Delaware
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1-13647
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73-1356520
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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99.1
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News release of Dollar Thrifty Automotive Group, Inc. dated May 5, 2011: Dollar Thrifty Automotive Group Reports First Quarter Profit
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DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
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(Registrant)
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May 5, 2011
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By:
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/s/ H. CLIFFORD BUSTER III
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H. Clifford Buster III
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Senior Executive Vice President, Chief Financial
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||
Officer and Principal Financial Officer
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99.1
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News release of Dollar Thrifty Automotive Group, Inc. dated May 5, 2011: Dollar Thrifty Automotive Group Reports First Quarter Profit
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·
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the impact of persistent pricing and demand pressures on our results and our low cost structure, particularly in light of the continuing volatility in the global financial and credit markets, and concerns about global economic prospects and the speed and strength of a recovery, and whether consumer confidence and spending levels will continue to improve;
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·
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the duration and effectiveness of ongoing governmental and regulatory initiatives in the United States and elsewhere to stimulate economic growth and the impact of developments outside the United States, such as the sovereign credit issues in certain countries in the European Union, which could affect the relative volatility of global credit markets generally, and the continuing significant political unrest in certain oil-producing countries, which has caused prices for petroleum products, including gasoline, to rise and adversely affect both broader economic conditions and consumer discretionary spending patterns;
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·
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the impact of pricing and other actions by competitors, particularly as they increase fleet sizes in anticipation of seasonal activity;
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·
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the impact of supply and production disruptions in the automotive industry as a result of events in Japan that have resulted in production shutdowns and delays at the affected equipment manufacturers, which could affect our ability to source vehicles for our rental fleet during the peak period and in future periods, as well as our planned fleet size and holding period for our vehicles;
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·
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our ability to manage our fleet mix to match demand and meet our target for vehicle depreciation costs, particularly in light of the significant increase in the level of risk vehicles (i.e., those vehicles not acquired through a guaranteed residual value program) in our fleet and our exposure to the used vehicle market;
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·
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the cost and other terms of acquiring and disposing of automobiles and the impact of conditions in the used vehicle market on our vehicle cost, including the impact on vehicle depreciation costs in 2011 based on recent pricing volatility in the used vehicle market, and our ability to reduce our fleet capacity as and when projected by our plans;
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·
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the strength of the recovery in the U.S. automotive industry, particularly in light of our dependence on vehicle supply from U.S. automotive manufacturers, and whether the recovery is sustained;
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·
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airline travel patterns, including disruptions or reductions in air travel resulting from capacity reductions, pricing actions, severe weather conditions, industry consolidation or other events, particularly given our dependence on leisure travel;
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·
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access to reservation distribution channels, particularly as the role of the Internet increases in the marketing and sale of travel-related services;
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·
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our ability to obtain cost-effective financing as needed (including replacement of asset-backed notes and other indebtedness as it comes due) without unduly restricting our operational flexibility;
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·
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our ability to manage the consequences under our financing agreements of an event of bankruptcy with respect to Financial Guaranty Insurance Company, the monoline insurer that provides credit support for one of our asset-backed financing structures;
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·
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our ability to comply with financial covenants, including the new financial covenants included in our amended senior secured credit facilities, and the impact of those covenants on our operating and financial flexibility;
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·
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whether our preliminary expectations about our federal income tax position, after giving effect to the impact of the Tax Relief Act, are affected by changes in our expected fleet size or operations or further legislative initiatives relating to taxes in the United States or elsewhere;
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·
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the cost of regulatory compliance, costs and other effects of potential future initiatives, including those directed at climate change and its effects, and the costs and outcome of pending litigation;
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·
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disruptions in the operation or development of information and communication systems that we rely on, including those relating to methods of payment;
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·
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local market conditions where we and our franchisees do business, including whether franchisees will continue to have access to capital as needed;
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·
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the effectiveness of actions we take to manage costs and liquidity; and
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·
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the impact of other events that can disrupt consumer travel, such as natural and man-made catastrophes, pandemics, social unrest and actual and perceived threats or acts of terrorism.
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·
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whether Avis Budget Group, Inc. (“Avis Budget”) would obtain regulatory approval to engage in a business combination transaction with us and, if so, the conditions upon which such approval would be granted (including potential divestitures of assets or businesses of either company), whether we and Avis Budget would reach agreement on the terms of such a transaction, whether our stockholders would approve the transaction and whether other conditions to consummation of the transaction would be satisfied or waived;
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·
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the impact on our results and liquidity if we become obligated to pay a termination fee to Hertz Global Holdings, Inc. (“Hertz”) upon our entry into a definitive agreement for, or our completion or recommendation of, a qualifying business combination transaction within 12 months of the October 1, 2010 termination date of our merger agreement with Hertz, and whether and the extent to which the relevant third party would bear all or any portion of that fee;
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·
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the risks to our business and prospects pending any future business combination transaction, diversion of management’s attention from day-to-day operations, a loss of key personnel, disruption of our operations, and the impact of pending or future litigation relating to any business combination transaction; and
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·
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the risks to our business and growth prospects as a stand-alone company, in light of our dependence on future growth of the economy as a whole to achieve meaningful revenue growth in the key airport and local markets we serve, high barriers to entry in the insurance replacement market, and capital and other constraints on expanding company-owned stores internationally.
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Table 1
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||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
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||||||||||||||||
Consolidated Statement of Income
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||||||||||||||||
(In thousands, except share and per share data)
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||||||||||||||||
Unaudited
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||||||||||||||||
Three months ended
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As % of
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|||||||||||||||
March 31,
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Total revenues
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||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Revenues:
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||||||||||||||||
Vehicle rentals
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$ | 332,272 | $ | 332,484 | 95.4% | 95.5% | ||||||||||
Other
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16,075 | 15,846 | 4.6% | 4.5% | ||||||||||||
Total revenues
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348,347 | 348,330 | 100.0% | 100.0% | ||||||||||||
Costs and Expenses:
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||||||||||||||||
Direct vehicle and operating
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178,305 | 179,858 | 51.2% | 51.6% | ||||||||||||
Vehicle depreciation and lease charges, net
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74,174 | 59,034 | 21.3% | 16.9% | ||||||||||||
Selling, general and administrative
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48,947 | 48,350 | 14.1% | 13.9% | ||||||||||||
Interest expense, net
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20,977 | 21,408 | 6.0% | 6.2% | ||||||||||||
Total costs and expenses
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322,403 | 308,650 | 92.6% | 88.6% | ||||||||||||
(Increase) decrease in fair value of derivatives
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(3,474 | ) | (7,370 | ) | (1.0% | ) | (2.1% | ) | ||||||||
Income before income taxes
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29,418 | 47,050 | 8.4% | 13.5% | ||||||||||||
Income tax expense
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12,895 | 19,758 | 3.7% | 5.7% | ||||||||||||
Net income
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$ | 16,523 | $ | 27,292 | 4.7% | 7.8% | ||||||||||
Earnings per share:
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||||||||||||||||
Basic
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$ | 0.57 | $ | 0.96 | ||||||||||||
Diluted
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$ | 0.53 | $ | 0.91 | ||||||||||||
Weighted average number
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||||||||||||||||
of shares outstanding:
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||||||||||||||||
Basic
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28,760,628 | 28,522,616 | ||||||||||||||
Diluted
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31,052,645 | 30,026,801 | ||||||||||||||
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Table 2 | |||||||||||
Dollar Thrifty Automotive Group, Inc.
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|||||||||||
Selected Operating and Financial Data
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|||||||||||
Three months ended
March 31, 2011
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OPERATING DATA:
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|||||||||||
Vehicle Rental Data:
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|||||||||||
Average number of vehicles operated
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97,940 | ||||||||||
% change from prior year
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3.5% | ||||||||||
Number of rental days
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7,022,094 | ||||||||||
% change from prior year
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2.7% | ||||||||||
Vehicle utilization
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79.7% | ||||||||||
Percentage points change from prior year
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(0.6) p.p.
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||||||||||
Average revenue per day
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$47.32 | ||||||||||
% change from prior year
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(2.7% | ) | |||||||||
Monthly average revenue per vehicle
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$1,131 | ||||||||||
% change from prior year
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(3.4% | ) | |||||||||
Average depreciable fleet
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98,616 | ||||||||||
% change from prior year
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3.1% | ||||||||||
Monthly average depreciation (net) per vehicle
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$251 | ||||||||||
% change from prior year
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21.8% | ||||||||||
FINANCIAL DATA: (in millions) (unaudited)
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|||||||||||
Non-vehicle depreciation and amortization
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$ | 7 | |||||||||
Non-vehicle interest expense
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2 | ||||||||||
Non-vehicle interest income
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- | ||||||||||
Non-vehicle capital expenditures
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3 | ||||||||||
Cash paid for/(refund of) income taxes
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(49 | ) | |||||||||
Table 2 (Continued) | |||||||||||||
Selected Balance Sheet Data
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|||||||||||||
(In millions)
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|||||||||||||
March 31,
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December 31,
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||||||||||||
2011 | 2010 | 2010 | |||||||||||
(unaudited)
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|||||||||||||
Cash and cash equivalents (a)
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$ | 519 | $ | 452 | $ | 563 | |||||||
Restricted cash and investments
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160 | 147 | 277 | ||||||||||
Revenue-earning vehicles, net
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1,682 | 1,565 | 1,342 | ||||||||||
Vehicle debt
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1,406 | 1,367 | 1,249 | ||||||||||
Non-vehicle debt (corporate debt)
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146 | 156 | 148 | ||||||||||
Stockholders' equity
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559 | 423 | 539 | ||||||||||
Tangible Net Worth Calculation
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|||||||||||||
(In millions)
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|||||||||||||
March 31,
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December 31,
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||||||||||||
2011 | 2010 | 2010 | |||||||||||
(unaudited)
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|||||||||||||
Stockholders' equity
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$ | 559 | $ | 423 | $ | 539 | |||||||
Less: Software, net
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(23 | ) | (25 | ) | (24 | ) | |||||||
Tangible net worth
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$ | 536 | $ | 398 | $ | 515 | |||||||
(a) Under the terms of a February 2009 amendment to the Senior Secured Credit Facilities, the Company was required to maintain a minimum cash balance of $100 million at all times. For the 2010 reporting periods, such minimum balance is included in cash and cash equivalents herein. In February 2011, the requirement to maintain such minimum cash balance was eliminated.
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Table 3 | ||||||||||||||||
Dollar Thrifty Automotive Group, Inc.
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Non-GAAP Measures
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Non-GAAP pretax income (loss), Non-GAAP net income (loss) and Non-GAAP EPS exclude the impact of the (increase) decrease in fair value of derivatives and the impact of long-lived asset impairments, net of related tax impact (as applicable), from the reported GAAP measures and are further adjusted to exclude merger-related expenses. Due to volatility resulting from the mark-to-market treatment of the derivatives and the nature of the non-cash impairments and merger-related expenses, the Company believes non-GAAP measures provide an important assessment of year-over-year operating results. See tables below for a reconciliation of non-GAAP to GAAP results.
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The following table reconciles reported GAAP pretax income per the income statement to non-GAAP pretax income:
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Three months ended
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|||||||||||||||
March 31,
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||||||||||||||||
2011
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2010
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(in thousands)
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||||||||||||||||
Income before income taxes - as reported
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$ | 29,418 | $ | 47,050 | ||||||||||||
(Increase) decrease in fair value of derivatives
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(3,474 | ) | (7,370 | ) | ||||||||||||
Pretax income - non-GAAP
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$ | 25,944 | $ | 39,680 | ||||||||||||
Merger-related expenses | 3,520 | 1,717 | ||||||||||||||
Non-GAAP pretax income, excluding merger-related expenses | $ | 29,464 | $ | 41,397 | ||||||||||||
The following table reconciles reported GAAP net income per the income statement to non-GAAP net income:
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Three months ended
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||||||||||||||||
March 31,
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||||||||||||||||
2011 | 2010 | |||||||||||||||
(in thousands)
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Net income - as reported
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$ | 16,523 | $ | 27,292 | ||||||||||||
(Increase) decrease in fair value of derivatives, net of tax (b)
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(2,037 | ) | (4,322 | ) | ||||||||||||
Net income - non-GAAP
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$ | 14,486 | $ | 22,970 | ||||||||||||
Merger-related expenses, net of tax (c) | 2,050 | 1,007 | ||||||||||||||
Non-GAAP net income, excluding merger-related expenses | $ | 16,536 | $ | 23,977 |
Table 3 (Continued)
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||||||||||||||||
The following table reconciles reported GAAP diluted earnings per share ("EPS") to non-GAAP diluted EPS:
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||||||||||||||||
Three months ended
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|||||||||||||||
March 31,
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|||||||||||||||
2011 | 2010 | |||||||||||||||
EPS, diluted - as reported
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$ | 0.53 | $ | 0.91 | ||||||||||||
EPS impact of (increase) decrease in fair value of derivatives, net of tax
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(0.07 | ) | (0.14 | ) | ||||||||||||
EPS, diluted - non-GAAP (d)
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$ | 0.47 | $ | 0.76 | ||||||||||||
EPS impact of merger-related expenses, net of tax | 0.07 | 0.03 | ||||||||||||||
Non-GAAP diluted EPS, excluding merger-related expenses (d) | $ | 0.53 | $ | 0.80 | ||||||||||||
(b) The tax effect of the (increase) decrease in fair value of derivatives is calculated using the entity-specific, U.S. federal and blended state tax rate applicable to the derivative instruments which amounts are ($1,437,000) and ($3,048,000) for the three months ended March 31, 2011 and 2010, respectively.
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(c) Merger-related expenses include legal, litigation, advisory and other fees related to a potential merger transaction. The tax effect of the merger-related expenses is calculated using the entity-specific, U.S. federal and blended state tax rate applicable to the merger-related expenses which amounts are $1,470,000 and $710,000 for the three months ended March 31, 2011 and 2010, respectively. | ||||||||||||||||
(d) Since each category of earnings per share is computed independently for each period, total per share amounts may not equal the sum of the respective categories. |
Table 4
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Dollar Thrifty Automotive Group, Inc.
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Non-GAAP Measures
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Corporate Adjusted EBITDA means earnings, excluding the impact of the (increase) decrease in fair value of derivatives, before non-vehicle interest expense, income taxes, non-vehicle depreciation, amortization, and certain other items as shown below. The Company believes Corporate Adjusted EBITDA is important as it provides investors with a supplemental measure of the Company's liquidity by adjusting earnings to exclude certain non-cash items, in addition to its relevance as a measure of operating performance. The items excluded from Corporate Adjusted EBITDA but included in the calculation of the Company's reported net income are significant components of its consolidated statement of income, and must be considered in performing a comprehensive assessment of overall financial performance. Corporate Adjusted EBITDA is not defined under GAAP and should not be considered as an alternative measure of the Company's net income, cash flow or liquidity. Corporate Adjusted EBITDA amounts presented may not be comparable to similar measures disclosed by other companies.
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||||||||||||||||
Three months ended
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||||||||||||||||
March 31,
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||||||||||||||||
2011
|
2010
|
|||||||||||||||
(in thousands)
|
||||||||||||||||
Reconciliation of Net Income to
|
||||||||||||||||
Corporate Adjusted EBITDA
|
||||||||||||||||
Net income - as reported
|
$ | 16,523 | $ | 27,292 | ||||||||||||
(Increase) decrease in fair value of derivatives
|
(3,474 | ) | (7,370 | ) | ||||||||||||
Non-vehicle interest expense
|
2,471 | 2,427 | ||||||||||||||
Income tax expense
|
12,895 | 19,758 | ||||||||||||||
Non-vehicle depreciation
|
4,840 | 4,813 | ||||||||||||||
Amortization
|
1,866 | 1,832 | ||||||||||||||
Non-cash stock incentives
|
1,209 | 684 | ||||||||||||||
Other
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(4 | ) | (12 | ) | ||||||||||||
Corporate Adjusted EBITDA
|
$ | 36,326 | $ | 49,424 | ||||||||||||
Reconciliation of Corporate Adjusted EBITDA
|
||||||||||||||||
to Cash Flows From Operating Activities
|
||||||||||||||||
Corporate Adjusted EBITDA
|
$ | 36,326 | $ | 49,424 | ||||||||||||
Vehicle depreciation, net of gains/losses from disposal
|
74,165 | 59,016 | ||||||||||||||
Non-vehicle interest expense
|
(2,471 | ) | (2,427 | ) | ||||||||||||
Change in assets and liabilities and other
|
43,304 | (2,400 | ) | |||||||||||||
Net cash provided by operating activities (f)
|
$ | 151,324 | $ | 103,613 | ||||||||||||
Memo:
|
||||||||||||||||
Net cash provided by (used in) investing activites
|
$ | (229,522 | ) | $ | 58,399 | |||||||||||
Net cash provided by (used in) financing activities (f)
|
$ | 133,593 | $ | (210,342 | ) |
Table 4 (Continued) | ||||||||||||||||
Full Year
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
(in millions)
|
||||||||||||||||
Reconciliation of Pretax Income to
|
(forecasted) | (actual) | ||||||||||||||
Corporate Adjusted EBITDA
|
||||||||||||||||
Pretax income
|
$216 - $241 | $221 | ||||||||||||||
(Increase) decrease in fair value of derivatives (2011 amount is YTD March 2011)
|
(3 | ) | (29 | ) | ||||||||||||
Non-vehicle interest expense
|
11 | 10 | ||||||||||||||
Non-vehicle depreciation
|
19 | 20 | ||||||||||||||
Amortization
|
7 | 7 | ||||||||||||||
Non-cash stock incentives
|
5 | 5 | ||||||||||||||
Long-lived asset impairment
|
- | 1 | ||||||||||||||
Merger-related expenses (e) | 5 | 23 | ||||||||||||||
Corporate Adjusted EBITDA, excluding merger-related expenses | $260 - $285 | $258 | ||||||||||||||
(e) Merger-related expenses include legal, litigation, advisory and other fees related to a potential merger transaction. | ||||||||||||||||
(f) Certain reclassifications have been made to the 2010 financial information to conform to the classifications used in 2011. | ||||||||||||||||
Table 5 | |||||||||||||
Dollar Thrifty Automotive Group, Inc.
|
|||||||||||||
Non-GAAP Measures
|
|||||||||||||
The Gross Leverage Ratio calculates the Company's non-vehicle (corporate) debt as a percentage of Corporate Adjusted EBITDA. This non-GAAP measure provides supplemental information for investors in order to evaluate the Company's corporate indebtedness, and the Company's ability to service that debt from cash generated from its operations. Additionally, this ratio provides investors with the ability to compare the efficiency of the Company's capital structure relative to its peers. Corporate Adjusted EBITDA Margin provides a measure of the Company's operating profitability. The Gross Leverage Ratio and the Corporate Adjusted EBITDA Margin amounts presented may not be comparable to similar measures disclosed by other companies.
|
|||||||||||||
Gross Leverage Ratio
|
|||||||||||||
(In thousands, except ratio)
|
|||||||||||||
March 31,
|
December 31,
|
||||||||||||
2011 | 2010 | 2010 | |||||||||||
Non-vehicle debt (corporate debt)
|
$ | 145,625 | $ | 155,625 | $ | 148,125 | |||||||
Corporate Adjusted EBITDA (trailing twelve months)
|
222,570 | 151,268 | 235,668 | ||||||||||
Gross Leverage Ratio
|
0.65 | 1.03 | 0.63 | ||||||||||
Trailing Twelve Months Corporate Adjusted EBITDA
|
|||||||||||||
(In thousands)
|
|||||||||||||
March 31,
|
December 31,
|
||||||||||||
Reconciliation of Net Income to | 2011 | 2010 | 2010 | ||||||||||
Corporate Adjusted EBITDA | |||||||||||||
Net income - as reported
|
$ | 120,447 | $ | 81,254 | 131,216 | ||||||||
(Increase) decrease in fair value of derivatives
|
(24,798 | ) | (31,173 | ) | (28,694 | ) | |||||||
Non-vehicle interest expense
|
9,691 | 10,470 | 9,647 | ||||||||||
Income tax expense | 83,339 | 57,639 | 90,202 | ||||||||||
Non-vehicle depreciation | 20,217 | 18,673 | 20,190 | ||||||||||
Amortization | 7,324 | 7,828 | 7,290 | ||||||||||
Non-cash stock incentives | 5,310 | 4,264 | 4,785 | ||||||||||
Long-lived asset impairment | 1,057 | 2,331 | 1,057 | ||||||||||
Other | (17 | ) | (18 | ) | (25 | ) | |||||||
Corporate Adjusted EBITDA | $ | 222,570 | $ | 151,268 | $ | 235,668 | |||||||
Corporate Adjusted EBITDA Margin | |||||||||||||
(In thousands, except percent)
|
|||||||||||||
Three months ended | |||||||||||||
March 31, | |||||||||||||
2011 | 2010 | ||||||||||||
Corporate Adjusted EBITDA | $ | 36,326 | $ | 49,424 | |||||||||
Total Revenues | 348,347 | 348,330 | |||||||||||
Corporate Adjusted EBITDA Margin | 10.4% | 14.2% | |||||||||||
|