Avis 2008 Annual Report Download - page 50

our international rental fleet and increased per-unit fleet costs including the effects of foreign exchange movements. EBITDA also reflects $37
million 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 (iii) $4 million in increased gasoline expenses. We incurred $7 million more interest expense during 2007 than in 2006 due to
increased borrowings for international operations and higher interest rates.
Truck Rental
Revenues and EBITDA declined $56 million (12%) and $28 million (62%), respectively, in 2007 compared with 2006, primarily reflecting
decreases in rental day volume and T&M revenue per day. EBITDA was also impacted by increased fleet costs.
Substantially all of the revenue decrease was due to a decline in T&M revenue, which reflected a 7% reduction in rental days and an 8%
decrease in T&M revenue per day. The 7% reduction in rental days resulted primarily from declines in one-way consumer and commercial
volumes, and a 6% reduction in the average size or our rental fleet. We believe these decreases reflect a soft housing market and heightened
competition for commercial rentals. Despite the reduction in the average size of our truck rental fleet, we incurred $4 million (4%) of
incremental fleet depreciation, interest and lease charges primarily due to higher per-unit fleet costs, including a reduction in expense of $5
million due to a change in projected vehicle hold periods. These items were offset by $22 million in reduced operating expenses, including (i) a
decrease of $11 million in operating commission expense primarily reflecting the decrease in T&M revenue, (ii) a $10 million decrease in
maintenance and damage costs, and (iii) an $8 million reduction in insurance expense as a result of favorable claims experience and the
reduction in rental days. EBITDA also reflected a $5 million reduction in restructuring charges compared to 2006 and a year-over-
year reduction
of $3 million in costs related to the Cendant Separation.
Corporate and Other
Revenues decreased $43 million and EBITDA increased from a loss of $393 million in 2006 to an income of $1 million in 2007.
Revenues were lower in 2007 due to (i) the absence of $17 million in revenue associated with a credit card marketing program under which we
earned fees based on a percentage of credit card spending through the date of the Cendant Separation, (ii) a $16 million decrease in revenues
earned for information technology service contracts with Realogy, Wyndham and Travelport as the contracts expire and services are no longer
being provided and (iii) a $10 million reduction primarily related to dividend income and gains on the sale of marketable securities in 2006.
EBITDA increased primarily due to (i) a $131 million reduction in selling and general expenses resulting from the spin-offs of Realogy and
Wyndham and the sale of Travelport in third quarter 2006, (ii) a $248 million reduction in separation-related expenses, including unallocated
corporate costs, (iii) a $40 million reduction in legal fees for litigation related to the former CUC business units and (iv) a $21 million decrease
in intercompany interest expense prior to the Cendant Separation.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We present separately the financial data of our vehicle programs. These programs are distinct from our other activities as the assets under vehicle
programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in
part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the generation or acquisition of such
assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle
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