ERAC Canada Finance Ltd.

Jarmo Saari, CFA; Kent Wideman, CFA/416-593-5577 ext.2257, ext.2235/jsaari@dbrs.com

DBRS is confirming the above ratings of ERAC Canada Finance Limited and Enterprise Rent-A-Car Company (“Enterprise” or the “Company”) with continuing Stable trends.

Although both the average gain on vehicle disposals and net income declined in fiscal 2003, results still remained very respectable and most other financial metrics remained positive for Enterprise.  Enterprise is the parent company which unconditionally guarantees the debt of ERAC Canada Finance Limited. Total revenue, fleet size, assets, cash flow, and equity all showed improvement in the past fiscal year ended July 2003.  Residual values of vehicles were weaker than in the prior year, which had a negative but manageable impact on profitability in 2003, but the outlook is for improved gains on disposal in 2004. The Company assumes residual risk on the majority of its rental fleet. Financial strength measures continued to be favourable, with debt-to-equity and cash flow-to-debt measures again improving, reflecting a long-term trend. Leverage is very conservative considering the profile of the business. Return on equity declined, but remained favourable. 

Competitors with well-known brand names continue to provide competition in the “off-airport” segment, the area where Enterprise is dominant with well-established relationships with industry players.  The number of on-airport locations has grown to 150, representing a presence for Enterprise in 80 of the top 100 airports in the U.S. However, this segment continues to represent only a minor aspect of the Company’s mainly U.S. operations. 

Dominion Bond Rating Service Limited (DBRS) has published a full report that provides additional analytical detail.  To see this report, please click on http://www.dbrs.com/web/sentry?COMP=2900&DocId=134180.  If you do not have access to this document, please contact us at info@dbrs.com.