Avis 2014 Annual Report Download - page 97

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F-30
The Company maintains concession agreements with various airport authorities that allow the Company to
conduct its car rental operations on site. In general, concession fees for airport locations are based on a
percentage of total commissionable revenue (as defined by each airport authority), subject to minimum
annual guaranteed amounts. These concession fees, which are included in the Company’s total rent
expense, were as follows for the years ended December 31:
2014 2013 2012
Rent expense (including minimum concession fees) $ 639 $ 622 $ 600
Contingent concession expense 193 173 155
832 795 755
Less: sublease rental income (6) (5) (5)
Total $ 826 $ 790 $ 750
Commitments under capital leases, other than those within the Company’s vehicle rental programs, for
which the future minimum lease payments have been reflected in Note 13—Debt Under Vehicle Programs
and Borrowing Arrangements, are not significant.
The Company leases a portion of its vehicles under operating leases, which extend through 2018. As of
December 31, 2014, the Company has guaranteed up to $100 million of residual values for these vehicles
at the end of their respective lease terms. The Company believes that, based on current market conditions,
the net proceeds from the sale of these vehicles at the end of their lease terms will equal or exceed their net
book values and therefore has not recorded a liability related to guaranteed residual values.
Contingencies
The Company is involved in claims, legal proceedings and governmental inquiries related, among other
things, to its vehicle rental operations, including contract and licensee disputes, wage-and-hour claims,
competition matters, employment matters, insurance claims, intellectual property claims and other
regulatory, environmental, commercial and tax matters. Litigation is inherently unpredictable and, although
the Company believes that its accruals are adequate and/or that it has valid defenses in these matters,
unfavorable resolutions could occur. The potential exposure resulting from adverse outcomes of such legal
proceedings in which it is reasonably possible that a loss may be incurred could, in the aggregate, range up
to approximately $20 million in excess of amounts accrued as of December 31, 2014. However, the
Company does not believe that the impact of such litigation should result in a material liability to the
Company in relation to its consolidated financial condition or results of operations.
Additionally, in 2006, the Company completed the spin-offs of its Realogy and Wyndham subsidiaries. In
connection with the spin-offs, Realogy assumed 62.5% and Wyndham assumed 37.5% of certain
contingent and other corporate liabilities of the Company that are not primarily related to any of the
respective businesses of Realogy, Wyndham, our former Travelport subsidiary and/or the Company’s
vehicle rental operations, and in each case incurred or allegedly incurred on or prior to each subsidiary’s
disposition (“Assumed Liabilities”). If Realogy or Wyndham were to default on its payment of costs or
expenses to the Company related to any Assumed Liabilities, the Company would be responsible for 50%
of the defaulting party’s obligation. The Company does not believe that the impact of any resolution of
contingent liabilities constituting Assumed Liabilities should result in a material liability to the Company in
relation to its consolidated financial position or liquidity, as Realogy and Wyndham each have agreed to
assume responsibility for these liabilities. The Company is also named in various litigation that is primarily
related to the businesses of its former subsidiaries, including Realogy, Wyndham and their current or former
subsidiaries. The Company is entitled to indemnification from such entities for any liability resulting from
such litigation.
Commitments to Purchase Vehicles
The Company maintains agreements with vehicle manufacturers under which the Company has agreed to
purchase approximately $6.7 billion of vehicles from manufacturers over the next 12 months. The majority
of these commitments are subject to the vehicle manufacturers satisfying their obligations under their
respective repurchase and guaranteed depreciation agreements. The purchase of such vehicles is financed
primarily through the issuance of vehicle-backed debt and cash received upon the disposition of vehicles.