Avis 2011 Annual Report Download - page 41

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Year Ended December 31, 2010 vs. Year Ended December 31, 2009
Our consolidated results of operations comprised the following:
Year Ended December 31,
2010 2009 Change
Net revenues $ 5,185 $ 5,131 $ 54
Total expenses 5,113 5,208 (95)
Income (loss) before income taxes 72 (77) 149
Provision for (benefit from) income taxes 18 (30) 48
Net income (loss) $ 54 $ (47) $ 101
In 2010, our net revenues increased $54 million (1%) principally due to a 6% increase in ancillary and other revenues, such as
sales of loss damage waivers and insurance products, gasoline sales and fees charged to customers. This increase in ancillary
revenue was partially offset by a 1% decrease in T&M revenue in our car rental operations, resulting primarily from a 2%
decline in North America and international car rental days partially mitigated by a 1% increase in T&M revenue per rental
day. In addition, the increase in revenue reflected a $97 million favorable effect related to the translation of our international
operations’ results into U.S. dollars.
Total expenses decreased $95 million (2%) principally due to (i) a $138 million (10%) decrease in vehicle depreciation and
lease charges resulting from a 9% decline in car per-unit fleet costs and a 1% decline in our average car rental fleet; (ii) the
absence of the $33 million in impairment charges recorded in 2009; (iii) a $20 million (1%) decrease in direct operating
expenses largely resulting from the 2% decrease in car rental days, reduced staffing levels, other cost-saving actions and the
absence of the $18 million charge recorded in 2009 for a litigation judgment against us related to the 2002 acquisition of our
Budget vehicle rental business; and (iv) a $9 million decrease in restructuring costs. These year-over-year decreases were
partially offset by (i) a $52 million expense related to the early extinguishment of a portion of our corporate debt and
associated interest rate swaps; (ii) a $32 million increase in selling, general and administrative expenses primarily related to
increased marketing and commission expenditures, but also including $14 million of due-diligence and other costs associated
with our previous efforts to acquire Dollar Thrifty; (iii) a $17 million increase in interest expense on corporate debt; and (iv) a
$10 million increase in vehicle interest. The decrease in total expenses includes an adverse impact from foreign currency
exchange rates of $80 million. As a result of these items, offset by a $48 million increase in our provision for income taxes,
our net income increased by $101 million during 2010 compared to 2009.
Our effective tax rate was a provision of 25.0% for 2010, which differed from the U.S. federal statutory rate primarily due to
a benefit relating to additional tax depreciation within our operations in Australia. For 2009, our effective tax rate was a
benefit of 39.0%.
Following is a more detailed discussion of the results of each of our reportable segments:
Revenues
Adjusted EBITDA
% %
2010
2009 Change 2010 2009 Change
North America $ 4,260 $ 4,297 (1)% $ 266 $ 140 90%
International 555 478 16% 114 94 21%
Truck Rental 367 354 4% 34 13 162%
Corporate and Other (a) 3
2 * (16) (42) *
Total Company $ 5,185 $ 5,131 1% 398 205
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
(b) - 33
Transaction-related costs
(c) 14
-
Income (loss) before income taxes $ 72 $ (77)
__________
* Not meaningful.
(a) Includes unallocated corporate overhead and the elimination of transactions between segments. For 2009, includes an $18 million
charge for a litigation judgment against us related to the 2002 acquisition of our Budget vehicle rental business.
(b) In 2009, we recorded impairment charges of $33 million primarily related to an investment.
(c) In 2010, we recorded transaction-related costs of $14 million associated with our previous efforts to acquire Dollar Thrifty.