Avis 2013 Annual Report Download - page 56
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46
Year Ended December 31, 2012 vs. Year Ended December 31, 2011
Our consolidated results of operations comprised the following:
Year Ended
December 31,
2012 2011 Change % Change
Revenues
Vehicle rental $ 5,297 $ 4,338 $ 959 22%
Other 2,060 1,562 498 32%
Net revenues 7,357 5,900 1,457 25%
Expenses
Operating 3,824 3,025 799 26%
Vehicle depreciation and lease charges, net 1,471 1,223 248 20%
Selling, general and administrative 925 756 169 22%
Vehicle interest, net 297 286 11 4%
Non-vehicle related depreciation and amortization 125 95 30 32%
Interest expense related to corporate debt, net:
Interest expense 268 219 49 22%
Early extinguishment of debt 75 — 75 *
Restructuring expense 38 5 33 *
Transaction-related costs 34 255 (221) (87%)
Total expenses 7,057 5,864 1,193 20%
Income before income taxes 300 36 264 *
Provision for income taxes 10 65 (55) (85%)
Net income (loss) $ 290 $ (29) $ 319 *
__________
* Not meaningful.
During 2012, our net revenues increased principally due to the acquisition of Avis Europe in fourth quarter 2011
and 6% increases in total rental days and ancillary revenues (excluding Avis Europe). Movements in currency
exchange rates had virtually no effect on revenues.
Total expenses increased as a result of including the results of Avis Europe for the full year; an increase in debt
extinguishment costs in connection with the retirement of a portion of our outstanding corporate debt; and an
increase in restructuring expenses. These increases were partially offset by a decrease in transaction-related
costs, which for 2012 related primarily to the integration of the operations of Avis Europe and which for 2011
related to costs associated with the acquisition of Avis Europe and our previous efforts to acquire Dollar Thrifty.
Our expenses were not materially impacted by currency exchange rates. As a result of these items, and a $55
million decrease in our provision for income taxes, our net income increased $319 million. Our effective tax rates
were a provision of 3% and 181% for 2012 and 2011, respectively, which reflected the settlement of a $128 million
unrecognized tax benefit in 2012 and the non-deductibility of many of the transaction-related costs related to the
acquisition of Avis Europe in 2011.
In the year ended December 31, 2012:
• Operating expenses were 52.0% of revenue, versus 51.3% in the prior year, primarily due to the
acquisition of Avis Europe.
• Vehicle depreciation and lease costs declined to 20.0% of revenue in 2012, from 20.7% in 2011, primarily
due to lower per-unit fleet costs in North America amid robust used-car residual values in the first half of
the year, partially offset by the acquisition of Avis Europe.
• Selling, general and administrative costs decreased to 12.6% of revenue, versus 12.8% in 2011, as a
result of our cost-reduction initiatives.