Avis 2014 Annual Report Download - page 51
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44
Year Ended December 31, 2013 vs. Year Ended December 31, 2012
Our consolidated results of operations comprised the following:
Year Ended
December 31,
2013 2012 Change % Change
Revenues
Vehicle rental $ 5,707 $ 5,297 $ 410 8%
Other 2,230 2,060 170 8%
Net revenues 7,937 7,357 580 8%
Expenses
Operating 4,074 3,824 250 7%
Vehicle depreciation and lease charges, net 1,811 1,471 340 23%
Selling, general and administrative 1,019 925 94 10%
Vehicle interest, net 264 297 (33) (11%)
Non-vehicle related depreciation and amortization 152 125 27 22%
Interest expense related to corporate debt, net:
Interest expense 228 268 (40) (15%)
Early extinguishment of debt 147 75 72 96%
Restructuring expense 61 38 23 61%
Transaction-related costs, net 51 34 17 50%
Impairment 33 — 33 *
Total expenses 7,840 7,057 783 11%
Income before income taxes 97 300 (203) (68%)
Provision for income taxes 81 10 71 *
Net income $ 16 $ 290 $ (274) (94%)
__________
* Not meaningful.
During 2013, our net revenues increased principally as a result of a 3% increase in total rental days (excluding
acquisitions), $246 million of revenue from Zipcar and $44 million of revenue from Payless (acquired in July
2013). Movements in currency exchange rates had virtually no effect on revenues in 2013 compared to 2012.
Total expenses increased as a result of higher vehicle depreciation and lease charges resulting from a 2%
increase in our car rental fleet and a 17% increase in our per-unit fleet costs (excluding acquisitions); an increase
in operating expenses as a result of the acquisition of Zipcar, increased volumes and inflationary pressures on
costs; an increase in selling, general and administrative costs, driven by the acquisition of Zipcar and increased
marketing commissions; and an increase in debt extinguishment costs in connection with the retirement of a
portion of our outstanding corporate debt. Our expenses were not materially impacted by currency exchange
rates. As a result of these items, and a $71 million increase in our provision for income taxes, our net income
decreased $274 million. Our effective tax rates were a provision of 84% and 3% in 2013 and 2012, respectively,
principally due to the non-deductibility of a portion of our debt extinguishment costs and the treatment of
impairment costs in 2013 and the effective settlement of a $128 million unrecognized tax benefit in 2012.
In the year ended December 31, 2013:
• Operating expenses decreased to 51.3% of revenue from 52.0% in the prior year, driven by cost-
reduction efforts.
• Vehicle depreciation and lease charges increased to 22.8% of revenue from 20.0% in 2012, principally
due to higher per-unit fleet costs amid an anticipated normalization of used-car residual values.
• Selling, general and administrative costs increased to 12.8% of revenue from 12.6% in 2012.