|
Form 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Avis Budget Group, Inc.
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
06-0918165
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
6 Sylvan Way
Parsippany, NJ
|
|
07054
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
(973) 496-4700
(Registrant’s telephone number, including area code)
|
|
Large accelerated filer
|
x
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
¨
|
|
|
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Page
|
PART I
|
|
|
Item 1.
|
|
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||
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||
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|
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Item 2.
|
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Item 3.
|
||
Item 4.
|
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PART II
|
|
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Item 1.
|
||
Item 6.
|
||
|
•
|
the high level of competition in the vehicle rental industry and the impact such competition may have on pricing and rental volume;
|
•
|
a change in our fleet costs as a result of a change in the cost of new vehicles, disruption in the supply of new vehicles, and/or a change in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;
|
•
|
risks relating to our March 2013 acquisition of Zipcar, Inc. (“Zipcar” ), including our ability to realize the synergies contemplated by the transaction and our ability to promptly and efficiently integrate the businesses of Zipcar and Avis Budget Group, Inc.;
|
•
|
the results of operations or financial condition of the manufacturers of our cars, which could impact their ability to perform their payment obligations under the agreements we have with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make cars available to us or the rental car industry as a whole on commercially reasonable terms or at all;
|
•
|
a change in travel demand, including changes in airline passenger traffic;
|
•
|
any change in economic conditions generally, particularly during our peak season or in key market segments;
|
•
|
our ability to continue to achieve and maintain cost savings and successfully implement our business strategies;
|
•
|
our ability to obtain financing for our global operations, including the funding of our vehicle fleet through the issuance of asset-backed securities and use of the global lending markets;
|
•
|
an occurrence or threat of terrorism, pandemic disease, natural disasters or military conflict in the locations in which we operate;
|
•
|
our dependence on third-party distribution channels, third-party suppliers of other services and co-marketing arrangements with third parties;
|
•
|
our ability to utilize derivative instruments, and the impact of derivative instruments we currently utilize, which can be affected by fluctuations in interest rates, gasoline prices and exchange rates, changes in government regulations and other factors;
|
•
|
our ability to accurately estimate our future results;
|
•
|
any major disruptions in our communication networks or information systems;
|
•
|
our exposure to uninsured claims in excess of historical levels;
|
•
|
our failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information;
|
•
|
any impact on us from the actions of our licensees, dealers and independent contractors;
|
•
|
any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business;
|
•
|
risks related to our indebtedness, including our substantial outstanding debt obligations and our ability to incur substantially more debt;
|
•
|
our ability to meet the financial and other covenants contained in the agreements governing our indebtedness;
|
•
|
the terms of agreements among us and our former real estate, hospitality and travel distribution businesses following the separation of those businesses from us in 2006, particularly with respect to the allocation of assets and liabilities, including contingent liabilities and guarantees, the ability of each of the separated companies to perform its obligations, including indemnification obligations, under these agreements, and the right of our former real estate business to control the process for resolving disputes related to contingent liabilities and assets;
|
•
|
risks associated with litigation or governmental or regulatory inquiries or investigations involving our Company;
|
•
|
risks related to tax obligations and the effect of future changes in accounting standards;
|
•
|
risks related to our October 2011 acquisition of Avis Europe plc (“Avis Europe”), including our ability to realize the synergies contemplated by the transaction;
|
•
|
risks related to completed or future acquisitions or investments that we may pursue, including any incurrence of incremental indebtedness to help fund such transactions and our ability to promptly and effectively integrate any acquired businesses; and
|
•
|
other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.
|
Item 1.
|
Financial Statements
|
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Revenues
|
|
|
|
||||
Vehicle rental
|
$
|
1,217
|
|
|
$
|
1,168
|
|
Other
|
474
|
|
|
455
|
|
||
Net revenues
|
1,691
|
|
|
1,623
|
|
||
|
|
|
|
||||
Expenses
|
|
|
|
||||
Operating
|
931
|
|
|
893
|
|
||
Vehicle depreciation and lease charges, net
|
386
|
|
|
318
|
|
||
Selling, general and administrative
|
224
|
|
|
219
|
|
||
Vehicle interest, net
|
57
|
|
|
74
|
|
||
Non-vehicle related depreciation and amortization
|
34
|
|
|
32
|
|
||
Interest expense related to corporate debt, net:
|
|
|
|
||||
Interest expense
|
58
|
|
|
73
|
|
||
Early extinguishment of debt
|
40
|
|
|
27
|
|
||
Restructuring expense
|
10
|
|
|
7
|
|
||
Transaction-related costs
|
8
|
|
|
6
|
|
||
Total expenses
|
1,748
|
|
|
1,649
|
|
||
|
|
|
|
||||
Loss before income taxes
|
(57
|
)
|
|
(26
|
)
|
||
Benefit from income taxes
|
(11
|
)
|
|
(3
|
)
|
||
|
|
|
|
||||
Net loss
|
$
|
(46
|
)
|
|
$
|
(23
|
)
|
|
|
|
|
||||
Comprehensive income (loss)
|
$
|
(69
|
)
|
|
$
|
21
|
|
|
|
|
|
||||
Earnings (loss) per share
|
|
|
|
||||
Basic
|
$
|
(0.43
|
)
|
|
$
|
(0.22
|
)
|
Diluted
|
$
|
(0.43
|
)
|
|
$
|
(0.22
|
)
|
|
March 31, 2013
|
|
December 31, 2012
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
569
|
|
|
$
|
606
|
|
Receivables, net
|
591
|
|
|
553
|
|
||
Deferred income taxes
|
153
|
|
|
146
|
|
||
Other current assets
|
558
|
|
|
405
|
|
||
Total current assets
|
1,871
|
|
|
1,710
|
|
||
|
|
|
|
||||
Property and equipment, net
|
559
|
|
|
529
|
|
||
Deferred income taxes
|
1,346
|
|
|
1,454
|
|
||
Goodwill
|
646
|
|
|
375
|
|
||
Other intangibles, net
|
910
|
|
|
731
|
|
||
Other non-current assets
|
361
|
|
|
320
|
|
||
Total assets exclusive of assets under vehicle programs
|
5,693
|
|
|
5,119
|
|
||
|
|
|
|
||||
Assets under vehicle programs:
|
|
|
|
||||
Program cash
|
53
|
|
|
24
|
|
||
Vehicles, net
|
10,162
|
|
|
9,274
|
|
||
Receivables from vehicle manufacturers and other
|
287
|
|
|
439
|
|
||
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party
|
362
|
|
|
362
|
|
||
|
10,864
|
|
|
10,099
|
|
||
Total assets
|
$
|
16,557
|
|
|
$
|
15,218
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and other current liabilities
|
$
|
1,546
|
|
|
$
|
1,421
|
|
Short-term debt and current portion of long-term debt
|
29
|
|
|
57
|
|
||
Total current liabilities
|
1,575
|
|
|
1,478
|
|
||
|
|
|
|
||||
Long-term debt
|
3,318
|
|
|
2,848
|
|
||
Other non-current liabilities
|
884
|
|
|
871
|
|
||
Total liabilities exclusive of liabilities under vehicle programs
|
5,777
|
|
|
5,197
|
|
||
|
|
|
|
||||
Liabilities under vehicle programs:
|
|
|
|
||||
Debt
|
1,589
|
|
|
1,603
|
|
||
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party
|
5,873
|
|
|
5,203
|
|
||
Deferred income taxes
|
2,126
|
|
|
2,163
|
|
||
Other
|
498
|
|
|
295
|
|
||
|
10,086
|
|
|
9,264
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value—authorized 10 million shares; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value—authorized 250 million shares; issued 137,081,056 and 137,081,056 shares
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
7,966
|
|
|
8,211
|
|
||
Accumulated deficit
|
(2,422
|
)
|
|
(2,376
|
)
|
||
Accumulated other comprehensive income
|
87
|
|
|
110
|
|
||
Treasury stock, at cost—28,943,192 and 30,027,146 shares
|
(4,938
|
)
|
|
(5,189
|
)
|
||
Total stockholders’ equity
|
694
|
|
|
757
|
|
||
Total liabilities and stockholders’ equity
|
$
|
16,557
|
|
|
$
|
15,218
|
|
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(46
|
)
|
|
$
|
(23
|
)
|
|
|
|
|
||||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Vehicle depreciation
|
353
|
|
|
331
|
|
||
Gain on sale of vehicles, net
|
—
|
|
|
(39
|
)
|
||
Non-vehicle related depreciation and amortization
|
34
|
|
|
32
|
|
||
Amortization of debt financing fees
|
11
|
|
|
16
|
|
||
Net change in assets and liabilities, excluding the impact of acquisitions and dispositions:
|
|
|
|
||||
Receivables
|
(57
|
)
|
|
(28
|
)
|
||
Income taxes and deferred income taxes
|
(21
|
)
|
|
—
|
|
||
Accounts payable and other current liabilities
|
(35
|
)
|
|
(65
|
)
|
||
Other, net
|
61
|
|
|
29
|
|
||
Net cash provided by operating activities
|
300
|
|
|
253
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Property and equipment additions
|
(21
|
)
|
|
(20
|
)
|
||
Proceeds received on asset sales
|
4
|
|
|
3
|
|
||
Net assets acquired, net of cash acquired
|
(476
|
)
|
|
—
|
|
||
Other, net
|
26
|
|
|
(1
|
)
|
||
Net cash used in investing activities exclusive of vehicle programs
|
(467
|
)
|
|
(18
|
)
|
||
|
|
|
|
||||
Vehicle programs:
|
|
|
|
||||
Increase in program cash
|
(24
|
)
|
|
(39
|
)
|
||
Investment in vehicles
|
(3,111
|
)
|
|
(3,053
|
)
|
||
Proceeds received on disposition of vehicles
|
2,394
|
|
|
2,143
|
|
||
|
(741
|
)
|
|
(949
|
)
|
||
Net cash used in investing activities
|
(1,208
|
)
|
|
(967
|
)
|
Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
|
|||||||
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Financing activities
|
|
|
|
||||
Proceeds from long-term borrowings
|
1,225
|
|
|
624
|
|
||
Payments on long-term borrowings
|
(788
|
)
|
|
(520
|
)
|
||
Net change in short-term borrowings
|
(31
|
)
|
|
(12
|
)
|
||
Purchases of warrants
|
(28
|
)
|
|
(13
|
)
|
||
Proceeds from sale of call options
|
37
|
|
|
19
|
|
||
Debt financing fees
|
(10
|
)
|
|
(8
|
)
|
||
Other, net
|
2
|
|
|
—
|
|
||
Net cash provided by financing activities exclusive of vehicle programs
|
407
|
|
|
90
|
|
||
|
|
|
|
||||
Vehicle programs:
|
|
|
|
||||
Proceeds from borrowings
|
3,762
|
|
|
3,140
|
|
||
Payments on borrowings
|
(3,279
|
)
|
|
(2,440
|
)
|
||
Debt financing fees
|
(17
|
)
|
|
(7
|
)
|
||
|
466
|
|
|
693
|
|
||
Net cash provided by financing activities
|
873
|
|
|
783
|
|
||
|
|
|
|
||||
Effect of changes in exchange rates on cash and cash equivalents
|
(2
|
)
|
|
3
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
(37
|
)
|
|
72
|
|
||
Cash and cash equivalents, beginning of period
|
606
|
|
|
534
|
|
||
Cash and cash equivalents, end of period
|
$
|
569
|
|
|
$
|
606
|
|
1.
|
Basis of Presentation and Recently Issued Accounting Pronouncements
|
•
|
North America—
provides car rentals in the United States and vehicle rentals in Canada, as well as related products and services, and operates the Company’s Zipcar business.
|
•
|
International—
provides, and licenses the Company’s brands to third parties for, vehicle rentals and ancillary products and services primarily in Europe, the Middle East, Asia, Africa, South America, Central America, the Caribbean, Australia and New Zealand.
|
•
|
Truck Rental—
provides truck rentals and related services to consumers and commercial users in the United States.
|
2.
|
Restructuring
|
|
North
America
|
|
International
|
|
Truck Rental
|
|
Total
|
||||||||
Balance as of January 1, 2013
|
$
|
1
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Restructuring expense
|
3
|
|
|
3
|
|
|
4
|
|
|
10
|
|
||||
Cash payment/utilization
|
(2
|
)
|
|
(7
|
)
|
|
(4
|
)
|
|
(13
|
)
|
||||
Balance as of March 31, 2013
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
||||||||
|
Personnel
Related
|
|
Facility
Related
|
|
Other
(a)
|
|
Total
|
||||||||
Balance as of January 1, 2013
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Restructuring expense
|
5
|
|
|
1
|
|
|
4
|
|
|
10
|
|
||||
Cash payment/utilization
|
(9
|
)
|
|
—
|
|
|
(4
|
)
|
|
(13
|
)
|
||||
Balance as of March 31, 2013
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
10
|
|
(a)
|
Includes expenses related to the disposition of vehicles.
|
3.
|
Earnings Per Share
|
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Net loss
|
$
|
(46
|
)
|
|
$
|
(23
|
)
|
Basic and diluted weighted average shares outstanding
(a)
|
107.7
|
|
|
105.9
|
|
||
Earnings per share:
|
|
|
|
||||
Basic and diluted
|
$
|
(0.43
|
)
|
|
$
|
(0.22
|
)
|
(a)
|
As the Company incurred a net loss for the three months ended March 31, 2013 and 2012, all outstanding stock options, restricted stock units, stock warrants and issuable shares underlying the 3½% convertible notes due 2014 have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.
|
|
Three Months Ended
March 31, |
||||
|
2013
|
|
2012
|
||
Options
(a)
|
1.5
|
|
|
2.8
|
|
Warrants
(b) (c)
|
4.7
|
|
|
15.0
|
|
Shares underlying 3½% convertible notes
(c)
|
4.7
|
|
|
15.0
|
|
(a)
|
For the three months ended March 31, 2013 and 2012, all outstanding stock options were anti-dilutive, as the Company incurred a net loss; such options had a weighted average exercise price of
$2.16
and
$3.74
, respectively.
|
(b)
|
Represents all outstanding warrants as of March 31, 2013 and 2012, which had an exercise price of
$22.50
.
|
(c)
|
The decrease in the number of warrants and the number of shares underlying the 3½% convertible notes that were anti-dilutive was related to the Company’s repurchase of a portion of its 3½% convertible notes and warrants (see Note 11—Long-term Debt and Borrowing Arrangements and Note 14—Stockholders’ Equity for more information).
|
4.
|
Acquisitions
|
5.
|
Other Current Assets
|
|
As of
|
|
As of
|
||||
|
March 31, 2013
|
|
December 31, 2012
|
||||
Sales and use tax
|
$
|
207
|
|
|
$
|
108
|
|
Prepaid expenses
|
189
|
|
|
174
|
|
||
Other
|
162
|
|
|
123
|
|
||
|
$
|
558
|
|
|
$
|
405
|
|
6.
|
Intangible Assets
|
|
As of March 31, 2013
|
|
As of December 31, 2012
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Amortized Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License agreements
|
$
|
251
|
|
|
$
|
42
|
|
|
$
|
209
|
|
|
$
|
257
|
|
|
$
|
39
|
|
|
$
|
218
|
|
Customer relationships
(a)
|
163
|
|
|
21
|
|
|
142
|
|
|
86
|
|
|
19
|
|
|
67
|
|
||||||
Other
|
2
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
1
|
|
||||||
|
$
|
416
|
|
|
$
|
64
|
|
|
$
|
352
|
|
|
$
|
345
|
|
|
$
|
59
|
|
|
$
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unamortized Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill
(a)
|
$
|
646
|
|
|
|
|
|
|
$
|
375
|
|
|
|
|
|
||||||||
Trademarks
(a)
|
$
|
558
|
|
|
|
|
|
|
$
|
445
|
|
|
|
|
|
(a)
|
The increases in carrying amounts primarily relate to the acquisition of Zipcar.
|
7.
|
Financial Instruments
|
|
As of March 31, 2013
|
|
As of December 31, 2012
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
||||||||
Corporate debt
|
|
|
|
|
|
|
|
||||||||
Short-term debt and current portion of long-term debt
(a)
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
57
|
|
|
$
|
58
|
|
Long-term debt, excluding convertible debt
(a)
|
3,241
|
|
|
3,443
|
|
|
2,720
|
|
|
2,903
|
|
||||
Convertible debt
(a)
|
77
|
|
|
133
|
|
|
128
|
|
|
171
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Debt under vehicle programs
|
|
|
|
|
|
|
|
||||||||
Vehicle-backed debt due to Avis Budget Rental Car Funding (AESOP) LLC
(a)
|
$
|
5,873
|
|
|
$
|
6,074
|
|
|
$
|
5,203
|
|
|
$
|
5,391
|
|
Vehicle-backed debt
(a)
|
1,586
|
|
|
1,602
|
|
|
1,599
|
|
|
1,613
|
|
||||
Interest rate swaps and interest rate contracts
(b)
|
3
|
|
|
3
|
|
|
4
|
|
|
4
|
|
(a)
|
The fair value measurements are based on significant observable inputs (Level 2).
|
(b)
|
Derivatives in a liability position.
|
|
As of
|
||
|
March 31, 2013
|
||
Interest rate caps
(a)
|
$
|
6,992
|
|
Interest rate swaps
|
913
|
|
|
Foreign exchange forward contracts
|
252
|
|
|
Foreign exchange swaps
|
763
|
|
(a)
|
Represents $
4.7 billion
of interest rate caps sold, partially offset by approximately $
2.3 billion
of interest rate caps purchased, which amount excludes $
2.4 billion
of interest rate caps purchased by the Company’s Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”) subsidiary.
|
|
As of March 31, 2013
|
|
As of December 31, 2012
|
||||||||||||
|
Fair Value,
Asset
Derivatives
|
|
Fair Value,
Liability
Derivatives
|
|
Fair Value,
Asset
Derivatives
|
|
Fair Value,
Liability
Derivatives
|
||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
||||||||
Currency exchange contracts
(b)
|
8
|
|
|
8
|
|
|
3
|
|
|
8
|
|
||||
Interest rate contracts
(c)
|
—
|
|
|
3
|
|
|
—
|
|
|
4
|
|
||||
Interest rate swaps
(a)
|
—
|
|
|
9
|
|
|
—
|
|
|
12
|
|
||||
Commodity contracts
(b)
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
10
|
|
|
$
|
20
|
|
|
$
|
3
|
|
|
$
|
25
|
|
(a)
|
Included in other non-current liabilities.
|
(b)
|
Included in other current assets and other current liabilities.
|
(c)
|
Included in assets under vehicle programs and liabilities under vehicle programs.
|
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Derivatives designated as hedging instruments
|
|
|
|
||||
Interest rate swaps
(a)
|
$
|
—
|
|
|
$
|
7
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
||||
Currency exchange contracts
(b)
|
1
|
|
|
(4
|
)
|
||
Commodity contracts
(c)
|
2
|
|
|
6
|
|
||
Interest rate contracts
(d)
|
3
|
|
|
(5
|
)
|
||
Total
|
$
|
6
|
|
|
$
|
4
|
|
(a)
|
Recognized, net of tax, as a component of other comprehensive income within stockholders’ equity.
|
(b)
|
For the three months ended March 31, 2013, included a
$2 million
gain in operating expenses, and included a
$1 million
loss in interest expense. For the three months ended March 31, 2012, amounts were included in operating expenses.
|
(c)
|
Included in operating expense.
|
(d)
|
Included in interest expense.
|
8.
|
Vehicle Rental Activities
|
|
As of
|
|
As of
|
||||
|
March 31, 2013
|
|
December 31, 2012
|
||||
Rental vehicles
|
$
|
10,973
|
|
|
$
|
10,000
|
|
Less: Accumulated depreciation
|
(1,302
|
)
|
|
(1,345
|
)
|
||
|
9,671
|
|
|
8,655
|
|
||
Vehicles held for sale
|
491
|
|
|
619
|
|
||
Vehicles, net
|
$
|
10,162
|
|
|
$
|
9,274
|
|
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Depreciation expense
|
$
|
353
|
|
|
$
|
331
|
|
Lease charges
|
33
|
|
|
26
|
|
||
Gain on sales of vehicles, net
|
—
|
|
|
(39
|
)
|
||
Vehicle depreciation and lease charges, net
|
$
|
386
|
|
|
$
|
318
|
|
9.
|
Income Taxes
|
10.
|
Accounts Payable and Other Current Liabilities
|
|
As of
|
|
As of
|
||||
|
March 31, 2013
|
|
December 31, 2012
|
||||
Accounts payable
|
$
|
344
|
|
|
$
|
309
|
|
Accrued sales and use taxes
|
240
|
|
|
148
|
|
||
Accrued payroll and related
|
174
|
|
|
198
|
|
||
Public liability and property damage insurance liabilities – current
|
129
|
|
|
132
|
|
||
Deferred income – current
|
91
|
|
|
60
|
|
||
Advertising and marketing
|
87
|
|
|
82
|
|
||
Income taxes payable – current
|
54
|
|
|
58
|
|
||
Other
|
427
|
|
|
434
|
|
||
|
$
|
1,546
|
|
|
$
|
1,421
|
|
11.
|
Long-term Debt and Borrowing Arrangements
|
|
|
|
As of
|
|
As of
|
||||
|
Maturity
Dates
|
|
March 31, 2013
|
|
December 31, 2012
|
||||
Floating rate notes
(b)
|
May 2014
|
|
$
|
250
|
|
|
$
|
250
|
|
3½% convertible notes
(c)
|
October 2014
|
|
77
|
|
|
128
|
|
||
Floating rate term loan
(a) (d)
|
May 2016
|
|
48
|
|
|
49
|
|
||
4⅞% notes
|
November 2017
|
|
300
|
|
|
300
|
|
||
9⅝% notes
|
March 2018
|
|
446
|
|
|
446
|
|
||
8¼% notes
|
January 2019
|
|
730
|
|
|
730
|
|
||
Floating rate term loan
(a) (e)
|
March 2019
|
|
894
|
|
|
689
|
|
||
9¾% notes
|
March 2020
|
|
250
|
|
|
250
|
|
||
6% Euro-denominated notes
|
March 2021
|
|
320
|
|
|
—
|
|
||
|
|
|
3,315
|
|
|
2,842
|
|
||
Other
|
|
|
32
|
|
|
63
|
|
||
Total
|
|
|
3,347
|
|
|
2,905
|
|
||
Less: Short-term debt and current portion of long-term debt
|
|
|
29
|
|
|
57
|
|
||
Long-term debt
|
|
|
$
|
3,318
|
|
|
$
|
2,848
|
|
(a)
|
The floating rate term loans are part of the Company’s senior credit facility, which also includes its revolving credit facility maturing
2016
, and are secured by pledges of all of the capital stock of all of the Company’s direct or indirect domestic subsidiaries and
65%
of the capital stock of each direct foreign subsidiary, subject to certain exceptions, and liens on substantially all of the Company’s intellectual property and certain other real and personal property.
|
(b)
|
As of March 31, 2013, the floating rate notes due 2014 bear interest at three-month LIBOR, plus 250 basis points, for an aggregate rate of
2.79%
.
|
(c)
|
As of March 31, 2013, the 3½% convertible notes are convertible by the holders into approximately
5 million
shares of our common stock.
|
(d)
|
As of March 31, 2013, the floating rate term loan due 2016 bears interest at three-month LIBOR, plus 300 basis points, for an aggregate rate of
3.31%
.
|
(e)
|
As of March 31, 2013, the floating term rate loan due 2019 bears interest at the greater of three-month LIBOR or
1.0%
, plus 275 basis points, for an aggregate rate of
3.75%
.
|
|
Total
Capacity
|
|
Outstanding
Borrowings
|
|
Letters of
Credit Issued
|
|
Available
Capacity
|
||||||||
Revolving credit facility maturing 2016
(a)
|
$
|
1,500
|
|
|
$
|
—
|
|
|
$
|
750
|
|
|
$
|
750
|
|
Other facilities
(b)
|
9
|
|
|
3
|
|
|
—
|
|
|
6
|
|
(a)
|
This revolving credit facility matures in 2016 and bears interest of one-month LIBOR, plus 300 basis points. The Company’s senior credit facility, which encompasses the floating rate term loans due 2016 and 2019 and the revolving credit facility, is secured by pledges of all of the capital stock of all of the Company’s domestic subsidiaries and
65%
of the capital stock of each foreign subsidiary directly owned by the Company’s domestic subsidiaries, subject to certain exceptions, and liens on substantially all of the Company’s intellectual property and certain other real and personal property.
|
(b)
|
These facilities encompass bank overdraft lines of credit, bearing interest of
4.50%
to
5.80%
as of March 31, 2013.
|
12.
|
Debt Under Vehicle Programs and Borrowing Arrangements
|
|
As of
|
|
As of
|
||||
|
March 31, 2013
|
|
December 31, 2012
|
||||
Debt due to Avis Budget Rental Car Funding
(a)
|
$
|
5,873
|
|
|
$
|
5,203
|
|
Budget Truck financing
|
236
|
|
|
253
|
|
||
Capital leases
|
298
|
|
|
315
|
|
||
European securitization
|
142
|
|
|
—
|
|
||
Other
|
913
|
|
|
1,035
|
|
||
|
$
|
7,462
|
|
|
$
|
6,806
|
|
(a)
|
The increase principally reflects increased borrowing to fund an increase in the size of the Company’s U.S. car rental fleet.
|
|
Vehicle-
Backed
Debt
|
||
Within 1 year
(a)
|
$
|
727
|
|
Between 1 and 2 years
|
2,425
|
|
|
Between 2 and 3 years
|
1,250
|
|
|
Between 3 and 4 years
|
1,294
|
|
|
Between 4 and 5 years
|
843
|
|
|
Thereafter
|
923
|
|
|
|
$
|
7,462
|
|
(a)
|
Vehicle-backed debt maturing within one year includes term asset-backed securities of approximately
$509 million
and bank and bank-sponsored borrowings of
$218 million
.
|
|
Total
Capacity
(a)
|
|
Outstanding
Borrowings
|
|
Available
Capacity
|
||||||
Debt due to Avis Budget Rental Car Funding
(b)
|
$
|
7,403
|
|
|
$
|
5,873
|
|
|
$
|
1,530
|
|
Budget Truck financing
(c)
|
277
|
|
|
236
|
|
|
41
|
|
|||
Capital leases
|
465
|
|
|
298
|
|
|
167
|
|
|||
European securitization
(d)
|
641
|
|
|
142
|
|
|
499
|
|
|||
Other
(e)
|
1,458
|
|
|
913
|
|
|
545
|
|
|||
|
$
|
10,244
|
|
|
$
|
7,462
|
|
|
$
|
2,782
|
|
(a)
|
Capacity is subject to maintaining sufficient assets to collateralize debt.
|
(b)
|
The outstanding debt is collateralized by approximately
$7.7 billion
of underlying vehicles and related assets.
|
(c)
|
The outstanding debt is collateralized by
$375 million
of underlying vehicles and related assets.
|
(d)
|
The outstanding debt is collateralized by approximately
$442 million
of underlying vehicles and related assets.
|
(e)
|
The outstanding debt is collateralized by approximately
$1.3 billion
of underlying vehicles and related assets.
|
13.
|
Commitments and Contingencies
|
14.
|
Stockholders’ Equity
|
|
Currency
Translation
Adjustments
|
|
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges
|
|
Net Unrealized
Gains on
Available-for
Sale Securities
|
|
Minimum
Pension
Liability
Adjustment
|
|
Accumulated
Other
Comprehensive
Income
|
||||||||||
Balance, January 1, 2013
|
$
|
193
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(85
|
)
|
|
$
|
110
|
|
Other comprehensive income before reclassifications
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net current-period other comprehensive income
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
As of March 31, 2013
|
$
|
170
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(85
|
)
|
|
$
|
87
|
|
|
Three Months Ended
March 31, |
||||||
|
2013
|
|
2012
|
||||
Net income
|
$
|
(46
|
)
|
|
$
|
(23
|
)
|
Other comprehensive income:
|
|
|
|
||||
Currency translation adjustment
|
(23
|
)
|
|
37
|
|
||
Net unrealized gains on cash flow hedges, net of tax
|
—
|
|
|
7
|
|
||
|
(23
|
)
|
|
44
|
|
||
Total comprehensive income
|
$
|
(69
|
)
|
|
$
|
21
|
|
15.
|
Stock-Based Compensation
|
•
|
25,000
time-based restricted cash units (“RCUs”) and
87,000
market-vesting restricted cash units (“MCUs”); and
|
•
|
585,000
time-based restricted stock units (“RSUs”),
374,000
performance-based restricted stock units (“PSUs”), and
87,000
market-vesting restricted stock units (“MSUs”).
|
|
Three Months Ended
March 31, |
||
|
2013
|
|
2012
|
Expected volatility of stock price
|
43%
|
|
49%
|
Risk-free interest rate
|
0.39%
|
|
0.39%
|
Expected term of awards
|
3 years
|
|
3 years
|
Dividend yield
|
0.0%
|
|
0.0%
|
|
RSUs
|
|
Options
|
||||||||||
|
Number
of RSUs
|
|
Weighted
Average
Fair Value
|
|
Number
of Options
|
|
Weighted
Average
Exercise Price
|
||||||
Balance at January 1, 2013
|
3,497
|
|
|
$
|
13.64
|
|
|
1,901
|
|
|
$
|
2.89
|
|
Granted at fair market value
|
1,046
|
|
|
20.54
|
|
|
—
|
|
|
—
|
|
||
Vested/exercised
(a)
|
(1,083
|
)
|
|
12.69
|
|
|
(416
|
)
|
|
5.31
|
|
||
Canceled
|
(47
|
)
|
|
14.12
|
|
|
(3
|
)
|
|
27.40
|
|
||
Balance at March 31, 2013
(b) (c)
|
3,413
|
|
|
16.06
|
|
|
1,482
|
|
|
2.16
|
|
(a)
|
During the three months ended March 31, 2013,
429,000
market-vesting and performance-based restricted stock units vested. Stock options exercised during the three months ended March 31, 2013 had an intrinsic value of
$8 million
.
|
(b)
|
As of March 31, 2013, the Company’s outstanding RSUs had an aggregate intrinsic value of
$95 million
; aggregate unrecognized compensation expense related to RSUs amounted to
$40 million
; and the balance of RSUs at March 31, 2013, consists of
1,338,000
related to time-based awards and
2,075,000
related to market-vesting and performance-based awards. Approximately
24,000
time-based restricted stock units and
9,000
market-vesting restricted stock units are eligible to vest in 2013, if applicable service criteria are satisfied.
|
(c)
|
As of March 31, 2013, the Company’s outstanding stock options had aggregate intrinsic value of
$38 million
; there were
1,472,000
“in-the-money” stock options; and aggregate unrecognized compensation expense related to unvested stock options was immaterial.
1,418,000
stock options are exercisable as of March 31, 2013.
|
Range of
Exercise Prices
|
Weighted Average
Contractual Life (years)
|
|
Number of
Options
|
|
Less than $5.00
|
5.8
|
|
1,312
|
|
$5.01 to $10.00
|
0
|
|
—
|
|
$10.01 to $15.00
|
6.8
|
|
160
|
|
$15.01 to $20.00
|
0
|
|
—
|
|
$20.01 and above
|
1.4
|
|
10
|
|
|
5.9
|
|
1,482
|
|
16.
|
Segment Information
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2013
|
|
2012
|
||||||||||||
|
Revenues
|
|
Adjusted
EBITDA
|
|
Revenues
|
|
Adjusted
EBITDA
|
||||||||
North America
|
$
|
1,100
|
|
|
$
|
90
|
|
|
$
|
1,038
|
|
|
$
|
93
|
|
International
|
515
|
|
|
14
|
|
|
510
|
|
|
22
|
|
||||
Truck Rental
|
76
|
|
|
(9
|
)
|
|
75
|
|
|
1
|
|
||||
Corporate and Other
(a)
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Total Company
(b)
|
$
|
1,691
|
|
|
83
|
|
|
$
|
1,623
|
|
|
112
|
|
||
|
|
|
|
|
|
|
|
||||||||
Less: Non-vehicle related depreciation and amortization
|
|
|
34
|
|
|
|
|
32
|
|
||||||
Interest expense related to corporate debt, net:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
|
58
|
|
|
|
|
73
|
|
||||||
Early extinguishment of debt
|
|
|
40
|
|
|
|
|
27
|
|
||||||
Transaction-related costs
(c)
|
|
|
8
|
|
|
|
|
6
|
|
||||||
Loss before income taxes
|
|
|
$
|
(57
|
)
|
|
|
|
$
|
(26
|
)
|
(a)
|
Includes unallocated corporate overhead and the elimination of transactions between segments.
|
(b)
|
Adjusted EBITDA for the three months ended
March 31, 2013
and
2012
, includes
$10 million
and
$7 million
, respectively, of restructuring expense.
|
(c)
|
During the three months ended
March 31, 2013
, the Company incurred
$8 million
in transaction-related costs related to our acquisition of Zipcar and expenses related to the integration of the operations of Avis Europe with the Company’s. During the three months ended
March 31, 2012
, the Company incurred
$6 million
in transaction-related costs related to the integration of the operations of Avis Europe.
|
17.
|
Guarantor and Non-Guarantor Consolidating Condensed Financial Statements
|
|
Parent
|
|
Subsidiary
Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vehicle rental
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
837
|
|
|
$
|
380
|
|
|
$
|
—
|
|
|
$
|
1,217
|
|
Other
|
—
|
|
|
—
|
|
|
246
|
|
|
526
|
|
|
(298
|
)
|
|
474
|
|
||||||
Net revenues
|
—
|
|
|
—
|
|
|
1,083
|
|
|
906
|
|
|
(298
|
)
|
|
1,691
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating
|
2
|
|
|
1
|
|
|
558
|
|
|
370
|
|
|
—
|
|
|
931
|
|
||||||
Vehicle depreciation and lease charges, net
|
—
|
|
|
—
|
|
|
260
|
|
|
243
|
|
|
(117
|
)
|
|
386
|
|
||||||
Selling, general and administrative
|
9
|
|
|
1
|
|
|
131
|
|
|
83
|
|
|
—
|
|
|
224
|
|
||||||
Vehicle interest, net
|
—
|
|
|
—
|
|
|
42
|
|
|
58
|
|
|
(43
|
)
|
|
57
|
|
||||||
Non-vehicle related depreciation and amortization
|
—
|
|
|
—
|
|
|
22
|
|
|
12
|
|
|
—
|
|
|
34
|
|
||||||
Interest expense related to corporate debt, net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
1
|
|
|
54
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
58
|
|
||||||
Intercompany interest expense (income)
|
(3
|
)
|
|
(11
|
)
|
|
3
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||||
Early extinguishment of debt
|
39
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
||||||
Restructuring expenses
|
—
|
|
|
—
|
|
|
6
|
|
|
4
|
|
|
—
|
|
|
10
|
|
||||||
Transaction-related costs
|
—
|
|
|
4
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
8
|
|
||||||
Total expenses
|
48
|
|
|
50
|
|
|
1,023
|
|
|
787
|
|
|
(160
|
)
|
|
1,748
|
|
||||||
Income (loss) before income taxes and equity in earnings of subsidiaries
|
(48
|
)
|
|
(50
|
)
|
|
60
|
|
|
119
|
|
|
(138
|
)
|
|
(57
|
)
|
||||||
Provision for (benefit from) income taxes
|
(4
|
)
|
|
(20
|
)
|
|
14
|
|
|
(1
|
)
|
|
—
|
|
|
(11
|
)
|
||||||
Equity in earnings (loss) of subsidiaries
|
(2
|
)
|
|
28
|
|
|
(18
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||||
Net income (loss)
|
$
|
(46
|
)
|
|
$
|
(2
|
)
|
|
$
|
28
|
|
|
$
|
120
|
|
|
$
|
(146
|
)
|
|
$
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Comprehensive income (loss)
|
$
|
(69
|
)
|
|
$
|
(25
|
)
|
|
$
|
2
|
|
|
$
|
95
|
|
|
$
|
(72
|
)
|
|
$
|
(69
|
)
|
|
Parent
|
|
Subsidiary
Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vehicle rental
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
786
|
|
|
$
|
382
|
|
|
$
|
—
|
|
|
$
|
1,168
|
|
Other
|
—
|
|
|
—
|
|
|
235
|
|
|
474
|
|
|
(254
|
)
|
|
455
|
|
||||||
Net revenues
|
—
|
|
|
—
|
|
|
1,021
|
|
|
856
|
|
|
(254
|
)
|
|
1,623
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating
|
(1
|
)
|
|
6
|
|
|
537
|
|
|
351
|
|
|
—
|
|
|
893
|
|
||||||
Vehicle depreciation and lease charges, net
|
—
|
|
|
—
|
|
|
197
|
|
|
212
|
|
|
(91
|
)
|
|
318
|
|
||||||
Selling, general and administrative
|
5
|
|
|
—
|
|
|
137
|
|
|
77
|
|
|
—
|
|
|
219
|
|
||||||
Vehicle interest, net
|
—
|
|
|
—
|
|
|
61
|
|
|
75
|
|
|
(62
|
)
|
|
74
|
|
||||||
Non-vehicle related depreciation and amortization
|
—
|
|
|
—
|
|
|
19
|
|
|
13
|
|
|
—
|
|
|
32
|
|
||||||
Interest expense related to corporate debt, net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
3
|
|
|
64
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
73
|
|
||||||
Intercompany interest expense (income)
|
(7
|
)
|
|
(81
|
)
|
|
74
|
|
|
14
|
|
|
—
|
|
|
—
|
|
||||||
Early extinguishment of debt
|
18
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||||
Restructuring expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Transaction-related costs
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
6
|
|
||||||
Total expenses
|
21
|
|
|
(2
|
)
|
|
1,025
|
|
|
758
|
|
|
(153
|
)
|
|
1,649
|
|
||||||
Income (loss) before income taxes and equity in earnings of subsidiaries
|
(21
|
)
|
|
2
|
|
|
(4
|
)
|
|
98
|
|
|
(101
|
)
|
|
(26
|
)
|
||||||
Provision for (benefit from) income taxes
|
(1
|
)
|
|
3
|
|
|
(2
|
)
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
Equity in earnings (loss) of subsidiaries
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||||
Net income (loss)
|
$
|
(23
|
)
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
$
|
101
|
|
|
$
|
(96
|
)
|
|
$
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Comprehensive income
|
$
|
21
|
|
|
$
|
41
|
|
|
$
|
42
|
|
|
$
|
146
|
|
|
$
|
(229
|
)
|
|
$
|
21
|
|
|
Parent
|
|
Subsidiary
Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
6
|
|
|
$
|
17
|
|
|
$
|
8
|
|
|
$
|
538
|
|
|
$
|
—
|
|
|
$
|
569
|
|
Receivables, net
|
—
|
|
|
—
|
|
|
184
|
|
|
407
|
|
|
—
|
|
|
591
|
|
||||||
Deferred income taxes
|
3
|
|
|
—
|
|
|
141
|
|
|
12
|
|
|
(3
|
)
|
|
153
|
|
||||||
Other current assets
|
4
|
|
|
88
|
|
|
116
|
|
|
350
|
|
|
—
|
|
|
558
|
|
||||||
Total current assets
|
13
|
|
|
105
|
|
|
449
|
|
|
1,307
|
|
|
(3
|
)
|
|
1,871
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment, net
|
—
|
|
|
93
|
|
|
310
|
|
|
156
|
|
|
—
|
|
|
559
|
|
||||||
Deferred income taxes
|
20
|
|
|
1,179
|
|
|
148
|
|
|
—
|
|
|
(1
|
)
|
|
1,346
|
|
||||||
Goodwill
|
—
|
|
|
—
|
|
|
348
|
|
|
298
|
|
|
—
|
|
|
646
|
|
||||||
Other intangibles, net
|
—
|
|
|
42
|
|
|
530
|
|
|
338
|
|
|
—
|
|
|
910
|
|
||||||
Other non-current assets
|
108
|
|
|
87
|
|
|
21
|
|
|
145
|
|
|
—
|
|
|
361
|
|
||||||
Intercompany receivables (payables)
|
142
|
|
|
100
|
|
|
282
|
|
|
(524
|
)
|
|
—
|
|
|
—
|
|
||||||
Investment in subsidiaries
|
603
|
|
|
2,546
|
|
|
3,230
|
|
|
—
|
|
|
(6,379
|
)
|
|
—
|
|
||||||
Total assets exclusive of assets under vehicle programs
|
886
|
|
|
4,152
|
|
|
5,318
|
|
|
1,720
|
|
|
(6,383
|
)
|
|
5,693
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets under vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Program cash
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
||||||
Vehicles, net
|
—
|
|
|
7
|
|
|
11
|
|
|
10,144
|
|
|
—
|
|
|
10,162
|
|
||||||
Receivables from vehicle manufacturers and other
|
—
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|
—
|
|
|
287
|
|
||||||
Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party
|
—
|
|
|
—
|
|
|
—
|
|
|
362
|
|
|
—
|
|
|
362
|
|
||||||
|
—
|
|
|
7
|
|
|
11
|
|
|
10,846
|
|
|
—
|
|
|
10,864
|
|
||||||
Total assets
|
$
|
886
|
|
|
$
|
4,159
|
|
|
$
|
5,329
|
|
|
$
|
12,566
|
|
|
$
|
(6,383
|
)
|
|
$
|
16,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and other current liabilities
|
$
|
13
|
|
|
$
|
214
|
|
|
$
|
557
|
|
|
$
|
765
|
|
|
$
|
(3
|
)
|
|
$
|
1,546
|
|
Short-term debt and current portion of long-term debt
|
—
|
|
|
15
|
|
|
3
|
|
|
11
|
|
|
—
|
|
|
29
|
|
||||||
Total current liabilities
|
13
|
|
|
229
|
|
|
560
|
|
|
776
|
|
|
(3
|
)
|
|
1,575
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt
|
77
|
|
|
3,233
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
3,318
|
|
||||||
Other non-current liabilities
|
102
|
|
|
91
|
|
|
276
|
|
|
416
|
|
|
(1
|
)
|
|
884
|
|
||||||
Total liabilities exclusive of liabilities under vehicle programs
|
192
|
|
|
3,553
|
|
|
844
|
|
|
1,192
|
|
|
(4
|
)
|
|
5,777
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities under vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt
|
—
|
|
|
3
|
|
|
—
|
|
|
1,586
|
|
|
—
|
|
|
1,589
|
|
||||||
Due to Avis Budget Rental Car Funding (AESOP) LLC-related party
|
—
|
|
|
—
|
|
|
—
|
|
|
5,873
|
|
|
—
|
|
|
5,873
|
|
||||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
1,939
|
|
|
187
|
|
|
—
|
|
|
2,126
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
498
|
|
|
—
|
|
|
498
|
|
||||||
|
—
|
|
|
3
|
|
|
1,939
|
|
|
8,144
|
|
|
—
|
|
|
10,086
|
|
||||||
Total stockholders’ equity
|
694
|
|
|
603
|
|
|
2,546
|
|
|
3,230
|
|
|
(6,379
|
)
|
|
694
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
886
|
|
|
$
|
4,159
|
|
|
$
|
5,329
|
|
|
$
|
12,566
|
|
|
$
|
(6,383
|
)
|
|
$
|
16,557
|
|
|
Parent
|
|
Subsidiary
Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
5
|
|
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
499
|
|
|
$
|
—
|
|
|
$
|
606
|
|
Receivables, net
|
—
|
|
|
—
|
|
|
156
|
|
|
397
|
|
|
—
|
|
|
553
|
|
||||||
Deferred income taxes
|
3
|
|
|
1
|
|
|
138
|
|
|
4
|
|
|
—
|
|
|
146
|
|
||||||
Other current assets
|
5
|
|
|
73
|
|
|
81
|
|
|
246
|
|
|
—
|
|
|
405
|
|
||||||
Total current assets
|
13
|
|
|
176
|
|
|
375
|
|
|
1,146
|
|
|
—
|
|
|
1,710
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment, net
|
—
|
|
|
90
|
|
|
276
|
|
|
163
|
|
|
—
|
|
|
529
|
|
||||||
Deferred income taxes
|
23
|
|
|
1,216
|
|
|
223
|
|
|
—
|
|
|
(8
|
)
|
|
1,454
|
|
||||||
Goodwill
|
—
|
|
|
—
|
|
|
74
|
|
|
301
|
|
|
—
|
|
|
375
|
|
||||||
Other intangibles, net
|
—
|
|
|
43
|
|
|
341
|
|
|
347
|
|
|
—
|
|
|
731
|
|
||||||
Other non-current assets
|
109
|
|
|
80
|
|
|
14
|
|
|
117
|
|
|
—
|
|
|
320
|
|
||||||
Intercompany receivables (payables)
|
142
|
|
|
141
|
|
|
174
|
|
|
(457
|
)
|
|
—
|
|
|
—
|
|
||||||
Investment in subsidiaries
|
723
|
|
|
2,030
|
|
|
3,293
|
|
|
—
|
|
|
(6,046
|
)
|
|
—
|
|
||||||
Total assets exclusive of assets under vehicle programs
|
1,010
|
|
|
3,776
|
|
|
4,770
|
|
|
1,617
|
|
|
(6,054
|
)
|
|
5,119
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets under vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Program cash
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||
Vehicles, net
|
—
|
|
|
7
|
|
|
13
|
|
|
9,254
|
|
|
—
|
|
|
9,274
|
|
||||||
Receivables from vehicle manufacturers and other
|
—
|
|
|
—
|
|
|
—
|
|
|
439
|
|
|
—
|
|
|
439
|
|
||||||
Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party
|
—
|
|
|
—
|
|
|
—
|
|
|
362
|
|
|
—
|
|
|
362
|
|
||||||
|
—
|
|
|
7
|
|
|
13
|
|
|
10,079
|
|
|
—
|
|
|
10,099
|
|
||||||
Total assets
|
$
|
1,010
|
|
|
$
|
3,783
|
|
|
$
|
4,783
|
|
|
$
|
11,696
|
|
|
$
|
(6,054
|
)
|
|
$
|
15,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and other current liabilities
|
$
|
22
|
|
|
$
|
250
|
|
|
$
|
490
|
|
|
$
|
659
|
|
|
$
|
—
|
|
|
$
|
1,421
|
|
Short-term debt and current portion of long-term debt
|
—
|
|
|
13
|
|
|
3
|
|
|
41
|
|
|
—
|
|
|
57
|
|
||||||
Total current liabilities
|
22
|
|
|
263
|
|
|
493
|
|
|
700
|
|
|
—
|
|
|
1,478
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt
|
128
|
|
|
2,712
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
2,848
|
|
||||||
Other non-current liabilities
|
103
|
|
|
79
|
|
|
277
|
|
|
420
|
|
|
(8
|
)
|
|
871
|
|
||||||
Total liabilities exclusive of liabilities under vehicle programs
|
253
|
|
|
3,054
|
|
|
778
|
|
|
1,120
|
|
|
(8
|
)
|
|
5,197
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities under vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt
|
—
|
|
|
4
|
|
|
—
|
|
|
1,599
|
|
|
—
|
|
|
1,603
|
|
||||||
Due to Avis Budget Rental Car Funding (AESOP) LLC-related party
|
—
|
|
|
—
|
|
|
—
|
|
|
5,203
|
|
|
—
|
|
|
5,203
|
|
||||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
1,975
|
|
|
188
|
|
|
—
|
|
|
2,163
|
|
||||||
Other
|
—
|
|
|
2
|
|
|
—
|
|
|
293
|
|
|
—
|
|
|
295
|
|
||||||
|
—
|
|
|
6
|
|
|
1,975
|
|
|
7,283
|
|
|
—
|
|
|
9,264
|
|
||||||
Total stockholders’ equity
|
757
|
|
|
723
|
|
|
2,030
|
|
|
3,293
|
|
|
(6,046
|
)
|
|
757
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,010
|
|
|
$
|
3,783
|
|
|
$
|
4,783
|
|
|
$
|
11,696
|
|
|
$
|
(6,054
|
)
|
|
$
|
15,218
|
|
|
Parent
|
|
Subsidiary
Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
6
|
|
|
$
|
(12
|
)
|
|
$
|
(25
|
)
|
|
$
|
331
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment additions
|
—
|
|
|
(5
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|
—
|
|
|
(21
|
)
|
||||||
Proceeds received on asset sales
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
4
|
|
||||||
Net assets acquired, net of cash acquired
|
—
|
|
|
(513
|
)
|
|
16
|
|
|
21
|
|
|
—
|
|
|
(476
|
)
|
||||||
Other, net
|
—
|
|
|
(1
|
)
|
|
28
|
|
|
(1
|
)
|
|
—
|
|
|
26
|
|
||||||
Net cash provided by (used in) investing activities exclusive of vehicle programs
|
—
|
|
|
(517
|
)
|
|
34
|
|
|
16
|
|
|
—
|
|
|
(467
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Increase in program cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
||||||
Investment in vehicles
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3,110
|
)
|
|
—
|
|
|
(3,111
|
)
|
||||||
Proceeds received on disposition of vehicles
|
—
|
|
|
1
|
|
|
—
|
|
|
2,393
|
|
|
—
|
|
|
2,394
|
|
||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
(741
|
)
|
|
—
|
|
|
(741
|
)
|
||||||
Net cash provided by (used in) investing activities
|
—
|
|
|
(517
|
)
|
|
34
|
|
|
(725
|
)
|
|
—
|
|
|
(1,208
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from long-term borrowings
|
—
|
|
|
1,225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,225
|
|
||||||
Payments on long-term borrowings
|
(89
|
)
|
|
(698
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(788
|
)
|
||||||
Net change in short-term borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
(31
|
)
|
||||||
Purchase of warrants
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
||||||
Proceeds from sale of call options
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||||
Net intercompany transactions
|
73
|
|
|
(73
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Debt financing fees
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||||
Other, net
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Net cash provided by (used in) financing activities exclusive of vehicle programs
|
(5
|
)
|
|
444
|
|
|
(1
|
)
|
|
(31
|
)
|
|
—
|
|
|
407
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
3,762
|
|
|
—
|
|
|
3,762
|
|
||||||
Payments on borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,279
|
)
|
|
—
|
|
|
(3,279
|
)
|
||||||
Debt financing fees
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
466
|
|
||||||
Net cash provided by (used in) financing activities
|
(5
|
)
|
|
444
|
|
|
(1
|
)
|
|
435
|
|
|
—
|
|
|
873
|
|
||||||
Effect of changes in exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Net increase (decrease) in cash and cash equivalents
|
1
|
|
|
(85
|
)
|
|
8
|
|
|
39
|
|
|
—
|
|
|
(37
|
)
|
||||||
Cash and cash equivalents, beginning of period
|
5
|
|
|
102
|
|
|
—
|
|
|
499
|
|
|
—
|
|
|
606
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
6
|
|
|
$
|
17
|
|
|
$
|
8
|
|
|
$
|
538
|
|
|
$
|
—
|
|
|
$
|
569
|
|
|
Parent
|
|
Subsidiary
Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
(6
|
)
|
|
$
|
(86
|
)
|
|
$
|
8
|
|
|
$
|
334
|
|
|
$
|
3
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment additions
|
—
|
|
|
(5
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|
—
|
|
|
(20
|
)
|
||||||
Proceeds received on asset sales
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
3
|
|
||||||
Other, net
|
4
|
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Net cash provided by (used in) investing activities exclusive of vehicle programs
|
4
|
|
|
(4
|
)
|
|
(7
|
)
|
|
(11
|
)
|
|
—
|
|
|
(18
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Increase in program cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(39
|
)
|
||||||
Investment in vehicles
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3,052
|
)
|
|
—
|
|
|
(3,053
|
)
|
||||||
Proceeds received on disposition of vehicles
|
—
|
|
|
4
|
|
|
—
|
|
|
2,139
|
|
|
—
|
|
|
2,143
|
|
||||||
|
—
|
|
|
3
|
|
|
—
|
|
|
(952
|
)
|
|
—
|
|
|
(949
|
)
|
||||||
Net cash provided by (used in) investing activities
|
4
|
|
|
(1
|
)
|
|
(7
|
)
|
|
(963
|
)
|
|
—
|
|
|
(967
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from long-term borrowings
|
—
|
|
|
624
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
624
|
|
||||||
Payments on long-term borrowings
|
(101
|
)
|
|
(419
|
)
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
(520
|
)
|
||||||
Net change in short-term borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
||||||
Purchase of warrants
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
||||||
Proceeds from sale of call option
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||||
Net intercompany transactions
|
100
|
|
|
(99
|
)
|
|
1
|
|
|
1
|
|
|
(3
|
)
|
|
—
|
|
||||||
Debt financing fees
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||||
Net cash provided by (used in) financing activities exclusive of vehicle programs
|
5
|
|
|
98
|
|
|
—
|
|
|
(10
|
)
|
|
(3
|
)
|
|
90
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Vehicle programs:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
3,140
|
|
|
—
|
|
|
3,140
|
|
||||||
Payments on borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,440
|
)
|
|
—
|
|
|
(2,440
|
)
|
||||||
Debt financing fees
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
693
|
|
|
—
|
|
|
693
|
|
||||||
Net cash provided by (used in) financing activities
|
5
|
|
|
98
|
|
|
—
|
|
|
683
|
|
|
(3
|
)
|
|
783
|
|
||||||
Effect of changes in exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Net increase in cash and cash equivalents
|
3
|
|
|
11
|
|
|
1
|
|
|
57
|
|
|
—
|
|
|
72
|
|
||||||
Cash and cash equivalents, beginning of period
|
2
|
|
|
234
|
|
|
1
|
|
|
297
|
|
|
—
|
|
|
534
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
5
|
|
|
$
|
245
|
|
|
$
|
2
|
|
|
$
|
354
|
|
|
$
|
—
|
|
|
$
|
606
|
|
18.
|
Subsequent Events
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
|
OVERVIEW
|
•
|
worldwide enplanements;
|
•
|
fleet, pricing, marketing and strategic decisions made by us and by our competitors;
|
•
|
changes in per-unit car fleet costs and in conditions in the used vehicle marketplace;
|
•
|
changes in borrowing costs and in market willingness to purchase corporate and vehicle-related debt;
|
•
|
our acquisitions and our integration of their operations and realization of synergies, particularly the integration of Zipcar and Avis Europe;
|
•
|
demand for car sharing services;
|
•
|
changes in the price of unleaded gasoline;
|
•
|
changes in currency exchange rates; and
|
•
|
demand for truck rentals.
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net revenues
|
$
|
1,691
|
|
|
$
|
1,623
|
|
|
$
|
68
|
|
Total expenses
|
1,748
|
|
|
1,649
|
|
|
99
|
|
|||
Loss before income taxes
|
(57
|
)
|
|
(26
|
)
|
|
(31
|
)
|
|||
Benefit from income taxes
|
(11
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|||
Net loss
|
$
|
(46
|
)
|
|
$
|
(23
|
)
|
|
$
|
(23
|
)
|
|
Revenues
|
|
Adjusted EBITDA
|
||||||||||||||||||
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
||||||||||
North America
|
$
|
1,100
|
|
|
$
|
1,038
|
|
|
6
|
%
|
|
$
|
90
|
|
|
$
|
93
|
|
|
(3
|
)%
|
International
|
515
|
|
|
510
|
|
|
1
|
%
|
|
14
|
|
|
22
|
|
|
(36
|
)%
|
||||
Truck Rental
|
76
|
|
|
75
|
|
|
1
|
%
|
|
(9
|
)
|
|
1
|
|
|
*
|
|
||||
Corporate and Other
(a)
|
—
|
|
|
—
|
|
|
*
|
|
|
(12
|
)
|
|
(4
|
)
|
|
*
|
|
||||
Total Company
|
$
|
1,691
|
|
|
$
|
1,623
|
|
|
4
|
%
|
|
83
|
|
|
112
|
|
|
(26
|
)%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Less: Non-vehicle related depreciation and amortization
|
|
|
|
|
|
|
34
|
|
|
32
|
|
|
|
||||||||
Interest expense related to corporate debt, net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
|
|
|
|
|
58
|
|
|
73
|
|
|
|
||||||||
Early extinguishment of debt
|
|
|
|
|
|
|
40
|
|
|
27
|
|
|
|
||||||||
Transaction-related costs
(b)
|
|
|
|
|
|
|
8
|
|
|
6
|
|
|
|
||||||||
Loss before income taxes
|
|
|
|
|
|
|
$
|
(57
|
)
|
|
$
|
(26
|
)
|
|
|
*
|
Not meaningful.
|
(a)
|
Includes unallocated corporate overhead and the elimination of transactions between segments. In first quarter 2013, we refined our allocation of corporate costs to reflect the benefit provided across our global segments. As a result, Corporate and Other segment includes $6 million of costs in the three months ended March 31, 2013 that were included in North America for the three months ended March 31, 2012.
|
(b)
|
For 2013, includes $8 million in costs primarily related to our acquisition of Zipcar and the integration of the operations of Avis Europe and, for 2012, includes $6 million in costs related to the integration of the operations of Avis Europe.
|
|
|
March 31,
2013
|
|
December 31, 2012
|
|
Change
|
||||||
Total assets exclusive of assets under vehicle programs
|
|
$
|
5,693
|
|
|
$
|
5,119
|
|
|
$
|
574
|
|
Total liabilities exclusive of liabilities under vehicle programs
|
|
5,777
|
|
|
5,197
|
|
|
580
|
|
|||
Assets under vehicle programs
|
|
10,864
|
|
|
10,099
|
|
|
765
|
|
|||
Liabilities under vehicle programs
|
|
10,086
|
|
|
9,264
|
|
|
822
|
|
|||
Stockholders’ equity
|
|
694
|
|
|
757
|
|
|
(63
|
)
|
|
Three Months Ended March 31,
|
||||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
300
|
|
|
$
|
253
|
|
|
$
|
47
|
|
Investing activities
|
(1,208
|
)
|
|
(967
|
)
|
|
(241
|
)
|
|||
Financing activities
|
873
|
|
|
783
|
|
|
90
|
|
|||
Effect of exchange rate changes
|
(2
|
)
|
|
3
|
|
|
(5
|
)
|
|||
Net change in cash and cash equivalents
|
$
|
(37
|
)
|
|
$
|
72
|
|
|
$
|
(109
|
)
|
|
|
|
As of
|
|
As of
|
|
|
||||||
|
Maturity
Dates
|
|
March 31, 2013
|
|
December 31, 2012
|
|
Change
|
||||||
Floating rate notes
(b)
|
May 2014
|
|
$
|
250
|
|
|
$
|
250
|
|
|
$
|
—
|
|
3½% convertible notes
(c)
|
October 2014
|
|
77
|
|
|
128
|
|
|
(51
|
)
|
|||
Floating rate term loan
(a) (d)
|
May 2016
|
|
48
|
|
|
49
|
|
|
(1
|
)
|
|||
4⅞% notes
|
November 2017
|
|
300
|
|
|
300
|
|
|
—
|
|
|||
9⅝% notes
|
March 2018
|
|
446
|
|
|
446
|
|
|
—
|
|
|||
8¼% notes
|
January 2019
|
|
730
|
|
|
730
|
|
|
—
|
|
|||
Floating rate term loan
(a) (e)
|
March 2019
|
|
894
|
|
|
689
|
|
|
205
|
|
|||
9¾% notes
|
March 2020
|
|
250
|
|
|
250
|
|
|
—
|
|
|||
6% Euro-denominated notes
|
March 2021
|
|
320
|
|
|
—
|
|
|
320
|
|
|||
|
|
|
3,315
|
|
|
2,842
|
|
|
473
|
|
|||
Other
|
|
|
32
|
|
|
63
|
|
|
(31
|
)
|
|||
|
|
|
$
|
3,347
|
|
|
$
|
2,905
|
|
|
$
|
442
|
|
(a)
|
The floating rate term loans are part of our senior credit facility, which also includes our revolving credit facility maturing 2016, and is secured by pledges of all of the capital stock of our domestic subsidiaries and 65% of the capital stock of each direct foreign subsidiary, subject to certain exceptions, and liens on substantially all of our intellectual property and certain other real and personal property.
|
(b)
|
As of March 31, 2013, the floating rate notes due 2014 bear interest at three-month LIBOR, plus 250 basis points, for an aggregate rate of
2.79%
.
|
(c)
|
The 3½% convertible notes due 2014 are convertible by the holders into approximately 5 million shares of our common stock as of March 31, 2013.
|
(d)
|
As of March 31, 2013, the floating rate term loan due 2016 bears interest at three-month LIBOR, plus 300 basis points, for an aggregate rate of
3.31%
.
|
(e)
|
As of March 31, 2013, the floating rate term loan due 2019 bears interest at the greater of three-month LIBOR or 1.0%, plus 275 basis points, for an aggregate rate of
3.75%
.
|
|
As of
March 31,
2013
|
|
As of
December 31, 2012 |
|
Change
|
||||||
Debt due to Avis Budget Rental Car Funding
(a)
|
$
|
5,873
|
|
|
$
|
5,203
|
|
|
$
|
670
|
|
Budget Truck financing
|
236
|
|
|
253
|
|
|
(17
|
)
|
|||
Capital leases
|
298
|
|
|
315
|
|
|
(17
|
)
|
|||
European securitization
|
142
|
|
|
—
|
|
|
142
|
|
|||
Other
|
913
|
|
|
1,035
|
|
|
(122
|
)
|
|||
|
$
|
7,462
|
|
|
$
|
6,806
|
|
|
$
|
656
|
|
(a)
|
The increase principally reflects increased borrowings to fund an increase in the size of our U.S. car rental fleet.
|
|
Total
Capacity
|
|
Outstanding
Borrowings
|
|
Letters of
Credit Issued
|
|
Available
Capacity
|
||||||||
Revolving credit facility maturing 2016
(a)
|
$
|
1,500
|
|
|
$
|
—
|
|
|
$
|
750
|
|
|
$
|
750
|
|
Other facilities
(b)
|
9
|
|
|
3
|
|
|
—
|
|
|
6
|
|
(a)
|
This revolving credit facility matures in 2016 and bears interest of one-month LIBOR, plus 300 basis points. The senior credit facility, which encompasses our floating rate term loans and the revolving credit facility, is secured by pledges of all of the capital stock of all of our direct or indirect domestic subsidiaries and 65% of the capital stock of each foreign subsidiary directly owned by our domestic subsidiaries, subject to certain exceptions, and liens on substantially all of our intellectual property and certain other real and personal property.
|
(b)
|
These facilities encompass bank overdraft lines of credit, bearing interest of
4.50%
to
5.80%
as of March 31, 2013.
|
|
Total
Capacity
(a)
|
|
Outstanding
Borrowings
|
|
Available
Capacity
|
||||||
Debt due to Avis Budget Rental Car Funding
(b)
|
$
|
7,403
|
|
|
$
|
5,873
|
|
|
$
|
1,530
|
|
Budget Truck financing
(c)
|
277
|
|
|
236
|
|
|
41
|
|
|||
Capital leases
|
465
|
|
|
298
|
|
|
167
|
|
|||
European securitization
(d)
|
641
|
|
|
142
|
|
|
499
|
|
|||
Other
(e)
|
1,458
|
|
|
913
|
|
|
545
|
|
|||
|
$
|
10,244
|
|
|
$
|
7,462
|
|
|
$
|
2,782
|
|
(a)
|
Capacity is subject to maintaining sufficient assets to collateralize debt.
|
(b)
|
The outstanding debt is collateralized by approximately
$7.7 billion
of underlying vehicles and related assets.
|
(c)
|
The outstanding debt is collateralized by $375 million of underlying vehicles and related assets.
|
(d)
|
The outstanding debt is collateralized by approximately $442 million of underlying vehicles and related assets.
|
(e)
|
The outstanding debt is collateralized by approximately $1.3 billion of underlying vehicles and related assets.
|
(a)
|
Disclosure Controls and Procedures.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the period ended March 31, 2013.
|
(b)
|
Changes in Internal Control Over Financial Reporting.
During the fiscal quarter to which this report relates, there has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
Item 1.
|
Legal Proceedings.
|
Item 6.
|
Exhibits
|
|
|
|
|
AVIS BUDGET GROUP, INC.
|
|
|
|
||
Date: May 7, 2013
|
|
|
|
|
|
|
|
|
/s/ David B. Wyshner
|
|
|
|
|
David B. Wyshner
|
|
|
|
|
Senior Executive Vice President and
|
|
|
|
|
Chief Financial Officer
|
|
|
|
||
Date: May 7, 2013
|
|
|
|
|
|
|
|
|
/s/ Izilda P. Martins
|
|
|
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Izilda P. Martins
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Senior Vice President and
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Acting Chief Accounting Officer
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Exhibit No.
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Description
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4.1
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Indenture dated as of March 7, 2013 among Avis Budget Finance, plc, as Issuer, the Guarantors from time to time parties thereto, Bank of Nova Scotia Trust Company of New York as Trustee and Citibank, N.A., London Branch, as paying agent and note registrar (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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4.2
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Form of 6.0% Senior Notes Due 2021 (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.1
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AESOP I Operating Sublease Agreement dated as of March 26, 2013 between Zipcar, Inc. and Avis Budget Car Rental, LLC.
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10.2
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Amendment Letter, dated March 19, 2013, to the Framework Agreement dated March 5, 2013 and the Master Definitions Agreement dated March 5, 2013 between, among others, Avis Finance Company Limited, Avis Budget Italia S.p.A. FleetCo S.A.p.A., FinCar Fleet B.V. and Avis Budget Italia S.p.A., Avis Budget Car Rental, LLC, Avis Budget EMEA Limited, Avis Alquile un Coche S.A., Avis Budget Autovermietung GmbH & Co. KG, Crédit Agricole Corporate and Investment Bank the Initial Senior Noteholders named therein, and Deutsche Trustee Company Limited.
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10.3
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Series 2013-1 Supplement, dated as of February 13, 2013, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2013-1 Agent (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 15, 2013).
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10.4
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Fifth Amendment, dated as of February 15, 2013, to the Amended and Restated Credit Agreement dated as of May 3, 2011, among Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC, the subsidiary borrowers from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the several lenders from time to time parties thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 20, 2013).
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10.5
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Sixth Amendment, dated as of March 4, 2013, to the Amended and Restated Credit Agreement dated as of May 3, 2011, among Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC, the subsidiary borrowers from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the several lenders from time to time parties thereto (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 5, 2013).
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10.6
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Issuer Note Facility Agreement dated March 5, 2013 among CarFin Finance International Limited, Credit Agricole Corporate And Investment Bank, the Initial Senior Noteholders listed therein, Deutsche Trustee Company Limited, Deutsche Bank AG, London Branch and Deutsche Bank Luxembourg S.A. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.7
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Subordinated Loan Agreement dated March 5, 2013, among CarFin Finance International Limited, Deutsche Bank AG, London Branch, Deutsche Trustee Company Limited, and Avis Finance Company Ltd as Subordinated Lender (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 11, 2013).*
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10.8
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Framework Agreement dated March 5, 2013 among CarFin Finance International Limited, Credit Agricole Corporate And Investment Bank, Deutsche Trustee Company Limited, Credit Agricole Corporate and Investment Bank, Avis Budget Car Rental, LLC, Avis Finance Company Limited, Avis Budget EMEA Limited, Deutsche Bank AG, London Branch, the Initial Senior Noteholders named therein and certain other entities named therein (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated March 11, 2013).*
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10.9
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Master Definitions Agreement dated March 5, 2013, among CarFin Finance International Limited, Credit Agricole Corporate And Investment Bank, Deutsche Trustee Company Limited, Credit Agricole Corporate and Investment Bank, Avis Budget Car Rental, LLC, Avis Finance Company Limited, Avis Budget EMEA Limited, Deutsche Bank AG, London Branch, the Initial Senior Noteholders named therein and certain other entities named therein (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated March 11, 2013).*
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10.10
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Fleetco Italian Facility Agreement dated March 5, 2013, among CarFin Finance International Limited, Avis Budget Italia S.p.A., Fleet Co. S.A.p.A., Deutsche Trustee Company Limited, Credit Agricole Corporate and Investment Bank, Deutsche Bank AG, London Branch and Avis Finance Company Limited (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.11
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Fleetco Spanish Facility Agreement dated March 5, 2013, among CarFin Finance International Limited, FinCar Fleet B.V., Sucursal en España, Deutsche Trustee Company Limited, Credit Agricole Corporate and Investment Bank and Deutsche Bank AG, London Branch (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.12
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Fleetco German Facility Agreement dated March 5, 2013, among CarFin Finance International Limited, FinCar Fleet B.V., Deutsche Trustee Company Limited, Credit Agricole Corporate and Investment Bank and Deutsche Bank AG, London Branch (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.13
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Master German Fleet Purchase Agreement dated March 5, 2013 among FinCar Fleet B.V., Avis Budget Autovermietung Gmbh & Co. Kg, and Credit Agricole Corporate And Investment Bank (Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.14
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Spanish Master Lease Agreement dated March 5, 2013, among FinCar Fleet B.V., Sucursal en España, Avis Alquile un Coche, S.A. and Credit Agricole Corporate And Investment Bank (Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.15
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Amended and Restated Italian Master Lease Agreement dated March 5, 2013 among Avis Budget Italia S.p.A., Fleet Co. S.A.p.A., Avis Budget Italia S.p.A. and Credit Agricole Corporate And Investment Bank (Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.16
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Spanish Servicing Agreement dated March 5, 2013 among FinCar Fleet B.V., Sucursal en España, Avis Alquile un Coche, S.A. and Credit Agricole Corporate And Investment Bank (Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K dated March 11, 2013).*
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10.17
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Amended and Restated Italian Servicing Agreement dated March 5, 2013 among Avis Budget Italia S.p.A., Fleet Co. S.A.p.A., Avis Budget Italia S.p.A. and Credit Agricole Corporate And Investment Bank (Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K dated March 11, 2013).*
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10.18
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Finco Payment Guarantee dated March 5, 2013, among Avis Finance Company Limited in favor of FinCar Fleet B.V., FinCar Fleet B.V., Sucursal en España, Avis Budget Italia S.p.A. Fleet Co. S.A.p.A. and Credit Agricole Corporate and Investment Bank (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.19
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Avis Europe Payment Guarantee dated March 5, 2013, among Avis Budget EMEA Limited in favor of Deutsche Trustee Company Limited (Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K dated March 11, 2013).
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10.20
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Purchase Agreement, dated as of February 28, 2013, by and among Avis Budget Finance, plc, as issuer, Avis Budget Group, Inc. and certain of its subsidiaries as guarantors, and Citigroup Global Markets Limited, for itself and on behalf of the several initial purchasers (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 5, 2013).
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10.21
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Purchase Agreement, dated as of March 19, 2013, by and among Avis Budget Car Rental, LLC and Avis Budget Finance, Inc. as issuers, Avis Budget Group, Inc. and certain of its subsidiaries as guarantors, and Barclays Capital Inc. for itself and on behalf of the several initial purchasers (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 25, 2013).
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12
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Statement re: Computation of Ratio of Earnings to Fixed Charges.
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31.1
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Certification of Chief Executive Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
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31.2
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Certification of Chief Financial Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
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32
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS
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XBRL Instance Document.
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101.SCH
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XBRL Taxonomy Extension Schema.
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase.
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase.
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101.LAB
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XBRL Taxonomy Extension Label Linkbase.
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase.
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*
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Confidential treatment has been requested for certain portions of this Exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, which portions have been omitted and filed separately with the Securities and Exchange Commission.
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Three Months Ended
March 31, |
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2013
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2012
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Earnings before fixed charges:
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Loss before income taxes
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$
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(57
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)
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$
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(26
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)
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Plus: Fixed charges
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143
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194
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Earnings available to cover fixed charges
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$
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86
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$
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168
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Fixed charges
(a)
:
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Interest, including amortization of deferred financing costs
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$
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119
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$
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171
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Interest portion of rental payments
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24
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23
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Total fixed charges
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$
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143
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$
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194
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Ratio of earnings to fixed charges
(b)
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—
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—
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(a)
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Consists of interest expense on all indebtedness (including amortization of deferred financing costs) and the portion of operating lease rental expense that is representative of the interest factor. Interest expense on all indebtedness is detailed as follows:
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Three Months Ended
March 31, |
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2013
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2012
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Related to debt under vehicle programs
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$
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61
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$
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76
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All other
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58
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95
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$
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119
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$
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171
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(b)
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Earnings were not sufficient to cover fixed charges for the three months ended March 31, 2013 and 2012 by $57 million and $26 million, respectively.
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1
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Interpretation
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1.1
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Unless otherwise defined herein or the context otherwise requires, terms defined in the Master Definitions Agreement have the same meaning in this Deed. Subject to paragraph 1.2 below, the provisions of clause 2 (
Principles of Interpretation and Construction
) of the Master Definitions Agreement shall apply herein as if set out in full herein and as if references therein to a “Relevant Agreement” were to this Deed.
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1.2
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A reference to a “
paragraph
” is a reference to a paragraph of this Deed.
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2
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Amendment relating to accession of the Liquidation Agent
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2.1
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Each of the Central Servicer and the Transaction Agent agrees that clause 11.4(iii) (
Acceding Liquidation Agent
) of the Framework Agreement shall be deleted in its entirety and replaced with the following:
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“(iii)
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such party accedes to each FleetCo German Security Document and German FleetCo Deed of Charge, in each case, accordance with the terms of each such document to the satisfaction of the FleetCo Security Agent and the Transaction Agent.”.
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2.2
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Any references in the Transaction Documents to the Liquidation Agent being or acting as a Spanish FleetCo Secured Creditor or an Italian FleetCo Secured Creditor shall be construed such that the Liquidation Agent is not a Spanish FleetCo Secured Creditor or an Italian FleetCo Secured Creditor (as applicable).
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4.1
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The amendments in paragraph 2 (
Amendments relating to accession of the Liquidation Agent
) have been made in accordance with clause 24.2(ii) of the Framework Agreement.
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4.2
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Save as expressly amended by this Deed, the Framework Agreement and the other Transaction Documents shall otherwise remain unamended and in full force and effect in accordance with the terms thereof.
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4.3
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By their acceptance of the terms of this Deed, the Central Servicer for itself and on behalf of the other Avis Obligors confirms that its obligations under the Transaction Documents to which it is a party will remain in full force and effect.
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4.4
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The FleetCo Security Agent and the Transaction Agent hereby designate this Deed as a FleetCo Transaction Document.
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4.5
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The Transaction Agent hereby designates this Deed as an Issuer Transaction Document.
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SUBLESSEE
:
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Zipcar, Inc.
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SUBLESSOR
:
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Avis Budget Car Rental, LLC
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By:
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/s/ Rochelle Tarlowe
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By:
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/s/ Mark D. Norman
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Ronald L. Nelson
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Ronald L. Nelson
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Chief Executive Officer
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May 7, 2013
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/s/
David B. Wyshner
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David B. Wyshner
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Senior Executive Vice President and
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Chief Financial Officer
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May 7, 2013
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1.
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I have reviewed this quarterly report on Form 10-Q of Avis Budget Group, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ David B. Wyshner
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Senior Executive Vice President and
Chief Financial Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Avis Budget Group, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Ronald L. Nelson
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Chief Executive Officer
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