Avis 2010 Annual Report Download - page 47

Table of Contents
Following is a more detailed discussion of the results of each of our reportable segments:
Domestic Car Rental
Revenues decreased $74 million (2%) in 2010 compared with 2009 primarily due to decreased car rental volumes, while Adjusted EBITDA
increased $117 million (108%), primarily due to reduced fleet costs and lower operating expenses.
The year-over-year change in revenue was comprised of a $107 million (3%) decrease in T&M revenue and a $33 million (4%) increase in
ancillary and other revenues. The decrease in T&M revenue was principally the result of a 2% decrease in rental days, entirely in the first half of
the year, and a 1% decrease in T&M revenue per day. The increase in ancillary revenue was primarily due to (i) a $15 million increase in sales of
loss damage waivers, insurance products and emergency roadside services, and fees charged to customers, (ii) a $9 million increase in gasoline
sales, which was more than offset in Adjusted EBITDA by $13 million of higher gasoline expense, and (iii) a $9 million increase in airport
concession and vehicle licensing revenue.
Adjusted EBITDA benefited from $147 million (13%) of decreased fleet depreciation and lease charges, reflecting a 12% decrease in per-unit
fleet costs and a 1% decrease in the average size of our domestic rental fleet. We continued to achieve significant cost savings during 2010 as a
result of our cost-saving initiatives, as Adjusted EBITDA also reflected a $56 million (2%) decrease in operating expenses, including (i) a $57
million decrease in expenses related to car rental volume including maintenance and damage, agency operator commissions, credit card fees, and
other costs, and (ii) a $26 million decrease in employee costs, rents and other expenses related primarily to reduced staffing levels and the
closure of unprofitable locations. These cost decreases were partially offset by (i) a $17 million increase in vehicle interest primarily driven by
higher vehicle-backed debt balances, (ii) a $6 million increase in selling, general and administrative expenses primarily for marketing
expenditures, and (iii) a $7 million increase in insurance related costs.
42
Revenues
Adjusted EBITDA
2010
2009
%
Change
2010
2009
%
Change
Domestic Car Rental
$
3,893
$
3,967
(2)%
$
225
$
108
108
%
International Car Rental
922
808
14%
155
126
23
%
Truck Rental
367
354
4%
34
13
162
%
Corporate and Other
3
2
*
(30
)
(42
)
*
Total Company
$
5,185
$
5,131
1%
384
205
Less: Non
-
vehicle related depreciation and amortization
90
96
Interest expense related to corporate debt, net:
Interest expense
170
153
Early extinguishment of debt
52
-
Impairment
-
33
Income (loss) before income taxes
$
72
$
(77
)
Not meaningful.
Includes unallocated corporate overhead and the elimination of transactions between segments. For 2010, includes $14 million of expenses
related to the potential acquisition of Dollar Thrifty, and for 2009, includes an $18 million charge for a litigation judgment against us related
to the 2002 acquisition of our Budget vehicle rental business.
During 2009, we recorded impairment charges of $33 million primarily related to our investment in Carey Holdings, Inc. (
“
Carey
”
).
(a)
(b)
*
(a)
(b)