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Rent-a-Wreck of America Announces Q2 and Six Months Results

13 November 2000

Rent-a-Wreck of America Announces Second Quarter and Six Months Results

    OWINGS MILLS, Md.--Nov. 10, 2000--Rent-A-Wreck of America, Inc. announced results for the second quarter and six-month period ended September 30, 2000.
    For the three-month period ended September 30, 2000, the Company reported an increase in operating cash flow (EBITDA) of 19% over the prior corresponding period. Net revenues for the three months ended September 30, 2000 increased 13% from $1,866,041 to $2,104,990.
    The increase was mainly due to a 17% increase in initial license fees, a 9% increase in continuing license fees and a 42% increase in premiums in connection with the reinsurance program. However, because of one-time compensation expense of $1,234,560 arising from the repurchase of 957,721 options, the Company had a net loss of $135,502 compared to net income of $432,467 in the same period last year.
    Net loss applicable to common shares was $157,602, or a loss of $.04 per common share (both basic and diluted) versus $.11 (basic) and $.07 (diluted) last year. Excluding the one-time expense associated with the repurchase of options, net income would have been $515,023 instead of a net loss of $135,502, which would have been an increase of 19%.
    Basic earnings per share would have been $.13 instead of a loss of $.04, and diluted earnings per share would have been $.10 instead of a loss of $.04.
    For the six months ended September 30, 2000, net income was $157,230, or $.03 per common share (both basic and diluted) versus $.16 (basic) and $.11 (diluted) last year.
    Excluding the one-time expense associated with the repurchase of options, net income would have been $807,276 instead of $157,230, which would have been an increase of 21%. Basic earnings per share would have been $.21 instead of $.03, and diluted earnings per share would have been $.15 instead of $.03.

    The statements regarding anticipated future performance of the Company contained in this press release are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause the Company's actual results to differ materially from the forward-looking statements.
    Factors which could cause or contribute to such differences include, but are not limited to, the Company's limited historic experience in the reinsurance business and the potential for negative claims experience in the Company's reinsurance program, the effects of government regulation of the Company's franchise and reinsurance programs including maintaining properly registered franchise documents and making any required alterations in the Company's franchise program to comply with changes in the laws, competitive pressures from other motor vehicle rental companies which have greater marketing and financial resources than the Company, protection of the Company's trademarks, and the dependence on the Company's relationships with its franchisees.
    These risks and uncertainties are more fully described under the caption, "Item 6 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Important Factors" in the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 2000. All forward-looking statements should be considered in light of these risks and uncertainties.

          CONDENSED CONSOLIDATED FINANCIAL STATEMENT ATTACHED

                             Three Months ended      Six Months ended       
                               September 30,           September 30,  
                               1999     2000         1999        2000 
                             ------------------     -----------------
                                   (in thousands except per share
                                  amounts and number of franchises)
                                            (Unaudited)

Franchisees' Results

Franchisees' revenue (1)     $15,498   $16,817     $26,819    $30,407
Number of franchised 
 locations                       655       669         655        669

Results of Operations

Total revenue                $ 1,866   $ 2,105     $ 3,345    $ 3,835
Total expense                  1,224     2,601       2,382      3,891
Income before income
  taxes                          663      (464)      1,002         12
Net income                       432      (136)        665        157
Earnings per common share

 Basic                       $   .11  $   (.04)   $    .16   $    .03
 Weighted average common
  shares                       3,944     3,824       3,942      3,697

 Diluted                     $   .07  $   (.04)   $    .11   $    .03
 Weighted average common
  shares plus convertible
   preferred stock, and options
    and warrants               6,106     3,824       6,000      5,412


EBITDA (2)                       703       839       1,080      1,351

(1) The franchisees' revenue data have been derived from unaudited
reports provided by franchisees for use in calculating license fees.

(2) "EBITDA" is earnings before interest expense, depreciation,
amortization, taxes and repurchase of options. EBITDA should not be
interpreted as a measure of operating results, cash flow provided by
operating activities, a measure of liquidity, or as an alternative to
any generally accepted accounting principle measure of performance.
The Company is reporting EBITDA because it is a widely used
financial measure of the potential capacity of a company to incur and
service debt. Rent-A-Wreck's reported EBITDA may not be comparable to
similarly titled measures used by other companies.