Avis 2013 Annual Report Download - page 114

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F-42
The effects of derivatives recognized in the Company’s Consolidated Financial Statements are as follows:
Year Ended December 31,
2013 2012 2011
Derivatives designated as hedging instruments
Interest rate swaps (a) $1$13$33
Derivatives not designated as hedging instruments (b)
Foreign exchange forward contracts and swaps (c) 27 (31) (19)
Interest rate caps (d) 4(15) (3)
Commodity contracts (e) 13—
Total $ 33 $ (30) $ 11
__________
(a) Recognized, net of tax, as a component of other comprehensive income within stockholders’ equity.
(b) Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures
being hedged.
(c) For the year ended December 31, 2013, included a $20 million gain included in interest expense and a $7 million gain included
in operating expenses. For the year ended December 31, 2012, included a $32 million loss in interest expense and a $1 million
gain in operating expenses. For the year ended December 31, 2011, included a $46 million loss in transaction-related costs
and a $27 million gain in operating expenses.
(d) For the year ended December 31, 2013, $1 million of expense is included in vehicle interest, net and a $5 million gain is
included in interest expense. For the year ended December 31, 2012, amounts are included in vehicle interest, net. For the
year ended December 31, 2011, $2 million of expense is included in vehicle interest, net and $1 million of expense is included
in interest expense.
(e) Included in operating expenses.
Debt Instruments
The carrying amounts and estimated fair values of financial instruments are as follows:
As of December 31, 2013 As of December 31, 2012
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Corporate debt
Short-term debt and current portion of long-term
debt, excluding convertible debt $23$23$57$58
Long-term debt, excluding convertible debt (a) 3,305 3,416 2,720 2,903
Convertible debt (a) 66 159 128 171
Debt under vehicle programs
Vehicle-backed debt due to Avis Budget Rental Car
Funding (a) $ 5,656 $ 5,732 $ 5,203 $ 5,391
Vehicle-backed debt (a) 1,668 1,675 1,599 1,613
Interest rate swaps and interest rate caps (b) 13 13 4 4
___________
(a) The fair value measurements are based on significant observable inputs (Level 2).
(b) Derivatives in liability position.
20. Segment Information
The Company’s chief operating decision maker assesses performance and allocates resources based upon
the separate financial information from the Company’s operating segments. In identifying its reportable
segments, the Company considered the nature of services provided, the geographical areas in which the
segments operated and other relevant factors. The Company aggregates two of its operating segments into
each of its North America and International reportable segments.
Management evaluates the operating results of each of its reportable segments based upon revenue and
“Adjusted EBITDA,” which the Company defines as income from continuing operations before non-vehicle
related depreciation and amortization, any impairment charge, early extinguishment of debt, non-vehicle
related interest, transaction-related costs and income taxes. The Company’s presentation of Adjusted
EBITDA may not be comparable to similarly-titled measures used by other companies.