Avis 2009 Annual Report Download - page 49

Table of Contents
Following is a more detailed discussion of the results of each of our reportable segments:
Domestic Car Rental
Revenues increased $16 million (less than 1%) while EBITDA decreased $253 million (95%) in 2008 compared with 2007. Revenue increased
due to growth in ancillary revenues offset by lower car rental pricing. EBITDA margins were negatively impacted year-over-year by lower car
rental pricing, increased fleet costs and severance costs.
The revenue increase of $16 million was comprised of a $91 million (9%) increase in ancillary revenues, offset by a $74 million (2%) decrease
in T&M revenue. The $91 million increase in ancillary revenues was primarily due to (i) a $48 million increase in rentals of GPS navigation
units, our implementation of an energy recovery fee, sales of insurance products and other items, (ii) a $33 million increase in gasoline sales,
which was more than offset in EBITDA by $71 million of higher gasoline expense including an unfavorable impact of $31 million from gasoline
hedges, and (iii) a $10 million increase in airport concession and vehicle licensing revenues, $6 million of which was offset in EBITDA by
higher airport concession and vehicle licensing expenses remitted to airport and other regulatory authorities. The decrease in T&M revenue was
principally driven by a 1% decrease in T&M revenue per day, while rental days remained essentially unchanged year-over-year.
The favorable effect of increased revenues was offset in EBITDA by $133 million (10%) of increased fleet depreciation and lease charges
resulting from an 11% increase in per-unit fleet costs, while the average size of our domestic rental fleet decreased 1%. EBITDA also reflected a
$61 million (2%) increase in operating and selling, general and administrative and other expenses including (i) $23 million of restructuring
charges recorded in 2008 primarily due to expenses related to severance and the closure of rental facilities, (ii) $22 million of incremental
operating expenses primarily representing inflationary increases in wages and salaries, off-airport rental expense and other costs offset by
expense savings from our process improvement and cost-reduction initiatives, and (iii) a $9 million increase in selling, general and
administration expense primarily related to higher travel agency commissions, travel incentive programs and other marketing costs.
44
Revenues
EBITDA
2008
2007
%
Change
2008
2007
%
Change
Domestic Car Rental
$
4,695
$
4,679
0%
$
12
$
265
(95
)%
International Car Rental
904
873
4%
141
131
8
%
Truck Rental
382
416
(8)%
(4
)
17
*
Corporate and Other
3
18
*
(13
)
1
*
Total Company
$
5,984
$
5,986
136
414
Less: Non
-
vehicle related depreciation and amortization
88
84
Interest expense related to corporate debt, net
129
127
Impairment
1,262
1,195
Loss before income taxes
$
(1,343
)
$
(992
)
Not meaningful.
In 2007, EBITDA reflects separation
-
related costs (credits) of $5 million in Domestic Car Rental and ($10) million in Corporate and Other.
Includes unallocated corporate overhead and the elimination of transactions between segments.
We recorded a charge of $1,262 million for the impairment of goodwill, our tradenames asset and our investment in Carey in 2008.
Domestic Car Rental recorded $882 million of the charge, International Car Rental recorded $275 million, Truck Rental recorded $87
million and Corporate and Other recorded $18 million. In 2007, we recorded a charge of $1,195 million for the impairment of goodwill.
Domestic Car Rental recorded $786 million of the goodwill impairment, International Car Rental recorded $268 million and Truck Rental
recorded $141 million.
(a)
(b)
(c)
(*)
(a)
(b)
(c)