Avis 2006 Annual Report Download - page 80

Table of Contents
Assets acquired and liabilities assumed in business combinations were recorded on the Company’s Consolidated Balance Sheets as of the
respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by the
Company have been included in the Company’s Consolidated Statements of Operations since their respective dates of acquisition. The
excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to
goodwill. In certain circumstances, the allocations of the excess purchase price are based upon preliminary estimates and assumptions.
Accordingly, the allocations may be subject to revision when the Company receives final information, including appraisals and other
analyses. Any revisions to the fair values, will be recorded by the Company as further adjustments to the purchase price allocations.
During 2006, the Company acquired 19 vehicle rental licensees for $20 million in cash, resulting in trademark intangible assets of $17
million. During 2005, the Company acquired 23 vehicle rental licensees for $206 million in cash, resulting in trademark intangible assets
of $88 million and goodwill of $6 million, none of which is expected to be deductible for tax purposes. During 2004, the Company
acquired 29 vehicle rental licensees for $60 million in cash, resulting in goodwill of $33 million, all of which is expected to be deductible
for tax purposes, and trademark intangible assets of $13 million. These acquisitions, which relate primarily to the Company’s International
Car Rental segment, were not significant individually or in the aggregate to the Company’s results of operations, financial position or cash
flows.
Intangible assets consisted of:
(c)
Represents the shares that were issuable under the forward purchase contract component of the Company’s Upper DECS securities
prior to the settlement of such securities on August 17, 2004, at which time the Company issued 3.8 million shares of Avis Budget
common stock. The impact of this share issuance is included in basic EPS from the settlement date forward (1.4 million shares in
2004, due to a partial year impact). However, diluted EPS does not reflect any shares that were issuable prior to August 17, 2004, as
the Upper DECS were anti-dilutive during such periods (since the appreciation price was greater than the average price of Avis
Budget common stock).
5.
Acquisitions
6. Intangible Assets
As of December 31, 2006
As of December 31, 2005
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortized Intangible
Assets
Franchise agreements
(a)
$
75
$
16
$
59
$
76
$
14
$
62
Customer lists
(b)
19
6
13
20
6
14
Other
(c)
2
1
1
2
1
1
$
96
$
23
$
73
$
98
$
21
$
77
Unamortized Intangible
Assets
Goodwill
$
2,193
$
2,188
Trademarks
(d)
$
666
$
654
(a)
Primarily amortized over a period ranging from 2 to 40 years.
(b)
Primarily amortized over 20 years.
(c)
Primarily amortized over a period ranging from 6 to 20 years.
F
-
23
(d)
Comprised of various tradenames (including the Avis and Budget tradenames) that the Company has acquired and which distinguish
the Company’s consumer services. These tradenames are expected to generate future cash flows for an indefinite period of time.