Avis 2010 Annual Report Download - page 49

Table of Contents
also resulting from decreased car rental days. In addition, the total revenue decrease includes a negative impact of $58 million related to the
effect of foreign currency exchange rate fluctuations on the translation of our international operations’ results into U.S. dollars.
Total expenses decreased $2,119 million (29%) principally due to (i) a $1,229 million (97%) decrease in impairment charges, (ii) a $511 million
(16%) decrease in direct operating expenses largely resulting from the 20% decrease in car rental days, reduced staffing levels and other cost-
saving actions, (iii) $272 million (16%) lower vehicle depreciation and lease charges resulting from a 19% decline in our average car rental fleet,
partially offset by a 3% increase in per-unit fleet costs, and (iv) a $104 million (16%) decrease in selling, general and administrative expenses
mainly related to reduced marketing and commission costs in light of lower rental volumes. The decrease in total expenses includes a positive
impact from foreign currency exchange rates of $42 million and also reflects numerous actions taken in late 2008 and throughout 2009 to reduce
both volume-related and non-volume-related expenses. As a result of our expense reductions, partially offset by a $189 million decrease in our
benefit from income taxes, net loss decreased $1,077 million during 2009 compared to 2008.
Our effective tax rate was a benefit of 39.0% and 16.3% for 2009 and 2008, respectively. The tax benefit for 2009 included a foreign investment
allowance relating to additional tax depreciation in Australia. The unusually low rate for 2008 was primarily due to the non-
deductible portion of
the impairment charges we incurred.
Following is a more detailed discussion of the results of each of our reportable segments:
Domestic Car Rental
Revenues decreased $728 million (16%) in 2009 compared with 2008 primarily due to decreased demand for car rental services, while Adjusted
EBITDA increased $96 million due to our actions to significantly reduce costs and increase prices.
The revenue decrease of $728 million was comprised of a $563 million (15%) decrease in T&M revenue and a $165 million (16%) decrease in
ancillary revenues. The decrease in T&M revenue was principally the result of a 21% decrease in rental days, partially offset by a 7% year-over-
year increase in T&M revenue per rental day.
44
Revenues
Adjusted EBITDA
2009
2008
%
Change
2009
2008
%
Change
Domestic Car Rental
$
3,967
$
4,695
(16)%
$
108
$
12
*
International Car Rental
808
904
(11)%
126
141
(11
)%
Truck Rental
354
382
(7)%
13
(4
)
*
Corporate and Other
2
3
*
(42
)
(13
)
*
Total Company
$
5,131
$
5,984
(14
)%
205
136
Less: Non
-
vehicle related depreciation and amortization
96
88
Interest expense related to corporate debt, net
153
129
Impairment
33
1,262
Loss before income taxes
$
(77
)
$
(1,343
)
Not meaningful.
Includes unallocated corporate overhead and the elimination of transactions between segments.
In 2009, we recorded impairment charges of $33 million primarily related to our investment in Carey, recorded in Corporate and Other. In
2008, we recorded a charge of $1,262 million for the impairment of goodwill, our tradenames asset and our investment in Carey. 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.
(a)
(b)
(*)
(a)
(b)