Avis 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Avis annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 217

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217

AVIS BUDGET GROUP, INC.
FORM 10-K
(Annual Report)
Filed 02/29/08 for the Period Ending 12/31/07
Telephone 973-496-2579
CIK 0000723612
Symbol CAR
SIC Code 7510 - Automotive Rental And Leasing, Without Drivers
Industry Rental & Leasing
Sector Services
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    AVIS BUDGET GROUP, INC. FORM 10-K (Annual Report) Filed 02/29/08 for the Period Ending 12/31/07 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 973-496-2579 0000723612 CAR 7510 - Automotive Rental And Leasing, Without Drivers Rental & Leasing Services 12/31 http://www.edgar-online.com...

  • Page 2
    ... fiscal year ended December 31, 2007 OR 3 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NO. 1-10308 AVIS BUDGET GROUP, INC. (Exact name of Registrant as specified in its charter) DELAWARE (State or other...

  • Page 3
    ..., Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in...

  • Page 4
    ...costs associated with our fleet based on our number of "risk" vehicles, including as a result of changes in the prices at which we dispose of risk vehicles in the used car market; a downturn in airline passenger traffic in the United States or in the other international locations in which we operate...

  • Page 5
    ... liabilities, including contingent liabilities and guarantees, commercial arrangements, the performance of each of the separated companies' obligations under these agreements, and the former real estate business' right to control the process for resolving disputes related to contingent liabilities...

  • Page 6
    ...-use vehicle rental operator in each of North America, Australia, New Zealand and certain other regions we serve, based on published airport statistics. We maintain the leading share of airport car rental revenue and operate one of the leading consumer truck rental businesses in the United States...

  • Page 7
    ...our commercial contracts. Avis and Budget maintained their marketing alliances with USAA and AARP, which are long-time Avis marketing partners, and Budget grew its awardwinning small business program. We opened approximately 195 new off-airport locations in 2007, and off-airport revenues represented...

  • Page 8
    ... our pricing and fleet planning, and we continue to analyze and streamline our operations to gain efficiencies. And, most importantly, our more than 30,000 employees continue to provide reliable, high-quality vehicle rental services that foster customer satisfaction and customer loyalty. *** 3

  • Page 9
    ...the New York Stock Exchange under the symbol "CAR." Avis Budget Group's operations consist of two of the most recognized brands in the global vehicle rental industry through Avis Budget Car Rental, LLC, the parent of Avis Rent A Car System, LLC, Budget Rent A Car System, Inc. and Budget Truck Rental...

  • Page 10
    ... Avis brand provides high-quality car rental services at price points generally above non-branded and value-branded national car rental companies. We offer Avis customers a variety of premium services, including: • • Avis Preferred, a counter bypass program, which is available at major airport...

  • Page 11
    ... Avis Europe and is comprised of approximately 700 additional company-operated and sub-licensee locations. We own and operate approximately 800 Budget car rental locations in the United States, Canada, Puerto Rico, Australia and New Zealand. In 2007, our Budget car rental operations generated total...

  • Page 12
    ... value pricing to drive customers to our Budget website, our call centers and other distribution channels. Budget also offers proprietary marketing programs such as Fastbreak, an expedited rental service for frequent renters. Our international Avis and Budget operations maintain close relationships...

  • Page 13
    ...websites, avis.com and budget.com, as well as third party websites. In 2007, the number of Avis and Budget vehicle rental customers who obtained rate, location and fleet information and then reserved their rentals directly on these websites increased. Direct bookings via our websites incur less cost...

  • Page 14
    ... inquiries each day, providing our customers with accurate and timely information about our locations, rental rates and vehicle availability, as well as the ability to place or modify reservations. Additionally, the Wizard System is linked to all major travel distribution networks worldwide and...

  • Page 15
    ... our sales force to analyze key account information of our corporate customers including historical and current rental activity, revenue and booking sources, top renting locations, rate usage categories and customer satisfaction data. We use this information, which is updated weekly and captured...

  • Page 16
    ... a location in a city other than the one in which it was rented, although, consistent with industry practices, a drop-off charge or special intercity rate may be imposed. We facilitate one-way car rentals between corporate-owned and franchised locations in the United States that enable us to operate...

  • Page 17
    ...including helpfulness and courtesy; and (iii) location image. In addition, we utilize a toll-free "800" number and a dedicated customer service e-mail address to allow customers of both Avis and Budget to report problems directly to our customer relations department. Location associates and managers...

  • Page 18
    ... business to potential customers. Budget truck rental customers can make reservations through the Budget truck rental reservation center toll-free at 1-800-GO-BUDGET, through our Budget truck rental website at budgettruck.com or by calling a location directly. In addition, we have established online...

  • Page 19
    ... our busiest quarter. Generally, December is also a strong month due to increased retail sales activity and package deliveries. Ancillary products and insurance coverages We supplement our daily truck rental revenue by offering customers a range of ancillary optional products. We rent automobile...

  • Page 20
    .... To date, 24 states have enacted legislation which requires disclosure to each customer at the time of rental that damage to the rented vehicle may be covered by the customer's personal automobile insurance and that loss damage waivers may not be necessary. In addition, New York permits the sale of...

  • Page 21
    ... into the United States. If this flow of information were to become illegal, or subject to onerous restrictions, our ability to serve our customers could be seriously impaired for an extended period of time. In addition, our failure to maintain the security of the data we hold, whether as...

  • Page 22
    ...results of operations, as we may lose rental volume. The Internet has increased pricing transparency among vehicle rental companies by enabling cost-conscious customers to more easily obtain and compare the rates available from various vehicle rental companies for any given rental. This transparency...

  • Page 23
    ...roughly one-year-old used cars. A decline in the prices at which we sell risk vehicles could have an adverse impact on our fleet holding costs and profitability. Our car rental business is dependent on airline passenger traffic, and disruptions in travel patterns could harm our business. In 2007, we...

  • Page 24
    ... products and services offered to our on- and off-airport customers, we plan to expand our presence in the domestic off-airport segment of the car rental market and expand our insurance replacement and local sales at new and existing off-airport locations through a dedicated local sales team. Our...

  • Page 25
    ...to liability and insurance. Our businesses expose us to claims for personal injury, death and property damage related to the use of our vehicles and for workers' compensation claims and other employment-related claims by our employees. We may become exposed to uninsured liability at levels in excess...

  • Page 26
    ... or cash flows. Changes in the U.S. and foreign legal and regulatory environment that affect our operations, including laws and regulations relating to the insurance products we sell, consumer privacy, data security, automobile-related liability and insurance rates, could disrupt our business...

  • Page 27
    ...market conditions or further deterioration in the credit ratings of our principal car manufacturers, including Ford and General Motors, or (iii) any other reasons; the occurrence of certain events, including but not limited to, an insolvency of, or a payment default by, a financial guarantee insurer...

  • Page 28
    ... cash flow from operations to pay principal and interest on our debt, which would reduce the funds available to us for other purposes; making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our...

  • Page 29
    ... to generate revenue. Risks related to the Cendant Separation We have limited operating history as a stand-alone vehicle rental company. The financial information included in this annual report on Form 10-K does not reflect the financial condition, results of operations or cash flows we would have...

  • Page 30
    ... or dispositions; changes in earnings estimates by securities analysts or our ability to meet those estimates; the operating and stock price performance of other comparable companies; overall market fluctuations; and general economic conditions. Stock markets in general have experienced volatility...

  • Page 31
    ... of junior preferred stock. The preferred stock purchase rights are triggered by the earlier to occur of (i) ten business days (or a later date determined by our Board of Directors before the rights are separated from our common stock) after the public announcement that a person or group has become...

  • Page 32
    ..., California was closed in 2005 and is currently vacant and is subject to a lease expiring in 2011. In addition, there are approximately 15 other leased office locations in the United States for administrative activities, regional sales and operations activities. We lease or have vehicle rental...

  • Page 33
    ....) and Isabel S. Cohen et al. v. Avis Budget Group, Inc. et al, No. CV07-08164 (C.D. Cal.), against Avis Budget, 12 other rental car companies, the CTTC and California's Secretary of Business, Transportation and Housing. These suits challenge the tourism commission assessment fees imposed on certain...

  • Page 34
    ...was a consolidated class action brought on behalf of all persons who acquired securities of Cendant and CUC, except PRIDES securities, between May 31, 1995 and August 28, 1998. Named as defendants are the Company; 28 current and former officers and directors of Cendant, CUC and HFS Incorporated; and...

  • Page 35
    ... and was filed against Cendant and its senior management. The Stock Purchase Agreement provided for the sale of Credentials Services International to Cendant for a set price of $125 million plus an additional amount which was contingent on Credentials' future performance. The closing occurred just...

  • Page 36
    ... PURCHASES OF EQUITY SECURITIES Market Price of Common Stock Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "CAR". At January 31, 2008, the number of stockholders of record was approximately 3,528. The following table sets forth the quarterly high and low sales...

  • Page 37
    ... prices in excess of our closing stock price of $13.00 on December 31, 2007. Number of Securities Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, Rights and Restricted Stock Units (d) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Plan...

  • Page 38
    ... at the time of termination, for one year (two years, in the case of retirement, death or disability). 1997 Employee Stock Plan . This plan provides for the grant of awards of stock options, stock appreciation rights (payable in cash or shares or a combination thereof) and restricted stock to our...

  • Page 39
    ... by (ii) the share price at the beginning of the periods presented) with (b) (i) the Standard & Poor's MidCap 400 Index and (ii) the Standard & Poor's Diversified Commercial and Professional Services Index. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Avis Budget Group, Inc., the S&P MidCap...

  • Page 40
    ... effect of accounting changes: Basic Diluted Net income (loss): Basic Diluted Cash dividends declared (a) Financial Position Total assets Assets of discontinued operations Assets under vehicle programs Long-term debt, including current portion Debt under vehicle programs (b) Stockholders' equity...

  • Page 41
    ... in the former business units of CUC International, Inc. The amount in 2004 includes a $55 million credit recorded in connection with previously established liabilities for severance and other termination benefits for which we no longer believe we are liable. In 2007, these costs were immaterial. In...

  • Page 42
    ... operate in the following business segments 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 Argentina, Australia, Canada, New Zealand, Puerto Rico and...

  • Page 43
    ... local markets, including insurance replacement rentals; Legislative changes in certain states that enable us to recover a greater percentage of airport concession and vehicle licensing fees, which favorably impacted our year-over-year results throughout 2007; and Decreased demand for truck rentals...

  • Page 44
    ... (i) rental days, which represents the total number of days (or portion thereof) a vehicle was rented, and (ii) T&M revenue per rental day, which represents the average daily revenue we earned from rental and mileage fees charged to our customers. Our car rental operating statistics (rental days and...

  • Page 45
    ...214 111 45 (393) (23) 105 549 $(677) % Change 24% 18 (62) * Domestic Car Rental International Car Rental Truck Rental Corporate and Other (b) Total Company Less: Non-vehicle related depreciation and amortization Interest expense related to corporate debt, net (c) Goodwill impairment (d) Loss before...

  • Page 46
    ... of additional expenses associated with increased car rental volume and fleet size, primarily related to credit card fees and agency operator commissions and (ii) $29 million of incremental expenses, primarily representing inflationary increases in salaries and wages and off-airport rental expense...

  • Page 47
    ... of incremental operating expenses including (i) $22 million in inflationary increases in salaries and wages, rents and other costs, (ii) $11 million in additional expenses associated with increased car rental volume, primarily related to license and registration fees and other vehicle costs, and...

  • Page 48
    ...charges relate primarily to the early extinguishment of debt, stock-based compensation, severance and retention and legal, accounting, and other professional fees. The year-over-year increase in total expenses also reflects (i) increases in operating costs associated with increased car rental volume...

  • Page 49
    ... EBITDA 2005 $ 225 111 103 (213) 226 116 172 $ (62) % Change (5)% (56) Domestic Car Rental International Car Rental Truck Rental Corporate and Other (a) Total Company Less: Non-vehicle related depreciation and amortization Interest expense related to corporate debt, net (b) Loss before income taxes...

  • Page 50
    ...our domestic car rental operations also reflects (i) $87 million of additional expenses primarily associated with increased car rental volume and fleet size, including vehicle maintenance and damage costs, (ii) $43 million of incremental expenses primarily representing inflationary increases in rent...

  • Page 51
    ... fleet and reduced rental volumes, (ii) a $13 million decrease in our public liability and property damage costs as a result of more favorable claims experience and a reduction in rental days, (iii) a decrease of $12 million in credit card and other commission expense partially associated with...

  • Page 52
    ... in Avis Budget Rental Car Funding related to a change in the value of derivatives, including derivatives which qualify for hedge-accounting treatment, used to manage the interest rate risk associated with the debt under vehicle program for our wholly-owned subsidiary, AESOP Leasing LP. Liabilities...

  • Page 53
    ...billion of cash to purchase rental vehicles, which will primarily be funded with proceeds received on sale of rental vehicles to manufacturers under our repurchase or guaranteed depreciation agreements or in the used car market and our borrowings under our vehicle-backed debt programs. We anticipate...

  • Page 54
    ... floating rate notes during the first six months of 2007 to support the acquisition of rental vehicles within the Company's Domestic Car Rental operations. The change in the balance at December 31, 2007 primarily reflects incremental borrowings during the year ended December 31, 2007 to support the...

  • Page 55
    ...entered into by Avis Budget Car Rental in April 2006, has a five year term and currently bears interest of LIBOR plus 125 basis points. The floating rate term loan and our revolving credit facility are secured by pledges of all of the capital stock of all of the Company's direct or indirect domestic...

  • Page 56
    ...unfavorable conditions in the vehicle rental industry or the asset backed financing market. Additionally, our liquidity as it relates to vehicle programs could be adversely affected by (i) the deterioration in the performance of the underlying assets of such programs, (ii) increased costs associated...

  • Page 57
    ... the net book value on the date of sale or return to the manufacturers is intended to equal the contractual guaranteed residual values. For vehicles acquired outside of manufacturer repurchase and guaranteed depreciation programs, we depreciate based on the vehicles' estimated residual market values...

  • Page 58
    ... insurance, public liability, property damage and personal accident insurance claims for which we are self-insured. We estimate the required liability of such claims on an undiscounted basis utilizing an actuarial method that is based upon various assumptions which include, but are not limited...

  • Page 59
    ... MARKET RISK We use various financial instruments, particularly swap contracts, futures and options contracts, to manage and reduce the interest rate risk related specifically to our debt. Foreign currency forwards are also used to manage and reduce the foreign currency exchange rate risk associated...

  • Page 60
    ... is included below. Changes in Internal Control Over Financial Reporting. There have not been any changes 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) during the Company's fiscal fourth quarter that have...

  • Page 61
    ...over financial reporting of Avis Budget Group, Inc. and subsidiaries (the "Company") as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible...

  • Page 62
    ... in the Company's Annual Proxy Statement under the section titled "Security Ownership of Certain Beneficial Owners and Management" is incorporated herein by reference in response to this item. Information concerning our equity compensation plans is included in Part II of this report under the...

  • Page 63
    ...Accounting Officer Date: February 28, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ RONALD L. NELSON (Ronald...

  • Page 64
    Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005 Consolidated Balance Sheets as of December 31, 2007 and 2006 Consolidated Statements of...

  • Page 65
    ... Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated...

  • Page 66
    ... STATEMENTS OF OPERATIONS (In millions, except per share data) Year Ended December 31, 2007 2006 2005 Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation...

  • Page 67
    ...in Avis Budget Rental Car Funding (AESOP) LLC-related party Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable and other current liabilities Current portion of long-term debt Total current liabilities Long-term debt Other non-current liabilities Total liabilities...

  • Page 68
    ... Income taxes Accounts payable and other current liabilities Other, net Net cash provided by (used in) operating activities exclusive of vehicle programs Vehicle programs: Vehicle depreciation Net cash provided by operating activities Investing activities Property and equipment additions Net assets...

  • Page 69
    ...of vehicle programs Vehicle programs: Proceeds from borrowings Principal payments on borrowings Net change in short-term borrowings Other, net Net cash provided by (used in) financing activities Effect of changes in exchange rates on cash and cash equivalents Cash provided by discontinued operations...

  • Page 70
    ...gains on available-for- sale securities, net of tax of $(10) Minimum pension liability adjustment, net of tax of $(12) Total comprehensive income Net activity related to restricted stock units Exercise of stock options Tax benefit from exercise of stock options Repurchases of common stock Payment of...

  • Page 71
    ... liability adjustment, net of tax of $(5) Total comprehensive loss Adoption of FIN 48 (see Note 2) Net activity related to restricted stock units Exercise of stock options Tax benefit from exercise of stock options Activity related to employee stock purchase plan Post-separation dividend adjustment...

  • Page 72
    ... share amounts) 1. Basis of Presentation Avis Budget Group, Inc. 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...

  • Page 73
    ...'s former Travel Distribution Services segment, which is now presented as a discontinued operation. Avis Budget Group, Inc. - encompasses the Company's vehicle rental operations. On July 31, 2006, the Company completed the spin-offs of Realogy and Wyndham in tax-free distributions of one share each...

  • Page 74
    ... the reverse stock split, unless otherwise noted. Changes in Accounting Estimate . During fourth quarter 2007, the Company revised the assumed service lives of its truck fleet, for model years 2004 and later, to better reflect the projected hold periods of these vehicles. The Company believes that...

  • Page 75
    ... RECOGNITION The Company derives revenue through the operation and franchising of the Avis and Budget rental systems, providing vehicle rentals and other services to business and leisure travelers and others. Other revenue includes rentals of GPS navigational units, sales of loss damage waivers and...

  • Page 76
    ... the estimated benefit period of the related assets, which may not exceed 20 years, or the lease term, if shorter. Useful lives are as follows: Buildings Furniture, fixtures & equipment Capitalized internal use software Buses and support vehicles 30 years 3 to 7 years 3 to 7 years 4 to 15 years The...

  • Page 77
    ... price and date, or guarantee the depreciation rate for a specified period of time, subject to certain eligibility criteria (such as car condition and mileage requirements). The Company depreciates vehicles such that the net book value on the date of return to the manufacturers is intended to equal...

  • Page 78
    ... model years 2004 and later, to better reflect the projected hold periods of these vehicles (see Note 1-Basis of Presentation). During the fourth quarter 2007, the Company revised its estimates for recording depreciation expense related to certain vehicles covered by guaranteed repurchase agreements...

  • Page 79
    ... during 2007. INVESTMENTS The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determination at each balance sheet date. The Company's non-marketable preferred stock investments are accounted for at cost...

  • Page 80
    ..., respectively. Such liabilities relate to additional liability insurance, personal effects protection insurance, public liability, property damage and personal accident insurance claims for which the Company is self-insured. These obligations represent an estimate for both reported claims not yet...

  • Page 81
    ... 31, 2007, the unrecognized tax benefits in long-term income taxes payable were $440 million. The Company does not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations within twelve months. Including...

  • Page 82
    ...and liabilities as if they had occurred on the acquisition date and revise prior period financial statements in subsequent filings for changes. In addition, SFAS No. 141 (R) requires that all acquisition related costs be expensed as incurred, rather than capitalized as part of the purchase price and...

  • Page 83
    ... its residual shares of Affinion preferred stock and warrants to Realogy and Wyndham pursuant to the Separation Agreement. Wright Express. On February 22, 2005, the Company completed the initial public offering of Wright Express for $964 million of cash. Additionally, the Company entered into...

  • Page 84
    ... Express in connection with the tax receivable agreement discussed above. Represents payments in connection with a guarantee obligation made to the Company's former Marketing Services division and a tax charge primarily related to state taxes prior to the date of disposition. Results are through the...

  • Page 85
    ... the date of disposition. Gain on disposal includes payments received from Wright Express in connection with the tax receivable agreement discussed above. The provision for income taxes reflects a $24 million charge associated with separating the appraisal business from the Company in connection...

  • Page 86
    ... accounting changes Net income (loss) (a) $ $ Because the Company incurred a loss from continuing operations in 2007, 2006 and 2005, outstanding stock options, restricted stock units and stock warrants are anti-dilutive. Accordingly, basic and diluted weighted average shares outstanding are equal...

  • Page 87
    ...of the Truck Rental headquarters, consolidation of Truck Rental operations and the closure of other facilities within the Company's Domestic Car Rental operations. Prior to December 31, 2006, the Company formally communicated the termination of employment to approximately 180 employees, representing...

  • Page 88
    ... operation (excluding independent commissioned dealer locations for the Budget truck rental business and Avis and Budget locations operated by or through Avis Europe Holdings, Limited, an independent third party) is as follows: 2007 Company-owned Avis brand Budget brand Franchised Avis brand Budget...

  • Page 89
    ...'s consumer services. These tradenames are expected to generate future cash flows for an indefinite period of time. The changes in the carrying amount of goodwill during 2007 are as follows: Adjustments Balance at January 1, Domestic Car Rental International Car Rental Truck Rental Total Company...

  • Page 90
    ... and $101 million, respectively, of interest expense related to the fixed and floating rate borrowings of the Company's Avis Budget Car Rental, LLC ("Avis Budget Car Rental") subsidiary. Such interest is recorded within interest expense related to corporate debt, net on the accompanying Consolidated...

  • Page 91
    ... the following: 2007 Current Federal State Foreign Current income tax provision (benefit) Deferred Federal State Foreign Deferred income tax benefit Benefit from income taxes Pretax income (loss) for domestic and foreign operations consists of the following: 2007 $ (1,064) 72 $ (992) F-28 Year Ended...

  • Page 92
    ... allowance will be reduced when and if the Company determines that the related deferred income tax assets are more likely than not to be realized. Deferred income tax assets and liabilities related to the vehicle programs are comprised of the following: As of December 31, 2007 2006 Deferred income...

  • Page 93
    ... years' examination issues Goodwill impairment Nondeductible expenses Other The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the year: Year Ended December 31, 2007 Balance at January 1, 2007 Additions based on tax positions related to the current year...

  • Page 94
    ... entitled to indemnification for non-Avis Budget Car Rental tax contingencies. The company believes that its accruals for tax liabilities, including the indemnified liabilities outlined in the Tax Sharing Agreement and the Separation Agreement, are adequate for all remaining open years, based on its...

  • Page 95
    ... 47.9% The Company acquired its investment in Carey Holdings, Inc. ("Carey") on October 23, 2007 for approximately $60 million in cash. Carey's subsidiary, Carey International, Inc., is a worldwide provider of chauffeured ground transportation services, operating in approximately 550 cities and 60...

  • Page 96
    ...88 $ 998 $ 452 Long-term income taxes payable Public liability and property damage insurance liability Acquisition related liabilities Accrued interest - tax contingencies Tax reserve Pension liability Other 16. Long-term Debt and Borrowing Arrangements Avis Budget Car Rental corporate debt: As of...

  • Page 97
    .... AVIS BUDGET CAR RENTAL CORPORATE DEBT Floating Rate Term Loan The Company's floating rate term loan was entered into in April 2006, has a six year term and bears interest at three month LIBOR plus 125 basis points, for a rate of 6.0% at December 31, 2007. Quarterly installment payments, of...

  • Page 98
    ... into by Avis Budget Car Rental in April 2006, has a five year term and currently bears interest at one month LIBOR plus 125 basis points. The floating rate term loan and the revolving credit facility are secured by pledges of all of the capital stock of all of the Company's direct or indirect...

  • Page 99
    ...LLC . Avis Budget Rental Car Funding, an unconsolidated bankruptcy remote qualifying special purpose limited liability company, issues private placement notes that at issuance are typically "AAA" rated generally with principal and interest payments guaranteed by independent insurance companies. Avis...

  • Page 100
    ... Company's vehicle programs (including related party debt due to Avis Budget Rental Car Funding) consisted of: Total Capacity (a) Outstanding Borrowings $ 4,646 246 204 500 5,596 Available Capacity $ 1,975 154 - 727 2,856 Debt due to Avis Budget Rental Car Funding Budget Truck financing: Budget...

  • Page 101
    ... agreements. The Company's featured suppliers for the Avis and Budget brands are General Motors Corporation and Ford Motor Company, respectively. The purchase of such vehicles is financed through the issuance of debt under vehicle programs in addition to cash received upon the sale of vehicles...

  • Page 102
    ...'s vehicle rental operations, arising or accrued on or prior to the separation of Travelport from the Company ("Assumed Assets"). Additionally, if Realogy or Wyndham were to default on its payment of costs or expenses to the Company related to any Assumed Liability, the Company would be responsible...

  • Page 103
    ... other liabilities related to the Company's litigation that are not related to its vehicle rental operations. Such litigation assumed by Realogy and Wyndham includes litigation which was retained by the Company in connection with the sale of its former Marketing Services division. On April 10, 2007...

  • Page 104
    ... potential amount of future payments that the Company may be required to make under the guarantees relating to the various real estate and product operating leases is estimated to be approximately $367 million. At December 31, 2007, the liability recorded by the Company in connection with these...

  • Page 105
    ... other comprehensive income which primarily related to the derivatives used to manage the interest-rate risk associated with the Company's vehicle-backed debt and the Company's floating rate debt (see Note 22-Financial Instruments for more information). Such amount in 2007 includes $131 million of...

  • Page 106
    ...significantly reducing the number of stock options granted and instead, issuing RSUs as a form of compensation. Additionally, in 2006, the Company issued stock-settled stock appreciation rights to certain executives. As of December 31, 2007 the Company's active stock plan consists of the 2007 Equity...

  • Page 107
    ... option-pricing model with the following weighted average assumptions: dividend yield-1.7%; expected volatility-30.0%; risk-free interest rate-3.8%; and expected holding period-5.5 years. Restricted Stock Units RSUs currently granted by the Company entitle the employee to receive one share of Avis...

  • Page 108
    ... using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield-0%; expected volatility-32.9%; risk-free interest rate-4.9%; and expected holding period-4.9 years. Employee Stock Purchase Plan The Company is authorized to sell shares of its Avis Budget...

  • Page 109
    ...components of net periodic pension cost and the assumptions related to the cost consisted of the following in millions of dollars: 2007 Service cost Interest cost Expected return on plan assets Amortization of unrecognized amounts Net periodic benefit cost F-46 $ For the Year Ended December 31, 2006...

  • Page 110
    ..., were used to determine pension obligations and pension costs for the principal plans in which the Company's employees participated: For the Year Ended December 31, 2006 5.50% 5.75% 8.25% 2007 Discount rate: Net periodic benefit cost Benefit obligation Long-term rate of return on plan assets 5.75...

  • Page 111
    ... with current market conditions and broad asset mix considerations. The expected rate of return is a long term assumption and generally does not change annually. As of December 31, 2007, substantially all of the Company's defined benefit pension plans had a projected benefit obligation in excess of...

  • Page 112
    ... other than (i) risks related to the Company's repurchase and guaranteed depreciation agreements with General Motors Corporation and Ford Motor Company with respect to program cars that were sold and returned to the car manufacturers but for which the Company has not yet received payment (see Note...

  • Page 113
    ...quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, available-for-sale securities, accounts receivable, program cash and accounts payable and accrued liabilities...

  • Page 114
    ... related depreciation and amortization, any goodwill impairment charge, non-vehicle interest and income taxes. The Company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies. Year Ended December 31, 2007 Corporate International Domestic Car Rental...

  • Page 115
    ...before income taxes The geographic segment information provided below is classified based on the geographic location of the Company's subsidiaries. United States 2007 Net revenues Segment assets exclusive of assets under vehicle programs Assets under vehicle programs Net property and equipment 2006...

  • Page 116
    ... financial information is being presented in relation to the Company's Guarantee of the Notes issued by Avis Budget Car Rental. See Note 16-Long-term Debt and Borrowing Arrangements for additional description of these Notes. The Notes have separate investors than the equity investors of the Company...

  • Page 117
    ... Condensed Statements of Operations For the Year Ended December 31, 2007 Subsidiary Parent Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation and...

  • Page 118
    ... of Contents For the Year Ended December 31, 2006 Subsidiary Parent Revenues Vehicle rental Other Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation and amortization Interest...

  • Page 119
    Table of Contents For the Year Ended December 31, 2005 Subsidiary Parent Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation and amortization Interest ...

  • Page 120
    ...in Avis Budget Rental Car Funding (AESOP) LLC-related party Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable and other current liabilities Current portion of long-term debt Total current liabilities Long-term debt Other non-current liabilities Total liabilities...

  • Page 121
    ...in Avis Budget Rental Car Funding (AESOP) LLC-related party Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable and other current liabilities Current portion of long-term debt Total current liabilities Long-term debt Other non-current liabilities Total liabilities...

  • Page 122
    ...) financing activities exclusive of vehicle programs Vehicle programs: Proceeds from borrowings Principal payments on borrowings Net change in short-term borrowings Other, net Net cash provided by (used in) financing activities Effect of changes in exchange rates on cash and cash $ 18 $ Issuers (13...

  • Page 123
    equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period 2 35 $ 37 $ 24 75 99 $ F-59 (17) 29 12 $ 6 33 33 66 $ $ 6 42 172 214

  • Page 124
    ... programs Vehicle programs: Proceeds from borrowings Principal payments on borrowings Net change in short-term borrowings Other, net Net cash provided by (used in) financing activities Effect of changes in exchange rates on cash and cash equivalents Cash provided by (used in) discontinued operations...

  • Page 125
    and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period (603) 638 $ 35 $ 74 1 75 $ F-60 16 13 29 $ (13) 46 33 $ 152 (152) $ (374) 546 172

  • Page 126
    ... additions Net assets acquired (net of cash acquired) and acquisition-related payments Proceeds received on asset sales Proceeds from sales of available-for-sale securities Other, net Net cash provided by (used in) investing activities exclusive of vehicle programs Vehicle programs: Decrease...

  • Page 127
    Cash provided by (used in) discontinued operations Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period 2,636 603 35 $ 638 $ 1 1 $ F-61 5 8 13 $ 357 (104) 150 46 $ (122) (30) (152) $ 2,993 383 163 546

  • Page 128
    ...which may fluctuate, based on quarterly income levels, market prices and share repurchases. Therefore, the sum of the quarters' per share information may not equal the total year amounts presented on the Consolidated Statements of Operations. First $1,365 12 1 13 2007 Second Third $ 1,516 $ 1,719 23...

  • Page 129
    ... of market conditions, share price, legal requirements and other factors. On February 21, 2007, the Company completed a new asset-backed conduit facility of $800 million. The facility, which issues variable funding notes by the Company's Avis Budget Rental Car Funding (AESOP), LLC subsidiary...

  • Page 130
    Table of Contents Schedule II - Valuation and Qualifying Accounts (in millions) Balance at Beginning Description Allowance for Doubtful Accounts: Year Ended December 31, 2007 2006 2005 of Period Expensed Other - Translation Adjustment Deductions Balance at End of Period $ $ $ 20 20 19 7 16 17 G-1...

  • Page 131
    ... Budget Car Rental, LLC, Avis Budget Finance, Inc., the guarantors from time to time parties thereto and the Bank of Nova Scotia Trust Company of New York, as trustee (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated February 9, 2007). Employment Agreement...

  • Page 132
    ...to the Company's Annual Report on Form 10-K for the year ended December 31, 2006 dated March 1, 2007).†Agreement between Avis Budget Group, Inc. and Larry De Shon.†1987 Stock Option Plan, as amended (Incorporated by reference to Exhibit 10.16 to the Company's Form 10-Q for the quarterly period...

  • Page 133
    ...to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 2005 dated March 1, 2006).†Form of Award Agreement-Restricted Stock Units (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated August 4, 2006).†H-3 10.11(d) 10...

  • Page 134
    ... by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 20, 2006). Supplemental Indenture No. 2, dated as of May 9, 2007, among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, and The Bank of New York Trust Company, N.A. (as successor in interest to The Bank...

  • Page 135
    ...) LLC***, AESOP Leasing L.P., AESOP Leasing Corp. II, Avis Rent A Car System, Inc.****, Budget Rent A Car System, Inc., Cendant Car Rental Group, Inc.** and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 10.34 to the Company's Annual Report on Form 10-K for the year ended...

  • Page 136
    ... as of June 3, 2004, among Cendant Rental Car Funding (AESOP) LLC***, as Issuer, and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 10.6 to Avis Group Holdings, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002, dated March 6, 2003) Fourth Amendment to...

  • Page 137
    ... to Exhibit 10.41(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2005, dated March 1, 2006) Third Amendment, dated as of May 9, 2007, among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, and The Bank of New York Trust Company, N.A. (as successor in interest to...

  • Page 138
    ... to Exhibit 10.45(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2005, dated March 1, 2006) Third Amendment, dated as of May 9, 2007, among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, and The Bank of New York Trust Company, N.A. (as successor in interest to...

  • Page 139
    ...to Exhibit 10.25(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2006, dated March 1, 2007) Second Amendment, dated as of May 9, 2007, among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, and The Bank of New York Trust Company, N.A. (as successor in interest to...

  • Page 140
    ...Truck Rental, LLC, as Administrator, and The Bank of New York Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006 dated, August 9, 2006) Master Motor Vehicle Operating Lease Agreement...

  • Page 141
    ... as Budget Truck Funding, LLC), as Issuer, Deutsche Bank Securities, Inc., as Administrative Agent, certain CP Conduit Purchasers, certain Funding Agents, certain APA Banks and The Bank of New York Trust Company, N.A., as Trustee. Asset and Stock Purchase Agreement by and among Budget Group, Inc...

  • Page 142
    ... of Canada, in its capacity as trustee of Bay Street Funding Trust, as limited partners (Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K dated December 20, 2006). Credit Agreement, dated as of April 19, 2006, among Avis Budget Holdings, LLC and Avis Budget Car...

  • Page 143
    ...License Agreement between Avis Rent A Car System, Inc. and Avis Europe plc. Purchaser Group Supplement, dated as of February 21, 2008, among Atlantic Asset Securitization LLC, as commercial paper conduit purchaser, Calyon New York Branch, as APA bank and funding agent, Avis Budget Rental Car Funding...

  • Page 144
    ... payment equal to 200% of your base salary plus your target incentive (bonus) and perquisites to include car usage, financial planning and health coverage (Company-subsidized COBRA) for a period of 24 months (excluding group life insurance and AD&D insurance). For purposes of this agreement 'company...

  • Page 145
    ...applicable law. This severance pay as set forth in this letter is in lieu of and supersedes any other severance benefits otherwise payable to you under any other agreement or severance plan of ABCR or its affiliates. Regards, /s/ Mark J. Servodidio Mark J. Servodidio Executive Vice President - Human...

  • Page 146
    Exhibit 10.40(a) CONFORMED COPY AMENDMENT NO. 1 TO MASTER MOTOR VEHICLE OPERATING LEASE AGREEMENT dated as of February 15, 2008 between CENTRE POINT FUNDING, LLC, as Lessor, BUDGET TRUCK RENTAL, LLC, as Administrator as Lessee and AVIS BUDGET CAR RENTAL, LLC, as Guarantor

  • Page 147
    ... TO MASTER MOTOR VEHICLE OPERATING LEASE AGREEMENT , dated February 15, 2008 (this " Amendment ") is between CENTRE POINT FUNDING, LLC (f/k/a Budget Truck Funding, LLC) (" BTF "), a Delaware limited liability company, as lessor (the " Lessor "), BUDGET TRUCK RENTAL, LLC, a Delaware limited liability...

  • Page 148
    ... whether payable as the purchase price of such BTF Trucks or as fees, expenses, costs, indemnities, insurance recoveries or otherwise;" (c) by adding the following new clause (v): "(v) the rights of the Lessee under any Sublease, as the same may be amended, modified or supplemented from time to time...

  • Page 149
    ... with this Section 7. Such use shall be confined solely to the United States, and the principal place of business or rental office of the Lessee with respect to the BTF Trucks shall be located in the United States. The Administrator shall promptly and duly execute, deliver, file and record all such...

  • Page 150
    rental operations, the Lessee may sublease BTF Trucks to a Permitted Sublessee provided that (i) such Permitted Sublessee uses such BTF Trucks in the regular course of its business and the regular course of such Permitted Sublessee's business is renting vehicles on a daily basis, (ii) the aggregate ...

  • Page 151
    .... THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible each provision of this Amendment shall be interpreted in such...

  • Page 152
    ... THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. Section 3.7. Headings . Section headings used in this Amendment are for convenience...

  • Page 153
    ... the day and year first above written. LESSOR : CENTRE POINT FUNDING, LLC By: /s/: Joe Ferraro Address: 6 Sylvan Way Parsippany, NJ 07054 Attention: Treasurer Telephone: (973) 496-7312 Fax: (973) 496-5852 LESSEE : BUDGET TRUCK RENTAL, LLC By: /s/: David Wyshner Address: 1 Campus Drive Parsippany, NJ...

  • Page 154
    GUARANTOR : AVIS BUDGET CAR RENTAL, LLC By: /s/: Rochelle Tarlowe Address: One Campus Drive Parsippany, NJ 07054 Attention: Treasurer Telephone: (973) 496-7312 Fax: (973) 496-5852

  • Page 155
    ... INDENTURE This AMENDMENT NO. 2 TO THE BASE INDENTURE , dated as of February 15, 2008 (this " Amendment ") is between Centre Point Funding, LLC (f/k/a Budget Truck Funding, LLC), as issuer (" BTF ") and The Bank of New York Trust Company, N.A., in its capacity as trustee (the " Trustee "). RECITALS...

  • Page 156
    ... of the new location or new legal name of BTF. BTF shall make all such filings and deliver to the Trustee copies of all such required filings with the filing information duly noted thereon by the office in which such filings were made within five (5) Business Days after changing its location or its...

  • Page 157
    ... Base Indenture is hereby amended to add the following defined terms in appropriate alphabetical order: " ACRG " means Avis Car Rental Group, LLC, a Delaware limited liability company. " BRACS " means Budget Rent A Car System, Inc., a Delaware corporation. " Permitted Sublessee " means each of ACRG...

  • Page 158
    ...and any notice period that may be required by any other agreement or document in connection with the execution...benefit of the parties hereto and their respective successors and assigns. Section 3.5. Governing Law . THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK...

  • Page 159
    ...be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. CENTRE POINT FUNDING, LLC, as Issuer By: /s/: Joe Ferraro Name: Joe Ferraro Title: Vice President, Truck Operations THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee By: /s/: Marian...

  • Page 160
    ... 15, 2008 (this " Amendment ") is between Centre Point Funding, LLC (f/k/a Budget Truck Funding, LLC) (" BTF "), Deutsche Bank Securities, Inc., (" DBSI "), Riverside Funding LLC (" Riverside Funding "), Deutsche Bank AG, New York Branch (" DBAG "), Sheffield Receivables Corporation (" Sheffield...

  • Page 161
    ... as of such date times (ii) the Required Ford E250 Extended Cargo Van Liquid Enhancement Percentage as of such date plus (g) the product of (i) the 16' Ford LCF Percentage as of such date times (ii) the Required 16' Ford LCF Liquid Enhancement Percentage as of such date plus (h) the product...

  • Page 162
    ...Amount as of such date plus (iii) the Series 2006-1 Available Reserve Account Amount as of such date minus (iv) the Series 2006-1 Excess Truck Amount over (b) the Series 2006-1 Required Enhancement Amount as of such date. (d) The definition of "Series 2006-1 Commitment Termination Date" set forth in...

  • Page 163
    ... of which is the Net Book Value of all Eligible Trucks that are Ford E250 Extended Cargo Van as of such date. " Required 16' Ford LCF Truck Enhancement Percentage " means, as of any date of determination, the sum of (1) the Required 16' Ford LCF Truck Liquid Enhancement Percentage as of such...

  • Page 164
    ...(d) no later than 40 days after the Distribution Date in May of each year, unless such requirement is waived by the Administrative Agent, they shall provide to each Funding Agent a report in form and substance acceptable to the Administrative Agent from a nationally-recognized auditing firm approved...

  • Page 165
    ..., modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Series Supplement, all of which are hereby ratified and affirmed in all respects by each of the parties hereto and shall continue in full force and effect. This Amendment shall...

  • Page 166
    ...the day and year first above written. CENTRE POINT FUNDING, LLC, as Issuer By: /s/: Joe Ferraro Name: Joe Ferraro Title: Vice President, Truck Operations THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee By: /s/: Marian Onischak Name: Marian Onischak Title: Vice President DEUTSCHE BANK SECURITIES...

  • Page 167
    DEUTSCHE BANK SECURITIES, INC., as a Funding Agent By: /s/: Eric Shea Name: Eric Shea Title: Managing Director SHEFFIELD RECEIVABLES CORPORATION, as a CP Conduit Purchaser By: /s/: Fouad S. Onbarge Name: Fouad S. Onbarge Title: Director BARCLAYS BANK PLC, as an APA Bank By: /s/: Jeffrey Goldberg ...

  • Page 168
    ... Copy AMENDING AGREEMENT NO. 4 THIS AGREEMENT made as of the 21 st day of November, 2007, B E T W E E N: AVISCAR INC. , a corporation incorporated under the laws of Canada, (hereinafter called the " Avis General Partner "), - and BUDGETCAR INC. , a corporation existing under the laws of Canada...

  • Page 169
    ... Agreement is hereby deleted and replaced with the following: "(b) The balance of each Limited Partner's Capital Account shall not at any time exceed an amount equal to the sum of $300,000,000 plus the aggregate Principal Amount of Bonds issued and outstanding by such Limited Partner at the time...

  • Page 170
    ... of the rights or obligations hereunder shall be assignable or transferable by any party without the prior written consent of the other party. This Agreement shall be governed and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. -3-

  • Page 171
    ... Tarlowe Title: Vice President and Treasurer Name: BNY TRUST COMPANY OF CANADA , as trustee of STARS TRUST (with liability limited to the assets of the Trust) by its Securitization Agent, BMO NESBITT BURNS INC. by /s/ Terry Ritchie Name: Terry Ritchie Title: Managing Director /s/ Christopher Romano...

  • Page 172
    MONTREAL TRUST COMPANY OF CANADA, as trustee of BAY STREET FUNDING TRUST (with liability limited to the assets of the trust) by its administrator, SCOTIA CAPITAL INC. by /s/ Douglas Noe Name: Douglas Noe Title: Director, Structured Finance Name: Title:

  • Page 173
    The undersigned hereby acknowledges notice of and consents to the foregoing amendments to the Limited Partnership Agreement. DATED this 21st day of November, 2007. AVIS BUDGET CAR RENTAL, LLC by /s/ David Calabria Name: David Calabria Title: Assistant Treasurer

  • Page 174
    ... Copy AMENDING AGREEMENT NO. 5 THIS AGREEMENT made as of the 12th day of February, 2008, B E T W E E N: AVISCAR INC. , a corporation incorporated under the laws of Canada, (hereinafter called the " Avis General Partner "), - and BUDGETCAR INC. , a corporation existing under the laws of Canada...

  • Page 175
    ... 3.3(b) of the Limited Partnership Agreement is hereby deleted and replaced with the following: "(b) The balance of the STARS Limited Partner's Capital Account shall not at any time exceed an amount equal to the sum of $300,000,000 plus the aggregate Principal Amount of Bonds issued and outstanding...

  • Page 176
    ... as amended or supplemented from time to time. 4. Miscellaneous (a) (b) (c) (d) (e) With the exception of the foregoing amendments, the Limited Partnership Agreement shall continue in full force and effect, unamended. This Agreement shall enure to the benefit of and be binding upon the parties...

  • Page 177
    ... Tarlowe Title: Vice President and Treasurer Name: BNY TRUST COMPANY OF CANADA , as trustee of STARS TRUST (with liability limited to the assets of the Trust) by its Securitization Agent, BMO NESBITT BURNS INC. by /s/ Terry Ritchie Name: Terry Ritchie Title: Managing Director /s/ Christopher Romano...

  • Page 178
    MONTREAL TRUST COMPANY OF CANADA, as trustee of BAY STREET FUNDING TRUST (with liability limited to the assets of the trust) by its administrator, SCOTIA CAPITAL INC. by /s/ Douglas Noe Name: Douglas Noe Title: Director, Structured Finance Name: Title:

  • Page 179
    The undersigned hereby acknowledges notice of and consents to the foregoing amendments to the Limited Partnership Agreement. DATED this 12th day of February, 2008. AVIS BUDGET CAR RENTAL, LLC by /s/ David Calabria Name: David Calabria Title: Director, Finance

  • Page 180
    ...Board of Directors of Avis pursuant to Section 6 hereof. 1.3 "Pension Plan" means the Retirement Plan for Employees as of June 30, 1985 of Avis Rent A Car System, Inc., as the same may be amended from time to time. 1.4 "Plan" means the Amended Retirement Equalization Benefit Plan as set forth herein...

  • Page 181
    ...and 415 thereof) over (ii) the monthly pension (expressed in the form of a straight life annuity) payable to the Executive (or the Executive's surviving spouse or other beneficiary) under the Pension Plan. 4. Time of Payment . Payment of the Retirement Equalization Benefit shall commence at the same...

  • Page 182
    ... Source of Payments . All payments provided for under the Plan shall be paid in cash from the general funds of Avis; provided, however, that Avis reserves the right to establish one or more trusts to provide alternate sources of benefit payments under the Plan. Avis may, but shall not be required to...

  • Page 183
    ... Each executive of Avis Rent A Car System, Inc. with the title of Vice President or higher who suffers a reduction in the pension benefits otherwise payable to such executive (or such executive's beneficiary) under Articles 4 and 6 of the Pension Plan as a result of the limitations imposed by the...

  • Page 184
    ... 22nd day of October 1986 between Wizard Co., Inc., a corporation of the State of Delaware, with its principal place of business at 900 Old Country Road, Garden City, Long Island, New York 11530 (hereafter referred to as "Licensor"), and Avis Europe plc, an English company, registered number 1995619...

  • Page 185
    ... and purchasers and prospective customers and purchasers of the Licensed Products and Services. Licensee agrees that it will not, and will use its best efforts so that its Sublicensees will not, during the term of this Agreement (a) do anything either by an act of omission or commission which...

  • Page 186
    ... shall also provide for the grant of rights to use the Avis System pursuant to the License Agreement of even date herewith (the "System License Agreement") between Avis Rent A Car System, Inc. ("ARACS") and Licensee, and for other related rights, but shall not grant to the Sublicensee any rights...

  • Page 187
    ...Until the expiration of a period of six (6) months from the date of execution of this Agreement, neither Licensor nor any of its affiliates otherwise entitled to use the Avis name shall engage in or license the distribution and sale of any products or services in the Licensed Territories, other than...

  • Page 188
    ... all assistance and access to all documents and personnel reasonably required by Indemnitor in connection with the Defence of any Claim. ARTICLE IV 4. 4.1 INDEMNIFICATION BY LICENSEE Licensee shall indemnify and hold Licensor harmless from and against any and all damages, claims, losses, costs and...

  • Page 189
    .../or its designated agents or representatives may enter the premises of Licensee or any of its Sublicensees at any reasonable time to inspect the premises and observe the conduct of business and rendering of services to insure compliance with the quality standards outlined in this Agreement. Licensee...

  • Page 190
    ... Agreement represents the valid and binding agreement of Licensor; that it is engaged exclusively in the businesses of (i) owning, using, maintaining, protecting and licensing the use of certain trademarks and service marks, including the Licensed Marks, and (ii) owning, developing operating, using...

  • Page 191
    ... stock, Licensor may, in its sole discretion, terminate this Agreement immediately on written notice to Licensee. For the purposes of this Section, a "competitor" shall mean any person or company who owns or operates a business under an international, national or regional vehicle rental system...

  • Page 192
    ... (15,000,000 PS) to be paid within thirty (30) days after the date of execution of this Agreement. In addition, Licensee shall pay a royalty or each use of the Licensed Marks or related or similar marks in connection with any Alternate Products and Services which may become Licensed Products and...

  • Page 193
    ...shall have access during reasonable business hours and upon reasonable prior notice to examine the books, records and other data relating to the calculation of the royalty payment. There shall be added to any payments made by Licensee hereunder amounts equal to any value added, sales or use or other...

  • Page 194
    ... after 30 days notice by Licensee to Licensor) inconsistent with the exclusive rights granted to Licensee under Section 2.1 to use the Licensed Marks in connection with the goods or services listed in Appendix II, Part I; or (iv) the issue by the Commission of the European Community of a decision...

  • Page 195
    ...without the other party's prior written consent except as provided in the Master Acquisition Agreement dated 7 February 1997 between Avis Europe plc, HFS Incorporated, Avis International Limited and Avis Rent A Car System, Inc. 11.3 It shall be a condition of any Assignment by Licensee that Licensee...

  • Page 196
    ... Wizard Co., Inc 900 Old Country Road Garden City, Long Island New York 11530 Attention: General Counsel with a copy to: HFS Incorporated 6, Sylvan Way Parsippany New Jersey 07054 Attention: General Counsel LICENSEE Avis Europe pIc Avis House Park Road Bracknell Berkshire RG122EW United Kingdom...

  • Page 197
    ... to be wholly performed therein and/or, where applicable, the laws of the United States of America. The courts of New York have jurisdiction over any dispute arising under this Agreement. 15.3 Entire Agreement This Agreement contains all the terms and conditions of the agreement between the parties...

  • Page 198
    ... the Sub-licensee carries on business terminates or expires. IN WITNESS WHEREOF, the parties have caused this License Agreement to be duly executed and delivered as of the date and year first above written. WIZARD CO., INC BY: Joseph Vittoria Title: Director AVIS EUROPE PLC BY: Alun Cathcart Title...

  • Page 199
    ...LICENCE AGREEMENT THIS AGREEMENT , made this 22nd day of October 1986 between Avis Rent A Car System, Inc., a Delaware corporation, with principal offices at 900 Old Country Road, Garden City, Long Island, New York, hereinafter called "Licensor", and Avis Europe plc an English company, of Avis House...

  • Page 200
    ... a vehicle rental business only within the Territory, including airports, ports and railroad stations therein and only in accordance with the methods, rules and regulations of the System as now constituted, or as the same may from time to time be changed or amended as provided herein. 3. GENERAL...

  • Page 201
    ... customers and to which Licensee agrees in writing. (b) At its option, when and on the terms and conditions of the program then offered to Licensee by Licensor, to pay the stipulated amount (the "DIC" charge) for bodily injury and property damage liability insurance coverage relating to claims...

  • Page 202
    ... motor vehicles used by Licensee in the conduct of the vehicle rental business in a safe, efficient and presentable condition and in first class mechanical and running order, and to use in the conduct of its transient rent a car operations passenger cars of the current or next preceding model year...

  • Page 203
    ... time to time prescribe such information as Licensor may request relating to Licensee's vehicle rental business, including information with respect to all vehicles registered, used or available for use by Licensee for any purpose, to the extent that Licensee is permitted by law and by Stock Exchange...

  • Page 204
    ...services required in the vehicle rental business. 5.5 Issue of Bulletins. Forms and Procedures To make available for the use of Licensee and to its Sub-licensees, through sale or otherwise, various forms, bulletins and procedures for use in the conduct of their vehicle rental business and from time...

  • Page 205
    ... In the event Licensee shall incur a loss, cost, liability or expense as result of the operation of the business of a licensee of Avis outside of Licensee's Territory, Licensor shall upon request, and to the extent permitted by law and the License Agreement with such Licensee, assign to Licensee any...

  • Page 206
    ... terminate, and Licensee will immediately thereafter cease to use the System or any part thereof and shall return forthwith to Licensor all unused Avis System Standard Rental Agreements, forms, advertising matter, bulletins, procedures, manuals of operation, and Commercial Customer Information...

  • Page 207
    ... in full force and effect. 14. NOTICES All written notices and other written communications to be served on or given to either party shall be sent or delivered addressed as follows: if to Licensor: Avis Rent A Car System Inc. 900 Old Country Road Garden City New York 11530 attn: General Counsel 9

  • Page 208
    ... prior written consent except as provided in the Master Acquisition Agreement dated 7 February 1997 between Avis Europe plc, HFS Incorporated, Avis International Limited and Avis Rent A Car System, Inc. and the Trademark Licence Agreement dated the same date as this Agreement between Wizard Co., Inc...

  • Page 209
    ..., validity and performance of this Agreement is governed by the laws of New York. Any disputes arising out of or in relation to this Agreement shall be resolved in accordance with the Review and Arbitration Agreement between Licensor, Licensee and Wizard Co. Inc. dated the date as this Agreement. 17...

  • Page 210
    (LICENSOR) BY: /s/ Michael P. Collins (Title) Vice President (AVIS EUROPE LIMITED) BY: /s/ Alun Cathcar Title: Chairman & Chief Executive Officer 12

  • Page 211
    ...) from continuing operations before income taxes Plus: Fixed charges Earnings available to cover fixed charges Fixed charges: Interest, including amortization of deferred financing costs (a) Interest portion of rental payment Total fixed charges Ratio of earnings to fixed charges (b) (a) Year Ended...

  • Page 212
    ... A Car System LLC Avis Service Inc. Avis Services Canada Inc. Aviscar Inc. Baker Car and Truck Rental Inc. BGI Leasing Inc. Budget Funding Corporation Budget Lease Management (Car Sales) Limited Budget Locacao de Veiculos Ltda. Budget Rent A Car Australia Pty. Ltd. Budget Rent A Car De Puerto Rico...

  • Page 213
    ... Company Limited Global Excess & Reinsurance Ltd. HFS Truck Funding Corporation Mansions Auto Garage Ltd Motorent Inc. Pathfinder Insurance Company PF Claims Management Ltd. PR Holdco, Inc PV Holding Corp. Quartx Fleet Management Inc. Rent-A-Car Company, Incorporated Runabout, LLC Servicios Avis...

  • Page 214
    ...No. 109 on January 1, 2007) and financial statement schedule and the effectiveness of internal control over financial reporting appearing in this Annual Report on Form 10-K of Avis Budget Group, Inc. for the year ended December 31, 2007. /s/ DELOITTE & TOUCHE LLP New York, New York February 27, 2008

  • Page 215
    Exhibit 31.1 CERTIFICATIONS I, Ronald L. Nelson, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Avis Budget Group, Inc.; 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 ...

  • Page 216
    ...financial information; and 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. b) Date: February 28, 2008 /s/ David B. Wyshner Executive Vice President and Chief Financial Officer

  • Page 217
    ... Annual Report of Avis Budget Group, Inc. (the "Company") on Form 10-K for the period ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Ronald L. Nelson, as Chief Executive Officer of the Company, and David B. Wyshner, as Chief Financial...