Avis 2007 Annual Report Download - page 52

Table of Contents
primarily as a result of the sale of our preferred stock investment in Affinion. These decreases were offset by (i) an increase of $60 million in
other non-current assets related to our investment in Carey in 2007, (ii) a $43 million increase in deferred taxes (iii) a $42 million increase in
cash and cash equivalents (see “Liquidity and Capital Resources—Cash Flows” for a detailed discussion), (iv) a $29 million increase in
accounts receivable primarily due to an increase in retention receivables from manufacturers, (v) a $21 million increase in intangible assets
related to our acquisition of vehicle rental licensees and (vi) fluctuations in foreign currency exchange rates.
Total liabilities exclusive of liabilities under vehicle programs decreased $260 million primarily due to (i) a $99 million decrease in balances
due to Realogy and Wyndham related to our preferred stock investment in Affinion, (ii) a $73 million decrease in accrued payroll costs, (iii) an
$80 million decrease in income taxes payable and (iv) a $45 million decrease in our corporate debt. These decreases were partially offset by a
$50 million increase in accrued settlement liabilities, for which we are entitled to indemnification by Realogy and Wyndham.
Assets under vehicle programs increased $281 million as a result of $425 million of net additions primarily to our International and Domestic
vehicle rental fleets, reflecting projected year-over- year increases in demand. This increase was partially offset by a $131 million decrease in
our Investment 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 under vehicle programs increased $441 million, primarily reflecting additional borrowings to support the growth in our vehicle
rental fleet described above. See “Liquidity and Capital Resources—Debt and Financing Arrangements”
for a detailed account of the change in
our debt related to vehicle programs.
Stockholders’ equity decreased $978 million primarily due to (i) a net loss of $916 million for 2007 reflecting a charge of $1,195 related to the
impairment of goodwill, (ii) a $66 million decrease to additional paid-in capital related to post Cendant Separation dividend adjustments to
Realogy and Wyndham in accordance with the Separation Agreement, (iii) a $36 million decrease in accumulated other comprehensive income
as a result of unrealized losses on cash flow hedges incurred during 2007, partially offset by currency translation adjustments and (iv) an $18
million charge to stockholders’ equity as a result of the adoption of Financial Accounting Standards Board (“FASB”) Interpretation No. 48
(“FIN 48”). These decreases were partially offset by a net $49 million increase in stockholders’
equity related to the exercise of employee stock
options and (iii) a net $12 million increase related to the granting and vesting of restricted stock units.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as
available funding arrangements and committed credit facilities, each of which is discussed below.
47