ANC Rental Corporation Reports Second Quarter Loss and Lowers Full Year Forecast.Business Editors FORT LAUDERDALE Fort Lauderdale (lô`dərdāl), residential, commercial, and resort city (1990 pop. 149,377), seat of Broward co., SE Fla., on the Atlantic coast; settled around a fort built (c.1837) in the Seminole War, inc. 1911. , Fla.--(BUSINESS WIRE)--Aug. 2, 2001 Enters Seasonally Strongest Quarter With Fleet Right-Sized; Retains Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. to Explore Strategic Alternatives to Maximize Shareholder Value ANC ANC abbr. African National Congress ANC African National Congress: South African political movement instrumental in bringing an end to apartheid ANC n abbr (= Rental Corporation (Nasdaq:ANCX) today announced a net loss for the second quarter 2001 of $23.6 million or $0.52 per share, compared to net income of $15.5 million last year. Revenue for the three-month period was $850.6 million or $58.6 million below last year. Comparative results of operations were impacted by: - A significant economic downturn throughout the entire travel sector o Continued price competition in the North American airport market - Higher fleet costs, which are the results of higher acquisition and disposal costs as well as the relative mix of fleet - Higher non-vehicle interest expense, the result of the Company's post-spin capital structure. Commenting, Mr. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. S. Egan, the Chairman and Chief Executive Officer noted, "In the second quarter, our business has been affected primarily by the dramatic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in both business and tour travel. We have been addressing these challenges aggressively, and throughout the quarter, we have made substantial efforts to re-size our fleet, as well as to control discretionary spending and significantly reduce costs throughout the entire organization. Looking ahead, we are entering our strongest quarter with two very strong brands. We believe our rental fleet is now balanced with anticipated demand, and that pricing in the domestic airport market, as compared to last year, is beginning to stabilize stabilize See peg. . "In addition, we have been engaged in investigating, and are continuing to pursue, strategic alternatives to maximize shareholder value and strengthen ANC. We have engaged Lehman Brothers to assist us in evaluating these options, which could include, among other possibilities, a significant investment by a third party or the sale of the Company." Revenue Results Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue for the quarter was $850.6 million as compared to $909.2 million last year, a decrease of 6.4%. Volume was lower by 4.1% primarily in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. with declines in commercial and tour channels. Pricing for the quarter declined 2.0% excluding the effects of foreign exchange as poor economic conditions, driving lower volumes, continue to adversely affect pricing. Cost Results Direct operating costs operating costs npl → gastos mpl operacionales decreased $1.3 million to $354.9 million for the quarter ended June June: see month. 30, 2001. Decreases in field personnel costs, the result of the Company's first quarter cost reduction program, were offset by increasing facility and rent expense due in part to the recently completed sale and leaseback sale and leaseback The sale of a fixed asset that is then leased by the former owner from the new owner. A sale and leaseback permits a firm to withdraw its equity in an asset without giving up use of the asset. Also called leaseback. transactions. Vehicle depreciation increased $31.6 million to $271.1 million for the quarter ended June 30, 2001. Savings realized in our efforts to rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear fleet size were more than offset by higher vehicle acquisition costs, relative mix of fleet and losses relative to disposition of fleet. Selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. decreased $21.1 million to $162.7 million for the quarter ended June 30, 2001. The decrease is the result of the Company's initiatives to lower advertising and marketing spending as well as other discretionary expenses. Separately, the quarter's results were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by a $1.0 million gain on interest rate hedges due to the application of new derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. accounting standards adopted in 2001. Additionally, June 30, 2000 results were negatively impacted by $8.3 million of transition costs related to the Company's 1999 restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan, which did not recur in the current quarter. The benefit for income taxes was $6.9 million for the three months ended June 30, 2001 as compared to a provision of $9.9 million for the prior year. The year to date effective rate was lowered to 33.8% reflecting the effects of the current lower earnings expectations. Financing Transactions During the quarter, ANC Rental Corporation closed $1.1 billion of asset-backed financings in two parts (i) $600.0 million of asset-backed medium term notes and (ii) $531.0 million of auction-rate notes. Proceeds of these offerings were used to retire maturing asset-backed medium term notes and provide for the reduction of ANC's $1.1 billion single seller commercial paper program, which is set to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. in September September: see month. 2001. The Company expects to replace remaining maturing capacity with similar asset-backed financings. The Company closed additional seasonal fleet financing facilities with a total capacity of $300.0 million. As of June 30, 2001 the Company rolled-over its $200.0 million interim financing Interim financing A short-term loan made to a company on the condition that a takeout will follow with long-term or intermediate financing. interim financing The financing that supports a transaction until permanent financing can be arranged. into a six-year term loan; concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with the roll-over the Company became obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to issue warrants representing up to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 3.7 million shares of common stock. The warrants have a term of ten years and an exercise price of $0.01 per share. Also during the quarter, the Company completed its program of sale and leaseback transactions, generating net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $31.3 million for the quarter and $110.3 million for the year. The proceeds initially have been used for working capital purposes and then up to approximately $70.0 million is scheduled to be used in September 2001 to pay down a portion of the roll-over loan. Earnings Outlook With economic and industry conditions uncertain, the Company anticipates third quarter earnings to range between $0.40 to $0.60 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share as compared to $1.10 per diluted share in the prior year with North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. revenue per day up to 2% below last year and volumes 5% below last year. For the full year, the Company anticipates reporting a loss in the range of $1.10 to $1.45 per share compared to $0.04 loss per share in the prior year. ANC Rental Corporation (Nasdaq:ANCX), headquartered in Fort Lauderdale, is one of the world's largest car rental companies with annual revenue of approximately $3.5 billion in 2000. ANC Rental Corporation, the parent company of Alamo Alamo Eighteenth-century mission in San Antonio, Texas, site of a historic siege of a small group of Texans by a Mexican army (1836) during the Texas war for independence from Mexico. and National, has more than 3,000 locations in 66 countries and employs approximately 19,000 associates worldwide. Certain statements and information included in this press release constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Federal Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause the actual results to differ materially from management's projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. , forecasts, estimates and expectations is contained in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other SEC filings.
ANC Rental Corporation
Consolidated Statements of Operations (Unaudited)
($ in millions except per share amounts)
Three Months As % of
Ended June 30, Total Revenue
2001 2000 2001 2000
Revenue:
Alamo $ 345.3 $ 366.9 40.6% 40.4%
National 348.3 383.3 41.0 42.2
------ ------- ------ ------
North America 693.6 750.2 81.6 82.6
Alamo Local Market 65.7 67.7 7.7 7.4
International 91.3 91.3 10.7 10.0
------ ------- ------ ------
Total Revenue 850.6 909.2 100.0 100.0
Direct operating costs 354.9 356.2 41.6 39.2
Vehicle depreciation, net 271.1 239.5 31.9 26.3
Selling, general, and
administrative 162.7 183.8 19.1 20.2
Severance/transition cost -- 8.3 -- 0.9
Amortization of
intangible assets 2.5 2.5 0.3 0.3
Interest expense,
net of income 90.4 90.9 10.7 10.0
Fair value adjustment
on interest rate hedges (1.0) -- (0.1) --
Loss on sale and
leaseback transaction 0.5 -- 0.1 --
Other (income) expense,
net -- 2.6 -- 0.3
------ ------ ------ ------
Income (loss) before
income taxes (30.5) 25.4 (3.6) 2.8
Provision (benefit)
for income taxes (6.9) 9.9 (0.8) 1.1
------ ------ ------ ------
Net income (loss) $ (23.6) $ 15.5 (2.8)% 1.7%
======== ========= ========== ========
Net income (loss)
per share:
Basic & diluted $ (0.52) $ 0.34
Shares used in
computing per share
amounts:
Basic & diluted 45.2 45.1
ANC Rental Corporation
Consolidated Statements of Operations (Unaudited)
($ in millions except per share amounts)
Six Months As % of
Ended June 30, Total Revenue
2001 2000 2001 2000
Revenue:
Alamo $ 646.3 $ 682.0 39.9% 39.7%
National 669.8 721.4 41.4 42.0
------ ------- ------ ------
North America 1,316.1 1,403.4 81.3 81.7
Alamo Local Market 129.1 137.9 8.0 8.0
International 174.4 176.7 10.7 10.3
------ ------- ------ ------
Total Revenue 1,619.6 1,718.0 100.0 100.0
Direct operating costs 691.0 701.1 42.6 40.8
Vehicle depreciation, net 512.7 469.1 31.7 27.3
Selling, general,
and administrative 320.5 366.8 19.8 21.3
Severance/transition cost 2.0 15.7 0.1 0.9
Amortization of
intangible assets 5.0 5.0 0.3 0.3
Interest expense,
net of income 178.7 172.2 11.0 10.1
Fair value adjustment
on interest rate hedges 2.3 -- 0.1 --
Loss on sale and
leaseback transaction 4.2 -- 0.3 --
Other (income) expense,
net (0.6) 2.9 -- 0.2
------ ------ ------ ------
Loss before income taxes (96.2) (14.8) (5.9) (0.9)
Provision (benefit)
for income taxes (32.5) (5.8) (2.0) (0.3)
------ ------ ------ ------
Net loss before
cumulative effect of
change in accounting
principle (63.7) (9.0) (3.9) (0.6)
Cumulative effect of
change in accounting
principle, net of tax 7.1 -- 0.4 --
------ ------ ------ ------
Net loss $ (56.6) (9.0) (3.5)% (0.6)%
======== ========= ========== ========
Net loss per share
before cumulative
effect of change in
accounting principle:
Basic & diluted $ (1.41) (0.20)
Net loss per share:
Basic & diluted $ (1.25) (0.20)
Shares used in computing
per share amounts:
Basic & diluted 45.2 45.1
ANC Rental Corporation
Key Operating Statistics (Unaudited)
($ in millions except statistical amounts)
Three months ended June 30,
Key Operating Statistics 2001 2000 Change
Revenue per day $ 35.54 $ 36.32 (2.1)%
Revenue per day, net
of foreign exchange $ 35.82 $ 36.55 (2.0)%
translation
Charge days in millions 23.6 24.6 (4.1)%
Utilization 76.87% 79.63% (276)bps
Other Data
Vehicle interest expense $ 75.7 $ 87.9 $ 12.2
Non-vehicle interest expense 16.6 3.5 (13.1)
Non-vehicle depreciation
and amortization 31.6 25.5 (6.1)
Capital expenditures 9.6 21.6 12.0
Balance Sheet Data June 2001 Dec. 2000 June 2000
Cash $ 96.6 $ 21.4 $ 10.3
Restricted cash 334.5 321.9 273.1
Vehicles, net 5,262.1 4,451.4 5,583.2
Vehicle debt 4,728.9 4,228.9 4,939.0
Other debt 289.3 276.7 332.8
Shareholders' equity 820.0 892.6 894.3
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