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Mobility Through Connectivity
Annual Report 2015

Table of contents

  • Page 1
    Mobility Through Connectivity Annual Report 2015

  • Page 2
    ... about Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Part III Item 10. Directors, Executive Officers and Corporate Governance...

  • Page 3

  • Page 4
    ... for mobility solutions. Technology is enabling new and better mobility options that will allow us to continue to enhance the customer experience we offer. We're testing new technology that will allow our customers to manage their entire rental, from reservation to vehicle pick-up, to car return and...

  • Page 5
    ...to be the world's leading car sharing network. Our Zipcar operations enjoyed a record-setting year, expanding to more cities, more countries and more colleges and universities. We extended the testing of Zipcar's ONE>WAY service offering, which promises to offer another source of revenue growth that...

  • Page 6
    ...ed that our people around the world maintained their focus during what was a busy year for Avis Budget Group. 2015 included implementation of our executive succession plan, in which we transitioned into our current roles as Executive Chairman and Chief Executive Officer, respectively, while David...

  • Page 7
    ... to AVIS BUDGET GROUP, INC. (Exact name of Registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 6 SYLVAN WAY PARSIPPANY, NJ (Address of principal executive offices) 06-0918165 (I.R.S. Employer Identification Number) 07054 (Zip Code) 973...

  • Page 8
    ... Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 9
    ...such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such...

  • Page 10
    ... indebtedness to help fund such transactions and our ability to promptly and effectively integrate any acquired businesses; risks related to protecting the integrity of our information technology systems and the confidential information of our employees and customers against security breaches...

  • Page 11
    ...Our Zipcar brand is the world's leading car sharing company, with nearly one million members in the United States, Canada and Europe. We operate Budget Truck, one of the leading truck rental businesses in the United States, with a fleet of approximately 21,000 vehicles that operate through a network...

  • Page 12
    ...in using advanced vehicle technologies as the first car sharing company in the United States to develop a self-service solution to managing the complex interactions of real-time, location-based activities inherent in a large-scale car sharing operation, including new member application, reservations...

  • Page 13
    ... New Zealand, and operates the Company's car sharing business in certain of these markets. • The following table presents key operating metrics for each of our two reporting segments: Average 2015 Time and Mileage ("T&M") Revenue per Day $40.55 $33.57 Americas International Total 2015 Rental...

  • Page 14
    ... the service we provide at these customer "touch points." For example: We offer Avis Preferred Select & Goâ„¢, a vehicle-choice program for customers, and have revised our rental agreements and receipts to improve transparency, and mobile applications to accept reservations and to better communicate...

  • Page 15
    ... our acquired businesses, to realize cost efficiencies from combined maintenance, systems, technology and administrative infrastructure, as well as fleet utilization benefits and savings by combining our car rental and car sharing fleets at times to reduce the number of unutilized vehicles. We...

  • Page 16
    ... significant benefits and savings by combining our car rental and car sharing maintenance activities and fleets at times to reduce the number of unutilized cars and to meet demand peaks. We believe that Avis, Budget and Zipcar all enjoy complementary demand patterns with mid-week commercial demand...

  • Page 17
    .... We offer Avis customers a variety of premium services, including: • Avis Preferred, a frequent renter rewards program that offers counter bypass at major airport locations and reward points for every dollar spent on vehicle rentals and related products; Avis Preferred Select & Go, a service that...

  • Page 18
    ...winning loyalty program, Unlimited Rewards®, which was selected by Travel Weekly as a 2015 Gold Magellan Award Winner. Zipcar Founded in 2000, Zipcar operates the world's leading membership-based car sharing network that provides "wheels when you want them" to nearly one million members, also known...

  • Page 19
    ... in reserved parking spaces and garages within an easy walk of where our members live, study and work. Members can book a designated vehicle online, by phone or via their mobile device, unlock the selected vehicle using a keyless entry card (called a "Zipcard"), and drive away. Because each Zipcar...

  • Page 20
    ... Budget Truck fleet is comprised of approximately 21,000 vehicles that are rented through a network of approximately 1,000 dealers and 450 Company-operated locations throughout the continental United States. These dealers are independently-owned businesses that generally operate other retail service...

  • Page 21
    ...the Wyndham Rewards program. And we have marketing relationships with numerous non-travel-related entities, including affinity groups, membership organizations, retailers, financial institutions and credit card companies. • • • In 2015, approximately 62% of vehicle rental transactions from...

  • Page 22
    ... work. Through our Zipcar for Business program, we also offer reduced membership fees and weekday driving rates to employees of companies, federal agencies and local governments that sponsor the use of Zipcars. LICENSING We have licensees in approximately 165 countries throughout the world. Royalty...

  • Page 23
    ... for driving convenience such as portable GPS navigation units, tablet rentals, optional roadside assistance services, fuel service options, electronic toll collection, access to satellite radio and child safety seat rentals. We also supplement our daily truck rental revenue by offering customers...

  • Page 24
    ... of online data tracking which enables our sales force to analyze key account information of our corporate customers including historical and current rental activity, revenue and booking sources, top renting locations, rate usage categories and customer satisfaction data. We use this information...

  • Page 25
    ... to expand the number of states that can participate in our Ultimate Test Drive consumer car sales program, which offers customers the ability to purchase our rental vehicles. Alternative disposition channels such as Ultimate Test Drive, online auctions and direct to dealer sales represented...

  • Page 26
    ... labor unions. We believe our employee relations are satisfactory. We have never experienced a large-scale work stoppage. AIRPORT CONCESSION AGREEMENTS We generally operate our vehicle rental and car sharing services at airports under concession agreements with airport authorities, pursuant to which...

  • Page 27
    ...; Europcar Group; Hertz Global Holdings, Inc., which operates the Hertz, Dollar and Thrifty brands; and Sixt AG. We also compete with smaller regional vehicle rental and car sharing companies as well as truck rental companies such as U-Haul International, Inc., Penske Truck Leasing Corporation, and...

  • Page 28
    ... aimed at protecting Company and customer data; a competitive employee benefits program; commitments to equal employment opportunities and diversity; offering fuel-efficient rental vehicles; and a commitment to corporate philanthropy through which we give back to the communities in which we operate...

  • Page 29
    ... of this Annual Report on Form 10-K. COMPANY INFORMATION Our principal executive office is located at 6 Sylvan Way, Parsippany, New Jersey 07054 (our telephone number is 973-496-4700). The Company files electronically with the Securities and Exchange Commission (the "SEC") required reports on Form...

  • Page 30
    ... cars or decline to sell program cars to us on terms or at prices consistent with past agreements, we may be unable to obtain a sufficient number of vehicles to operate our business without significantly increasing our fleet costs or reducing our volumes. Our program car purchases also generally...

  • Page 31
    ...strength of the used car market, particularly the market for one- to two-year old used vehicles. We currently sell non-program vehicles through auctions, third-party resellers and other channels in the used vehicle marketplace. Such channels may not produce stable used vehicle prices. A reduction in...

  • Page 32
    ... our car sharing services will become more intense as additional companies enter our existing markets or try to expand their operations. Competitors could introduce new solutions with competitive price and convenience characteristics, new technologies or undertake more aggressive marketing campaigns...

  • Page 33
    ... reservation systems through alternate channels. We face risks related to our leases and vehicle rental concessions. We lease or have vehicle rental concessions at locations throughout the world, including at airports both in the United States and internationally and train stations throughout Europe...

  • Page 34
    ... processes and related systems, including accounting systems and internal controls over financial reporting; limitations on, or costs associated with, workforce reductions; a failure to implement our strategy for a particular acquisition, including successfully integrating the acquired business; the...

  • Page 35
    ... to offer loss damage waivers to our customers, our financial condition or results of operations could be adversely impacted. If the current federal law that pre-empted state laws that imputed tort liability solely based on ownership of a vehicle involved in an accident were to change, our insurance...

  • Page 36
    ... our customers' credit card information is protected. Failure to meet these data security standards could result in substantial increased fees to credit card companies, other liabilities and/or loss of the right to collect credit card payments, which could adversely impact our financial condition...

  • Page 37
    ... and regulations applicable to their businesses, including our internal policies and standards. Under these agreements, third-party operators retain control over the employment and management of all personnel at their locations. Regulators, courts or others may seek to hold us responsible for the...

  • Page 38
    ... reducing or eliminating deferral of federal or state income taxes allowed for our U.S. vehicle rental fleet. We face risks related to our protection of our intellectual property. We have registered "Avis," "Budget," "Zipcar" and "Payless" and various related marks or designs, such as "We try harder...

  • Page 39
    ... be able to refinance or obtain a replacement for such financing programs. We face risks related to movements or disruptions in the credit and asset-backed securities markets. We finance our operations through the use of asset-backed securities and other debt financing structures available through...

  • Page 40
    ..., fleet costs, pricing actions or other competitive actions; changes in earnings estimates by securities analysts or our ability to meet those estimates; changes in investors' and analysts' perceptions of our industry, business or related industries; the operating and stock price performance of...

  • Page 41
    ..., to our vehicle rental and car sharing operations, including, among others, business practice disputes, contract and licensee disputes, employment and wage-and-hour claims, competition matters, insurance claims, intellectual property claims and other regulatory, environmental, commercial and tax...

  • Page 42
    ... the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable resolutions could occur, which could adversely impact the Company's financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 34

  • Page 43
    ... OF EQUITY SECURITIES MARKET PRICE OF COMMON STOCK Our common stock is currently traded on the NASDAQ Global Select Market ("NASDAQ") under the symbol "CAR." The following table sets forth the quarterly high and low sales prices per share of our common stock as reported by NASDAQ for 2015 and 2014...

  • Page 44
    ... subsequently expanded in 2014 and 2015. In January 2016, the Board of Directors authorized a $300 million increase in the Company's share repurchase program. The Company's stock repurchases may occur through open market purchases or trading plans pursuant to Rule 10b5-1 of the Securities Exchange...

  • Page 45
    ... common stock against the cumulative total returns of peer group indices, the S&P 500 Index and the Dow Jones U.S. Transportation Average Index for the period of five fiscal years commencing December 31, 2010 and ending December 31, 2015. The broad equity market indices used by the Company are the...

  • Page 46
    ... Update 2015-03. See Note 2 to our Consolidated FInancial Statements. For the Year Ended December 31, 2014 2013 2012 2011 127 $ 134 $ 128 $ 138 $ 67 73 72 90 60 61 56 48 Total assets decreased Corporate debt decreased Debt under vehicle programs decreased In presenting the financial data above...

  • Page 47
    ...and Las Vegas, and contingent consideration related to our Apex Car Rentals acquisition. In 2013, these costs were primarily related to the acquisition of Zipcar and the integration of acquired businesses. During 2012, these costs were primarily related to the integration of Avis Europe's operations...

  • Page 48
    ... relating to our results of operations are presented before taxes. OVERVIEW OUR COMPANY We operate three of the most recognized brands in the global vehicle rental and car sharing industry, Avis, Budget and Zipcar. We are a leading vehicle rental operator in North America, Europe, Australia, New...

  • Page 49
    ... customers, both of which exclude our U.S. truck rental and Zipcar car sharing operations. We also measure our ancillary revenues (rental-transaction revenue other than T&M revenue), such as from the sale of collision and loss damage waivers, insurance products, fuel service options and portable GPS...

  • Page 50
    ... presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. Year Ended December 31, 2015 vs. Year Ended December 31, 2014 Our consolidated results of operations comprised the following: Year Ended December 31, 2015 2014 Revenues Vehicle rental Other...

  • Page 51
    ... fleet costs (3% in constant currency), partially offset by decreased pricing, higher maintenance, damage and insurance costs and a $7 million (1%) negative impact from currency exchange rate changes. In the year ended December 31, 2015: • • Operating expenses were 49.3% of revenue compared...

  • Page 52
    ... due to lower pricing and higher insurance costs, partially offset by increased rental volumes. Vehicle depreciation and lease charges decreased to 18.7% of revenue from 20.0% compared to the prior year, driven by lower per-unit fleet costs. Selling, general and administrative costs decreased to 14...

  • Page 53
    ...: Year Ended December 31, 2014 2013 Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation and amortization Interest expense related to corporate debt...

  • Page 54
    ... volumes and pricing as well as the acquisition of Zipcar, partially offset by 5% higher per-unit fleet costs. In the year ended December 31, 2014: • Operating expenses were 49.1% of revenue, a decrease from 50.4% in the prior year, driven by increased rental volumes and higher pricing. Vehicle...

  • Page 55
    ... year. Selling, general and administrative costs increased to 15.0% of revenue from 14.4% in the prior year, primarily due to our planned increase in advertising and brand investment. Vehicle interest costs, at 1.9% of revenue, remained level compared to the prior year. • • • Corporate...

  • Page 56
    ... vehicle programs. Cash Flows Year Ended December 31, 2015 vs. Year Ended December 31, 2014 The following table summarizes our cash flows: Year Ended December 31, 2015 2014 Cash provided by (used in): Operating activities Investing activities Financing activities Effects of exchange rate changes...

  • Page 57
    ... under vehicle programs of approximately $8.9 billion). We use various hedging strategies, including derivative instruments, to manage a portion of the risks associated with our floating rate debt. Corporate indebtedness consisted of: Maturity Date November 2017 December 2017 March 2019 March 2020...

  • Page 58
    ... of Maggiore. Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of December 31, 2015 and 2014 were $41 million and $44 million, respectively. The following table provides the contractual maturities for our corporate debt and our debt under vehicle programs, including...

  • Page 59
    ... 31, 2015, can be found in Notes 12 and 13 to our Consolidated Financial Statements. LIQUIDITY RISK Our primary liquidity needs include the payment of operating expenses, servicing of corporate and vehicle-related debt and procurement of rental vehicles to be used in our operations. The present...

  • Page 60
    ... on the rates of return generated from plan assets and other factors (see Note 17 to our Consolidated Financial Statements) and are not included above. Primarily represents commitments under service contracts for information technology, telecommunications and marketing agreements with travel service...

  • Page 61
    ... our business plans, a significant deterioration of the macroeconomic conditions of the countries in which we operate, or significant changes in the assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets (such as the discount rate) could...

  • Page 62
    ... prices. We manage our exposure to market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments, particularly swap contracts, futures and options contracts, to manage and reduce the interest rate risk related...

  • Page 63
    ... "Exchange Act")). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report. (b) Management's Annual Report on Internal Control Over Financial...

  • Page 64
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Avis Budget Group, Inc. Parsippany, New Jersey We have audited the internal control over financial reporting of Avis Budget Group, Inc. and subsidiaries (the "Company") as of December 31, 2015, based on...

  • Page 65
    ITEM 9B. OTHER INFORMATION None. 57

  • Page 66
    ...," "Corporate Governance - Committees of the Board of Directors," "Executive Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" is incorporated herein by reference in response to this item. ITEM 11. EXECUTIVE COMPENSATION The information contained in the Company's Annual Proxy...

  • Page 67
    ... ITEM 15(A)(1). FINANCIAL STATEMENTS See Consolidated Financial Statements and Consolidated Financial Statements Index commencing on page F-1 hereof. ITEM 15(A)(2). FINANCIAL STATEMENT SCHEDULES See Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2015, 2014 and...

  • Page 68
    ... 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AVIS BUDGET GROUP, INC. By: /s/ DAVID T. CALABRIA David T. Calabria Senior Vice President and Chief Accounting Officer Date: February 24...

  • Page 69
    ... Chief Executive Officer and Director Date February 24, 2016 President and Chief Financial Officer February 24, 2016 Senior Vice President and Chief Accounting Officer Director February 24, 2016 February 24, 2016 Director February 24, 2016 Director February 24, 2016 Director February...

  • Page 70
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013 Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013 ...

  • Page 71
    ... financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting...

  • Page 72
    Avis Budget Group, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Year Ended December 31, 2015 2014 2013 Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, ...

  • Page 73
    ... Budget Group, Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2015 2014 2013 Net income $ 313 $ 245 $ 16 Other comprehensive income (loss), net of tax Currency translation adjustments, net of tax of $(22), $(30) and $7, $ respectively Available-for-sale...

  • Page 74
    ...vehicle programs Assets under vehicle programs: Program cash Vehicles, net Receivables from vehicle manufacturers and other Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable and other current...

  • Page 75
    ... Accounts payable and other current liabilities Other, net Net cash provided by operating activities Investing activities Property and equipment additions Proceeds received on asset sales Net assets acquired (net of cash acquired) Other, net Net cash used in investing activities exclusive of vehicle...

  • Page 76
    Avis Budget Group, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In millions) Year Ended December 31, 2015 2014 2013 Vehicle programs: Proceeds from borrowings Payments on borrowings Debt financing fees Net cash provided by financing activities Effect of changes in exchange rates on cash ...

  • Page 77
    ... income Net activity related to restricted stock units Exercise of stock options Change in excess tax benefit on equity awards Activity related to employee stock purchase plan Repurchase of common stock Balance at December 31, 2015 - - - - - 137.1 1 137.1 1 137.1 1 $ - - - - Shares 137.1 Amount...

  • Page 78
    ... markets. International-provides and licenses the Company's brands to third parties for vehicle rentals and ancillary products and services in Europe, the Middle East, Africa, Asia, Australia and New Zealand, and operates the Company's car sharing business in certain of these markets. • In 2015...

  • Page 79
    ... The Company derives revenue primarily through the operation and licensing of its rental systems and by providing vehicle rentals and other services to business and leisure travelers and others. Other revenue includes sales of loss damage waivers and insurance products, fuel and fuel service charges...

  • Page 80
    ... to repurchase vehicles at a specified price and date, or guarantee the depreciation rate for a specified period of time, subject to certain eligibility criteria (such as car condition and mileage requirements). The Company depreciates vehicles such that the net book value on the date of return to...

  • Page 81
    ... Instruments Derivative instruments are used as part of the Company's overall strategy to manage exposure to market risks associated with fluctuations in currency exchange rates, interest rates and gasoline costs. As a matter of policy, derivatives are not used for trading or speculative purposes...

  • Page 82
    ...public liability and third-party property damage claims, as well as claims arising from the sale of ancillary insurance products including but not limited to supplemental liability, personal effects protection and personal accident insurance. These obligations represent an estimate for both reported...

  • Page 83
    ...period of the awards. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant and, since the Company does not currently pay or plan to pay a dividend on its common stock, the expected dividend yield was zero. Business Combinations The Company uses the...

  • Page 84
    ... requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued and to provide related footnote disclosures in certain circumstances. ASU 2014-15 became effective for the Company on...

  • Page 85
    ... States, in which it closed certain rental locations and decreased the size of the rental fleet, with the intent to increase fleet utilization and reduce costs (the "Truck Rental restructuring"). This initiative is complete. In 2011, subsequent to the acquisition of Avis Europe plc, the Company...

  • Page 86
    ... In April 2015, the Company completed the acquisition of Maggiore Group ("Maggiore") for approximately $160 million, net of acquired cash and short-term investments. The investment enables the Company to expand its footprint with a leading provider of vehicle rental services in Italy. The excess of...

  • Page 87
    ..., Canada; Southern California and Las Vegas, and reacquired the right to operate the Budget brand in Portugal, for approximately $263 million, plus $132 million for acquired fleet. These investments enabled the Company to expand its footprint of Company-operated locations. The acquired fleet was...

  • Page 88
    ... and Las Vegas and Portugal. 2013 Payless Car Rental In July 2013, the Company completed the acquisition of Payless for $46 million, net of acquired cash. The acquisition provided the Company with a position in the deep-value segment of the car rental industry. The excess of the purchase price over...

  • Page 89
    ... 2017, $40 million for 2018, $38 million for 2019 and $38 million for 2020, excluding effects of currency exchange rates. The carrying amounts of goodwill and related changes are as follows: Total Americas International Company $ 1,904 $ 905 $ 2,809 (1,587) (531) (2,118) 317 374 691 190 13 203 (28...

  • Page 90
    8. Income Taxes The provision for (benefit from) income taxes consists of the following: Year Ended December 31, 2015 2014 2013 Current Federal State Foreign Current income tax provision Deferred Federal State Foreign Deferred income tax provision Provision for income taxes $ (32) $ 3 40 11 (1) $ 4...

  • Page 91
    ...: State and local income taxes, net of federal tax benefits Changes in valuation allowances (a) Taxes on foreign operations at rates different than statutory U.S. federal rates Resolution of a prior-year tax matter (b) Non-deductible debt extinguishment costs Non-deductible transaction-related costs...

  • Page 92
    ... tax benefits will change significantly in 2016. The Company is subject to taxation in the United States and various foreign jurisdictions. As of December 31, 2015, the 2012 through 2014 tax years generally remain subject to examination by the federal tax authorities. The 2010 through 2014 tax years...

  • Page 93
    ... 31, 2015 2014 352 $ 328 220 194 199 229 131 121 103 89 480 530 1,485 $ 1,491 Accounts payable Accrued sales and use taxes Accrued payroll and related Public liability and property damage insurance liabilities - current Deferred revenue - current Other Accounts payable and other current liabilities...

  • Page 94
    ...to partially fund the acquisition of its Budget licensee for Southern California and Las Vegas. 5¼% Senior Notes due 2025. In March 2015, the Company issued $375 million of 5¼% Senior Notes due 2025 at par. In April 2015, the Company used net proceeds from the offering to redeem the remaining $223...

  • Page 95
    ... borrowings principally to fund increases in the Company's car rental fleet. The increase includes additional borrowing related to the acquisition of Maggiore. Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of December 31, 2015 and 2014 were $41 million and $44...

  • Page 96
    ... payment date of December 2020, respectively. The Company used the proceeds from these borrowings to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States. Borrowings under the Avis Budget Rental Car Funding program primarily represent fixed rate...

  • Page 97
    ... due to Avis Budget Rental Car Funding, at December 31, 2015: Debt under Vehicle Programs $ 1,501 2,884 1,626 1,389 1,513 $ 8,913 2016(a) 2017 2018 2019 2020 _____ (a) Vehicle backed debt maturing within one year primarily represents term asset-backed securities. COMMITTED CREDIT FACILITIES AND...

  • Page 98
    ...term lengths and prevailing market rate rents. Future minimum lease payments required under noncancelable operating leases, including minimum concession fees charged by airport authorities, which in many locations are recoverable from vehicle rental customers, as of December 31, 2015, are as follows...

  • Page 99
    ... invoiced related to renting a vehicle and associated products in Canada. The application seeks penalties against the Company and its subsidiaries totaling approximately $25 million as well as reimbursements to current and former customers of amounts collected and retained by the Company related to...

  • Page 100
    ... Company's Board of Directors has authorized the repurchase of up to $885 million of its common stock under a plan originally approved in 2013 and subsequently expanded in 2014 and 2015. During 2015, 2014 and 2013, the Company repurchased approximately 16.1 million shares of common stock at a cost...

  • Page 101
    ...'s repurchase of a portion of its Convertible Notes, the Company repurchased warrants for the purchase of the Company's common stock for $37 million and sold an equal portion of its convertible note hedge for $50 million, reducing the number of shares related to each of the hedge and warrant by...

  • Page 102
    ...-free interest rate Valuation period Dividend yield 2015 37% 0.74% 3 years 0% 2014 40% 0.83% 3 years 0% 2013 43% 0.39% 3 years 0% Annual activity related to stock units and cash units, consisted of (in thousands of shares): Performance-Based and Market Based RSUs Weighted Average Grant Number Date...

  • Page 103
    ... Compensation Plan. During 2015, 2014 and 2013, the Company granted 22,000, 20,000 and 33,000 awards, respectively, to non-employee directors. Employee Stock Purchase Plan The Company is authorized to sell shares of its common stock to eligible employees at 95% of fair market value. This plan has...

  • Page 104
    ... Benefit obligation at end of prior year Service cost Interest cost Plan amendments Actuarial (gain) loss Currency translation adjustment Net benefits paid Benefit obligation at end of current year Change in Plan Assets Fair value of assets at end of prior year Actual return on plan assets Employer...

  • Page 105
    ... used to determine pension obligations and pension costs for the principal plans in which the Company's employees participated: For the Year Ended December 31, 2015 2014 2013 4.00% 4.40% 7.25% 4.75% 4.00% 7.50% 3.75% 4.75% 7.50% U.S. Pension Benefit Plans Discount rate: Net periodic benefit cost...

  • Page 106
    ...the years ended December 31, 2015, 2014 and 2013, the Company contributed a total of $9 million, $9 million and $8 million, respectively, to multiemployer plans. 18. Financial Instruments Risk Management Currency Risk. The Company uses currency exchange contracts to manage its exposure to changes in...

  • Page 107
    ... of credit risk with any individual counterparty or groups of counterparties at December 31, 2015 or 2014, other than (i) risks related to the Company's repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers, including Ford, General Motors, Chrysler...

  • Page 108
    ... of December 31, 2015 Carrying Estimated Amount Fair Value Corporate debt Short-term debt and current portion of long-term debt $ Long-term debt Debt under vehicle programs Vehicle-backed debt due to Avis Budget Rental Car Funding Vehicle-backed debt Interest rate swaps and interest rate caps (a) 26...

  • Page 109
    ...-titled measures used by other companies. Year Ended December 31, 2015 Americas $ 6,069 1,478 234 682 143 3,940 9,440 131 International $ 2,433 455 55 277 75 1,901 2,276 68 Corporate and Other (a) $ - - - (56) - 77 - - Total 8,502 1,933 289 903 218 5,918 11,716 199 Net revenues Vehicle depreciation...

  • Page 110
    ... The geographic segment information provided below is classified based on the geographic location of the Company's subsidiaries. United States 2015 Net revenues Assets exclusive of assets under vehicle programs Assets under vehicle programs Net long-lived assets 2014 Net revenues Assets exclusive of...

  • Page 111
    ... of assets under vehicle programs decreased $114 121 Total $127 134 20. Guarantor and Non-Guarantor Consolidating Financial Statements The following consolidating financial information presents Consolidating Condensed Statements of Operations for the years ended December 31, 2015, 2014 and 2013...

  • Page 112
    ... Statements of Operations For the Year Ended December 31, 2015 NonGuarantor Subsidiaries $ 1,902 3,335 5,237 Parent Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related...

  • Page 113
    ... 3,426 5,414 Parent Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation and amortization Interest expense related to corporate debt, net: Interest expense...

  • Page 114
    ... 3,086 5,007 Parent Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative Vehicle interest, net Non-vehicle related depreciation and amortization Interest expense related to corporate debt, net: Interest expense...

  • Page 115
    ...vehicle programs Assets under vehicle programs: Program cash Vehicles, net Receivables from vehicle manufacturers and other Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable and other current...

  • Page 116
    ...vehicle programs Assets under vehicle programs: Program cash Vehicles, net Receivables from vehicle manufacturers and other Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable and other current...

  • Page 117
    ... Other, net Net cash provided by (used in) financing activities exclusive of vehicle programs Vehicle programs: Proceeds from borrowings Payments on borrowings Debt financing fees Net cash provided by (used in) financing activities Effect of changes in exchange rates on cash and cash equivalents Net...

  • Page 118
    ... Other, net Net cash provided by (used in) financing activities exclusive of vehicle programs Vehicle programs: Proceeds from borrowings Payments on borrowings Debt financing fees Net cash provided by (used in) financing activities Effect of changes in exchange rates on cash and cash equivalents Net...

  • Page 119
    ... Other, net Net cash provided by (used in) financing activities exclusive of vehicle programs Vehicle programs: Proceeds from borrowings Payments on borrowings Debt financing fees Net cash provided by (used in) financing activities Effect of changes in exchange rates on cash and cash equivalents Net...

  • Page 120
    ...levels and market prices. Therefore, the sum of the quarters' per share information may not equal the annual amount presented on the Consolidated Statements of Operations. 2015 First Second 1,850 $ 2,173 $ (9) 143 Third 2,577 184 Fourth 1,902 (5) Net revenues Net income (loss) Per share information...

  • Page 121
    ...Tax Valuation Allowance: Year Ended December 31, 2015 (a)(b) $ 319 $ 20 $ 2014 (a) 347 (9) 2013 (c) 298 27 _____ (a) Other adjustments relate to currency translation adjustments. (b) Other adjustments relate to the acquisition of Brazil. (c) Other adjustments relate to the acquisition of Zipcar. 12...

  • Page 122
    ...Amended and Restated By-Laws of Avis Budget Group, Inc. as of September 15, 2015 (Incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K dated September 18, 2015). Indenture dated as of November 8, 2012 among Avis Budget Car Rental, LLC and Avis Budget Finance, Inc., as...

  • Page 123
    ... 2009).†Avis Budget Group, Inc. Non-Employee Directors Deferred Compensation Plan, amended and restated as of January 1, 2013 (Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012 dated February 21, 2013).†Avis Budget Group...

  • Page 124
    ... Avis Budget Car Rental, LLC and General Motors LLC (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated August 20, 2015). ††Avis Budget Car Rental 2015 Model Year Program Letter dated September 30, 2014 between Avis Budget Car Rental, LLC and Ford Motor...

  • Page 125
    ... Quartx Fleet Management, Inc., as a Permitted Nominee, and Avis Budget Rental Car Funding (AESOP) LLC, as Lender, to the Second Amended and Restated Loan Agreement, dated as of June 3, 2004 (Incorporated by reference to Exhibit 10.36(c) to the Company's Annual Report on Form 10-K for the year ended...

  • Page 126
    ... Leasing Corp. II, Avis Rent A Car System, Inc.****, Budget Rent A Car System, Inc., Cendant Car Rental Group, Inc.** and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 10.34 to the Company's Annual Report on Form 10-K for the year ended December 31, 2005, dated March 1, 2006...

  • Page 127
    ...Exhibit 10.1 to the Company's Current Report on Form 8-K dated May 29, 2015). Third Amended and Restated Credit Agreement, dated as of October 3, 2014, among Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC, Avis Budget Group, Inc., the Subsidiary Borrowers from time to time parties there, the...

  • Page 128
    ... Rental Group, LLC, Avis Caribbean, Limited, Avis Enterprises, Inc., Avis Group Holdings, LLC, Avis International, Ltd., Avis Operations, LLC, Avis Rent A Car System, LLC, PF Claims Management, Ltd., PR Holdco, Inc., Wizard Co., Inc., BGI Leasing, Inc., Budget Rent A Car System, Inc., Budget Truck...

  • Page 129
    ... 10, 2015). Cooperation Agreement, dated as of January 25, 2016, by and among Avis Budget Group, Inc. and SRS Investment Management LLC (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 25, 2016). Statement Re: Computation of Ratio of Earnings to...

  • Page 130
    ... and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 24, 2016 /s/ Larry D. De Shon Chief Executive Officer and Director

  • Page 131
    ...for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in...

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    Global Headquarters Avis Budget Group, Inc. 6 Sylvan Way Parsippany, New Jersey 07054 Tel: 973.496.4700 Web: www.avisbudgetgroup.com NASDAQ: CAR