-----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, CR4zRt65UGAb0VxOYqrRCFwaRS7+qa/zTa6V4D73yTQVIST7n4R0hvOhlI7so0H0 QWkJTcDTR3PcmSK7pS0YUg== /in/edgar/work/0000950147-00-001524/0000950147-00-001524.txt : 20001004 0000950147-00-001524.hdr.sgml : 20001004 ACCESSION NUMBER: 0000950147-00-001524 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000921 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RENT A WRECK OF AMERICA INC CENTRAL INDEX KEY: 0000763567 STANDARD INDUSTRIAL CLASSIFICATION: [6794 ] IRS NUMBER: 953926056 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-14819 FILM NUMBER: 734262 BUSINESS ADDRESS: STREET 1: 11460 CRONRIDGE DRIVE SUITE 118 CITY: OWINGS MILLS STATE: MD ZIP: 21117 BUSINESS PHONE: 4105815755 MAIL ADDRESS: STREET 1: 11460 CRONRIDGE DRIVE STE 118 CITY: OWINGS MILLS STATE: MD ZIP: 21117 8-K 1 0001.txt CURRENT REPORT DATED 9/21/2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) September 21, 2000 ------------------ Rent-A-Wreck of America, Inc. ------------------------------------------------------ (Exact name of Registrant as Specified in its Charter) Delaware ---------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-14819 95-3926056 ------------------------ ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 10324 South Dolfield Road, Owing Mills, Maryland 21117 - ------------------------------------------------ ---------- (Address of Principal Executive Offices) (Zip Code) (410) 581-5755 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 5. DISCLOSURE On September 21, 2000, the Board of Directors of Rent-A-Wreck authorized the repurchase of certain options and announced authorizing a 1,000,000 share addition to the Company's ongoing share repurchase program. Details are set forth in the attached press release. Information from the press release is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits: See Exhibit Index following the Signature page of this report, which is incorporated herein by reference. SIGNATURE 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. RENT-A-WRECK OF AMERICA. (Registrant) Date: September 29, 2000 By: /s/ Mitra Ghahramanlou ------------------------------------ Mitra Ghahramanlou Chief Accounting Officer (Acting Principal Financial and Accounting Officer and duly authorized to sign on behalf of the Registrant) RENT-A-WRECK OF AMERICA, INC. (the "Registrant") (Commission File No. 0-14819) EXHIBIT INDEX to FORM 8-K CURRENT REPORT Dated September 21, 2000 Exhibit Filed Number Description Herewith - ------ ----------- -------- 99.1 Press Release dated X September 22, 2000 EX-99.1 2 0002.txt PRESS RELEASE NEWS RELEASE CONTACT: Mitra Ghahramanlou Chief Accounting Officer (800) 421-7253 Extension #143 BOARD OF DIRECTORS OF RENT-A-WRECK AUTHORIZES REPURCHASE OF UP TO ONE MILLION SHARES On September 21, 2000, the Board authorized management of Rent-A-Wreck to repurchase up to 1,000,000 shares of its common or preferred stock, including options for its common stock. The Board specifically authorized the repurchase of options held by Ken Blum, Jr., the Company's President, and Ms. Robin Cohn, a sister of Ken Blum, Jr., both of whom have agreed to exercise their remaining options. In authorizing the specific repurchase, the Board wanted to eliminate the market overhang associated with the 1,575,000 options held by management while also ensuring that management acquires and holds a substantial equity stake in Rent-A-Wreck. The Board's objectives were to minimize the after-tax cash cost of acquiring the maximum number of shares or share equivalents while also ensuring that members of management buy and retain a substantial equity interest in the Company which they will be under no pressure to sell for tax purposes. The Board believes it has achieved these objectives by authorizing the following repurchases of options which expire June 30, 2003: 1. the remaining 354,167 options exercisable at $1.15 per share held by each Ken Blum, Jr. and Robin Cohn for $1.25 per option, or a total of $885,418. 2. 95,282 options exercisable at $1.00 per share from Ken Blum, Jr. for $1.40 per option, or a total of $133,395. 3. 154,105 options exercisable at $1.00 per share from Robin Cohn for $1.40 per option, or a total of $215,747. Mr. Blum and Ms. Cohn have agreed to use all of the respective proceeds received by each of them to provide for income taxes on the amounts received by them as well as on income earned by them upon exercise of their remaining 617,279 $1.00 options, 288,051 of which are being exercised by Mr. Blum and 329,228 of which are being exercised by Ms. Cohn, and to pay $617,279 of their proceeds to the Company for such option exercises at this time. The Company and the option holders are required to treat the purchases as compensation expense, notwithstanding that they are part of the Company's share repurchase program. Accordingly, the Company will take a pre-tax charge of $1,234,560 in its fiscal quarter ending September 30, 2000, which is expected to more than offset any earnings the Company may have in the quarter and most, if not all, of earnings for the six months through September 30. Partially offsetting this charge, the Company will benefit by taking a tax deduction equal to the charge for compensation expense as well as an additional tax deduction for the amount of taxable income recognized by the option holders upon exercise of their remaining 617,279 options. The total number of options being repurchased and canceled in these transactions is 957,721. This brings to approximately 3 million the total number of shares and share equivalents repurchased and retired since the Company began its share repurchase program in 1995. After these transactions, there will be 4,495,496 common shares outstanding, of which Mr. Blum will own 530,718, or 11.8%, and Ms. Cohn will own 456,395, or 10.2%. There also are 1,105,000 shares of convertible preferred stock outstanding, convertible one for one into an equal number of common shares. There are no more options or warrants outstanding, meaning fully-diluted shares have been reduced to 5,600,496. Including its new authorization, the Company is authorized, but not obligated, to repurchase, on the market or in private transactions, up to an additional 542,279 shares. Because of cash which will come in to the Company upon the exercise of remaining options as well as cash it expects to save by paying lower income taxes, the net cash outflow for the repurchase and retirement of 957,721 options and early exercise of the remaining 617,279 options is expected to be less than $35,000. The net after-tax cost of the repurchase of the 957,721 options is expected to be approximately $650,000, or about $.68 per repurchased option. 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 experience in the reinsurance business and the potential for negative claims experience in the Company's new 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. -----END PRIVACY-ENHANCED MESSAGE-----