board (United States), of the unaudited interim financial information of Dollar Thrifty Automotive Group, Inc. and subsidiaries for the periods ended September 30, 2005 and 2004, as indicated in our report dated November 4, 2005; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, is incorporated by reference in Registration Statements No. 333-79603, No. 333-89189, No. 333-33144, No. 333-33146, No. 333-50800 and No. 333-128714 on Form S-8.

We also are aware that the aforementioned report, pursuant to Rule 436 (c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ DELOITTE & TOUCHE LLP

Tulsa, Oklahoma

EX-31 4 exhibit3121.htm

EXHIBIT 31.21

CERTIFICATION

I, Gary L. Paxton, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Dollar Thrifty Automotive Group, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2005

	/s/ Gary L. Paxton
	Gary L. Paxton
	Chief Executive Officer

EX-31 5 exhibit3122.htm

EXHIBIT 31.22

CERTIFICATION

I, Steven B. Hildebrand, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Dollar Thrifty Automotive Group, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2005

	/s/ Steven B. Hildebrand
	Steven B. Hildebrand
	Chief Financial Officer

EX-32 6 exhibit3221.htm

EXHIBIT 32.21

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Dollar Thrifty Automotive Group, Inc. (the “Company”) for the period ended September 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary L. Paxton, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gary L. Paxton

Gary L. Paxton

Chief Executive Officer

November 4, 2005

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Dollar Thrifty Automotive Group, Inc. and will be retained by Dollar Thrifty Automotive Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32 7 exhibit3222.htm

EXHIBIT 32.22

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Dollar Thrifty Automotive Group, Inc. (the “Company”) for the period ended September 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven B. Hildebrand, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven B. Hildebrand

Steven B. Hildebrand

Chief Financial Officer

November 4, 2005

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								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								29

ITEM 5. OTHER INFORMATION								29

ITEM 6. EXHIBITS								30

SIGNATURES								31