Avis 2007 Annual Report Download - page 89

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Table of Contents
During 2007, the Company acquired 13 vehicle rental franchisees for $10 million in cash, resulting in trademark intangible assets of $11
million. During 2006, the Company acquired 19 vehicle rental franchisees for $20 million in cash, resulting in trademark intangible assets
of $17 million. During 2005, the Company acquired 23 vehicle rental franchisees 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. These
acquisitions, which for 2007 and 2006 relate primarily to the Company’
s Domestic Car Rental segment and for 2005 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.
The Company acquired approximately 48% of the equity in Carey Holdings, Inc., the parent of Carey International, Inc., on October 23,
2007 (see Note 13—Equity Investment).
Intangible assets consisted of:
8.
Intangible Assets
As of December 31, 2007
As of December 31, 2006
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortized Intangible Assets
Franchise agreements
(a)
$
75
$
18
$
57
$
75
$
16
$
59
Customer lists
(b)
19
7
12
19
6
13
Other
(c)
2
1
1
2
1
1
$
96
$
26
$
70
$
96
$
23
$
73
Unamortized Intangible Assets
Goodwill
$
1,000
$
2,193
Trademarks
(d)
$
690
$
666
(a)
Primarily amortized over a period ranging from 25 to 40 years.
(b)
Primarily amortized over 20 years.
(c)
Primarily amortized over 27 years.
The changes in the carrying amount of goodwill during 2007 are as follows:
(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.
Balance at
January 1,
2007
Adjustments
To Goodwill
Acquired
during
2007
(a)
Goodwill
Impairment
Balance at
December 31,
2007
Domestic Car Rental
$
1,355
$
-
$
(786
)
$
569
International Car Rental
595
2
(268
)
329
Truck Rental
243
-
(141
)
102
Total Company
$
2,193
$
2
$
(1,195
)
$
1,000
During the Company’s annual assessment of goodwill and other indefinite-lived assets for impairment, it was determined that impairment
had occurred (see Note 2—Summary of Significant Accounting Policies).
F
-
26
(a)
The adjustment in goodwill was primarily due to fluctuations in foreign currency.