SOURCE: Avis Budget Group, Inc.

Avis Budget Group, Inc.

November 02, 2009 16:25 ET

Avis Budget Group Reports Results for Third Quarter 2009

-- Third quarter revenue totaled $1.5 billion.

-- Third quarter EBITDA was $165 million, an increase of 17% versus prior year, and pretax income was $102 million, both excluding unusual items.

-- Domestic Car Rental EBITDA increased 52% versus prior year.

-- Third quarter pretax income was $83 million.

PARSIPPANY, N.J.--(Marketwire - November 2, 2009) - Avis Budget Group, Inc. (NYSE: CAR) today announced results for its third quarter, which ended September 30, 2009. The Company had revenue of $1.5 billion, a decrease of 14% versus third quarter 2008, and pretax income of $83 million. Excluding restructuring costs, an adverse litigation judgment and a 2008 impairment charge, third quarter EBITDA increased 17% to $165 million and pretax income increased 17% to $102 million.

"The operating trends that characterized the second quarter continued into the third quarter, with strong domestic leisure pricing, up 13% year-over-year, offsetting soft demand levels. Domestic pricing increased 9% across the Avis and Budget brands, reflecting gains in both leisure and commercial segments. We remained intensely focused on controlling expenses throughout our operations and have increased our forecast of realized cost savings for 2009 to $350-400 million," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer.

"The strength of the used car market definitely provided some wind at our back during the quarter, allowing us to actively manage the fleet in concert with demand to optimize pricing. Despite revenues that were almost $240 million lower than last year, the combination of strong pricing, cost reduction initiatives and aggressive fleet management enabled us to deliver strong gains in EBITDA versus last year's third quarter results," Mr. Nelson said.

Executive Summary

In the third quarter, our car rental revenues decreased 14% year-over-year, driven primarily by a 21% decrease in rental days. Time and mileage revenue per day increased 9% excluding the effects of foreign-exchange movements and increased 9% on a reported basis. Ancillary revenues (excluding gas and customer recoveries) increased 8% per rental day year-over-year.

Our car fleet costs decreased 25% primarily due to a 21% reduction in our average fleet and a better-than-anticipated 4% decrease in our per-unit fleet costs. Other operating expenses decreased 140 basis points to 47.7% of revenue primarily due to lower gasoline costs and our cost savings initiatives, partially offset by the effects of lower rental volumes. Selling, general and administrative costs increased 60 basis points to 10.5% of revenue, primarily due to the absence of incentive compensation expense accruals in third quarter 2008. Excluding this item, selling, general and administrative expenses decreased 30 basis points as a percentage of revenue.

Truck rental revenue declined due to a 9% decline in rental days and a slight decrease in time and mileage revenue per rental day. The decrease in rental days was driven by decreased commercial and local consumer rentals, partially offset by an increase in one-way rental volumes. Truck rental EBITDA increased $7 million due to cost saving initiatives and lower fleet costs, partially offset by the decline in revenue.

Business Segment Discussion

The following discussion of third 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   $ 1,109   $ 1,319        (16%)
EBITDA    $   102   $    67         52%

Revenue declined primarily due to a 23% decrease in rental days offset by a 9% increase in time and mileage per day rates. EBITDA increased as the decline in volume was more than offset by the increase in time and mileage rate per day, a decline in net gasoline expense and cost saving actions. EBITDA includes $1 million of restructuring costs in third quarter 2009 and $5 million in third quarter 2008.

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

            2009      2008    % change
          -------   -------   --------
Revenue   $   250   $   265         (6%)
EBITDA    $    56   $    60         (7%)

Revenue decreased primarily due to a 9% decline in rental days partially offset by a 4% increase in time and mileage per day rates. Excluding the impact of foreign exchange, time and mileage per day rates increased 9%. The reported decrease in EBITDA was entirely due to the impact of exchange rates ($10 million) as an increase in per-unit fleet costs was offset by higher pricing.

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

            2009      2008    % change
          -------   -------   --------
Revenue   $   106   $   116         (9%)
EBITDA    $    13   $     6        117%

Truck rental revenue declined due to a 9% decline in rental days. EBITDA increased due to lower fleet costs and cost-reduction efforts, partially offset by the decline in rental days.

Other Items

--  Debt Covenant Compliance - As of September 30, 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 $174 million exceeded the minimum requirement of
    $80 million.
--  Vehicle Financing - Since June, the Company's Avis Budget Rental Car
    Funding (AESOP) LLC subsidiary has completed $2.8 billion of domestic fleet
    financing in three separate transactions: in July, we completed an offering
    of $450 million three-year asset-backed securities; in early October, we
    closed an additional offering of $450 million three-year asset-backed
    securities; and in late October, we completed the renewal of our domestic
    bank conduit fleet facility, which will provide $1.95 billion in financing.
    These transactions substantially complete our domestic fleet financing
    requirements for 2010.
--  Corporate Financing - In October, the Company completed an offering of
    $345 million 3.50% Convertible Senior Notes, which mature in 2014.
--  Fleet Negotiations - The Company has largely completed its agreements
    with auto manufacturers for the purchase of model-year 2010 vehicles.
    Based on these agreements, the Company expects that no single manufacturer
    will account for more than 25% of its U.S. rental car fleet and that per-
    unit vehicle costs will be lower for model-year 2010 vehicles compared to
    the prior model-year's.
--  Unusual Item - The Company recorded an $18 million charge in its
    Corporate and Other segment in third quarter 2009 as a result of a jury
    verdict in a breach-of-contract case filed by one of our licensees in 2003
    with respect to our acquisition of our Budget vehicle rental business in
    2002.  We believe the verdict is unsupported by the evidence and will seek
    to vacate or appeal the jury's decision.
--  Carey - Our third quarter results include our equity in the results of
    Carey International, the leading international provider of chauffeured
    ground transportation services, which declined $4 million year-over-year
    due to challenging conditions in the business travel environment.  These
    results are included in the Corporate and Other segment.
    

Outlook

While demand for vehicle rentals appears to have stabilized, the Company expects the macroeconomic climate will remain challenging and rental volumes in the fourth quarter will again be lower than in the comparable 2008 period. Based on rental and reservation activity to date, the Company expects that favorable year-over-year pricing comparisons will continue in the fourth quarter. The Company also expects to keep the size of its rental fleet in line with rental demand, as it has throughout 2009.

The used car market continued to strengthen over the course of the third quarter. Our domestic fleet costs are now expected to increase 4-6% on a per-unit basis in 2009, including a modest year-over-year decrease in fourth quarter 2009. The Company is continuing its efforts to reduce costs and enhance productivity through its Performance Excellence initiative and expects the benefits of this program to exceed $100 million over the course of 2009. Such benefits are expected to be incremental to the more than $270 million of annual savings generated by the Company's five-point cost-reduction and efficiency improvement plan and from cost-reduction actions the Company implemented in third quarter 2008.

Investor Conference Call

Avis Budget Group will host a conference call to discuss third quarter results on November 3, 2009, 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 ten 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 November 3, 2009 until 8:00 p.m. (ET) on November 10 at (402) 220-9786, 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 24,000 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 fourth quarter and full year 2009 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, a greater-than-anticipated downturn in 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 June 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         Nine Months Ended
                             September 30,             September 30,
                        -----------------------   -----------------------
                                           %                        %
                         2009     2008   Change    2009     2008   Change
                        ------  -------  ------   ------  -------  ------
Income Statement Items
    Net revenues        $1,465  $ 1,701     (14%) $3,971  $ 4,723     (16%)
    Income (loss)
     before income taxes    83   (1,186)      *       11   (1,179)      *
    Net income (loss)       57   (1,006)      *        2   (1,003)      *
    Earnings (loss) per
     share - Diluted      0.54    (9.91)      *     0.02    (9.84)      *

    Excluding Unusual
     Items (non-GAAP)(A)
    Net revenues        $1,465  $ 1,701     (14%) $3,971  $ 4,723     (16%)
    Income before
     income taxes          102       87      17%      44       96     (54%)
    Net income              69       57      21%      23       61     (62%)
    Earnings per share
     - Diluted            0.65     0.55      18%    0.21     0.60     (65%)

                             As of
                        ---------------
                      September December
                          30,      31,
                         2009     2008
                        ------  -------
Balance Sheet Items
    Cash and cash
     equivalents (B)    $  470  $   258
    Vehicles, net        6,135    7,164
    Debt under vehicle
     programs            4,516    6,034
    Corporate debt       1,885    1,789
    Stockholders'
     equity                229       93

Segment Results
                          Three Months Ended         Nine Months Ended
                             September 30,             September 30,
                        -----------------------   -----------------------
                                           %                          %
                         2009     2008   Change    2009     2008   Change
                        ------  -------  ------   ------  -------  ------
Net Revenues
Domestic Car Rental     $1,109  $ 1,319     (16%)  $3,100  $ 3,695    (16%)
International Car Rental   250      265      (6%)     597      725    (18%)
Truck Rental               106      116      (9%)     273      300     (9%)
Corporate and Other          -        1       *         1        3      *
                        ------  -------            ------  -------
Total Company           $1,465  $ 1,701     (14%)  $3,971  $ 4,723    (16%)
                        ======  =======            ======  =======

EBITDA (C)
Domestic Car Rental     $  102  $    67      52%   $  128  $   128      0%
International Car Rental    56       60      (7%)      93      116    (20%)
Truck Rental                13        6     117%       12        4    200%
Corporate and Other        (25)      (3)      *       (36)     (11)     *
                        ------  -------            ------  -------
Total Company           $  146  $   130      12%   $  197  $   237    (17%)
                        ======  =======            ======  =======

Reconciliation of EBITDA
 to Pretax Income (loss)
Total Company EBITDA    $  146  $   130            $  197  $   237
Less:   Non-vehicle
 related depreciation and
 amortization               26       23                71       62
  Interest expense
   related to corporate
   debt, net                37       31               114       92
      Impairment (A)         -    1,262                 1    1,262
                        ------  -------            ------  -------
Income (loss) before
 income taxes           $   83  $(1,186)      *    $   11  $(1,179)     *
                        ======  =======            ======  =======

*  Not meaningful.
(A) During the three and nine months ended September 30, 2009, we recorded
    unusual items of $19 million and $33 million, respectively. For the
    three months ended September 30, 2009, these items consist of $18
    million ($11 million, net of tax) for an adverse litigation judgment
    and $1 million ($1 million, net of tax) in restructuring charges
    related to our cost-reduction and efficiency improvement plan. For
    the nine months ended September 30, 2009, these items consist of (i)
    $18 million ($11 million, net of tax) for an adverse litigation
    judgment, (ii) $14 million ($9 million, net of tax) in restructuring
    charges related to our cost-reduction and efficiency improvement plan
    and (iii) $1 million ($1 million, net of tax) for impairment of an
    investment. During the three and nine months ended September 30, 2008,
    we recorded unusual charges of (i) $1,262 million ($1,056 million,
    net of tax) for the impairment of goodwill, our tradenames asset and
    our investment in Carey Holdings, Inc., and $13 million
    ($8 million, net of tax) for restructuring and other items.

(B) The balance at September 30, 2009 and December 31, 2008 includes $6
    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  Nine Months Ended
                                       September 30,       September 30,
                                    ------------------  ------------------
                                      2009      2008      2009      2008
                                    --------- --------  --------- --------
Revenues
   Vehicle rental                   $   1,123 $  1,298  $   3,036 $  3,611
   Other                                  342      403        935    1,112
                                    --------- --------  --------- --------
Net revenues                            1,465    1,701      3,971    4,723
                                    --------- --------  --------- --------

Expenses
   Operating (A)                          731      847      2,020    2,435
   Vehicle depreciation and lease
    charges, net                          357      473      1,104    1,296
   Selling, general and
    administrative                        155      171        421      513
   Vehicle interest, net                   75       74        215      234
   Non-vehicle related depreciation
    and amortization                       26       23         71       62
   Interest expense related to
    corporate debt, net                    37       31        114       92
   Restructuring charges                    1        6         14        6
   Impairment                               -    1,262          1    1,262
   Separation costs, net                    -        -          -        2
                                    --------- --------  --------- --------
Total expenses                          1,382    2,887      3,960    5,902
                                    --------- --------  --------- --------

Income (loss) before income taxes          83   (1,186)        11   (1,179)
Provision for (benefit from) income
 taxes                                     26     (180)         9     (176)
                                    --------- --------  --------- --------
Net income (loss)                   $      57 $ (1,006) $       2 $ (1,003)
                                    ========= ========  ========= ========

Earnings (loss) per share
   Basic                            $    0.55 $  (9.91) $    0.02 $  (9.84)
   Diluted                          $    0.54 $  (9.91) $    0.02 $  (9.84)

Weighted average shares outstanding
   Basic                                102.3    101.6      102.1    101.9
   Diluted                              104.5    101.6      103.4    101.9


(A) Operating expenses for the three and nine months ended September 30,
    2009 include $18 million for an adverse litigation judgment.




                                                                    Table 3

                          Avis Budget Group, Inc.
                      SEGMENT REVENUE DRIVER ANALYSIS

                            Three Months Ended      Nine Months Ended
                               September 30,           September 30,
                          ----------------------  ----------------------
                                   2008     %               2008     %
                            2009    (B)   Change     2009    (B)   Change
                          ------- ------- ------   ------- ------- ------
CAR RENTAL

    Domestic Car Rental
     Segment

       Rental Days
        (000's)            19,167  24,783    (23%)  57,230  72,584    (21%)
       Time and Mileage
        Revenue per Day   $ 45.06 $ 41.17      9%  $ 42.09 $ 39.50      7%
       Average Rental
        Fleet             278,189 359,771    (23%) 281,707 353,789    (20%)

    International Car
     Rental Segment

       Rental Days
        (000's)             3,774   4,139     (9%)  10,065  11,046     (9%)
       Time and Mileage
        Revenue per
         Day(A)           $ 46.28 $ 44.60      4%  $ 40.83 $ 45.72    (11%)
       Average Rental
        Fleet              55,101  62,675    (12%)  52,177  57,360     (9%)

    Total Car Rental

       Rental Days
        (000's)            22,941  28,922    (21%)  67,295  83,630    (20%)
       Time and Mileage
        Revenue per Day   $ 45.26 $ 41.66      9%  $ 41.90 $ 40.32      4%
       Average Rental
        Fleet             333,290 422,446    (21%) 333,884 411,149    (19%)

TRUCK RENTAL SEGMENT

       Rental Days
        (000's)             1,089   1,195     (9%)    2,882   3,151   (9%)
       Time and Mileage
        Revenue per Day   $ 77.50 $ 77.74     (0%)  $ 75.01 $ 75.69   (1%)
       Average Rental
        Fleet              28,871  30,068     (4%)   29,195  29,764   (2%)

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, (5) percentage points and
    (14) percentage points are due to movements in foreign exchange rates
    in the three months and nine months ended September 30, 2009,
    respectively, with time and mileage revenue per day increasing by 9
    percentage points and 3 percentage points, respectively, excluding
    foreign-exchange effects.
(B) Amounts presented for 2008 average rental fleet for Domestic Car Rental
    and Total Car Rental were adjusted, by less than 1%, to conform to the
    current year's presentation.




                                                                    Table 4

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

                    CONSOLIDATED SCHEDULE OF CASH FLOWS

                                                         Nine Months Ended
                                                         September 30, 2009
                                                          ----------------
Operating Activities
 Net cash provided by operating activities exclusive of
  vehicle programs                                        $            154
 Net cash provided by operating activities of vehicle
  programs                                                           1,096
                                                          ----------------
 Net cash provided by operating activities                           1,250
                                                          ----------------

Investing Activities
 Net cash used in investing activities exclusive of
  vehicle programs                                                      (9)
 Net cash provided by investing activities of vehicle
  programs                                                             429
                                                          ----------------
 Net cash provided by investing activities                             420
                                                          ----------------

Financing Activities
 Net cash provided by financing activities exclusive of
  vehicle programs                                                      90
 Net cash used in financing activities of vehicle
  programs                                                          (1,577)
                                                          ----------------
 Net cash used in financing activities                              (1,487)
                                                          ----------------

Effect of changes in exchange rates on cash and cash
 equivalents                                                            29
                                                          ----------------
Net increase in cash and cash equivalents                              212
Cash and cash equivalents, beginning of period                         258
                                                          ----------------
Cash and cash equivalents, end of period                  $            470
                                                          ================



              CONSOLIDATED SCHEDULE OF FREE CASH FLOWS (A)

                                                         Nine Months Ended
                                                         September 30, 2009
                                                          ----------------
Pretax income                                             $             11
Addback of non-cash, non-vehicle related depreciation and
 amortization                                                           71
Working capital and other (B)                                          128
Capital expenditures                                                   (19)
Tax payments, net of refunds                                           (16)
Vehicle programs and (gain) loss on vehicle sales (C)                  (82)
                                                          ----------------
Free Cash Flow                                                          93

Borrowings, net                                                         92
Foreign exchange effects and other                                      27
                                                          ----------------
Net increase in cash and cash equivalents (per above)     $            212
                                                          ================

(A) See Table 5 for a description of Free Cash Flow.
(B) Working capital and other includes net separation-related outflows
    of $6 million.
(C) Primarily reflects vehicle-backed borrowings (repayments) that are
    incremental to vehicle-backed borrowings (repayments) required to fund
    incremental (reduced) vehicle and vehicle backed assets.



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

                                                         Nine Months Ended
                                                         September 30, 2009
                                                          ----------------
     Free Cash Flow (per above)                           $             93
     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                   (429)
           Financing activities of vehicle programs                  1,577
           Capital expenditures                                         19
           Proceeds received on asset sales                            (10)
                                                          ----------------
     Net Cash Provided by Operating Activities (per
      above)                                              $          1,250
                                                          ================





                                                                    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 and a reconciliation of income (loss) before income taxes
to net income (loss) can be found on Table 2.

Unusual items

The accompanying press release presents EBITDA and loss before income taxes
for the three and nine months ended September 30, 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 September 30,
2009, unusual items consisted of $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 $1 million for
restructuring-related expenses. For the nine months ended September 30,
2009, unusual items consisted of (i) $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, (ii) $14 million for
restructuring-related expenses and (iii) a $1 million impairment charge
related to an investment.

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 and nine months
ended September 30, 2009.

      Reconciliation of EBITDA excluding unusual items to net income:


                                                Three Months  Nine Months
                                                    Ended         Ended
                                                  September     September
                                                  30, 2009      30, 2009
                                                ------------  ------------
       EBITDA, excluding unusual items          $        165  $        229

       Less:   Non-vehicle related depreciation
        and amortization                                  26            71
                 Interest expense related to
                  corporate debt, net                     37           114
                                                ------------  ------------
       Income before income taxes, excluding
        unusual items                                    102            44

       Less unusual items:
                Litigation costs                          18            18
                Restructuring charges                      1            14
                Impairment                                 -             1
                                                ------------  ------------
       Income before income taxes                         83            11
       Provision for income taxes                         26             9
                                                ------------  ------------
       Net income                               $         57  $          2
                                                ============  ============



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

       Net income, excluding unusual items      $         69  $         23
       Less unusual items, net of tax:
                 Litigation costs                         11            11
                 Restructuring charges                     1             9
                 Impairment                                -             1
                                                ------------  ------------
       Net income                               $         57  $          2
                                                ============  ============

       Earnings per share, excluding unusual
        items (diluted)                         $       0.65  $       0.21
                                                ============  ============

       Earnings per share (diluted)             $       0.54  $       0.02
                                                ============  ============

       Shares used in non-GAAP per share
        calculations-diluted                           104.5         103.4
                                                ============  ============

The accompanying press release presents EBITDA and income before income
taxes for the three and nine months ended September 30, 2008 excluding
unusual items. Unusual items consist of restructuring-related expenses and
the settlement of a litigation claim for EBITDA. For income before income
taxes, unusual items include (i) restructuring-related expenses, (ii) the
settlement of a litigation claim, (iii) separation-related costs and (iv)
the impairment of goodwill, our tradenames asset and our investment in
Carey Holdings, Inc.

During the three and nine months ended September 30, 2008, we recorded (i)
$6 million of restructuring costs primarily related to severance for
headcount reductions, (ii) a $5 million charge for the settlement of a
litigation claim and (iii) 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. During the
nine months ended September 30, 2008, we recorded $2 million in separation-
related costs. 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. Table 1
presents income (loss) before income taxes, income (loss) from continuing
operations and EPS from continuing operations (diluted), excluding unusual
items.

     Reconciliation of EBITDA excluding unusual items to net loss:

                                                Three Months  Nine Months
                                                    Ended         Ended
                                                  September     September
                                                  30, 2008      30, 2008
                                                ------------  ------------

       EBITDA, excluding unusual items          $        141  $        250

       Less:   Non-vehicle related depreciation
        and amortization                                  23            62
                 Interest expense related to
                  corporate debt, net                     31            92
                                                ------------  ------------
       Income before income taxes, excluding
        unusual items                                     87            96

       Less unusual items:
                 Separation-related costs                  -             2
                 Restructuring charge                      6             6
                 Settlement of a litigation
                  claim                                    5             5
                 Impairment of goodwill,
                  tradenames and equity
                  investment                           1,262         1,262
                                                ------------  ------------
       Loss before income taxes                       (1,186)       (1,179)
       Benefit from income taxes                        (180)         (176)
                                                ------------  ------------
       Net loss                                 $     (1,006) $     (1,003)
                                                ============  ============


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

       Net income, excluding unusual items      $         57  $         61
       Less unusual items, net of tax:
                 Separation-related costs                  -             1
                 Restructuring charge                      4             4
                 Settlement of a litigation
                  claim                                    3             3
                 Impairment of goodwill,
                  tradenames and equity
                  investment                           1,056         1,056
                                                ------------  ------------
       Net loss                                 $     (1,006) $     (1,003)
                                                ============  ============

       Earnings per share, excluding unusual
        items (diluted)                         $       0.55  $       0.60
                                                ============  ============

       Earnings per share (diluted)             $      (9.91) $      (9.84)
                                                ============  ============

       Shares used in non-GAAP per share
        calculations-diluted                           101.6         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 Contact:
    David Crowther
    973-496-7277