SOURCE: Avis Budget Group, Inc.

Avis Budget Group, Inc.

February 17, 2010 16:15 ET

Avis Budget Group Reports Results for Fourth Quarter and Full Year 2009

-- Fourth quarter EBITDA improved by $111 million year-over-year.

-- Full-year EBITDA increased 44% to $243 million and pretax loss improved to $6 million, excluding unusual items.

-- Full-year revenue of $5.1 billion.

-- Full-year pretax loss of $77 million.

PARSIPPANY, N.J.--(Marketwire - February 17, 2010) - Avis Budget Group, Inc. (NYSE: CAR) today reported results for its fourth quarter and full year, which ended December 31, 2009. The Company reported full-year revenue of $5.1 billion and a pretax loss of $77 million, including $20 million of restructuring charges and $33 million of non-cash impairment charges. For the fourth quarter, the Company reported revenue of $1.2 billion and a pretax loss of $88 million, including $5 million of restructuring charges and a $32 million non-cash impairment charge.

Excluding unusual items, the Company generated full-year EBITDA of $243 million and a pretax loss of $6 million, and fourth quarter EBITDA of $14 million and a pretax loss of $51 million.

"In the fourth quarter, we saw a continuation of trends from the third quarter, specifically, strong pricing, tepid demand, a healthy used-car market and rigorous cost control throughout our operations. This enabled us to post significant year-over-year improvement in earnings," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "Our decisions to remain tight-fleeted and further reduce unprofitable transactions helped us increase our Domestic Car Rental EBITDA by more than $80 million versus the prior-year quarter, despite lower revenues and lower rental volumes. Our ongoing cost reductions were also critical to our improved results.

"As we look into 2010, we expect year-over-year rental volume comparisons to improve over the course of the year, cost-saving initiatives to provide incremental benefits and the used car market to remain healthy. We also expect our per-unit fleet costs to decline year-over-year as we add more model-year 2010 vehicles to our fleet," Mr. Nelson said.

Executive Summary

Fourth Quarter Results

In the fourth quarter, total car rental revenues decreased 9% year-over-year, driven primarily by a 19% decrease in rental days and a 13% increase in time and mileage revenue per day. Domestic ancillary revenues grew 9% on a per-rental-day basis.

Our car fleet costs decreased 21% due to a 3% decrease in our per-unit fleet costs and an 18% reduction in our average fleet. Other operating expenses, excluding net gasoline and insurance-related impacts, decreased 80 basis points to 52.6% of revenue, principally reflecting cost-saving and productivity improvement initiatives. Selling, general and administrative costs increased 10 basis points as a percentage of revenue to 10.9% primarily due to the absence of incentive compensation expense in fourth quarter 2008.

Truck rental revenue decreased 2% and EBITDA increased as cost savings were partially offset by a 2% decline in rental days, and time and mileage revenue per day was essentially unchanged.

In the fourth quarter, we recorded a $5 million restructuring charge related to our cost-reduction and efficiency improvement plan, as well as a $32 million non-cash impairment charge related to our investment in Carey Holdings, Inc.

Full-Year Results

For the full year, total car rental revenues decreased 15% versus the previous year, driven by a 20% decline in rental days partially offset by a 6% increase in time and mileage revenue per day. Leisure pricing was strong, particularly in the second half of 2009. Commercial pricing also increased modestly. Our rental days declined year-over-year due to the effects of reduced airline passenger volumes and our actions to reduce volume from unprofitable channels and transactions. Our off-airport revenues decreased 15%, to approximately $700 million, and we closed 124 under-performing off-airport locations during the year. Domestic ancillary revenue growth of 15% per rental day was driven by pricing actions and higher penetration rates.

Our car fleet costs decreased 16% due to a 3% increase in our per-unit fleet costs and a 19% reduction in our average fleet. Other operating expenses, excluding net gasoline and insurance-related impacts, decreased 40 basis points to 49.9% of revenue, principally reflecting cost-saving initiatives and productivity improvements. Selling, general and administrative costs decreased 20 basis points as a percentage of revenue to 10.5%, primarily due to cost-saving initiatives, partially offset by the absence of incentive compensation expense in 2008.

Truck rental revenue decreased 7% as rental days declined 7% and time and mileage revenue per day decreased 1%. EBITDA increased significantly, as we achieved substantial cost savings.

Business Segment Discussion

The following discussion of fourth quarter operating results focuses on revenue and EBITDA for each of our operating segments. Revenue and EBITDA are expressed in millions.

Domestic Car Rental

(Consisting of the Company's U.S. Avis and Budget car rental operations)

               2009      2008    % change
              ------    ------   --------
Revenue       $  867    $  999        (13%)
EBITDA        $  (20)   $ (116)        NM

Revenue declined 13% primarily due to a 21% decrease in rental days, partially offset by a 9% increase in time and mileage revenue per day. EBITDA increased due to higher time and mileage rates per day, increased ancillary revenues per day, lower per-unit fleet costs, favorable self-insurance costs and cost-saving initiatives, partially offset by lower revenues. EBITDA includes restructuring costs of $4 million in fourth quarter 2009 compared with $18 million in fourth quarter 2008.

International Car Rental

(Consisting of the Company's international Avis and Budget vehicle rental operations)

               2009      2008    % change
              ------    ------   --------
Revenue       $  211    $  179         18%
EBITDA        $   33    $   26         27%

Revenue increased 18% due to a 34% increase in time and mileage revenue per day, partially offset by a 10% decrease in rental days. EBITDA increased year-over-year primarily due to higher time and mileage revenue per day and the impact of exchange rates, partially offset by lower rental days and higher per-unit fleet costs. Excluding the impact of foreign exchange, time and mileage per day rates increased 10% and EBITDA increased slightly. EBITDA includes $1 million of restructuring costs in fourth quarter 2009 compared with $2 million in fourth quarter 2008.

Truck Rental

(Consisting of the Company's Budget Truck rental business)

               2009      2008    % change
              ------    ------   --------
Revenue       $   81    $   83         (2%)
EBITDA        $    1    $   (8)        NM

Revenue decreased 2% due to a 2% decrease in rental day volume. EBITDA increased primarily due to reduced operating and fleet costs. EBITDA in fourth quarter 2008 included $2 million of restructuring costs.

Other Items

-- Debt Covenant Compliance - As of December 31, 2009, the Company remained
   in compliance with its financial covenant requirements under its senior
   credit facility.  EBITDA for the latest twelve months for covenant
   purposes of approximately $265 million exceeded the requirement of
   $155 million.
-- Vehicle Financing - In November 2009, the Company completed a $200
   million two-year vehicle-backed financing facility to fund its domestic
   and/or Canadian car rental fleet. In addition, the Company completed the
   annual renewal of its $1.95 billion vehicle-backed conduit financing
   facility at a reduced interest rate from the prior year. These
   transactions substantially completed our domestic fleet financing
   requirements for 2010.
-- Convertible Debt - In October 2009, the Company completed a $345 million
   five-year convertible note offering to provide additional corporate
   liquidity.  The Company simultaneously entered into a convertible note
   hedge and warrant transaction to increase the effective conversion
   price of the notes from the Company's perspective.
-- Fleet Negotiations - The Company has substantially completed its
   agreements with auto manufacturers for the purchase of model-year 2010
   vehicles.  Based on the agreements, the Company expects that no single
   manufacturer will account for more than approximately 25% of its U.S.
   rental car fleet and per-unit fleet costs are expected to decline
   compared with the prior year.
-- Annual Stockholders Meeting - We have scheduled our 2010 Annual Meeting
   of Stockholders for May 26, 2010 in Wilmington, Del.  Stockholders of
   record as of the close of business on March 31, 2010 will be entitled
   to vote at the annual meeting.

Outlook

While demand for vehicle rentals appears to have stabilized, the Company expects the macroeconomic climate will remain challenging and rental volumes in the first quarter will again be lower than in the comparable prior-year period. Based on rental and reservation activity to date, the Company expects year-over-year pricing comparisons will continue to be positive in the first quarter. Furthermore, the Company expects rental volumes to improve sequentially over the course of 2010. The Company also expects to keep the size of its rental fleet in line with rental demand, as it did throughout 2009.

We estimate that our domestic fleet costs will decline 4-6% in 2010 on a per-unit basis, which we project will offset higher interest costs and other inflationary cost increases. The Company is continuing its efforts to reduce costs and enhance productivity through its Performance Excellence initiative and five-point cost-reduction and efficiency improvement plan. The Company expects that its cost-saving initiatives will provide an incremental $40-60 million of savings in 2010 compared to 2009, and the total annual savings from the Company's actions are expected to exceed $450 million in 2010.

Investor Conference Call

Avis Budget Group will host a conference call to discuss fourth quarter and full-year results on Thursday, February 18, 2010, at 9:00 a.m. (ET). Investors may access the call live at www.avisbudgetgroup.com or by dialing (210) 234-0038, and providing the access code "Avis Budget." Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at www.avisbudgetgroup.com following the call. A telephone replay will be available from 2:00 p.m. (ET) on February 18, 2010 until 8:00 p.m. (ET) on February 25 at (402) 998-1687, access code: "Avis Budget."

About Avis Budget Group, Inc.

Avis Budget Group is a leading provider of vehicle rental services, with operations in more than 70 countries. Through its Avis and Budget brands, the Company is a leading general-use vehicle rental company in each of North America, Australia, New Zealand and certain other regions based on published airport statistics. Avis Budget Group is headquartered in Parsippany, N.J. and has approximately 23,000 employees. For more information about Avis Budget Group, visit www.avisbudgetgroup.com.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may fluctuate", "forecast" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results, including all statements related to first quarter and full-year 2010 results, future fleet costs, refinancing plans and cost-saving initiatives are forward-looking statements.

Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, a weaker-than-anticipated economic environment, the high level of competition in the vehicle rental industry, greater-than-expected costs for new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers of our cars, lower-than-anticipated airline passenger traffic, an occurrence or threat of terrorism, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our operations, including the funding of our vehicle fleet via the asset-backed securities market and the financial condition of financial-guaranty firms that have insured a portion of our outstanding vehicle-backed debt, higher-than-expected fuel costs, fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, the Company's ability to meet or amend financial covenants associated with its borrowings and the Company's ability to accurately estimate its future results and implement its strategy for cost savings and growth, particularly in the current environment. Other unknown or unpredictable factors also could have material adverse effects on Avis Budget Group's performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Avis Budget Group's Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the period ended September 30, 2009 included under headings such as "Forward-Looking Statements", "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in other filings and furnishings made by the Company with the SEC from time to time. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.

This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained on Table 5 to this release.

                                                                    Table 1

                          Avis Budget Group, Inc.
                            SUMMARY DATA SHEET
                   (In millions, except per share data)

                           Three Months Ended           Year Ended
                               December 31,            December 31,
                         -----------------------  ------------------------
                          2009    2008  % Change   2009     2008  % Change
                         ------  ------  -------  ------  -------  -------
Income Statement Items
      Net revenues       $1,160  $1,261      (8%) $5,131  $ 5,984     (14%)
      Loss before income
       taxes                (88)   (164)       *     (77)  (1,343)       *
      Net loss              (49)   (121)       *     (47)  (1,124)       *
      Earnings per share
       - Diluted          (0.47)  (1.20)       *   (0.46)  (11.04)       *

      Excluding Unusual
       Items
       (non-GAAP)(A)
      Net revenues       $1,160  $1,261      (8%) $5,131  $ 5,984     (14%)
      Loss before income
       taxes                (51)   (143)       *      (6)     (48)       *
      Net loss              (27)   (111)       *      (4)     (51)       *
      Earnings per share
       - Diluted          (0.25)  (1.08)       *   (0.04)   (0.50)       *


                             As of
                         --------------
                       December December
                           31,     31,
                          2009    2008
                         ------  ------
Balance Sheet Items
      Cash and cash
       equivalents (B)   $  482  $  258
      Vehicles, net       5,967   7,164
      Debt under vehicle
       programs           4,374   6,034
      Corporate debt      2,131   1,789
      Stockholders'
       equity               222      93


Segment Results

                           Three Months Ended           Year Ended
                               December 31,            December 31,
                         -----------------------  ------------------------
                          2009    2008  % Change   2009     2008  % Change
                         ------  ------  -------  ------  -------  -------
Net Revenues
Domestic Car Rental      $  867  $  999     (13%) $3,967  $ 4,695     (16%)
International Car Rental    211     179      18%     808      904     (11%)
Truck Rental                 81      83      (2%)    354      382      (7%)
Corporate and Other           1       -        *       2        3        *
                         ------  ------           ------  -------
Total Company            $1,160  $1,261      (8%) $5,131  $ 5,984     (14%)
                         ======  ======           ======  =======

EBITDA (C)
Domestic Car Rental      $  (20) $ (116)       *  $  108  $    12        *
International Car Rental     33      26      27%     126      141     (11%)
Truck Rental                  1      (8)       *      13       (4)       *
Corporate and Other          (5)     (4)       *     (42)     (13)       *
                         ------  ------           ------  -------
Total Company            $    9  $ (102)       *  $  205  $   136      51%
                         ======  ======           ======  =======

Reconciliation of EBITDA
 to Pretax Loss
Total Company EBITDA     $    9  $ (102)          $  205  $   136
Less:   Non-vehicle
 related depreciation
 and amortization            24      26               96       88
  Interest expense
   related to corporate
   debt, net                 41      36              153      129
  Impairment (A)             32       -               33    1,262
                         ------  ------           ------  -------
Loss before income taxes $  (88) $ (164)       *  $  (77) $(1,343)       *
                         ======  ======           ======  =======

*  Not meaningful.
(A) During the three months and year ended December 31, 2009, we recorded
    unusual items of $37 million and $71 million, respectively. For the
    three months ended December 31, 2009, these items consist of $5
    million ($3 million, net of tax) in restructuring charges related to
    our cost-reduction and efficiency improvement plan and $32 million
    ($19 million, net of tax) for the impairment of our investment in
    Carey Holdings, Inc. ("Carey"). For the year ended December 31, 2009,
    these items consist of (i) $20 million ($12 million, net of tax) in
    restructuring charges related to our cost-reduction and efficiency
    improvement plan, (ii) $18 million ($11 million, net of tax) for an
    adverse litigation judgment and (iii) $33 million ($20 million, net
    of tax) for investment impairments.
    During the three months and year ended December 31, 2008, we recorded
    unusual items of $21 million and $1,295 million, respectively. For
    the three months ended December 31, 2008, these items consist of $22
    million ($13 million, net of tax) in restructuring charges related to
    our cost-reduction and efficiency improvement plan and a $1 million
    credit for separation-related costs in connection with the execution
    of the plan to separate Cendant (as we were formerly known) into four
    independent companies. For the year ended December 31, 2008, these
    items consist of $1,262 million ($1,053 million, net of tax) for the
    impairment of goodwill, our tradenames asset and our investment in
    Carey, and $33 million ($20 million, net of tax) for restructuring
    and other items.

(B) The balance at December 31, 2009 and 2008 includes $5 million and $10
    million, respectively, of cash which will be utilized to pay separation
    costs or will be distributed to Realogy and Wyndham.

(C) See Table 5 for a description of EBITDA.




                                                                    Table 2

                          Avis Budget Group, Inc.
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                   (In millions, except per share data)

                                       Three Months Ended    Year Ended
                                          December 31,      December 31,
                                        ----------------  ----------------
                                          2009     2008     2009     2008
                                        -------  -------  -------  -------
Revenues
   Vehicle rental                       $   869  $   954  $ 3,906  $ 4,564
   Other                                    291      307    1,225    1,420
                                        -------  -------  -------  -------
Net revenues                              1,160    1,261    5,131    5,984
                                        -------  -------  -------  -------

Expenses
   Operating                                617      711    2,636    3,147
   Vehicle depreciation and lease
    charges, net                            320      400    1,425    1,697
   Selling, general and administrative      130      144      551      655
   Vehicle interest, net                     79       87      294      321
   Non-vehicle related depreciation and
    amortization                             24       26       96       88
   Interest expense related to
    corporate debt, net                      41       36      153      129
   Restructuring charges                      5       22       20       28
   Impairment                                32        -       33    1,262
   Separation costs, net                      -       (1)       -        -
                                        -------  -------  -------  -------
Total expenses                            1,248    1,425    5,208    7,327
                                        -------  -------  -------  -------

Loss before income taxes                    (88)    (164)     (77)  (1,343)
Benefit from income taxes                   (39)     (43)     (30)    (219)
                                        -------  -------  -------  -------
Net loss                                $   (49) $  (121) $   (47) $(1,124)
                                        =======  =======  =======  =======

Earnings (loss) per share
   Basic and Diluted                    $ (0.47) $ (1.20) $ (0.46) $(11.04)

Weighted average shares outstanding
   Basic and Diluted                      102.3    101.7    102.2    101.9




                                                                    Table 3

                          Avis Budget Group, Inc.
                      SEGMENT REVENUE DRIVER ANALYSIS

                              Three Months Ended
                                 December 31,       Year Ended December 31,
                            ----------------------  ----------------------
                              2009   2008  %Change   2009    2008  %Change
                            ------- ------- ------  ------- ------- ------
CAR RENTAL

    Domestic Car Rental
     Segment

       Rental Days (000's)   15,581  19,707   (21%)  72,811  92,291   (21%)
       Time and Mileage
        Revenue per Day     $ 42.69 $ 39.06     9%  $ 42.22 $ 39.41     7%
       Average Rental Fleet 235,771 291,003   (19%) 270,223 338,093   (20%)

    International Car
     Rental Segment

       Rental Days (000's)    2,955   3,300   (10%)  13,021  14,346    (9%)
       Time and Mileage
        Revenue per Day (A) $ 47.60 $ 35.64    34%  $ 42.36 $ 43.40    (2%)
       Average Rental Fleet  47,905  54,825   (13%)  51,109  56,726   (10%)

    Total Car Rental

       Rental Days (000's)   18,536  23,007   (19%)  85,832 106,637   (20%)
       Time and Mileage
        Revenue per Day     $ 43.47 $ 38.57    13%  $ 42.24 $ 39.94     6%
       Average Rental Fleet 283,676 345,828   (18%) 321,332 394,819   (19%)

TRUCK RENTAL SEGMENT

       Rental Days (000's)      958     978    (2%)   3,840   4,129    (7%)
       Time and Mileage
        Revenue per Day     $ 67.27 $ 67.13     0%  $ 73.08 $ 73.66    (1%)
       Average Rental Fleet  28,366  29,686    (4%)  28,988  29,744    (3%)

Rental days and time and mileage revenue per day are calculated based on
the actual rental of the vehicle during a 24-hour period. Our calculation
of rental days and time and mileage revenue per day may not be comparable
to the calculation of similarly-titled statistics by other companies.

(A) Of the change in time and mileage per day, 24 percentage points and (7)
    percentage points are due to movements in foreign exchange rates in the
    three months and for the year ended December 31, 2009, respectively,
    with time and mileage revenue per day increasing by 10 percentage
    points and 5 percentage points, respectively, excluding
    foreign-exchange effects.





                                                                    Table 4

                          Avis Budget Group, Inc.
         CONSOLIDATED SCHEDULES OF CASH FLOWS AND FREE CASH FLOWS
                              (In millions)


                    CONSOLIDATED SCHEDULE OF CASH FLOWS


                                                               Year Ended
                                                              December 31,
                                                                  2009
                                                              ------------
Operating Activities
 Net cash provided by operating activities exclusive of
  vehicle programs                                            $        100
 Net cash provided by operating activities of vehicle
  programs                                                           1,391
                                                              ------------
 Net cash provided by operating activities                           1,491
                                                              ------------

Investing Activities
 Net cash used in investing activities exclusive of vehicle
  programs                                                             (25)
 Net cash provided by investing activities of vehicle
  programs                                                             191
                                                              ------------
 Net cash provided by investing activities                             166
                                                              ------------

Financing Activities
 Net cash provided by financing activities exclusive of
  vehicle programs                                                     288
 Net cash used in financing activities of vehicle programs          (1,753)
                                                              ------------
 Net cash used in financing activities                              (1,465)
                                                              ------------

Effect of changes in exchange rates on cash and cash
 equivalents                                                            32
                                                              ------------
Net increase in cash and cash equivalents                              224
Cash and cash equivalents, beginning of period                         258
                                                              ------------
Cash and cash equivalents, end of period                      $        482
                                                              ============


             CONSOLIDATED SCHEDULE OF FREE CASH FLOWS (A)

                                                               Year Ended
                                                              December 31,
                                                                  2009
                                                              ------------
Pretax income                                                 $        (77)
Addback of impairment                                                   33
Addback of non-cash, non-vehicle related depreciation and
 amortization                                                           96
Working capital and other (B)                                          111
Capital expenditures                                                   (39)
Tax payments, net of refunds                                           (19)
Vehicle programs and (gain) loss on vehicle sales (C)                 (201)
                                                              ------------ 
Free Cash Flow                                                         (96)

Borrowings, net                                                        334
Foreign exchange effects and other                                      19
Net purchases of equity instruments                                    (33)
                                                              ------------
Net increase in cash and cash equivalents (per above)         $        224
                                                              ============


(A) See Table 5 for a description of Free Cash Flow.
(B) Working capital and other includes net separation-related outflows
    of $5 million.
(C) Primarily reflects vehicle-backed borrowings (repayments) that are
    incremental to vehicle-backed borrowings (repayments) required to
    fund incremental (reduced) vehicle and vehicle-related assets.



               RECONCILIATION OF FREE CASH FLOW TO NET CASH
                     PROVIDED BY OPERATING ACTIVITIES

                                                               Year Ended
                                                              December 31,
                                                                  2009
                                                              ------------
     Free Cash Flow (per above)                               $        (96)
     Cash (inflows) outflows included in Free Cash Flow but
      not reflected in Net Cash Provided by Operating
      Activities (per above)
           Investing activities of vehicle programs                   (191)
           Financing activities of vehicle programs                  1,753
           Capital expenditures                                         39
           Proceeds received on asset sales                            (14)
                                                              ------------
     Net Cash Provided by Operating Activities (per above)    $      1,491
                                                              ============




                                                                    Table 5

                          Avis Budget Group, Inc.
           DEFINITIONS AND RECONCILIATIONS OF NON-GAAP MEASURES
                              (In millions)

The accompanying press release includes certain non-GAAP (generally
accepted accounting principles) financial measures as defined under SEC
rules. To the extent not provided in the press release or accompanying
tables, we have provided below the reasons we present these non-GAAP
financial measures, a description of what they represent and a
reconciliation to the most comparable financial measure calculated and
presented in accordance with GAAP.

                               DEFINITIONS
EBITDA
The accompanying press release presents EBITDA, which represents income
(loss) before non-vehicle related depreciation and amortization, any
impairment charge, non-vehicle related interest and income taxes. We
believe that EBITDA is useful as a supplemental measure in evaluating the
aggregate performance of our operating businesses. EBITDA is the measure
that is used by our management, including our chief operating decision
maker, to perform such evaluation. It is also a component of our financial
covenant calculations under our credit facilities, subject to certain
adjustments. EBITDA should not be considered in isolation or as a
substitute for net income (loss) or other income statement data prepared in 
accordance with GAAP and our presentation of EBITDA may not be comparable
to similarly-titled measures used by other companies.

A reconciliation of EBITDA to income (loss) before income taxes can be
found on Table 1, Summary Data Sheet, and a reconciliation of income (loss)
before income taxes to net income (loss) can be found on Table 2,
Consolidated Condensed Statement of Operations.

Unusual items
The accompanying press release presents EBITDA and loss before income taxes
for the three months and year ended December 31, 2009, excluding unusual
items. Table 1 presents loss before income taxes, net loss and earnings per
share, excluding unusual items. For the three months ended December 31,
2009, unusual items consisted of (i) $5 million for restructuring-related
expenses and (ii) $32 million for an impairment of our investment in Carey
Holdings, Inc. ("Carey"). For the year ended December 31, 2009, unusual
items consisted of (i) $20 million for restructuring-related expenses, (ii)
$18 million for an adverse litigation judgment for a breach of contract
claim related to our acquisition of our Budget vehicle rental business in
2002 and (iii) $33 million for impairments of investments. Reconciliations
of EBITDA and net loss, excluding unusual items to net loss are presented
below.

We believe that the measures referred to above are useful as supplemental
measures in evaluating the aggregate performance of the Company. We exclude
restructuring-related expenses, the litigation expense referred to above
and the impairment of an investment as such items are not representative of
the results of operations of our business for the three months and year
ended December 31, 2009.


 Reconciliation of EBITDA, excluding unusual items to net loss:

                                                Three Months
                                                    Ended      Year Ended
                                                December 31,  December 31,
                                                    2009          2009
                                                ------------  ------------
  EBITDA, excluding unusual items               $         14  $        243
  Less:   Non-vehicle related depreciation and
           amortization                                   24            96
          Interest expense related to corporate
           debt, net                                      41           153
                                                ------------  ------------
  Loss before income taxes, excluding unusual
   items                                                 (51)           (6)

  Less unusual items:
          Restructuring charges                            5            20
          Litigation costs                                 -            18
          Impairment                                      32            33
                                                ------------  ------------
  Loss before income taxes                               (88)          (77)
  Benefit from income taxes                              (39)          (30)
                                                ------------  ------------
  Net loss                                      $        (49) $        (47)
                                                ============  ============


Reconciliation of net loss, excluding unusual
 items to net loss:

  Net loss, excluding unusual items             $        (27) $         (4)
  Less unusual items, net of tax:
          Restructuring charges                            3            12
          Litigation costs                                 -            11
          Impairment                                      19            20
                                                ------------  ------------
  Net loss                                      $        (49) $        (47)
                                                ============  ============

  Earnings per share, excluding unusual items
   (diluted)                                    $      (0.25) $      (0.04)
                                                ============  ============

  Earnings per share (diluted)                  $      (0.47) $      (0.46)
                                                ============  ============

  Shares used in non-GAAP per share
   calculations-diluted                                102.3         102.2
                                                ============  ============

The accompanying press release presents EBITDA and income before income
taxes for the three months and year ended December 31, 2008 excluding
unusual items. Table 1 presents income (loss) before income taxes, income
from continuing operations and EPS from continuing operations (diluted),
excluding unusual items. For EBITDA, unusual items consist of
restructuring-related expenses, separation-related costs and the settlement
of a litigation claim. For loss before income taxes, unusual items include
separation-related costs, restructuring-related expenses, the settlement of
a litigation claim and the impairment of (i) goodwill, (ii) our tradenames
asset and (iii) our investment in Carey.

During the three months ended December 31, 2008, we recorded $21 million in
unusual items which consisted of (i) $22 million of restructuring costs,
primarily related to severance for headcount reductions, the closure of
certain facilities and the cancellation of lease contracts, and (ii) $1
million of separation-related credits. Separation-related costs were
expenses incurred in connection with the execution of the plan to separate
Cendant Corporation (as we were formerly known) into four independent
companies. The credit recorded for the three months ended December 31, 2008
relates to Separation-related tax items.

During the twelve months ended December 31, 2008, we recorded $1,295
million of unusual items which consisted of (i) a charge of $1,262 million
for the impairment of goodwill, our tradenames asset and our investment in
Carey to reflect a decline in their fair values compared to their carrying
values, (ii) $28 million of restructuring costs, primarily related to
severance for headcount reductions, the closure of certain facilities and
the cancellation of lease contracts and (iii) a $5 million charge for the
settlement of a litigation claim.




 Reconciliation of EBITDA, excluding unusual items to net loss:

                                                Three Months
                                                    Ended      Year Ended
                                                December 31,  December 31,
                                                    2008          2008
                                                ------------  ------------
  EBITDA, excluding unusual items               $        (81) $        169
  Less:   Non-vehicle related depreciation and
           amortization                                   26            88
          Interest expense related to corporate
           debt, net                                      36           129
                                                ------------  ------------
  Loss before income taxes, excluding unusual
   items                                                (143)          (48)
  Less unusual items:
          Impairment                                       -         1,262
          Restructuring charges                           22            28
          Litigation costs                                 -             5
          Separation-related costs                        (1)            -
                                                ------------  ------------
  Loss before income taxes                              (164)       (1,343)
  Benefit from income taxes                              (43)         (219)
                                                ------------  ------------
  Net loss                                      $       (121) $     (1,124)
                                                ============  ============

Reconciliation of net loss, excluding unusual
 items to net loss:

  Net loss, excluding unusual items             $       (111) $        (51)
  Less unusual items, net of tax:
          Impairment                                      (3)        1,053
          Restructuring charges                           13            17
          Litigation costs                                 -             3
          Separation-related costs                         -             -
                                                ------------  ------------
  Net loss                                      $       (121) $     (1,124)
                                                ============  ============

  Earnings per share, excluding unusual items
   (diluted)                                    $      (1.08) $      (0.50)
                                                ============  ============

  Earnings per share (diluted)                  $      (1.20) $     (11.04)
                                                ============  ============

  Shares used in non-GAAP per share
   calculations-diluted                                101.7         101.9
                                                ============  ============

Free Cash Flow
Represents Net Cash Provided by Operating Activities adjusted to include
the cash inflows and outflows relating to (i) capital expenditures and GPS
navigational units, (ii) the investing and financing activities of our
vehicle programs and (iii) asset sales, if any. We believe that Free Cash
Flow is useful to management and the investors in measuring the cash
generated that is available to be used to repurchase stock, repay debt
obligations, pay dividends and invest in future growth through new business
development activities or acquisitions. Free Cash Flow should not be
construed as a substitute in measuring operating results or liquidity, and
our presentation of Free Cash Flow may not be comparable to similarly-
titled measures used by other companies. A reconciliation of Free Cash Flow
to the appropriate measure recognized under GAAP (Net Cash Provided by
Operating Activities) is presented in Table 4, which accompanies this press
release.

Contact Information

  • Contacts
    Media Contact:
    John Barrows
    973-496-7865

    Investor Contacts:
    David Crowther
    973-496-7277

    Neal Goldner
    973-496-5086