Avis 2006 Annual Report Download - page 66

Table of Contents
Avis Budget Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except per share amounts)
Avis Budget Group, Inc. (formerly Cendant Corporation) provides car and truck rentals and ancillary services to businesses and consumers
in the United States and internationally. The accompanying Consolidated Financial Statements include the accounts and transactions of
Avis Budget Group, Inc. and its subsidiaries (“Avis Budget”), as well as entities in which Avis Budget directly or indirectly has a
controlling financial interest (collectively, the “Company”).
The Company operates in the following business segments:
The Company adopted the above segment reporting structure as a result of a reevaluation performed subsequent to the completion of the
spin-offs of Realogy Corporation (“Realogy”) and Wyndham Worldwide Corporation (“Wyndham”) and the sale of Travelport, Inc.
(“Travelport”), in third quarter 2006, each of which is discussed below. Also, following the spin-offs of Realogy and Wyndham and the
sale of Travelport, the Company’s stockholders approved a change in the Company’s name from Cendant Corporation to Avis Budget,
Group Inc.
In presenting the Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and
related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ
from those estimates. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. During
fourth quarter 2006, the Company recorded a reclassification related to the previously disclosed dividend of Realogy and Wyndham, in
connection with the restatement of the Travelport impairment charge, discussed in Note 22—Selected Quarterly Financial Data. This
reclassification increased retained earnings by $300 million, with a corresponding decrease to additional paid in capital and had no impact
on total stockholders’ equity.
Selling, general and administrative expenses on the accompanying Consolidated Statements of Operations include unallocated corporate
expenses related to the Company’s discontinued operations. Accordingly, the expenses recorded by the Company in the Consolidated
Statements of Operations may not be indicative of the actual expenses the Company will incur as a separate company.
Vehicle Programs. The Company presents separately the financial data of its vehicle programs. These programs are distinct from the
Company's other activities since the assets are generally funded through the issuance of debt that is collateralized by such assets. Assets
under vehicle programs are funded through borrowings under asset-backed funding or other similar arrangements. The income generated
by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the
generation or acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of the
Company's vehicle programs. The Company believes it is appropriate to segregate the financial data of its vehicle programs because,
ultimately, the source of repayment of such debt is the realization of such assets.
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1.
Basis of Presentation
•
Domestic Car Rental
—
provides car rentals and ancillary products and services in the United States.
•
International Car Rental
—provides car rentals and ancillary products and services primarily in Canada, Argentina, Australia,
New Zealand, Puerto Rico and the U.S. Virgin Islands.
•
Truck Rental
—
provides truck rentals and related services to consumers and light commercial users in the United States.