Avis 2008 Annual Report Download - page 49

(*)
Not meaningful.
(a)
In 2007, EBITDA reflects separation-related costs (credits) of $5 million in Domestic Car Rental and ($10) million in Corporate and Other.
In 2006, EBITDA reflects separation-related costs of $19 million in Domestic Car Rental, $1 million in International Car Rental, $3 million
in Truck Rental and $238 million in Corporate and Other.
(b)
Includes unallocated corporate overhead, the elimination of transactions between segments and the results of operations of certain non-
strategic businesses. In addition, EBITDA for 2006 reflects unallocated corporate expenses related to discontinued operations. Following the
completion of the Cendant Separation, we do not incur the majority of such costs.
(c)
The amount in 2006 includes a $313 million charge related to the early extinguishment of corporate debt.
Domestic Car Rental
Revenues and EBITDA increased $284 million (6%) and $51 million (24%), respectively, in 2007 compared with 2006. We experienced
increased demand for car rentals and significantly increased our ancillary revenues.
The revenue increase of $284 million was comprised of a $132 million (4%) increase in T&M revenue and a $152 million (19%) increase in
ancillary revenues. The increase in T&M revenue was principally driven by a 4% increase in rental days. The $152 million increase in ancillary
revenues was due primarily to (i) a $72 million increase in airport concession and vehicle licensing revenues, $20 million of which was offset in
EBITDA by higher airport concession and vehicle licensing expenses remitted to airport and other regulatory authorities, (ii) a $69 million
increase in rentals of GPS navigation units, sales of loss damage waivers and insurance products and other items, and (iii) an $11 million
increase in gasoline sales.
The favorable effect of incremental revenues was offset in EBITDA by $125 million (11%) of increased fleet depreciation and lease charges
primarily resulting from increased per-unit fleet costs in 2007 and a 4% increase in average fleet. EBITDA also reflected a $92 million increase
in operating expenses including (i) $64 million 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. We incurred $8 million more vehicle-related interest expense during 2007
compared to 2006, primarily due to the loss of intercompany interest income recorded in 2006 prior to the Cendant Separation. EBITDA also
benefited from a $17 million decrease in separation-related costs, primarily related to accelerated vesting of stock-based compensation awards
incurred in 2006.
International Car Rental
Revenues and EBITDA increased $112 million (15%) and $20 million (18%), respectively, in 2007 compared with 2006, primarily due to the
impact of foreign currency exchange rate fluctuations, increased car rental pricing and higher demand for car rentals.
The revenue increase of $112 million was comprised of a $73 million (13%) increase in car rental T&M revenue and a $39 million
(18%) increase in ancillary revenues. The increase in T&M revenue was principally driven by a 10% increase in T&M revenue per day and a 3%
increase in the number of days a car was rented. The total growth in revenue includes a $67 million increase related to the translation of foreign
currency exchange rates, which increased T&M revenue per day by 8% and was largely offset in EBITDA by the opposite impact on expenses
and provided a net benefit of $8 million year-over-year. The $39 million increase in ancillary revenues was due primarily to (i) a $23 million
increase in counter sales of insurance and other items, and (ii) a $13 million increase in airport concession and vehicle licensing revenues, which
was more than offset in EBITDA by higher airport concession and vehicle licensing expenses remitted to airport and other regulatory authorities.
The favorable effect of incremental T&M revenues was partially offset in EBITDA by $27 million (15%) of increased fleet depreciation and
lease charges principally resulting from an increase of 4% in the average size of
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(d)
We recorded a charge of $1,195 million for the impairment of goodwill during the three months ended December 31, 2007. Domestic Car
Rental recorded $786 million of the goodwill impairment, International Car Rental recorded $268 million and Truck Rental recorded $141
million.