Form | 10-Q |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Avis Budget Group, Inc. | ||
(Exact name of registrant as specified in its charter) |
Delaware | 06-0918165 | ||||||||||||||||||||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||||||||||||||||||||||||||||||||
6 Sylvan Way | |||||||||||||||||||||||||||||||||||
Parsippany, | NJ | 07054 | |||||||||||||||||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||||||||||||||||
(973) | 496-4700 | ||||||||||||||||||||||||||||||||||
(Registrant’s telephone number, including area code) |
Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | Non-accelerated Filer | ☐ | ||||||||||||
Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, Par Value $0.01 | CAR | The NASDAQ Global Select Market |
Page | ||||||||
PART I | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 6. | ||||||||
•the COVID-19 outbreak and resulting economic conditions, which had, and is expected to continue to have, a significant impact on our operations, including an unprecedented decline in demand, as well as its current, and uncertain future impact, including, but not limited to, its effect on the ability or desire of people to travel due to travel restrictions, and other restrictions and orders, which is expected to continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price; • |
•the absence of an improvement in, or further deterioration of, economic conditions, particularly during our peak season or in key market segments; •an occurrence or threat of terrorism, the current and any future pandemic diseases, natural disasters, military conflict, civil unrest or political instability in the locations in which we operate; • |
1 •our dependence on third-party distribution channels, third-party suppliers of other services and co-marketing arrangements with third parties; • |
•our ability to utilize derivative instruments, and the impact of derivative instruments we utilize, which can be affected by fluctuations in interest rates, gasoline prices and exchange rates, changes in government regulations and other factors; •our exposure to uninsured or unpaid claims in excess of historical levels and our ability to obtain insurance at desired levels and the cost of that insurance; •risks associated with litigation, governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and consumer privacy, labor and employment, and tax; • |
•any impact on us from the actions of our licensees, dealers, third-party vendors and independent operators and independent contractors and/or disputes that may arise out of our agreements with such parties; • |
•risks related to our indebtedness, including our substantial outstanding debt obligations, potential interest rate increases, recent and potential further downgrades by rating agencies and our ability to incur substantially more debt; • |
•our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, or to obtain a waiver or amendment of such covenants should we be unable to meet such covenants; • |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues | $ | 2,337 | $ | 2,328 | $ | 4,257 | $ | 4,296 | Revenues | $ | 760 | $ | 2,337 | $ | 2,513 | $ | 4,257 | ||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating | 1,172 | 1,175 | 2,243 | 2,267 | Operating | 622 | 1,172 | 1,680 | 2,243 | |||||||||||||||||||||||||||||||||||||||||||||||||
Vehicle depreciation and lease charges, net | 543 | 591 | 1,028 | 1,106 | Vehicle depreciation and lease charges, net | 374 | 543 | 833 | 1,028 | |||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 313 | 321 | 597 | 617 | Selling, general and administrative | 132 | 313 | 383 | 597 | |||||||||||||||||||||||||||||||||||||||||||||||||
Vehicle interest, net | 90 | 80 | 171 | 152 | Vehicle interest, net | 87 | 90 | 170 | 171 | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-vehicle related depreciation and amortization | 66 | 67 | 133 | 128 | Non-vehicle related depreciation and amortization | 71 | 66 | 140 | 133 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense related to corporate debt, net: | Interest expense related to corporate debt, net: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | 48 | 49 | 90 | 95 | Interest expense | 51 | 48 | 99 | 90 | |||||||||||||||||||||||||||||||||||||||||||||||||
Early extinguishment of debt | — | — | — | 5 | Early extinguishment of debt | 3 | — | 7 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and other related charges | 23 | 4 | 44 | 10 | Restructuring and other related charges | 28 | 23 | 72 | 44 | |||||||||||||||||||||||||||||||||||||||||||||||||
Transaction-related costs, net | 1 | 3 | 6 | 7 | Transaction-related costs, net | 1 | 1 | 3 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total expenses | Total expenses | 2,256 | 2,290 | 4,312 | 4,387 | Total expenses | 1,369 | 2,256 | 3,387 | 4,312 | ||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | Income (loss) before income taxes | 81 | 38 | (55 | ) | (91 | ) | Income (loss) before income taxes | (609) | 81 | (874) | (55) | ||||||||||||||||||||||||||||||||||||||||||||||
Provision for (benefit from) income taxes | Provision for (benefit from) income taxes | 19 | 12 | (26 | ) | (30 | ) | Provision for (benefit from) income taxes | (128) | 19 | (235) | (26) | ||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | Net income (loss) | $ | 62 | $ | 26 | $ | (29 | ) | $ | (61 | ) | Net income (loss) | $ | (481) | $ | 62 | $ | (639) | $ | (29) | ||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | Comprehensive income (loss) | $ | 60 | $ | (24 | ) | $ | (36 | ) | $ | (103 | ) | Comprehensive income (loss) | $ | (448) | $ | 60 | $ | (705) | $ | (36) | |||||||||||||||||||||||||||||||||||||
Earnings (loss) per share | Earnings (loss) per share | Earnings (loss) per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | 0.81 | $ | 0.33 | $ | (0.39 | ) | $ | (0.75 | ) | Basic | $ | (6.91) | $ | 0.81 | $ | (8.96) | $ | (0.39) | |||||||||||||||||||||||||||||||||||||||
Diluted | $ | 0.81 | $ | 0.32 | $ | (0.39 | ) | $ | (0.75 | ) | Diluted | $ | (6.91) | $ | 0.81 | $ | (8.96) | $ | (0.39) |
June 30, 2020 | December 31, 2019 | ||||||||||||||||
Assets | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,258 | $ | 686 | |||||||||||||
Receivables, net | 537 | 911 | |||||||||||||||
Other current assets | 445 | 548 | |||||||||||||||
Total current assets | 2,240 | 2,145 | |||||||||||||||
Property and equipment, net | 729 | 792 | |||||||||||||||
Operating lease right-of-use assets | 2,714 | 2,596 | |||||||||||||||
Deferred income taxes | 1,737 | 1,662 | |||||||||||||||
Goodwill | 1,077 | 1,101 | |||||||||||||||
Other intangibles, net | 790 | 798 | |||||||||||||||
Other non-current assets | 227 | 217 | |||||||||||||||
Total assets exclusive of assets under vehicle programs | 9,514 | 9,311 | |||||||||||||||
Assets under vehicle programs: | |||||||||||||||||
Program cash | 79 | 211 | |||||||||||||||
Vehicles, net | 10,810 | 12,177 | |||||||||||||||
Receivables from vehicle manufacturers and other | 562 | 778 | |||||||||||||||
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party | 725 | 649 | |||||||||||||||
12,176 | 13,815 | ||||||||||||||||
Total assets | $ | 21,690 | $ | 23,126 | |||||||||||||
Liabilities and stockholders’ equity | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable and other current liabilities | $ | 2,084 | $ | 2,206 | |||||||||||||
Short-term debt and current portion of long-term debt | 19 | 19 | |||||||||||||||
Total current liabilities | 2,103 | 2,225 | |||||||||||||||
Long-term debt | 3,884 | 3,416 | |||||||||||||||
Long-term operating lease liabilities | 2,226 | 2,140 | |||||||||||||||
Other non-current liabilities | 735 | 757 | |||||||||||||||
Total liabilities exclusive of liabilities under vehicle programs | 8,948 | 8,538 | |||||||||||||||
Liabilities under vehicle programs: | |||||||||||||||||
Debt | 2,483 | 3,132 | |||||||||||||||
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party | 8,057 | 7,936 | |||||||||||||||
Deferred income taxes | 2,013 | 2,189 | |||||||||||||||
Other | 342 | 675 | |||||||||||||||
12,895 | 13,932 | ||||||||||||||||
Commitments and contingencies (Note 13) | |||||||||||||||||
Stockholders’ equity: | |||||||||||||||||
Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, respectively | — | — | |||||||||||||||
Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively | 1 | 1 | |||||||||||||||
Additional paid-in capital | 6,670 | 6,741 | |||||||||||||||
Accumulated deficit | (1,425) | (785) | |||||||||||||||
Accumulated other comprehensive loss | (223) | (157) | |||||||||||||||
Treasury stock, at cost—67 and 63 shares, respectively | (5,176) | (5,144) | |||||||||||||||
Total stockholders’ equity | (153) | 656 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 21,690 | $ | 23,126 |
June 30, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 534 | $ | 615 | ||||
Receivables, net | 920 | 955 | ||||||
Other current assets | 832 | 604 | ||||||
Total current assets | 2,286 | 2,174 | ||||||
Property and equipment, net | 749 | 736 | ||||||
Operating lease right-of-use assets | 2,409 | — | ||||||
Deferred income taxes | 1,438 | 1,301 | ||||||
Goodwill | 1,107 | 1,092 | ||||||
Other intangibles, net | 806 | 825 | ||||||
Other non-current assets | 223 | 242 | ||||||
Total assets exclusive of assets under vehicle programs | 9,018 | 6,370 | ||||||
Assets under vehicle programs: | ||||||||
Program cash | 48 | 115 | ||||||
Vehicles, net | 14,278 | 11,474 | ||||||
Receivables from vehicle manufacturers and other | 432 | 631 | ||||||
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party | 679 | 559 | ||||||
15,437 | 12,779 | |||||||
Total assets | $ | 24,455 | $ | 19,149 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and other current liabilities | $ | 2,249 | $ | 1,693 | ||||
Short-term debt and current portion of long-term debt | 420 | 23 | ||||||
Total current liabilities | 2,669 | 1,716 | ||||||
Long-term debt | 3,115 | 3,528 | ||||||
Long-term operating lease liabilities | 1,995 | — | ||||||
Other non-current liabilities | 752 | 767 | ||||||
Total liabilities exclusive of liabilities under vehicle programs | 8,531 | 6,011 | ||||||
Liabilities under vehicle programs: | ||||||||
Debt | 3,543 | 2,874 | ||||||
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party | 8,913 | 7,358 | ||||||
Deferred income taxes | 2,029 | 1,961 | ||||||
Other | 1,063 | 531 | ||||||
15,548 | 12,724 | |||||||
Commitments and contingencies (Note 13) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, respectively | — | — | ||||||
Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively | 1 | 1 | ||||||
Additional paid-in capital | 6,723 | 6,771 | ||||||
Accumulated deficit | (1,116 | ) | (1,091 | ) | ||||
Accumulated other comprehensive loss | (139 | ) | (133 | ) | ||||
Treasury stock, at cost—61 shares, respectively | (5,093 | ) | (5,134 | ) | ||||
Total stockholders’ equity | 376 | 414 | ||||||
Total liabilities and stockholders’ equity | $ | 24,455 | $ | 19,149 |
Six Months Ended June 30, | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
Operating activities | |||||||||||||||||||||||
Net loss | $ | (639) | (29) | ||||||||||||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||||||||
Vehicle depreciation | 748 | 941 | |||||||||||||||||||||
Amortization of right-of-use assets | 424 | 486 | |||||||||||||||||||||
(Gain) loss on sale of vehicles, net | (13) | (32) | |||||||||||||||||||||
Non-vehicle related depreciation and amortization | 140 | 133 | |||||||||||||||||||||
Stock-based compensation | 2 | 12 | |||||||||||||||||||||
Amortization of debt financing fees | 16 | 16 | |||||||||||||||||||||
Early extinguishment of debt costs | 7 | — | |||||||||||||||||||||
Net change in assets and liabilities: | |||||||||||||||||||||||
Receivables | 243 | (77) | |||||||||||||||||||||
Income taxes and deferred income taxes | (240) | (77) | |||||||||||||||||||||
Accounts payable and other current liabilities | (98) | 72 | |||||||||||||||||||||
Operating lease liabilities | (422) | (483) | |||||||||||||||||||||
Other, net | 182 | 3 | |||||||||||||||||||||
Net cash provided by operating activities | 350 | 965 | |||||||||||||||||||||
Investing activities | |||||||||||||||||||||||
Property and equipment additions | (64) | (117) | |||||||||||||||||||||
Proceeds received on asset sales | 4 | 6 | |||||||||||||||||||||
Net assets acquired (net of cash acquired) | (60) | (54) | |||||||||||||||||||||
Other, net | — | 81 | |||||||||||||||||||||
Net cash used in investing activities exclusive of vehicle programs | (120) | (84) | |||||||||||||||||||||
Vehicle programs: | |||||||||||||||||||||||
Investment in vehicles | (4,196) | (8,715) | |||||||||||||||||||||
Proceeds received on disposition of vehicles | 4,709 | 5,773 | |||||||||||||||||||||
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party | (175) | (167) | |||||||||||||||||||||
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party | 99 | 47 | |||||||||||||||||||||
437 | (3,062) | ||||||||||||||||||||||
Net cash provided by (used in) investing activities | 317 | (3,146) |
Six Months Ended June 30, | |||||||||
2019 | 2018 | ||||||||
Operating activities | |||||||||
Net loss | $ | (29 | ) | $ | (61 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Vehicle depreciation | 941 | 996 | |||||||
Amortization of right-of-use assets | 486 | — | |||||||
(Gain) loss on sale of vehicles, net | (32 | ) | (10 | ) | |||||
Non-vehicle related depreciation and amortization | 133 | 128 | |||||||
Stock-based compensation | 12 | 12 | |||||||
Amortization of debt financing fees | 16 | 13 | |||||||
Early extinguishment of debt costs | — | 5 | |||||||
Net change in assets and liabilities: | |||||||||
Receivables | (77 | ) | (68 | ) | |||||
Income taxes and deferred income taxes | (77 | ) | (49 | ) | |||||
Accounts payable and other current liabilities | 72 | 141 | |||||||
Operating lease liabilities | (483 | ) | — | ||||||
Other, net | 3 | 14 | |||||||
Net cash provided by operating activities | 965 | 1,121 | |||||||
Investing activities | |||||||||
Property and equipment additions | (117 | ) | (115 | ) | |||||
Proceeds received on asset sales | 6 | 6 | |||||||
Net assets acquired (net of cash acquired) | (54 | ) | (28 | ) | |||||
Other, net | 81 | (37 | ) | ||||||
Net cash used in investing activities exclusive of vehicle programs | (84 | ) | (174 | ) | |||||
Vehicle programs: | |||||||||
Investment in vehicles | (8,715 | ) | (8,359 | ) | |||||
Proceeds received on disposition of vehicles | 5,773 | 4,807 | |||||||
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party | (167 | ) | (22 | ) | |||||
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party | 47 | — | |||||||
(3,062 | ) | (3,574 | ) | ||||||
Net cash used in investing activities | (3,146 | ) | (3,748 | ) |
Avis Budget Group, Inc. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued) (In millions) (Unaudited) | ||||||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||||||||||||||
Financing activities | Financing activities | Financing activities | ||||||||||||||||||||||||||
Proceeds from long-term borrowings | Proceeds from long-term borrowings | 2 | 81 | Proceeds from long-term borrowings | 669 | 2 | ||||||||||||||||||||||
Payments on long-term borrowings | Payments on long-term borrowings | (12 | ) | (94 | ) | Payments on long-term borrowings | (198) | (12) | ||||||||||||||||||||
Net change in short-term borrowings | — | (2 | ) | |||||||||||||||||||||||||
Issuance of common stock | Issuance of common stock | 15 | — | |||||||||||||||||||||||||
Repurchases of common stock | Repurchases of common stock | (4 | ) | (78 | ) | Repurchases of common stock | (118) | (4) | ||||||||||||||||||||
Debt financing fees | Debt financing fees | — | (9 | ) | Debt financing fees | (17) | — | |||||||||||||||||||||
Other, net | Other, net | (17 | ) | 2 | Other, net | — | (17) | |||||||||||||||||||||
Net cash used in financing activities exclusive of vehicle programs | (31 | ) | (100 | ) | ||||||||||||||||||||||||
Net cash provided by (used in) financing activities exclusive of vehicle programs | Net cash provided by (used in) financing activities exclusive of vehicle programs | 351 | (31) | |||||||||||||||||||||||||
Vehicle programs: | Vehicle programs: | Vehicle programs: | ||||||||||||||||||||||||||
Proceeds from borrowings | 11,758 | 10,145 | Proceeds from borrowings | 9,042 | 11,758 | |||||||||||||||||||||||
Payments on borrowings | (9,688 | ) | (7,643 | ) | Payments on borrowings | (9,610) | (9,688) | |||||||||||||||||||||
Debt financing fees | (12 | ) | (13 | ) | Debt financing fees | (7) | (12) | |||||||||||||||||||||
2,058 | 2,489 | (575) | 2,058 | |||||||||||||||||||||||||
Net cash provided by financing activities | 2,027 | 2,389 | ||||||||||||||||||||||||||
Net cash provided by (used in) financing activities | Net cash provided by (used in) financing activities | (224) | 2,027 | |||||||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash | Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash | 4 | (2 | ) | Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash | (4) | 4 | |||||||||||||||||||||
Net decrease in cash and cash equivalents, program and restricted cash | (150 | ) | (240 | ) | ||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents, program and restricted cash | Net increase (decrease) in cash and cash equivalents, program and restricted cash | 439 | (150) | |||||||||||||||||||||||||
Cash and cash equivalents, program and restricted cash, beginning of period | Cash and cash equivalents, program and restricted cash, beginning of period | 735 | 901 | Cash and cash equivalents, program and restricted cash, beginning of period | 900 | 735 | ||||||||||||||||||||||
Cash and cash equivalents, program and restricted cash, end of period | Cash and cash equivalents, program and restricted cash, end of period | $ | 585 | $ | 661 | Cash and cash equivalents, program and restricted cash, end of period | $ | 1,339 | $ | 585 |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 137.1 | $ | 1 | $ | 6,677 | $ | (944) | $ | (256) | (67.5) | $ | (5,186) | $ | 292 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | (481) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | 33 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | (448) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest | — | — | (2) | — | — | — | — | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net activity related to restricted stock units | — | — | (5) | — | — | 0.1 | 10 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 137.1 | $ | 1 | $ | 6,670 | $ | (1,425) | $ | (223) | (67.4) | $ | (5,176) | $ | (153) | |||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 137.1 | $ | 1 | $ | 6,737 | $ | (1,178) | $ | (137) | (61.1) | $ | (5,099) | $ | 324 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 62 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (2) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net activity related to restricted stock units | — | — | 2 | — | — | — | 6 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Option premiums paid | — | — | (16) | — | — | — | — | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 137.1 | $ | 1 | $ | 6,723 | $ | (1,116) | $ | (139) | (61.1) | $ | (5,093) | $ | 376 |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Stockholders’ Equity | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 137.1 | $ | 1 | $ | 6,737 | $ | (1,178 | ) | $ | (137 | ) | (61.1 | ) | $ | (5,099 | ) | $ | 324 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 62 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (2 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net activity related to restricted stock units | — | — | 2 | — | — | — | 6 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option premiums paid | — | — | (16 | ) | — | — | — | — | (16 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 137.1 | $ | 1 | $ | 6,723 | $ | (1,116 | ) | $ | (139 | ) | (61.1 | ) | $ | (5,093 | ) | $ | 376 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2018 | 137.1 | $ | 1 | $ | 6,780 | $ | (1,344 | ) | $ | (22 | ) | (55.9 | ) | $ | (4,960 | ) | $ | 455 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | Balance at December 31, 2019 | 137.1 | $ | 1 | $ | 6,741 | $ | (785) | $ | (157) | (63.2) | $ | (5,144) | $ | 656 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | 2 | — | — | — | 2 | Cumulative effect of accounting change | — | — | — | (1) | — | — | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss: | Comprehensive loss: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 26 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | Net loss | — | — | — | (639) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | Other comprehensive loss | — | — | — | — | (66) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | Total comprehensive loss | (705) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest | Non-controlling interest | — | — | (2) | — | — | — | — | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net activity related to restricted stock units | Net activity related to restricted stock units | — | — | (84) | — | — | 0.4 | 81 | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | Issuance of common stock | — | — | 15 | — | — | 0.4 | — | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | Repurchase of common stock | — | — | — | — | — | (5.0) | (113) | (113) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | Balance at June 30, 2020 | 137.1 | $ | 1 | $ | 6,670 | $ | (1,425) | $ | (223) | (67.4) | $ | (5,176) | $ | (153) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | Balance at December 31, 2018 | 137.1 | $ | 1 | $ | 6,771 | $ | (1,091) | $ | (133) | (61.5) | $ | (5,134) | $ | 414 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of accounting change | Cumulative effect of accounting change | — | — | — | 4 | 1 | — | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | Comprehensive loss | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | Net loss | — | — | — | (29) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (50 | ) | — | — | Other comprehensive loss | — | — | — | — | (7) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | (24 | ) | Total comprehensive loss | (36) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net activity related to restricted stock units | — | — | 1 | — | — | — | 5 | 6 | Net activity related to restricted stock units | — | — | (27) | — | — | 0.3 | 36 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | (2 | ) | — | — | 0.1 | 2 | — | Exercise of stock options | — | — | (5) | — | — | 0.1 | 5 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | (1.6 | ) | (67 | ) | (67 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option premiums paid | Option premiums paid | — | — | (16) | — | — | — | — | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2018 | 137.1 | $ | 1 | $ | 6,779 | $ | (1,316 | ) | $ | (72 | ) | (57.4 | ) | $ | (5,020 | ) | $ | 372 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Balance at June 30, 2019 | 137.1 | $ | 1 | $ | 6,723 | $ | (1,116) | $ | (139) | (61.1) | $ | (5,093) | $ | 376 |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance at December 31, 2018 | 137.1 | $ | 1 | $ | 6,771 | $ | (1,091 | ) | $ | (133 | ) | (61.5 | ) | $ | (5,134 | ) | $ | 414 | |||||||||||
Cumulative effect of accounting change | — | — | — | 4 | 1 | — | — | 5 | |||||||||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||||
Net loss | — | — | — | (29 | ) | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (7 | ) | — | — | |||||||||||||||||||||
Total comprehensive loss | (36 | ) | |||||||||||||||||||||||||||
Net activity related to restricted stock units | — | — | (27 | ) | — | — | 0.3 | 36 | 9 | ||||||||||||||||||||
Exercise of stock options | — | — | (5 | ) | — | — | 0.1 | 5 | — | ||||||||||||||||||||
Option premiums paid | — | — | (16 | ) | — | — | — | — | (16 | ) | |||||||||||||||||||
Balance at June 30, 2019 | 137.1 | $ | 1 | $ | 6,723 | $ | (1,116 | ) | $ | (139 | ) | (61.1 | ) | $ | (5,093 | ) | $ | 376 | |||||||||||
Balance at December 31, 2017 | 137.1 | $ | 1 | $ | 6,820 | $ | (1,222 | ) | $ | (24 | ) | (56.3 | ) | $ | (5,002 | ) | $ | 573 | |||||||||||
Cumulative effect of accounting change | — | — | — | (33 | ) | (6 | ) | — | — | (39 | ) | ||||||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||||
Net loss | — | — | — | (61 | ) | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (42 | ) | — | — | |||||||||||||||||||||
Total comprehensive loss | (103 | ) | |||||||||||||||||||||||||||
Net activity related to restricted stock units | — | — | (26 | ) | — | — | 0.3 | 32 | 6 | ||||||||||||||||||||
Exercise of stock options | — | — | (15 | ) | — | — | 0.2 | 17 | 2 | ||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | (1.6 | ) | (67 | ) | (67 | ) | ||||||||||||||||||
Balance at June 30, 2018 | 137.1 | $ | 1 | $ | 6,779 | $ | (1,316 | ) | $ | (72 | ) | (57.4 | ) | $ | (5,020 | ) | $ | 372 |
•Americas—consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which the Company does not operate directly. •International—consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which the Company does not operate directly. |
As of June 30, | As of June 30, | |||||||||||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||||||||||
Cash and cash equivalents | $ | 534 | $ | 489 | Cash and cash equivalents | $ | 1,258 | $ | 534 | |||||||||||||||
Program cash | 48 | 161 | Program cash | 79 | 48 | |||||||||||||||||||
Restricted cash (a) | 3 | 11 | Restricted cash (a) | 2 | 3 | |||||||||||||||||||
Total cash and cash equivalents, program and restricted cash | $ | 585 | $ | 661 | Total cash and cash equivalents, program and restricted cash | $ | 1,339 | $ | 585 |
(a)Included within other current assets. |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Americas | Americas | $ | 1,627 | $ | 1,590 | $ | 2,954 | $ | 2,938 | Americas | $ | 565 | $ | 1,627 | $ | 1,822 | $ | 2,954 | |||||||||||||||||||||||||||||||||
Europe, Middle East and Africa | Europe, Middle East and Africa | 572 | 600 | 1,005 | 1,047 | Europe, Middle East and Africa | 159 | 572 | 516 | 1,005 | |||||||||||||||||||||||||||||||||||||||||
Asia and Australasia | Asia and Australasia | 138 | 138 | 298 | 311 | Asia and Australasia | 36 | 138 | 175 | 298 | |||||||||||||||||||||||||||||||||||||||||
Total revenues | Total revenues | $ | 2,337 | $ | 2,328 | $ | 4,257 | $ | 4,296 | Total revenues | $ | 760 | $ | 2,337 | $ | 2,513 | $ | 4,257 |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Avis | Avis | $ | 1,328 | $ | 1,351 | $ | 2,428 | $ | 2,496 | Avis | $ | 402 | $ | 1,328 | $ | 1,387 | $ | 2,428 | |||||||||||||||||||||||||||||||||
Budget | Budget | 816 | 777 | 1,467 | 1,419 | Budget | 267 | 816 | 886 | 1,467 | |||||||||||||||||||||||||||||||||||||||||
Other | Other | 193 | 200 | 362 | 381 | Other | 91 | 193 | 240 | 362 | |||||||||||||||||||||||||||||||||||||||||
Total revenues | Total revenues | $ | 2,337 | $ | 2,328 | $ | 4,257 | $ | 4,296 | Total revenues | $ | 760 | $ | 2,337 | $ | 2,513 | $ | 4,257 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Balance, January 1 | $ | 64 | $ | 69 | |||
Revenue deferred | 12 | 10 | |||||
Revenue recognized | (10 | ) | (7 | ) | |||
Balance, June 30 | $ | 66 | $ | 72 |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||
Americas | $ | 1,617 | $ | 2,936 | ||||
Europe, Middle East and Africa | 553 | 967 | ||||||
Asia and Australasia | 134 | 291 | ||||||
Total lease revenues | $ | 2,304 | $ | 4,194 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Americas | $ | 552 | $ | 1,617 | $ | 1,796 | $ | 2,936 | |||||||||||||||||||||||||||
Europe, Middle East and Africa | 151 | 553 | 493 | 967 | |||||||||||||||||||||||||||||||
Asia and Australasia | 35 | 134 | 170 | 291 | |||||||||||||||||||||||||||||||
Total lease revenues | $ | 738 | $ | 2,304 | $ | 2,459 | $ | 4,194 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Avis | $ | 389 | $ | 1,311 | $ | 1,357 | $ | 2,394 | |||||||||||||||||||||||||||
Budget | 261 | 804 | 869 | 1,444 | |||||||||||||||||||||||||||||||
Other | 88 | 189 | 233 | 356 | |||||||||||||||||||||||||||||||
Total lease revenues | $ | 738 | $ | 2,304 | $ | 2,459 | $ | 4,194 |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||
Avis | $ | 1,311 | $ | 2,394 | ||||
Budget | 804 | 1,444 | ||||||
Other | 189 | 356 | ||||||
Total lease revenues | $ | 2,304 | $ | 4,194 |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Property leases (a) | |||||||
Operating lease expense | $ | 179 | $ | 356 | |||
Variable lease expense | 74 | 126 | |||||
Sublease income | (3 | ) | (4 | ) | |||
Total property lease expense | $ | 250 | $ | 478 | |||
Vehicle leases | |||||||
Finance lease expense: | |||||||
Amortization of ROU assets (b) | $ | 12 | $ | 23 | |||
Interest on lease liabilities (c) | 1 | 2 | |||||
Operating lease expense (b) | 62 | 119 | |||||
Total vehicle lease expense | $ | 75 | $ | 144 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Property leases (a) | |||||||||||||||||||||||||||||||||||
Operating lease expense | $ | 128 | $ | 179 | $ | 313 | $ | 356 | |||||||||||||||||||||||||||
Variable lease expense | 20 | 74 | 56 | 126 | |||||||||||||||||||||||||||||||
Total property lease expense | $ | 148 | $ | 253 | $ | 369 | $ | 482 |
(a) Primarily included in operating expense and includes $30 million of minimum annual guaranteed rent in excess of concession fees as defined in our rental concession agreement for the three and six months ended June 30, 2020. |
As of June 30, 2019 | |||
Property leases | |||
Operating lease ROU assets | $ | 2,409 | |
Short-term operating lease liabilities (a) | $ | 433 | |
Long-term operating lease liabilities | 1,995 | ||
Operating lease liabilities | $ | 2,428 | |
Weighted average remaining lease term | 9.5 years | ||
Weighted average discount rate | 4.57 | % | |
Vehicle leases | |||
Finance | |||
Finance lease ROU assets, gross | $ | 332 | |
Accumulated amortization | (53 | ) | |
Finance lease ROU assets, net (b) | $ | 279 | |
Short-term vehicle finance lease liabilities | $ | 105 | |
Long-term vehicle finance lease liabilities | 141 | ||
Vehicle finance lease liabilities (c) | $ | 246 | |
Weighted average remaining lease term | 1.6 years | ||
Weighted average discount rate | 1.48 | % | |
Operating | |||
Vehicle operating lease ROU assets (d) | $ | 216 | |
Short-term vehicle operating lease liabilities | $ | 170 | |
Long-term vehicle operating lease liabilities | 46 | ||
Vehicle operating lease liabilities (e) | $ | 216 | |
Weighted average remaining lease term | 2.2 years | ||
Weighted average discount rate | 2.89 | % |
As of June 30, 2020 | As of December 31, 2019 | ||||||||||
Property leases | |||||||||||
Operating lease ROU assets | $ | 2,714 | $ | 2,596 | |||||||
Short-term operating lease liabilities (a) | $ | 513 | $ | 479 | |||||||
Long-term operating lease liabilities | 2,225 | 2,140 | |||||||||
Operating lease liabilities | $ | 2,738 | $ | 2,619 | |||||||
Weighted average remaining lease term | 8.8 years | 8.9 years | |||||||||
Weighted average discount rate | 4.12 | % | 4.31 | % |
(a) Included in Accounts payable and other current liabilities. |
Six Months Ended June 30, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Cash payments for lease liabilities within operating activities: | |||||||||||||||||
Property operating leases | $ | 327 | $ | 378 | |||||||||||||
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities: | |||||||||||||||||
Property operating leases (a) | 455 | (17) |
Six Months Ended June 30, 2019 | |||
Cash payments for lease liabilities within operating activities: | |||
Property operating leases | $ | 378 | |
Vehicle operating leases | 105 | ||
Vehicle finance leases | 2 | ||
Cash payments for lease liabilities within financing activities: | |||
Vehicle finance leases | 90 | ||
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities: | |||
Property operating leases (a) | (17 | ) | |
Vehicle operating leases (a) | 136 | ||
Vehicle finance leases | 133 |
Property Operating Leases | Vehicle Finance Leases | Vehicle Operating Leases | |||||||||
Within 1 year | $ | 531 | $ | 105 | $ | 149 | |||||
Between 1 and 2 years | 420 | 7 | 56 | ||||||||
Between 2 and 3 years | 360 | 129 | 14 | ||||||||
Between 3 and 4 years | 297 | 5 | 3 | ||||||||
Between 4 and 5 years | 229 | — | — | ||||||||
Thereafter | 1,199 | — | — | ||||||||
Total lease payments | 3,036 | 246 | 222 | ||||||||
Less: Imputed interest | (608 | ) | — | (6 | ) | ||||||
Total | $ | 2,428 | $ | 246 | $ | 216 |
Amount | |||
2019 | $ | 835 | |
2020 | 476 | ||
2021 | 345 | ||
2022 | 253 | ||
2023 | 162 | ||
Thereafter | 590 | ||
$ | 2,661 |
Americas | International | Total | ||||||||||
Balance as of January 1, 2019 | $ | — | $ | 2 | $ | 2 | ||||||
Restructuring expense: | ||||||||||||
T19 | 25 | 8 | 33 | |||||||||
Restructuring payment/utilization: | ||||||||||||
T19 | (20 | ) | (7 | ) | (27 | ) | ||||||
Workforce planning | — | (1 | ) | (1 | ) | |||||||
Balance as of June 30, 2019 | $ | 5 | $ | 2 | $ | 7 | ||||||
Personnel Related | Other (a) | Total | ||||||||||
Balance as of January 1, 2019 | $ | 1 | $ | 1 | $ | 2 | ||||||
Restructuring expense: | ||||||||||||
T19 | 13 | 20 | 33 | |||||||||
Restructuring payment/utilization: | ||||||||||||
T19 | (12 | ) | (15 | ) | (27 | ) | ||||||
Workforce planning | (1 | ) | — | (1 | ) | |||||||
Balance as of June 30, 2019 | $ | 1 | $ | 6 | $ | 7 |
Americas | International | Total | |||||||||||||||||||||||||||
Balance as of January 1, 2020 | $ | 2 | $ | 4 | $ | 6 | |||||||||||||||||||||||
Restructuring expense: | |||||||||||||||||||||||||||||
2020 Optimization Plan | 24 | 23 | 47 | ||||||||||||||||||||||||||
Brazil | 1 | — | 1 | ||||||||||||||||||||||||||
T19 | 4 | — | 4 | ||||||||||||||||||||||||||
Restructuring payment/utilization: | |||||||||||||||||||||||||||||
2020 Optimization Plan | (19) | (17) | (36) | ||||||||||||||||||||||||||
Brazil | (2) | — | (2) | ||||||||||||||||||||||||||
T19 | (6) | (3) | (9) | ||||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | 4 | $ | 7 | $ | 11 | |||||||||||||||||||||||
Personnel | Facility Related | Other (a) | Total | ||||||||||||||||||||||||||
Balance as of January 1, 2020 | $ | 3 | $ | 1 | $ | 2 | $ | 6 | |||||||||||||||||||||
Restructuring expense: | |||||||||||||||||||||||||||||
2020 Optimization Plan | 44 | 1 | 2 | 47 | |||||||||||||||||||||||||
Brazil | 1 | — | — | 1 | |||||||||||||||||||||||||
T19 | — | — | 4 | 4 | |||||||||||||||||||||||||
Restructuring payment/utilization: | |||||||||||||||||||||||||||||
2020 Optimization Plan | (35) | — | (1) | (36) | |||||||||||||||||||||||||
Brazil | (1) | (1) | — | (2) | |||||||||||||||||||||||||
T19 | (4) | — | (5) | (9) | |||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | 8 | $ | 1 | $ | 2 | $ | 11 |
(a)Includes expenses primarily related to the disposition of vehicles. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
Net income (loss) for basic and diluted EPS | $ | (481) | $ | 62 | $ | (639) | $ | (29) | ||||||||||||||||||||||||||||||
Basic weighted average shares outstanding | 69.6 | 76.0 | 71.3 | 75.9 | ||||||||||||||||||||||||||||||||||
Options and non-vested stock (a) | — | 0.4 | — | — | ||||||||||||||||||||||||||||||||||
Diluted weighted average shares outstanding | 69.6 | 76.4 | 71.3 | 75.9 | ||||||||||||||||||||||||||||||||||
Earnings (Loss) per share: | ||||||||||||||||||||||||||||||||||||||
Basic | $ | (6.91) | $ | 0.81 | $ | (8.96) | $ | (0.39) | ||||||||||||||||||||||||||||||
Diluted | $ | (6.91) | $ | 0.81 | $ | (8.96) | $ | (0.39) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) for basic and diluted EPS | $ | 62 | $ | 26 | $ | (29 | ) | $ | (61 | ) | ||||||
Basic weighted average shares outstanding | 76.0 | 80.7 | 75.9 | 80.8 | ||||||||||||
Options and non-vested stock (a) | 0.4 | 0.8 | — | — | ||||||||||||
Diluted weighted average shares outstanding | 76.4 | 81.5 | 75.9 | 80.8 | ||||||||||||
Earnings (loss) per share: | ||||||||||||||||
Basic | $ | 0.81 | $ | 0.33 | $ | (0.39 | ) | $ | (0.75 | ) | ||||||
Diluted | $ | 0.81 | $ | 0.32 | $ | (0.39 | ) | $ | (0.75 | ) |
5. Acquisitions |
As of June 30, 2020 | As of December 31, 2019 | ||||||||||
Prepaid expenses | $ | 165 | $ | 234 | |||||||
Sales and use taxes | 134 | 173 | |||||||||
Other | 146 | 141 | |||||||||
Other current assets | $ | 445 | $ | 548 |
As of June 30, 2019 | As of December 31, 2018 | ||||||
Sales and use taxes | $ | 376 | $ | 180 | |||
Prepaid expenses | 281 | 241 | |||||
Other | 175 | 183 | |||||
Other current assets | $ | 832 | $ | 604 |
As of June 30, 2019 | As of December 31, 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Amortized Intangible Assets | |||||||||||||||||||||||
License agreements | $ | 308 | $ | 183 | $ | 125 | $ | 305 | $ | 168 | $ | 137 | |||||||||||
Customer relationships | 258 | 154 | 104 | 251 | 141 | 110 | |||||||||||||||||
Other | 52 | 24 | 28 | 52 | 21 | 31 | |||||||||||||||||
Total | $ | 618 | $ | 361 | $ | 257 | $ | 608 | $ | 330 | $ | 278 | |||||||||||
Unamortized Intangible Assets | |||||||||||||||||||||||
Goodwill | $ | 1,107 | $ | 1,092 | |||||||||||||||||||
Trademarks | $ | 549 | $ | 547 |
As of June 30, 2020 | As of December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Intangible Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
License agreements | $ | 266 | $ | 123 | $ | 143 | $ | 241 | $ | 108 | $ | 133 | |||||||||||||||||||||||||||||||||||||||||||||||
Customer relationships | 254 | 177 | 77 | 255 | 165 | 90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 51 | 28 | 23 | 50 | 25 | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 571 | $ | 328 | $ | 243 | $ | 546 | $ | 298 | $ | 248 | |||||||||||||||||||||||||||||||||||||||||||||||
Unamortized Intangible Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | $ | 1,077 | $ | 1,101 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trademarks | $ | 547 | $ | 550 |
As of | As of | ||||||
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
Rental vehicles | $ | 15,466 | $ | 12,548 | |||
Less: Accumulated depreciation | (1,482 | ) | (1,670 | ) | |||
13,984 | 10,878 | ||||||
Vehicles held for sale | 294 | 596 | |||||
Vehicles, net | $ | 14,278 | $ | 11,474 |
As of | As of | ||||||||||
June 30, | December 31, | ||||||||||
2020 | 2019 | ||||||||||
Rental vehicles | $ | 11,964 | $ | 13,461 | |||||||
Less: Accumulated depreciation | (1,525) | (1,621) | |||||||||
10,439 | 11,840 | ||||||||||
Vehicles held for sale | 371 | 337 | |||||||||
Vehicles, net | $ | 10,810 | $ | 12,177 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation expense | $ | 334 | 505 | $ | 748 | 941 | |||||||||||||||||||||||||||||||||||||||||
Lease charges | 42 | 62 | 98 | 119 | |||||||||||||||||||||||||||||||||||||||||||
(Gain) loss on sale of vehicles, net | (2) | (24) | (13) | (32) | |||||||||||||||||||||||||||||||||||||||||||
Vehicle depreciation and lease charges, net | $ | 374 | $ | 543 | $ | 833 | $ | 1,028 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Depreciation expense | $ | 505 | $ | 536 | $ | 941 | $ | 996 | |||||||
Lease charges | 62 | 64 | 119 | 120 | |||||||||||
(Gain) loss on sale of vehicles, net | (24 | ) | (9 | ) | (32 | ) | (10 | ) | |||||||
Vehicle depreciation and lease charges, net | $ | 543 | $ | 591 | $ | 1,028 | $ | 1,106 |
As of | As of | ||||||||||
June 30, | December 31, | ||||||||||
2020 | 2019 | ||||||||||
Short-term operating lease liabilities | $ | 513 | $ | 479 | |||||||
Accounts payable | 389 | 378 | |||||||||
Accrued sales and use taxes | 201 | 223 | |||||||||
Public liability and property damage insurance liabilities – current | 177 | 178 | |||||||||
Accrued advertising and marketing | 128 | 191 | |||||||||
Accrued payroll and related | 132 | 195 | |||||||||
Deferred lease revenues – current | 112 | 125 | |||||||||
Other | 432 | 437 | |||||||||
Accounts payable and other current liabilities | $ | 2,084 | $ | 2,206 |
As of | As of | ||||||
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
Short-term operating lease liabilities | $ | 433 | $ | — | |||
Accounts payable | 400 | 371 | |||||
Deferred lease revenues – current | 230 | 140 | |||||
Accrued sales and use taxes | 228 | 208 | |||||
Accrued payroll and related | 185 | 200 | |||||
Accrued advertising and marketing | 180 | 192 | |||||
Public liability and property damage insurance liabilities – current | 152 | 149 | |||||
Other | 441 | 433 | |||||
Accounts payable and other current liabilities | $ | 2,249 | $ | 1,693 |
As of | As of | ||||||||||||||||
Maturity Date | June 30, | December 31, | |||||||||||||||
2020 | 2019 | ||||||||||||||||
5½% Senior Notes | April 2023 | $ | 100 | $ | 200 | ||||||||||||
6⅜% Senior Notes | April 2024 | 350 | 350 | ||||||||||||||
4⅛% euro-denominated Senior Notes | November 2024 | 337 | 336 | ||||||||||||||
5¼% Senior Notes | March 2025 | 375 | 375 | ||||||||||||||
4½% euro-denominated Senior Notes | May 2025 | 281 | 280 | ||||||||||||||
10½% Senior Secured Notes | May 2025 | 485 | — | ||||||||||||||
4¾% euro-denominated Senior Notes | January 2026 | 393 | 393 | ||||||||||||||
5¾% Senior Notes | July 2027 | 400 | 400 | ||||||||||||||
Floating Rate Term Loan (a) | August 2027 | 1,204 | 1,112 | ||||||||||||||
Other (b) | 26 | 28 | |||||||||||||||
Deferred financing fees | (48) | (39) | |||||||||||||||
Total | 3,903 | 3,435 | |||||||||||||||
Less: Short-term debt and current portion of long-term debt | 19 | 19 | |||||||||||||||
Long-term debt | $ | 3,884 | $ | 3,416 |
As of | As of | ||||||||
Maturity Dates | June 30, | December 31, | |||||||
2019 | 2018 | ||||||||
5½% Senior Notes (a) | April 2023 | $ | 675 | $ | 675 | ||||
6⅜% Senior Notes | April 2024 | 350 | 350 | ||||||
4⅛% euro-denominated Senior Notes | November 2024 | 341 | 344 | ||||||
Floating Rate Term Loan (b) | February 2025 | 1,118 | 1,123 | ||||||
5¼% Senior Notes | March 2025 | 375 | 375 | ||||||
4½% euro-denominated Senior Notes | May 2025 | 284 | 287 | ||||||
4¾% euro-denominated Senior Notes | January 2026 | 398 | 401 | ||||||
Other (c) | 34 | 41 | |||||||
Deferred financing fees | (40 | ) | (45 | ) | |||||
Total | 3,535 | 3,551 | |||||||
Less: Short-term debt and current portion of long-term debt | 420 | 23 | |||||||
Long-term debt | $ | 3,115 | $ | 3,528 |
Total Capacity | Outstanding Borrowings | Letters of Credit Issued | Available Capacity | ||||||||||||
Senior revolving credit facility maturing 2023 (a) | $ | 1,800 | $ | — | $ | 1,225 | $ | 575 |
Total Capacity | Outstanding Borrowings | Letters of Credit Issued | Available Capacity | ||||||||||||||||||||
Senior revolving credit facility maturing 2023 (a) | $ | 1,800 | $ | — | $ | 1,581 | $ | 219 |
(a)The senior revolving credit facility bears interest at one-month LIBOR plus 250 basis points and |
As of | As of | ||||||
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
Americas - Debt due to Avis Budget Rental Car Funding (a) | $ | 8,951 | $ | 7,393 | |||
Americas - Debt borrowings (a) | 986 | 635 | |||||
International - Debt borrowings (a) | 2,342 | 2,060 | |||||
International - Finance leases (a) | 226 | 191 | |||||
Other | 1 | 2 | |||||
Deferred financing fees (b) | (50 | ) | (49 | ) | |||
Total | $ | 12,456 | $ | 10,232 |
As of | As of | ||||||||||
June 30, | December 31, | ||||||||||
2020 | 2019 | ||||||||||
Americas - Debt due to Avis Budget Rental Car Funding | $ | 8,095 | $ | 7,975 | |||||||
Americas - Debt borrowings | 765 | 827 | |||||||||
International - Debt borrowings | 1,576 | 2,100 | |||||||||
International - Finance leases | 148 | 215 | |||||||||
Other | 1 | — | |||||||||
Deferred financing fees (a) | (45) | (49) | |||||||||
Total | $ | 10,540 | $ | 11,068 |
(a)Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of June 30, 2020 and December 31, 2019 was $38 million and $40 million, respectively |
Debt under Vehicle Programs (a) | |||
Within 1 year | $ | 1,636 | |
Between 1 and 2 years (b) | 4,747 | ||
Between 2 and 3 years (c) | 3,102 | ||
Between 3 and 4 years | 1,207 | ||
Between 4 and 5 years | 1,275 | ||
Thereafter | 539 | ||
Total | $ | 12,506 |
Debt under Vehicle Programs (a) |
Within 1 year (b) |
$ | 2,602 | ||||
Between 1 and 2 years (c) | |||||
Between 2 and | 1,243 | ||||
Between 3 and 4 years | 1,279 | ||||
Between 4 and 5 years | 1,538 | ||||
Thereafter | 16 | ||||
Total | $ | 10,585 |
Total Capacity (a) | Outstanding Borrowings (b) | Available Capacity | |||||||||
Americas - Debt due to Avis Budget Rental Car Funding | $ | 9,526 | $ | 8,951 | $ | 575 | |||||
Americas - Debt borrowings | 1,008 | 986 | 22 | ||||||||
International - Debt borrowings | 3,017 | 2,342 | 675 | ||||||||
International - Finance leases | 248 | 226 | 22 | ||||||||
Other | 1 | 1 | — | ||||||||
Total | $ | 13,800 | $ | 12,506 | $ | 1,294 |
Total Capacity (a) | Outstanding Borrowings (b) | Available Capacity | |||||||||||||||
Americas - Debt due to Avis Budget Rental Car Funding | $ | 9,394 | $ | 8,095 | $ | 1,299 | |||||||||||
Americas - Debt borrowings | 882 | 765 | 117 | ||||||||||||||
International - Debt borrowings | 2,947 | 1,576 | 1,371 | ||||||||||||||
International - Finance leases | 205 | 148 | 57 | ||||||||||||||
Other | 1 | 1 | — | ||||||||||||||
Total | $ | 13,429 | $ | 10,585 | $ | 2,844 |
(a) Capacity is subject to maintaining sufficient assets to collateralize debt. (b) The outstanding debt is collateralized by vehicles and related assets of $8.8 billion for Americas - Debt due to Avis Budget Rental Car Funding; $1.0 billion for Americas - Debt borrowings; $1.9 billion for International - Debt borrowings; and $0.2 billion for International - Finance leases. |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | Net income (loss) | $ | 62 | $ | 26 | $ | (29 | ) | $ | (61 | ) | Net income (loss) | $ | (481) | $ | 62 | $ | (639) | $ | (29) | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustments (net of tax of $4, $(10), $(2), and $(5) respectively) | 9 | (54 | ) | 10 | (53 | ) | Currency translation adjustments (net of tax of $4, $4, $0, and $(2) respectively) | 39 | 9 | (44) | 10 | |||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain (loss) on cash flow hedges (net of tax of $4, $(1), and $7, and $(3) respectively) | (13 | ) | 2 | (21 | ) | 8 | Net unrealized gain (loss) on cash flow hedges (net of tax of $3, $4, $9, and $7 respectively) | (8) | (13) | (26) | (21) | |||||||||||||||||||||||||||||||||||||||||||
Minimum pension liability adjustment (net of tax of $0, $0, $0, and $(1), respectively) | 2 | 2 | 4 | 3 | Minimum pension liability adjustment (net of tax of $0, $0, $0, and $0, respectively) | 2 | 2 | 4 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
(2 | ) | (50 | ) | (7 | ) | (42 | ) | 33 | (2) | (66) | (7) | |||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | Comprehensive income (loss) | $ | 60 | $ | (24 | ) | $ | (36 | ) | $ | (103 | ) | Comprehensive income (loss) | $ | (448) | $ | 60 | $ | (705) | $ | (36) |
Currency Translation Adjustments | Net Unrealized Gains (Losses) on Cash Flow Hedges(a) | Minimum Pension Liability Adjustment(b) | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||
Balance, January 1, 2020 | $ | 9 | $ | (20) | $ | (146) | $ | (157) | |||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (44) | (28) | 1 | (71) | |||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 2 | 3 | 5 | |||||||||||||||||||||||||
Net current-period other comprehensive income (loss) | (44) | (26) | 4 | (66) | |||||||||||||||||||||||||
Balance, June 30, 2020 | $ | (35) | $ | (46) | $ | (142) | $ | (223) | |||||||||||||||||||||
Balance, December 31, 2018 | $ | (3) | $ | 2 | $ | (132) | $ | (133) | |||||||||||||||||||||
Cumulative effect of accounting change | — | 1 | — | 1 | |||||||||||||||||||||||||
Balance, January 1, 2019 | $ | (3) | $ | 3 | $ | (132) | $ | (132) | |||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 10 | (19) | 1 | (8) | |||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | (2) | 3 | 1 | |||||||||||||||||||||||||
Net current-period other comprehensive income (loss) | 10 | (21) | 4 | (7) | |||||||||||||||||||||||||
Balance, June 30, 2019 | $ | 7 | $ | (18) | $ | (128) | $ | (139) |
Currency Translation Adjustments | Net Unrealized Gains (Losses) on Cash Flow Hedges(a) | Net Unrealized Gains (Losses) on Available-for-Sale Securities | Minimum Pension Liability Adjustment(b) | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||
Balance, December 31, 2018 | $ | (3 | ) | $ | 2 | $ | — | $ | (132 | ) | $ | (133 | ) | |||||||
Cumulative effect of accounting change (c) | — | 1 | — | — | 1 | |||||||||||||||
Balance, January 1, 2019 | $ | (3 | ) | $ | 3 | $ | — | $ | (132 | ) | $ | (132 | ) | |||||||
Other comprehensive income (loss) before reclassifications | 10 | (19 | ) | — | 1 | (8 | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | (2 | ) | — | 3 | 1 | ||||||||||||||
Net current-period other comprehensive income (loss) | 10 | (21 | ) | — | 4 | (7 | ) | |||||||||||||
Balance, June 30, 2019 | $ | 7 | $ | (18 | ) | $ | — | $ | (128 | ) | $ | (139 | ) | |||||||
Balance, December 31, 2017 | $ | 71 | $ | 5 | $ | 2 | $ | (102 | ) | $ | (24 | ) | ||||||||
Cumulative effect of accounting change | 7 | 1 | (2 | ) | (12 | ) | (6 | ) | ||||||||||||
Balance, January 1, 2018 | $ | 78 | $ | 6 | $ | — | $ | (114 | ) | $ | (30 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (53 | ) | 8 | — | 1 | (44 | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | — | 2 | 2 | |||||||||||||||
Net current-period other comprehensive income (loss) | (53 | ) | 8 | — | 3 | (42 | ) | |||||||||||||
Balance, June 30, 2018 | $ | 25 | $ | 14 | $ | — | $ | (111 | ) | $ | (72 | ) |
(a)For the three and six months ended June 30, 2020, the amount reclassified from accumulated other comprehensive income (loss) into corporate interest expense and vehicle interest expense was $2 million ($1 million, net of tax) and $1 million ($1 million, net of tax), respectively, in each period. For the three and six months ended June 30, 2019, the amount reclassified from accumulated other comprehensive income (loss) in corporate interest expense was $1 million ($1 million, net of tax) and $3 million ($2 million, net of tax), respectively. |
Six Months Ended June 30, 2020 | |||||||||||
Expected volatility of stock price | 91% | ||||||||||
Risk-free interest rate | 0.18% | ||||||||||
Valuation period | 3 years | ||||||||||
Dividend yield | —% |
Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in millions) | Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | Time-based RSUs | Time-based RSUs | |||||||||||||||||||||||||||||||||||||||||||||||
Outstanding at January 1, 2019 | 838 | $ | 38.67 | Outstanding at January 1, 2020 | 847 | $ | 36.99 | ||||||||||||||||||||||||||||||||||||||||||
Granted (a) | 485 | 34.90 | Granted (a) | 705 | 21.67 | ||||||||||||||||||||||||||||||||||||||||||||
Vested (b) | (361 | ) | 35.80 | Vested (b) | (397) | 38.14 | |||||||||||||||||||||||||||||||||||||||||||
Forfeited | (55 | ) | 38.73 | Forfeited | (69) | 33.51 | |||||||||||||||||||||||||||||||||||||||||||
Outstanding and expected to vest at June 30, 2019 (c) | 907 | $ | 37.79 | 1.3 | $ | 32 | Outstanding and expected to vest at June 30, 2020 (c) | 1,086 | $ | 26.85 | 1.4 | $ | 25 | ||||||||||||||||||||||||||||||||||||
Performance-based and market-based RSUs | Performance-based and market-based RSUs | Performance-based and market-based RSUs | |||||||||||||||||||||||||||||||||||||||||||||||
Outstanding at January 1, 2019 | 1,169 | $ | 35.14 | Outstanding at January 1, 2020 | 1,061 | $ | 38.89 | ||||||||||||||||||||||||||||||||||||||||||
Granted (a) | 522 | 34.87 | Granted (a) | 552 | 21.06 | ||||||||||||||||||||||||||||||||||||||||||||
Vested | — | — | Vested (b) | (73) | 36.64 | ||||||||||||||||||||||||||||||||||||||||||||
Forfeited | (430 | ) | 24.85 | Forfeited | (414) | 35.16 | |||||||||||||||||||||||||||||||||||||||||||
Outstanding at June 30, 2019 | 1,261 | $ | 38.54 | 1.8 | $ | 44 | Outstanding at June 30, 2020 | 1,126 | $ | 31.67 | 2.0 | $ | 26 | ||||||||||||||||||||||||||||||||||||
Outstanding and expected to vest at June 30, 2019 (c) | 518 | $ | 39.96 | 2.1 | $ | 18 | Outstanding and expected to vest at June 30, 2020 (c) | 38 | $ | 20.70 | 3.0 | $ | 1 |
(a)Reflects the maximum number of stock units assuming achievement of all performance-, market- and time-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs and performance-based and market-based RSUs granted during the six months ended June 30, 2019 was $34.90 and $34.87, respectively. |
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in millions) | |||||||||||
Outstanding at January 1, 2019 | 57 | $ | 0.79 | 0.1 | $ | 1 | ||||||||
Granted | — | — | — | |||||||||||
Exercised (a) | (57 | ) | 0.79 | 1 | ||||||||||
Forfeited/expired | — | — | — | |||||||||||
Outstanding and exercisable at June 30, 2019 | — | $ | — | — | $ | — |
As of June 30, 2019 | |||
Foreign exchange contracts | $ | 1,393 | |
Interest rate caps (a) | 8,398 | ||
Interest rate swaps | 1,500 | ||
Commodity contracts (millions of gallons of unleaded gasoline) | 9 |
As of June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | $ | 1,563 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate caps (a)
__________ (a)Represents $5.7 billion of interest rate caps sold, partially offset by approximately $2.7 billion of interest rate caps purchased. These amounts exclude $3.0 billion of interest rate caps purchased by the Company’s Avis Budget Rental Car Funding subsidiary as it is not consolidated by the Company. Estimated fair values (Level 2) of derivative instruments were as follows: 24
__________ Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding, as it is not consolidated by the Company; however, certain amounts related to the derivatives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss), as discussed in Note
The effects of derivatives recognized in the Company’s Consolidated Condensed Financial Statements were as follows:
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(b)Classified as a net unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss). Refer to Note 14–Stockholders’ Equity for amounts reclassified from accumulated other comprehensive income into earnings. (c)Classified as a net investment hedge within currency translation adjustment in accumulated other comprehensive income (loss). (d)Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged. (e)For the three months ended June 30, 2020, included a $8 million loss in operating expense and for the six months ended June 30, 2020, included a $28 million gain in interest expense and $2 million loss in operating expense. For the three months ended June 30, 2019, included $15 million gain in interest expense and a $5 million loss in operating expense and for the six months ended June 30, 2019, included a $11 million gain in interest expense. (f)Included primarily in vehicle interest, net. (g)Included in operating expense. Debt Instruments The carrying amounts and estimated fair values (Level 2) of debt instruments were as follows: 25
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17. Segment Information The Company’s chief operating decision-maker assesses performance and allocates resources based upon the separate financial information from each of the Company’s operating segments. In identifying its reportable segments, the Company considered the nature of services provided, the geographical areas in which the segments operated and other relevant factors. The Company aggregates certain of its operating segments into its reportable segments. Management evaluates the operating results of each of its reportable segments based upon revenues and “Adjusted EBITDA,” which the Company defines as income (loss) from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring and other related charges, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, net charges for unprecedented personal-injury legal matters, non-operational charges related to shareholder activist activity, gain on sale of equity method investment in 26
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(b)For three months ended June 30, 2020 consists of $72 million within operating expenses and $1 million within selling, general and administrative expenses. Primarily consisting of $30 million of minimum annual guaranteed rent in excess of concession fees, $28 million of losses associated with vehicles damaged in overflow parking lots and $15 million of incremental cleaning supplies to sanitize vehicles and facilities, and overflow parking for idle vehicles.
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As of June 30, As of June 30, 2020 and
* * * * 28
The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q, and with our
Our Company We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other Our Segments We categorize our operations into two reportable business segments: Americas, consisting primarily of our vehicle rental operations in North America, South America, Central America and the Caribbean, car sharing operations in certain of these markets, and licensees in the areas in which we do not operate directly; and International, consisting primarily of our vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, car sharing operations in certain of these markets, and licensees in the areas in which we do not operate directly. Business and Trends Significant events affecting travel, have historically had an impact on vehicle rental volumes, with the full extent of the impact generally determined by the length of time the event influences travel decisions. COVID-19 and the resulting economic conditions have had, and we believe will continue to have, a significant negative impact on our operations and •The used vehicle market was significantly disrupted in the •In April 2020, Moody’s and S&P Global (the “Rating Agencies”) downgraded our long-term corporate debt rating. If we were to experience a further downgrade, this could negatively impact our ability to respond to adverse changes in general economic, industry and competitive conditions, as well as changes in government regulation and changes to our business. 29 •As a result of decreased rental volume, we have parked our vehicles in overflow parking lots. In April 2020, we experienced a fire at an overflow parking lot near Southwest Florida International Airport. As a result, we have lost vehicles with an estimated carrying value of approximately $50 million. We estimate a loss of up to $10 million related to this incident, which will be treated as COVID-19 charges and excluded from Adjusted EBITDA. We could experience similar casualty losses in other overflow parking lots. •We have taken cost removal and mitigation actions by eliminating all non-essential capital and operating expenditures and we are continuing to negotiate with partners and suppliers for further reductions. We have reduced or furloughed a large part of our global workforce, reduced base compensation at the level of Although our results for second quarter were significantly impacted by COVID-19, we do not believe they reflect the positive momentum we saw at the end of the quarter and look to carry throughout the remainder of 2020. Our revenues in second quarter showed sequential improvement, down approximately 80% from prior year at the start and finished down approximately 60% from prior year. Rental volumes also improved throughout the second quarter and ended down approximately 50% year-over-year. Fleet size continues to be a focal point as we align with demand while taking advantage of a strong used vehicle market. As the environment remains challenging, these trends could be hindered if a “second wave” of the virus were to impact the economy. We have never previously experienced such a RESULTS OF OPERATIONS We measure performance principally using the following key metrics: (i) rental days, which represent the total number of days (or portion thereof) a vehicle was rented, (ii) revenue per day, which represents revenues divided by rental days, (iii) vehicle utilization, which represents rental days divided by available rental days, with available rental days We assess performance and allocate resources based upon the separate financial information of our operating segments. In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which our segments operate and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring and other related charges, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, net charges for unprecedented personal-injury legal matters, non-operational charges related to shareholder activist activity, gain on sale of equity method investment in 30 are recorded within selling, general and administrative expenses in our consolidated results of operations. COVID-19 charges include unusual, direct and incremental costs due to the COVID-19 global pandemic such as minimum annual guaranteed rent in excess of concession fees for the period, overflow parking for idle vehicles, incremental cleaning supplies to sanitize vehicles and facilities, and losses associated with vehicles damaged in overflow parking lots and are recorded within operating expenses in our consolidated condensed statement of operations. We have revised our definition of Adjusted EBITDA to exclude During the six months ended June 30, •Our revenues totaled •Our net loss was •We repurchased $113 million of our common stock at an average price of $22.49, reducing our shares outstanding by •We acquired various licensees in the United States and Europe. Three Months Ended June 30, Our consolidated condensed results of operations comprised the following:
__________ n/m Not meaningful. Revenues decreased during the three months ended June 30, 31 similar period in Operating expenses Our effective tax rates were For the three months ended June 30, 2020 and 2019, the Company reported a loss of $6.91 per diluted share and income of $0.81 per diluted share, respectively. 32 Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income (loss) to Adjusted EBITDA:
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Americas
n/m Not meaningful. Revenues Operating expenses increased to 78.0% of revenue during the three months ended June 30, 2020 compared to 50.4% during the similar period in 2019. Vehicle depreciation and lease charges increased to 47.7% of revenue during the three months ended June 30, 2020 compared to 24.2% during the similar period in 2019. Selling, general and administrative costs increased to 14.2% of revenue during the three months ended June 30, 2020 compared to 11.5% during the similar period in 2019. Vehicle interest costs increased to 12.9% of revenue during the three months ended June 30, 2020 compared to 4.6% during the similar period in 2019. During the three months ended June 30, 2020, all expenses increased as a percentage of revenue as a result of the impact of COVID-19, partially offset by strategic cost reduction initiatives to right size the business. 33 Adjusted EBITDA was $385 million lower during the three months ended June 30, 2020 compared to the similar period in 2019, primarily due to lower revenues directly related to COVID-19, partially offset by a 22% decrease in per-unit fleet costs excluding exchange rate effects. International
Revenues decreased 73% during the three months ended June 30, 2020, compared to the similar period in 2019, primarily due to a 60% decrease in volume and a Operating expenses increased to Adjusted EBITDA was
34 Six Months Ended June 30, Our consolidated results of operations comprised the following:
__________ n/m Not meaningful. Revenues decreased during the six months ended June 30, Operating expenses Our effective tax rates were benefits of For the six months ended June 30, 2020 and 2019, the Company reported a loss of $8.96 and earnings of $0.39 per diluted share, respectively. 35 Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net loss to Adjusted EBITDA:
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Americas
Revenues Operating expenses increased to 64.7% of revenue during the six months ended June 30, 2020 compared to 51.3% during the similar period in 2019. Vehicle depreciation and lease charges increased to 33.0% of revenue during the six months ended June 30, 2020 compared to 25.3% during the similar period in 2019. Selling, general and administrative costs increased to 12.9% of revenue during the six months ended June 30, 2020 compared to 12.3% during the similar period in 2019. Vehicle interest costs increased to 7.9% of revenue during the six months ended June 30, 2020 compared to 4.8% during the similar period in 2019. During the six months ended June 30, 2020, all expenses increased as a percentage of revenue as a result of the impact of COVID-19, partially offset by strategic cost reduction initiatives to right size the business. Adjusted EBITDA was $450 million lower during the six months ended June 30, 2020 compared to the similar period in 2019, due to lower revenues directly related to COVID-19. 36 International
Revenues decreased 47% during the six months ended June 30, 2020 compared to the similar period in 2019, primarily due to a Operating expenses increased to
Adjusted EBITDA was FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES We present separately the financial data of our vehicle programs. These programs are distinct from our other activities as the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the generation or acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets. FINANCIAL CONDITION
The LIQUIDITY AND CAPITAL RESOURCES Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below. 37 The proceeds from these borrowings were used to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States. In CASH FLOWS The following table summarizes our cash flows:
The decrease in cash provided by operating activities during the six months ended June 30, The The DEBT AND FINANCING ARRANGEMENTS At June 30, Supplemental Guarantor Financial Information The following financial information presents summarized financial information presented from the Consolidated Condensed Statements of Comprehensive Income for the six months ended June 30, 2020 and Consolidated Condensed Balance Sheets as of June 30, 2020 and December 31, 2019 for: Avis Budget Group, Inc. (the “Parent”), ABCR and Avis Budget Finance, Inc. (the “Subsidiary Issuers”) and the guarantor subsidiaries (the “Guarantor Subsidiaries”). The Subsidiary Issuers and the Guarantor Subsidiaries are 100% owned by the Parent, either directly or indirectly. All guarantees are full and unconditional and joint and several. This financial information is being presented in relation to the Company’s guarantee of the payment of principal, premium (if any) and interest on the Senior Notes issued by the Subsidiary Issuers. For a description of these guaranteed notes, see Note 11 to our Consolidated Condensed Financial Statements. The Senior Notes are guaranteed by the Parent and certain subsidiaries. The following tables present summarized financial information for the Parent, the Subsidiary Issuer and the Guarantor Subsidiaries on a combined basis after intercompany transactions have been eliminated, including adjustments to remove the receivable and payable balances, investment in, and equity in earnings from the 38 subsidiaries that do not guarantee the Senior Notes (the “Non-Guarantor Subsidiaries”). Summarized Income Statement
__________ For the six months ended June 30, 2020, the above amounts include expenses of $1.1 billion associated with intercompany charges from the Non-Guarantor Subsidiaries. Summarized Balance Sheets
__________ As of June 30, 2020 and December 31, 2019, the above amounts exclude receivables of $3 million and $2 million, respectively, from the Non-Guarantor Subsidiaries. As of June 30, 2020 and December 31, 2019, the above amounts exclude payables of approximately $2.0 billion and $1.0 billion, respectively, to the Non-Guarantor Subsidiaries. LIQUIDITY RISK Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses. The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations. Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities. Our liquidity position has been impacted by COVID-19 as a result of significant volume declines and we expect the impact of COVID-19 on the U.S. and worldwide economies to continue to affect our volumes even after the outbreak is contained. Our liquidity could be further negatively affected by any financial market disruptions or the absence of a As of June 30, 2020, we had access to $1.3 billion of available cash and cash equivalents and available borrowings under our revolving credit facility of approximately $0.2 billion, providing us with access to an approximate $1.5 billion of total liquidity. See Note 1 to our Consolidated Condensed Financial Statements for detailed information on liquidity and management’s plans. 39 Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the CONTRACTUAL OBLIGATIONS Our future contractual obligations have not changed significantly from the amounts reported within our ACCOUNTING POLICIES The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions that we are required to make pertain to matters that are inherently uncertain as they relate to future events. Presented within the section titled “Critical Accounting Policies” of our liabilities) that we believe require subjective and/or complex judgments that could potentially affect Goodwill and Other Indefinite-lived Intangible Assets. We perform our annual goodwill and other indefinite-lived intangible assets impairment assessment in the fourth quarter of each year at the reporting unit level, or more frequently if events or circumstances indicate that the carrying amount of goodwill and other indefinite-lived intangible assets may be impaired. Accordingly, we have reviewed the carrying value of our goodwill and other indefinite-lived intangibles assets for impairment during the quarter. When determining fair value, we utilize various assumptions, including the fair market trading price of our common stock and management’s projections of future cash flows. A change in these underlying assumptions will cause a change in the results of the tests and, as such could cause the fair value to be less than the respective carrying amount. In such an event, we would be required to record a charge, which would impact earnings. Our goodwill and other indefinite-lived intangible assets are allocated among our reporting units. During the six months ended June 30, 2020, there was no impairment of goodwill and other intangible assets. For our Europe, Middle East and Africa (“EMEA”) reporting unit, the percentage by which the estimated fair value exceeds the carrying value was approximately 24% and the amount of goodwill allocated to our reporting unit was $464 million. Further deterioration in the general economic conditions in the travel industry, would result in another interim impairment test of our goodwill and indefinite-lived trademarks, which may result in an impairment charge to earnings in future quarters. We will continue to closely monitor actual results versus our expectations as well as any significant changes in events or conditions, including the impact of COVID-19 on our business and the travel industry, and the resulting impact to our assumptions about future estimated cash flows, the weighted average cost of capital and market multiples. If our expectations of the operating results, both in magnitude or timing, do not materialize, or if our weighed average cost of capital increases or if market multiples decline, we may be required to record goodwill and indefinite-lived intangible asset impairment charges, which may be material. New Accounting Standards 40 For detailed information regarding new accounting standards and their impact on our business, see Note 1 to our Consolidated Condensed Financial Statements. Item 3. Quantitative and Qualitative Disclosures about Market Risk We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and gasoline prices. We assess our market risks based on changes in interest and currency exchange rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates. We used June 30, Item 4. Controls and Procedures (a)Disclosure Controls and Procedures. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “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 June 30, 2020. (b)Changes in Internal Control Over Financial Reporting. During the fiscal quarter to which this report relates, there has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 41 PART II – OTHER INFORMATION Item 1.Legal Proceedings During the quarter ended June 30, The following risk factors are provided to update the risk factors of the Company previously disclosed in periodic reports filed with the SEC, including its 2019 Form 10-K. COVID-19 has disrupted, and may continue to disrupt, our business and financial performance. The outbreak of COVID-19 in multiple countries across the globe, including North America, Europe and Asia, has adversely impacted the U.S., U.K. and global economy and demand for our business. Governmental authorities have taken and continue to take measures to address the outbreak, including restrictions on travel and other orders, including partial shelter-in-place orders. The pandemic is a highly fluid and rapidly evolving situation and we cannot anticipate with any certainty the length, scope or severity of such restrictions in each of the jurisdictions that we operate. The full impact that COVID-19 will have on our business cannot be predicted at this time due to numerous uncertainties, including the duration and severity of the outbreak, including a “second wave” caused by additional periods of increases or spikes in the number of cases and travel restrictions, the effectiveness of actions taken to contain the disease, the length of time it takes for rental volume and pricing to return and normal economic and operating conditions to resume, and other factors. This impact could include, but is not limited to, those discussed below: •changes in our revenues and customer demand: Our revenues and profitability have been materially impacted during the first two quarters of 2020 and in the third quarter •our expenses: To date we have incurred, and expect to continue to incur, increased costs related to COVID-19, such as procurement of overflow parking for our idle vehicles and costs associated with sanitizing our vehicles and facilities. In addition, the industry may be subject to enhanced health and hygiene requirements in attempts to address future outbreaks, which may increase our costs and take a significant amount of time to implement across our global operations. These additional costs may be required by regulators or expected by consumers even after the immediate effects of COVID-19 subside. •our workforce: The COVID-19 outbreak has also caused us to reduce and furlough employees in order to aim to right size our business for vehicle rental demand by reducing operating costs. These actions could create risks, including but not limited to, our ability to manage the size of our workforce given uncertain future demand. Further, we may incur additional costs as a result of negotiations with labor unions that represent our employees or severance payments in the event our workforce is further reduced, and we could experience labor disputes or disruptions as we continue to implement our mitigation plans. 42 •our relationship with, and the financial and operational capacities of, vehicle manufacturers and other suppliers: We could face disruptions in the supply of vehicles from vehicle manufacturers, whether due to outbreaks of COVID-19 at their manufacturing facilities, measures they take in response to COVID-19 or otherwise. We may also face delays in receiving delivery of vehicles or other supplies that may make it difficult to meet consumer demand. •the used car market: We depend on the used car market to sell vehicles and enable us to refresh our fleet. The used car market has faced and may again experience lower demand due to the slowdown in overall global economic activity due to COVID-19, unemployment rates, depressed consumer demand and related factors. •risks associated with our indebtedness (including available borrowing capacity and ability to refinance indebtedness on favorable terms, as well as our ability to meet the quarterly-tested leverage covenant contained in the credit agreement governing our senior credit facilities at the end of the covenant relief period on June 30, Our business is generally subject to We believe that business disruption relating to the COVID-19 pandemic will continue to negatively impact the global economy and may materially affect our businesses as outlined above, all of which would adversely impact our business and results of operations. To the extent that the COVID-19 outbreak continues to adversely affect our business and financial performance, including for the reasons outlined above, it may also have the effect of heightening many of the other risks identified below and in the “Risk Factors” section of our 2019 10-K, such as those relating to our substantial amount of outstanding indebtedness. We may not realize any or all of our estimated cost savings, which may have a negative effect on our results of operations. We have identified several areas that present opportunities for cost savings and efficiencies to potentially improve our results of operations while our business is being impacted by the COVID-19 crisis, including initiatives related to reductions in fleet, staffing and compensation expense. The potential cost savings that have been estimated based on these opportunities are based on a number of assumptions and expectations which, if achieved, would improve our profitability and cash flows from operating activities. However, there can be no assurance that the expected results will be achieved. These and any future spend reductions, if any, may also negatively impact our other initiatives or our efforts to grow our business in a recovery, which may negatively impact our future results of operations and increase the burden on existing management, systems and resources. In addition, these cost savings may be negated or offset by unexpected or increased costs, including as a result of price declines in the used car market or the increased cost of insurance, among other things, which could impact the contribution of our fleet reduction initiatives. 43 We are dependent on a functioning used vehicle market and highly exposed to residual value risk in the event that vehicle prices decline, which may both be exacerbated by COVID-19. We dispose of a significant number of vehicles in the used car market, including at wholesale automotive auctions, through sales to vehicle dealers, and directly to consumers. The COVID-19 crisis effectively closed many of the automotive auctions and vehicle dealerships across the globe, as well as retail locations that we operate directly. While such channels have reopened, they could be caused to shut down again in the future. Additionally, unprecedented increases in unemployment rates may severely impact vehicle demand from consumers and increase the number of loan and lease defaults, leading to repossessions which are typically sold by lenders in the wholesale market. Further, car manufacturers may increase incentives to stimulate new vehicle sales, which may depress used vehicle values. In the event our revenue declines do not significantly improve, we would attempt to further reduce the size of our global vehicle fleet. In such event, our competitors may likely also be attempting to sell vehicles. This confluence of events may lead to sharp and sustained declines in vehicle residual values, which may require increased compliance payments pursuant to our ABS securitization facility. In the event of extreme declines in residual values, the sale of vehicle inventory might result in no incremental recovery of our equity capital or even the requirement to fund additional capital to dispose of vehicles, or to choose to continue to keep idle vehicle fleet until demand or market values recover, which cannot be assured. The foregoing factors could have a material adverse impact on our business, financial position and results of operations. Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets. We carry a significant amount of goodwill and identifiable intangible assets on our consolidated balance sheets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill and indefinite-lived intangible assets for impairment each year, or more frequently if circumstances suggest an impairment may have occurred. We have determined in the past and may again determine in the future that a significant impairment has occurred in the value of our goodwill. Additionally, we have a significant amount of identifiable intangible assets and fixed assets that could also be subject to impairment. If we determine that a significant impairment has occurred in the value of our unamortized intangible assets or fixed assets, we could be required to write off a portion of our assets, which could adversely affect our consolidated financial condition or our reported results of operations. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company’s Board of Directors has authorized the repurchase of up to On February 10, 2020, the Company’s new Chairman purchased an aggregate $15 million of unregistered shares of the Company’s common stock at a price per share equal to the closing price of the Company’s common stock on February 7, 2020. Item 6. Exhibits See Exhibit Index. 44 SIGNATURES Pursuant to the requirements 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.
45 Exhibit Index
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