June 30, 2001================================================================================
QuickLinks-- Click here to rapidly navigate through this documentSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-----------FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D)15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED MARCH 31,
For the quarterly period ended June 30, 2002
COMMISSION FILE NUMBER: 1-13315-----------AVIS GROUP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 11-3347585 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 6 SYLVAN WAY 07054 PARSIPPANY, NJ (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)11-3347585
(I.R.S. Employer Identification No.)
6 SYLVAN WAY
PARSIPPANY, NJ
(Address of principal executive offices)
07054
(Zip Code)(973) 496-3500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(Registrant's telephone number, including area code)SECURITIES REGISTERED PURSUANT TO SECTION
12(B)12(b) OF THE ACT:NONE
NoneSECURITIES REGISTERED PURSUANT TO SECTION
12(G)12(g) OF THE ACT:NONE -----------
NoneIndicate by check mark whether the Registrant (1) has filed all reports required to be filed in Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements, for the past 90 days: Yes
[ ]o No[X]ýAPPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the Registrant's common stock was
5,537shares5,537 shares as ofApril 30,July 31, 2002.Avis Group Holdings, Inc. meets the conditions set forth in General Instructions H (1) (a) and (b) to Form 10-Q and is therefore filing this form with the reduced disclosure format.
================================================================================AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES INDEX PAGE ----Avis Group Holdings, Inc. and Subsidiaries
Page PART I Financial Information
Item 1.
Financial Statements
Independent Accountants' Report
1
Consolidated Condensed Statements of Operations for the three months ended June 30, 2002 and 2001
2
Consolidated Condensed Statements of Operations for the six months ended June 30, 2002, the period March 1, 2001 (Date of Acquisition) to June 30, 2001 and the two months ended February 28, 2001
3
Consolidated Condensed Balance Sheets as of June 30, 2002 and December 31, 2001
4
Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2002, the period March 1, 2001 (Date of Acquisition) to June 30, 2001 and the two months ended February 28, 2001
5
Notes to the Consolidated Condensed Financial Statements
7
Item 2.
Management's Narrative Analysis of the Results of Operations
19
Item 3.
Quantitative and Qualitative Disclosure about Market Risks
22
PART II
Other Information
Item 6.
Exhibits and Report on Form 8-K
23
Signatures
24PART
I Financial InformationI—FINANCIAL INFORMATIONItem 1. Financial Statements
Independent Accountants' Report 1 Consolidated Condensed Statements of Operations for the three months ended March 31, 2002, the period March 1, 2001 (Date of Acquisition) to March 31, 2001 and the two months ended February 28, 2001 2 Consolidated Condensed Balance Sheets as of March 31, 2002 and December 31, 2001 3 Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2002, the period March 1, 2001 (Date of Acquisition) to March 31, 2001 and the two months ended February 28, 2001 4 Notes to the Consolidated Condensed Financial Statements 6 Item 2. Management's Narrative Analysis of the Results of Operations 17 Item 3. Quantitative and Qualitative Disclosure about Market Risks 19 PART II Other Information Item 6. Exhibits and Report on Form 8-K 20 Signatures 21PART I - FINANCIAL INFORMATION Item 1. Financial StatementsINDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholder of
Avis Group Holdings, Inc.
Parsippany, New JerseyWe have reviewed the accompanying consolidated condensed balance sheet of Avis Group Holdings, Inc. and subsidiaries (successor to Avis Rent A Car System, Inc. and subsidiaries, Avis Fleet Leasing and Management Corp., and subsidiaries and Reserve Claims Management Co., collectively the "Predecessor Companies") (collectively referred to as the "Company") as of
March 31,June 30, 2002, and the related consolidated condensed statements of operations and cash flows for thethree-monththree and six month period endedMarch 31,June 30, 2002, the period March 1, 2001 (Date of Acquisition) toMarch 31,June 30, 2001, and as to the Predecessor Companies for the period January 1, 2001 to February 28, 2001. These financial statements are the responsibility of the Company's management.We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to such consolidated condensed financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of December 31, 2001, and the related consolidated statements of operations, common stockholders' equity, and cash flows for the period March 1, 2001 (Date of Acquisition) to December 31, 2001 and as to the Predecessor Companies, the consolidated related statements of operations, common stockholders' equity and cash flows for the period January 1, 2001 to February 28, 2001 (not presented herein); and in our report dated January 23, 2002, we expressed an unqualified opinion (and included an explanatory paragraph relating to a change in accounting for derivative instruments and hedging activities) on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 2001 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s//s/ DELOITTE & TOUCHE LLP
May 7,
August 12, 2002
New York, New YorkAVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES1
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(IN THOUSANDS)
PREDECESSOR COMPANIES MARCH 1, 2001 ----------------- THREE MONTHS (DATE OF ACQUISITION) TWO MONTHS ENDED TO ENDED MARCH 31, 2002 MARCH 31, 2001 FEBRUARY 28, 2001 -------------- --------------------- -----------------REVENUES $ 564,603 $ 217,996 $ 385,821 --------- --------- --------- EXPENSES Operating, net 223,567 78,672 173,830 Vehicle depreciation and lease charges, net 162,691 55,095 111,966 Selling, general and administrative 114,931 37,575 83,229 Vehicle interest, net 50,647 20,547 43,625 Non-vehicle interest, net 10,795 5,086 9,167 Non-vehicle depreciation and amortization 6,125 4,427 6,241 --------- --------- --------- Total expenses 568,756 201,402 428,058 --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAX (4,153) 16,594 (42,237) Provision (benefit) for income taxes (1,744) 7,899 (15,783) --------- --------- --------- INCOME (LOSS) FROM CONTINUING OPERATIONS (2,409) 8,695 (26,454) Income from discontinued operations, net of tax -- -- 4,947 --------- --------- --------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (2,409) 8,695 (21,507) Cumulative effect of accounting change, net of tax -- -- (7,612) --------- --------- --------- NET INCOME (LOSS) $ (2,409) $ 8,695 $ (29,119) ========= ========= =========
(In thousands)
Three Months
Ended
June 30, 2002Three Months
Ended
June 30, 2001Revenues $ 650,631 $ 628,893 Expenses Operating, net 256,366 232,168 Vehicle depreciation and lease charges, net 161,401 170,982 Selling, general and administrative 121,929 116,540 Vehicle interest, net 51,339 55,899 Non-vehicle interest, net 10,823 14,577 Non-vehicle depreciation and amortization 9,445 15,075 Total expenses 611,303 605,241 Income before income taxes 39,328 23,652 Provision for income taxes 16,518 13,753 Net income $ 22,810 $ 9,899 See Notes to Consolidated Condensed Financial Statements.
1AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES2
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSEDBALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)STATEMENTS OF OPERATIONS
MARCH 31, DECEMBER 31, 2002 2001 ----------- ------------ASSETS Cash and cash equivalents $ 14,500 $ 13,311 Receivables, net 158,365 168,372 Prepaid expenses 39,606 42,543 Deferred income taxes 555,369 548,087 Property and equipment, net 208,111 203,232 Goodwill, net 1,263,496 1,271,192 Other assets 145,041 146,608 ----------- ----------- Total assets exclusive of assets under management programs 2,384,488 2,393,345 ----------- ----------- Assets under management programs: Restricted cash 275,898 581,187 Vehicles, net 3,628,153 3,470,937 Due from vehicle manufacturers 61,125 92,614 ----------- ----------- 3,965,176 4,144,738 ----------- ----------- TOTAL ASSETS $ 6,349,664 $ 6,538,083 =========== ===========LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accounts payable 164,120 363,891 Accrued liabilities 477,575 434,665 Due to Cendant Corporation and affiliates, net 499,859 514,433 Non-vehicle debt 582,058 588,259 Public liability, property damage and other insurance liabilities 214,143 228,503 ----------- ----------- Total liabilities exclusive of liabilities under management programs 1,937,755 2,129,751 ----------- ----------- Liabilities under management programs: Vehicle debt 3,766,596 3,771,341 Deferred income taxes 315,595 315,905 ----------- ----------- 4,082,191 4,087,246 ----------- ----------- Commitments and contingencies (Note 5) Stockholder's equity: Common stock, $.01 par value--authorized 10,000 shares; issued 5,537 shares -- -- Additional paid-in-capital 168,832 168,832 Retained earnings 186,897 189,306 Accumulated other comprehensive loss (26,011) (37,052) ----------- ----------- Total stockholder's equity 329,718 321,086 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 6,349,664 $ 6,538,083 =========== ===========
(In thousands)
Predecessor
CompaniesMarch 1, 2001
(Date of Acquisition)
to
June 30, 2001Six Months
Ended
June 30, 2002Two Months
Ended
February 28, 2001Revenues $ 1,215,234 $ 846,889 $ 385,821 Expenses Operating, net 480,401 310,979 174,087 Vehicle depreciation and lease charges, net 321,251 225,172 110,117 Selling, general and administrative 236,860 154,115 83,229 Vehicle interest, net 101,986 76,446 43,625 Non-vehicle interest, net 21,618 19,663 9,167 Non-vehicle depreciation and amortization 17,943 20,268 7,833 Total expenses 1,180,059 806,643 428,058 Income (loss) before income taxes 35,175 40,246 (42,237 ) Provision (benefit) for income taxes 14,774 21,652 (15,783 ) Income (loss) from continuing operations 20,401 18,594 (26,454 ) Income from discontinued operations, net of tax — — 4,947 Income (loss) before cumulative effect of accounting change 20,401 18,594 (21,507 ) Cumulative effect of accounting change, net of tax — — (7,612 ) Net income (loss) $ 20,401 $ 18,594 $ (29,119 ) See Notes to Consolidated Condensed Financial Statements.
2AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES3
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSEDSTATEMENTS OF CASH FLOWS (IN THOUSANDS)
PREDECESSOR COMPANIES --------------------- THREE MONTHS MARCH 1, 2001 TWO MONTHS ENDED (DATE OF ACQUISITION) ENDED MARCH 31, 2002 TO MARCH 31, 2001 FEBRUARY 28, 2001 -------------------- ------------------- ---------------------OPERATING ACTIVITIES Net income (loss) $ (2,409) $ 8,695 $ (29,119) Adjustments to arrive at income (loss) from continuing operations - - 2,665 -------------------- ------------------- --------------------- Income (loss) from continuing operations (2,409) 8,695 (26,454) Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: Non-vehicle depreciation and amortization 6,125 4,427 6,241 Net change in operating assets and liabilities, excluding the impact of acquisitions and dispositions: Receivables (5,541) (13,478) 10,108 Accounts payable (2,453) 16,237 (30,518) Accrued liabilities 23,568 818 1,486 Other, net (17,397) 8,782 (30,923) -------------------- ------------------- --------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS 1,893 25,481 (70,060) -------------------- ------------------- --------------------- MANAGEMENT PROGRAMS: Vehicle depreciation 154,750 51,436 105,928 -------------------- ------------------- --------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 156,643 76,917 35,868 -------------------- ------------------- --------------------- INVESTING ACTIVITIES Property and equipment additions (10,698) (5,324) (3,278) Retirements of property and equipment - 315 (380) Payment for purchase of rental car franchise licensees (2,835) - - -------------------- ------------------- --------------------- NET CASH USED IN INVESTING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (13,533) (5,009) (3,658) -------------------- ------------------- --------------------- MANAGEMENT PROGRAMS: (Increase) decrease in restricted cash 305,289 (33,868) 10,978 Decrease in due from vehicle manufacturers 31,179 147,412 16,368 Investment in vehicles (1,190,832) (490,138) (943,102) Payments received on investment in vehicles 706,215 353,216 813,460 -------------------- ------------------- --------------------- (148,149) (23,378) (102,296) -------------------- ------------------- --------------------- NET CASH USED IN INVESTING ACTIVITIES (161,682) (28,387) (105,954) -------------------- ------------------- ---------------------3AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED) (IN THOUSANDS)BALANCE SHEETS
PREDECESSOR COMPANIES ---------------------- THREE MONTHS MARCH 1, 2001 TWO MONTHS ENDED (DATE OF ACQUISITION) ENDED MARCH 31, 2002 TO MARCH 31, 2001 FEBRUARY 28, 2001 -------------- --------------------- ----------------------FINANCING ACTIVITIES Proceeds from borrowings - 45,000 - Principal payments on borrowings (125) (62,039) (77) Increase (decrease) in due to Cendant Corporation and affiliates, net (13,897) 97,216 (45,818) Payments for debt issuance costs (115) (3,621) (12) Issuances of common stock - - 140 ---------------- ------------------- ---------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (14,137) 76,556 (45,767) ---------------- ------------------- ---------------------- MANAGEMENT PROGRAMS: Proceeds from borrowings 49,703 812,162 132,294 Principal payments on borrowings (29,456) (938,650) (31,087) ---------------- ------------------- ---------------------- 20,247 (126,488) 101,207 ---------------- ------------------- ---------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 6,110 (49,932) 55,440 ---------------- ------------------- ---------------------- Effect of changes in net assets of discontinued operations - - 394 Effect of changes in exchange rates on cash and cash equivalents 118 (923) (11) ---------------- ------------------- ---------------------- Net increase (decrease) in cash and cash equivalents 1,189 (2,325) (14,263) Cash and cash equivalents, beginning of period 13,311 66,105 80,368 ---------------- ------------------- ---------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,500 $ 63,780 $ 66,105 ================ =================== ====================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest payments $ 50,151 $ 18,301 $ 44,315 Income tax payments, net $ 420 $ 1,313 $ 1,962
(In thousands, except share data)
June 30,
2002December 31,
2001ASSETS Cash and cash equivalents $ 40,669 $ 13,311 Receivables, net 165,755 168,372 Prepaid expenses 40,966 42,543 Deferred income taxes 556,148 548,087 Property and equipment, net 256,217 245,276 Goodwill, net 1,254,909 1,271,192 Other assets 145,054 146,608 Total assets exclusive of assets under management programs 2,459,718 2,435,389 Assets under management programs: Restricted cash 9,306 581,187 Vehicles, net 4,226,575 3,428,893 Due from vehicle manufacturers 64,492 92,614 4,300,373 4,102,694 Total assets $ 6,760,091 $ 6,538,083 LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accounts payable $ 245,132 $ 363,891 Accrued liabilities 447,341 434,665 Due to Cendant Corporation and affiliates, net 514,007 514,433 Non-vehicle debt 575,856 588,259 Public liability, property damage and other insurance liabilities 215,877 228,503 Total liabilities exclusive of liabilities under management programs 1,998,213 2,129,751 Liabilities under management programs: Vehicle debt 4,115,860 3,771,341 Deferred income taxes 307,296 315,905 4,423,156 4,087,246 Commitments and contingencies (Note 6) Stockholder's equity: Common stock, $.01 par value—authorized 10,000 shares; issued 5,537 shares — — Additional paid-in-capital 168,832 168,832 Retained earnings 209,707 189,306 Accumulated other comprehensive loss (39,817 ) (37,052 ) Total stockholder's equity 338,722 321,086 Total liabilities and stockholder's equity $ 6,760,091 $ 6,538,083 See Notes to Consolidated Condensed Financial Statements.
4
AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Predecessor
CompaniesMarch 1, 2001
(Date of Acquisition)
to
June 30, 2001Six Months
Ended
June 30, 2002Two Months
Ended
February 28, 2001Operating Activities Net income (loss) $ 20,401 $ 18,594 $ (29,119 ) Adjustments to arrive at income (loss) from continuing operations — — 2,665 Income (loss) from continuing operations 20,401 18,594 (26,454 ) Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: Non-vehicle depreciation and amortization 17,943 20,268 7,833 Net change in operating assets and liabilities, excluding the impact of acquisitions and dispositions: Receivables (12,664 ) (12,108 ) 10,108 Accounts payable (9,766 ) (12,531 ) (30,518 ) Accrued liabilities 848 (3,789 ) 1,486 Other, net (10,935 ) (4,082 ) (30,923 ) Net cash provided by (used in) operating activities exclusive of management programs 5,827 6,352 (68,468 ) Management programs: Vehicle depreciation 312,221 211,602 104,336 Net cash provided by operating activities 318,048 217,954 35,868 Investing Activities Property and equipment additions (24,807 ) (25,658 ) (5,821 ) Retirements of property and equipment 778 8,375 433 Payment for purchase of rental car franchise licensees (3,087 ) (19,047 ) — Net cash used in investing activities exclusive of management programs (27,116 ) (36,330 ) (5,388 ) Management programs: Decrease in restricted cash 571,881 5,208 10,978 Decrease in due from vehicle manufacturers 29,348 131,813 16,368 Investment in vehicles (2,684,823 ) (1,900,052 ) (940,559 ) Payments received on investment in vehicles 1,472,033 1,412,819 812,647 (611,561 ) (350,212 ) (100,566 ) Net cash used in investing activities (638,677 ) (386,542 ) (105,954 ) 5
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Predecessor
CompaniesMarch 1, 2001
(Date of Acquisition)
to
June 30, 2001Six Months
Ended
June 30, 2002Two Months
Ended
February 28, 2001Financing Activities Proceeds from borrowings — 140,000 — Principal payments on borrowings (253 ) (457,806 ) (77 ) Increase (decrease) in due to Cendant Corporation and affiliates, net (2,667 ) 316,882 (45,818 ) Payments for debt issuance costs (131 ) (4,231 ) (12 ) Issuances of common stock — — 140 Net cash used in financing activities exclusive of management programs (3,051 ) (5,155 ) (45,767 ) Management programs: Proceeds from borrowings 650,431 916,633 132,294 Principal payments on borrowings (299,818 ) (786,470 ) (31,087 ) 350,613 130,163 101,207 Net cash provided by financing activities 347,562 125,008 55,440 Effect of changes in net assets of discontinued operations — — 394 Effect of changes in exchange rates on cash and cash equivalents 425 (117 ) (11 ) Net increase (decrease) in cash and cash equivalents 27,358 (43,697 ) (14,263 ) Cash and cash equivalents, beginning of period 13,311 66,105 80,368 Cash and cash equivalents, end of period $ 40,669 $ 22,408 $ 66,105 Supplemental disclosure of Cash Flow Information: Interest payments $ 130,775 $ 108,764 $ 44,315 Income tax payments, net $ 485 $ 8,889 $ 1,962 See Notes to Consolidated Condensed Financial Statements.
6
Avis Group Holdings, Inc. and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(UNLESS OTHERWISE NOTED, ALL AMOUNTS ARE IN THOUSANDS)
(Unless otherwise noted, all amounts are in thousands)1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATIONSummary of Significant Accounting PoliciesBasis of Presentation
The accompanying unaudited Consolidated Condensed Financial Statements include the accounts and transactions of Avis Group Holdings, Inc. and its subsidiaries (collectively, "the Company").
Avis Group Holdings, Inc. is a holding company that operates through a wholly-owned subsidiary, Avis Rent A Car System, Inc., the second largest general use car rental brand in the world. On March 1, 2001, all the Company's common stock not then-owned by Cendant Corporation ("Cendant") was acquired by a wholly-owned subsidiary of Cendant for approximately $994 million with the Company emerging as the surviving legal entity. Accordingly, the Consolidated Condensed Financial Statements as of and for the three and six months ended June 30, 2002, for the period March 1, 2001 (Date of Acquisition) to June 30, 2001 and as of December 31, 2001 include the financial statements of Avis Group Holdings, Inc. and its subsidiaries. The Consolidated Condensed Financial Statements for the two months ended February 28, 2001 include the financial statements of the Company and its former fleet management and fuel card businesses, which are presented as a discontinued operation (the "Predecessor Companies").
In management's opinion, the Consolidated Condensed Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. In addition, management is required to make estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. The Consolidated Condensed Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K dated March 29, 2002.
Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
Avis Group Holdings, Inc. is a holding company that operates, through a wholly-owned subsidiary, Avis Rent A Car System, Inc., the second largest general use car rental brand in the world. On March 1, 2001, all the Company's common stock not then owned by Cendant Corporation ("Cendant") was acquired by a subsidiary of PHH Corporation ("PHH"), a wholly-owned subsidiary of Cendant, for approximately $994 million with the Company emerging as the surviving legal entity. The Company assumed intercompany indebtedness of $937 million through the acquisition. Simultaneous with the acquisition, the Company's fleet management and fuel card businesses were sold to PHH. The Company received proceeds of $800 million from the sale of these businesses, which were used by the Company to repay a portion of the intercompany indebtedness it assumed in connection with the acquisition. Simultaneous with the acquisition, the Company became a Cendant subsidiary not within the PHH ownership structure. Accordingly, the Consolidated Condensed Financial Statements as of and for the three months ended March 31, 2002, for the month ended March 31, 2001, and as of December 31, 2001 include the financial statements of Avis Group Holdings, Inc. and its subsidiaries. The Consolidated Condensed Financial Statements for the two months ended February 28, 2001 include the financial statements of the Company and its former fleet management and fuel card businesses, which are presented as a discontinued operation (the "Predecessor Companies"). The acquisition was accounted for using the purchase method of accounting; accordingly, the Company's assets and liabilities were adjusted to their estimated fair values as of March 1, 2001. The purchase price has been allocated among the Predecessor Companies based upon their estimated fair values as of March 1, 2001. The excess of the purchase price over the estimated fair value of the Company's assets and liabilities was allocated to goodwill and was being amortized over 40 years on a straight-line basis until the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", as discussed below. The final allocation of the purchase price is summarized as follows:
AMOUNT -----------Cash consideration $ 937,554 Fair value of converted options 17,000 Transaction costs and expenses 40,000 ----------- Total purchase price 994,554 Book value of Cendant's existing net investment in Avis Group 408,779 ----------- Cendant's basis in Predecessor Companies. 1,403,333 Portion of basis attributable to fleet management and fuel card businesses (987,822) ----------- Cendant's basis in the Successor Company 415,511 Intercompany loan assumed by Successor Company (137,554) ----------- Cendant's adjusted basis in Successor Company 277,957 Fair value of liabilities assumed in excess of assets acquired of Successor Company 986,830 ----------- Goodwill $1,264,787 ==========5Pursuant to certain covenant requirements in an indenture under which the Company issued debt, the Company continues to operate and maintain its status as a separate public reporting entity.
Assets used by the Company to generate revenue are classified as assets under management programs. Funding for such assets is primarily provided by secured financing arrangements, which are classified as
debtliabilities under management programs. Revenues generated from these assets are used, in part, to repay the interest and principal associated with the debt. Cash inflows and outflows relating to the generation and acquisition of assets and the principal debt repayment or financing of such assets are classified as activities of the Company's management programs.CHANGES IN ACCOUNTING POLICIES BUSINESS COMBINATIONS.Changes in Accounting Policies
On
JulyJanuary 1,2001,2002, the Company adoptedSFASStatement of Financial Accounting Standards ("SFAS") No.141, "Business Combinations," which prohibits142 "Goodwill and Other Intangible Assets" in its entirety. Prior to theuse of the pooling of interests method of accounting for all business combinations initiated after June 30, 2001. SFAS No. 141 also addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination and requires additional disclosures for material business combinations completed after such date. Uponadoption of SFAS No. 142,on January 1, 2002, intangible assets required to be reclassified to goodwill were not material. GOODWILL AND OTHER INTANGIBLE ASSETS. During first quarter 2001,all intangible assets were amortized on a straight-line basis over their estimated periods to be benefited.On January 1, 2002,Subsequent to theCompany adopted SFAS No. 142 in its entirety. Pursuant to suchadoption, the Company did not amortize any goodwill or indefinite-lived intangible assets duringfirst quarter2002.TheIn connection with the implementation of SFAS No. 142, the Company is required to assess goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company reviewed the carrying value of all its goodwill and other intangible assets by comparing such amounts to their fair value and determined that the carrying amounts of such assets did not exceed their respective fair values. Accordingly, the initial implementation of this standard did not result in a charge and, as such, did not impact the Company's results of operations during
the first quarter2002.7
2.
RELATED PARTY TRANSACTIONSRelated Party TransactionsExpenses of the Company include the following items charged by Cendant and
affiliates. These chargesaffiliates, which include allocations from Cendant for services provided to theCompany, which consist of:Company:
PREDECESSOR COMPANIES MARCH 1, 2001 ------------------ THREE MONTHS (DATE OF ACQUISITION) TWO MONTHS ENDED TO ENDED MARCH 31, 2002 MARCH 31, 2001 FEBRUARY 28, 2001 -------------- ------------------- -----------------Royalties $ 24,276 $ 9,200 $ 16,205 Reservations 12,682 5,155 8,496 Data processing 8,265 4,484 11,395 Rent and other 13,779 672 1,456 Interest 3,399 - - -------------- ----------------- -------------- Total $ 62,401 $ 19,511 $ 37,552 ============== ================= ==============
Three Months
Ended
June 30, 2002Three Months
Ended
June 30, 2001Royalties $ 27,977 $ 26,610 Reservations 16,639 14,031 Data processing 9,475 15,657 Rent, corporate overhead allocations and other 15,300 10,957 Interest, net 2,959 7,011 Total $ 72,350 $ 74,266
Predecessor
CompaniesMarch 1, 2001
(Date of Acquisition)
to
June 30, 2001Six Months
Ended
June 30, 2002Two Months
Ended
February 28, 2001Royalties $ 52,253 $ 35,810 $ 16,205 Reservations 29,321 19,186 8,496 Data processing 17,740 20,141 11,395 Rent, corporate overhead allocations and other 29,079 11,629 1,456 Interest, net 6,358 7,011 — Total $ 134,751 $ 93,777 $ 37,552 On the Consolidated Condensed Statements of Operations, the royalty and reservation charges are included within selling, general and administration expenses, the rent and other and data processing expenses are included within operating,
expensesnet and interestexpenses areexpense is included within non-vehicle interest, net. These charges, including corporate overhead allocations, are determined in accordance with various intercompany agreements,and include certain corporate overhead allocations,which are based upon factors, such as square footage, employee salaries and computer usage time.63.
INTANGIBLE ASSETSRestricted CashRestricted cash includes cash and investments that are not readily available for normal Company disbursements that have been set aside as required under the Company's debt covenants. The restricted cash balance at December 31, 2001 was held as collateral for outstanding vehicle debt that was not callable and, therefore, could not be immediately repaid. During 2002, the restricted cash was depleted through the normal purchase of vehicles.
4. Intangible Assets
Intangible assets consisted of:
MARCH 31, 2002 DECEMBER 31, 2001 ------------------------ ------------------------ GROSS GROSS CARRYING ACCUMULATED CARRYING ACCUMULATED AMOUNT AMORTIZATION AMOUNT AMORTIZATION ---------- ------------ ---------- ------------AMORTIZED INTANGIBLE ASSETS Customer lists $ 18,952 $ 1,040 $ 18,952 $ 800 ========== ======== ========== ======== UNAMORTIZED INTANGIBLE ASSETS Goodwill $1,263,496 $1,297,774 $ 26,582 ========== ========== ========
June 30, 2002 December 31, 2001 Gross
Carrying
AmountAccumulated
AmortizationGross
Carrying
AmountAccumulated
AmortizationAmortized Intangible Assets Customer lists $ 18,952 $ 1,280 $ 18,952 $ 800 Unamortized Intangible Assets Goodwill $ 1,254,909 $ 1,297,774 $ 26,582 8
Customer lists are included in other assets on the Company's Consolidated Condensed Balance Sheet. Amortization expense relating to customer lists during the three and six months ended June 30, 2002 was approximately $240 thousand and $480 thousand, respectively. Amortization expense relating to all intangible assets
was $240,000 and $80,000 forduring thefirst quarter 2002two months ended February 28, 2001 and the period March 1, 2001 (Date of Acquisition) toMarch 31,June 30, 2001,respectively. Amortization expense relating to goodwillwas approximately$2.8$2.1 million and$2.0$10.5 million,forrespectively, including theperiod March 1, 2001 (Dateamortization ofAcquisition) to March 31, 2001goodwill of $2.1 million andfor the two months ended February 28, 2001,$10.2 million, respectively. The Company expects amortization expense on intangible assets for the remainder of 2002 to approximate$720,000$480 thousand and $1 million for each of the succeeding five years.Intangible assets are included as a component of other assets on the balance sheet.The changes in the carrying amount of goodwill for
the first quarter2002 are as follows:
Balance as of January 1, 2002 $1,271,192 Goodwill acquired during 2002 1,584 Other (9,280) ---------- Balance as of March 31, 2002 $1,263,496 ==========
Balance as of January 1, 2002 $ 1,271,192 Goodwill acquired during 2002 1,836 Other (18,119 ) Balance as of June 30, 2002 $ 1,254,909 Had the Company applied the non-amortization provisions of SFAS No. 142 for the three months ended June 30, 2001 and for the period March 1, 2001 (Date of Acquisition) to
March 31,June 30, 2001 and the two months ended February 28, 2001, net income (loss) would have been as follows:
PREDECESSOR MARCH 1, 2001 COMPANIES (DATE OF ----------------- ACQUISITION) TWO MONTHS TO ENDED MARCH 31, 2001 FEBRUARY 28, 2001 -------------- -----------------Reported net income (loss) $ 8,695 $ (29,119) Add back: Goodwill amortization 2,814 1,903 ---------- ---------- Pro forma net income (loss) $ 11,509 $ (27,216) ========== ==========4. VEHICLE DEBT
Predecessor
CompaniesMarch 1, 2001
(Date of Acquisition)
to
June 30, 2001Three Months
Ended
June 30, 2001Two Months
Ended
February 28, 2001Reported net income (loss) $ 9,899 $ 18,594 $ (29,119 ) Add back: Goodwill amortization, net of tax 3,108 4,708 1,307 Pro forma net income (loss) $ 13,007 $ 23,302 $ (27,812 ) 5. Vehicle Debt
Vehicle debt consisted of:
June 30,
2002December 31,
2001Commercial paper notes $ 299,030 $ 119,998 Series 2001-2 auction rate rental car asset-backed notes 385,000 40,000 Series 1997-1B 6.40% asset-backed medium-term notes 566,667 850,000 Series 1998-1 6.14% asset-backed medium-term notes 600,000 600,000 Series 2000-1 floating rate rental car asset-backed notes 250,000 250,000 Series 2000-2 floating rate rental car asset-backed notes 300,000 300,000 Series 2000-3 floating rate rental car asset-backed notes 200,000 200,000 Series 2000-4 floating rate rental car asset-backed notes 500,000 500,000 Series 2001-1 floating rate rental car asset-backed notes 750,000 750,000 Other 265,163 161,343 $ 4,115,860 $ 3,771,341 As of
March 31,June 30, 2002, the Company'sasset backedasset-backed funding arrangements under the AESOP Funding program provided for the issuance of up to$4.45$4.14 billion of debt. Amounts outstanding under the AESOP Funding program approximated$3.6$3.85 billion. As ofMarch 31,June 30, 2002, the Company had an additional$850$291 million of availability under the AESOP Funding program. In addition, the Companyhashad other outstanding vehicle debt of approximately$167$265 million and availability of approximately$172$112 million under other funding arrangements as ofMarch 31,June 30, 2002.5. COMMITMENTS AND CONTINGENCIES Parent Company Litigation Cendant is involved in litigation asserting claims associated with the accounting irregularities discovered in former CUC business units outside of the principal common stockholder class action litigation. Cendant does not believe that it is feasible to predict or determine the final outcome or resolution of these unresolved proceedings. An adverse outcome from such unresolved proceedings could be material with respect to earnings in any given reporting period. However, Cendant does not believe that the impact of such unresolved proceedings should result in a material liability to Cendant in relation to its consolidated financial position or liquidity.6. Commitments and Contingencies
The Company is involved in pending litigation in the usual course of business. In the opinion of management, such
otherlitigation will not have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.76. STOCKHOLDER'S EQUITY9
7. Comprehensive Income (Loss)
The components of comprehensive income (loss) are summarized as follows:
PREDECESSOR COMPANIES MARCH 1, 2001 ----------------- THREE MONTHS (DATE OF ACQUISITION) TWO MONTHS ENDED TO ENDED MARCH 31, 2002 MARCH 31, 2001 FEBRUARY 28, 2001 --------------- --------------------- -----------------Net income (loss) $ (2,409) $ 8,695 $ (29,119) Other comprehensive income (loss): Currency translation adjustment 791 (3,414) (1,758) Unrealized gains (losses) on cash flow hedges, net of tax 11,586 (1,371) 561 Minimum pension liability adjustment (1,336) - - Cumulative effect from change in accounting policy for derivative instruments, net of tax - - 1,464 ------------ --------------- ------------ Total comprehensive income (loss) $ 8,632 $ 3,910 $ (28,852) ============ =============== ============The after-tax components of accumulated other comprehensive income (loss) for the three months ended March 31, 2002 are as follows: UNREALIZED MINIMUM ACCUMULATED CURRENCY GAINS (LOSSES) PENSION OTHER TRANSLATION ON CASH FLOWS LIABILITY COMPREHENSIVE ADJUSTMENTS HEDGES ADJUSTMENT GAIN (LOSS) ----------- -------------- ----------- --------------Balance, January 1, 2002 $ (2,469) $ (34,583) $ - $(37,052) Current period change 791 11,586 (1,336) 11,041 ----------- ------------ --------- --------- Balance, March 31, 2002 $ (1,678) $ (22,997) $ (1,336) $(26,011) =========== ============ ========= =========7. GUARANTOR AND NON-GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
Three Months
Ended
June 30, 2002Three Months
Ended
June 30, 2001Net income $ 22,810 $ 9,899 Other comprehensive income (loss): Currency translation adjustment 3,660 2,239 Unrealized losses on cash flow hedges, net of tax (17,466 ) (1,395 ) Total comprehensive income $ 9,004 $ 10,743
Predecessor
CompaniesMarch 1, 2001
(Date of Acquisition)
to
June 30, 2001Six Months
Ended
June 30, 2002Two Months
Ended
February 28, 2001Net income (loss) $ 20,401 $ 18,594 $ (29,119 ) Other comprehensive income (loss): Currency translation adjustment 4,451 (1,175 ) (1,758 ) Unrealized gains (losses) on cash flow hedges, net of tax (5,880 ) (2,766 ) 561 Minimum pension liability adjustment (1,336 ) — — Cumulative effect from change in accounting policy for derivative instruments, net of tax — — 1,464 Total comprehensive income (loss) $ 17,636 $ 14,653 $ (28,852 ) The after-tax components of accumulated other comprehensive income (loss) for the six months ended June 30, 2002 are as follows:
Currency
Translation
AdjustmentsUnrealized
Losses
on Cash Flows
HedgesMinimum
Pension
Liability
AdjustmentAccumulated
Other
Comprehensive
LossBalance, January 1, 2002 $ (2,469 ) $ (34,583 ) $ — $ (37,052 ) Current period change 4,451 (5,880 ) (1,336 ) (2,765 ) Balance June 30, 2002 $ 1,982 $ (40,463 ) $ (1,336 ) $ (39,817 ) 8. Subsequent Event
On July 25, 2002, the Company issued $750 million of rental car asset backed notes under its AESOP Funding Program. Approximately $500 million of such notes bear interest at a fixed rate of 3.85% and approximately $250 million of such notes bear interest at a floating rate of LIBOR plus 29 basis points.
9. Guarantor and Non-Guarantor Consolidating Condensed Financial Statements
The following consolidating condensed financial information presents the Consolidating Condensed Balance Sheets as of
March 31,June 30, 2002 and December 31, 2001, the Consolidated Condensed Statements of Operations for the three months ended June 30, 2002 and June 30, 2001 and the Consolidating Condensed Statements of Operations and Statements of Cash Flows for thethreesix months endedMarch 31,June 30, 2002, the period March 1, 2001 (Date of Acquisition) toMarch 31,June 30, 2001, and as to the Predecessor Companies for the two months ended February 28, 2001 of (a) Avis Group Holdings, Inc. ("the Parent"); (b) the guarantor subsidiaries; (c) the non-guarantor subsidiaries; (d) elimination entries necessary to consolidate the Parent with the guarantor and non-guarantor subsidiaries; and (e) the Company on a consolidated basis.Investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the subsidiary guarantors have not been provided as management believes the following information is sufficient.
8AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES10
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONSFOR THE THREE MONTHS ENDED MARCH 31,
For the Three Months ended June 30, 2002
NON- AVIS GROUP GUARANTOR GUARANTOR HOLDINGS, INC. PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED --------- ------------ ------------ ------------ ----------------REVENUES $ -- $ 507,415 $ 57,188 $ -- $ 564,603 --------- --------- --------- --------- --------- EXPENSES Operating, net -- 195,292 28,275 -- 223,567 Vehicle depreciation and lease charges, net -- 145,565 17,126 -- 162,691 Selling, general and administrative -- 107,594 7,337 -- 114,931 Vehicle interest, net 459 49,980 208 -- 50,647 Non-vehicle interest, net 7,657 3,138 -- -- 10,795 Non-vehicle depreciation and amortization 239 5,202 684 -- 6,125 --------- --------- --------- --------- --------- Total expenses 8,355 506,771 53,630 -- 568,756 --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES (8,355) 644 3,558 -- (4,153) Equity in earnings of subsidiaries 1,571 2,064 -- (3,635) -- --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES (6,784) 2,708 3,558 (3,635) (4,153) Provision (benefit) for income taxes (4,375) 1,137 1,494 -- (1,744) --------- --------- --------- --------- --------- NET INCOME (LOSS) $ (2,409) $ 1,571 $ 2,064 $ (3,635) $ (2,409) ========= ========= ========= ========= =========AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedRevenues $ — $ 591,572 $ 59,059 $ — $ 650,631 Expenses Operating, net — 227,135 29,231 — 256,366 Vehicle depreciation and lease charges, net — 146,991 14,410 — 161,401 Selling, general and administrative — 113,735 8,194 — 121,929 Vehicle interest, net 459 50,544 336 — 51,339 Non-vehicle interest, net 7,658 3,165 — — 10,823 Non-vehicle depreciation and amortization 240 8,439 766 — 9,445 Total expenses 8,357 550,009 52,937 — 611,303 Income (loss) before equity in earnings of subsidiaries (8,357 ) 41,563 6,122 — 39,328 Equity in earnings of subsidiaries 26,166 3,550 — (29,716 ) — Income before income taxes 17,809 45,113 6,122 (29,716 ) 39,328 Provision (benefit) for income taxes (5,001 ) 18,947 2,572 — 16,518 Net income $ 22,810 $ 26,166 $ 3,550 $ (29,716 ) $ 22,810
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONSFOR THE PERIOD MARCH 1,
For the Three Months Ended June 30, 2001(DATE OF ACQUISITION) TO MARCH 31, 2001
NON- AVIS GROUP GUARANTOR GUARANTOR HOLDINGS, INC. PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------ ------------ --------------REVENUES $ -- $197,435 $ 20,561 $ -- $217,996 -------- -------- -------- -------- -------- EXPENSES Operating, net -- 69,559 9,113 -- 78,672 Vehicle depreciation and lease charges, net -- 48,906 6,189 -- 55,095 Selling, general and administrative -- 34,946 2,629 -- 37,575 Vehicle interest, net 1,154 18,957 436 -- 20,547 Non-vehicle interest, net 3,283 1,803 -- -- 5,086 Non-vehicle depreciation and amortization 1,828 2,368 231 -- 4,427 -------- -------- -------- -------- -------- Total expenses 6,265 176,539 18,598 -- 201,402 -------- -------- -------- -------- -------- INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES (6,265) 20,896 1,963 -- 16,594 Equity in earnings of subsidiaries 11,488 1,029 -- (12,517) -- -------- -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 5,223 21,925 1,963 (12,517) 16,594 Provision (benefit) for income taxes (3,472) 10,437 934 -- 7,899 -------- -------- -------- -------- -------- NET INCOME $ 8,695 $ 11,488 $ 1,029 $(12,517) $ 8,695 ======== ======== ======== ======== ========9AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedRevenues $ — $ 570,551 $ 58,342 $ — $ 628,893 Expenses Operating, net — 206,665 25,503 — 232,168 Vehicle depreciation and lease charges, net — 158,512 12,470 — 170,982 Selling, general and administrative — 108,548 7,992 — 116,540 Vehicle interest, net 3,459 52,015 425 — 55,899 Non-vehicle interest, net 8,350 6,227 — — 14,577 Non-vehicle depreciation and amortization 4,746 9,505 824 — 15,075 Total expenses 16,555 541,472 47,214 — 605,241 Income (loss) before equity in earnings of subsidiaries (16,555 ) 29,079 11,128 — 23,652 Equity in earnings of subsidiaries 14,176 4,674 — (18,850 ) — Income (loss) before income taxes (2,379 ) 33,753 11,128 (18,850 ) 23,652 Provision (benefit) for income taxes (12,278 ) 19,577 6,454 — 13,753 Net income $ 9,899 $ 14,176 $ 4,674 $ (18,850 ) $ 9,899 11
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS(PREDECESSOR COMPANIES) FOR THE TWO MONTHS ENDED FEBRUARY
For the Six Months ended June 30, 2002
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedRevenues $ — $ 1,098,987 $ 116,247 $ — $ 1,215,234 Expenses Operating, net — 422,895 57,506 — 480,401 Vehicle depreciation and lease charges, net — 289,810 31,441 — 321,251 Selling, general and administrative — 221,329 15,531 — 236,860 Vehicle interest, net 918 100,524 544 — 101,986 Non-vehicle interest, net 15,315 6,303 — — 21,618 Non-vehicle depreciation and amortization 479 15,919 1,545 — 17,943 Total expenses 16,712 1,056,780 106,567 — 1,180,059 Income (loss) before equity in earnings of subsidiaries (16,712 ) 42,207 9,680 — 35,175 Equity in earnings of subsidiaries 27,737 5,614 — (33,351 ) — Income before income taxes 11,025 47,821 9,680 (33,351 ) 35,175 Provision (benefit) for income taxes (9,376 ) 20,084 4,066 — 14,774 Net income $ 20,401 $ 27,737 $ 5,614 $ (33,351 ) $ 20,401
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the Period March 1, 2001 (Date of Acquisition) to June 30, 2001
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedRevenues $ — $ 767,986 $ 78,903 $ — $ 846,889 Expenses Operating, net — 276,363 34,616 — 310,979 Vehicle depreciation and lease charges, net — 206,553 18,619 — 225,172 Selling, general and administrative — 143,494 10,621 — 154,115 Vehicle interest, net 4,612 70,973 861 — 76,446 Non-vehicle interest, net 11,634 8,029 — — 19,663 Non-vehicle depreciation and amortization 6,574 12,599 1,095 — 20,268 Total expenses 22,820 718,011 65,812 — 806,643 Income (loss) before equity in earnings of subsidiaries (22,820 ) 49,975 13,091 — 40,246 Equity in earnings of subsidiaries 25,759 6,022 — (31,781 ) — Income before income taxes 2,939 55,997 13,091 (31,781 ) 40,246 Provision (benefit) for income taxes (15,655 ) 30,238 7,069 — 21,652 Net income $ 18,594 $ 25,759 $ 6,022 $ (31,781 ) $ 18,594 12
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Predecessor Companies)
For the Two Months Ended February 28, 2001
NON- AVIS GROUP GUARANTOR GUARANTOR HOLDINGS, INC. PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED --------- ------------ ------------ ------------ --------------REVENUES $ -- $ 344,496 $ 41,325 $ -- $ 385,821 --------- --------- --------- --------- --------- EXPENSES Operating, net -- 154,490 19,340 -- 173,830 Vehicle depreciation and lease charges, net -- 102,490 9,476 -- 111,966 Selling, general and administrative -- 77,866 5,363 -- 83,229 Vehicle interest, net 2,306 40,375 944 -- 43,625 Non-vehicle interest, net 9,167 -- -- -- 9,167 Non-vehicle depreciation and amortization -- 5,767 474 -- 6,241 --------- --------- --------- --------- --------- Total expenses 11,473 380,988 35,597 -- 428,058 --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE EQUITY IN EARNINGS (LOSSES) OF SUBSIDIARIES (11,473) (36,492) 5,728 -- (42,237) Equity in earnings (losses) of subsidiaries (25,645) 9,950 -- 15,695 -- --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES (37,118) (26,542) 5,728 15,695 (42,237) Provision (benefit) for income taxes (7,999) (9,926) 2,142 -- (15,783) --------- --------- --------- --------- --------- INCOME (LOSS) FROM CONTINUING OPERATIONS (29,119) (16,616) 3,586 15,695 (26,454) Income (loss) from discontinued operations, net of tax -- (6,358) 11,305 -- 4,947 --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (29,119) (22,974) 14,891 15,695 (21,507) Cumulative effect of accounting change, net of tax -- (2,671) (4,941) -- (7,612) --------- --------- --------- --------- --------- NET INCOME (LOSS) $ (29,119) $ (25,645) $ 9,950 $ 15,695 $ (29,119) ========= ========= ========= ========= =========10AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedRevenues $ — $ 344,496 $ 41,325 $ — $ 385,821 Expenses Operating, net — 154,747 19,340 — 174,087 Vehicle depreciation and lease charges, net — 100,718 9,399 — 110,117 Selling, general and administrative — 77,866 5,363 — 83,229 Vehicle interest, net 2,306 40,375 944 — 43,625 Non-vehicle interest, net 9,167 — — — 9,167 Non-vehicle depreciation and amortization — 7,282 551 — 7,833 Total expenses 11,473 380,988 35,597 — 428,058 Income (loss) before equity in earnings (losses) of subsidiaries (11,473 ) (36,492 ) 5,728 — (42,237 ) Equity in earnings (losses) of subsidiaries (25,645 ) 9,950 — 15,695 — Income (loss) before income taxes (37,118 ) (26,542 ) 5,728 15,695 (42,237 ) Provision (benefit) for income taxes (7,999 ) (9,926 ) 2,142 — (15,783 ) Income (loss) from continuing operations (29,119 ) (16,616 ) 3,586 15,695 (26,454 ) Income (loss) from discontinued operations, net of tax — (6,358 ) 11,305 — 4,947 Income (loss) before cumulative effect of accounting change (29,119 ) (22,974 ) 14,891 15,695 (21,507 ) Cumulative effect of accounting change, net of tax — (2,671 ) (4,941 ) — (7,612 ) Net income (loss) $ (29,119 ) $ (25,645 ) $ 9,950 $ 15,695 $ (29,119 ) 13
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED BALANCE SHEETMARCH 31,
June 30, 2002
NON- AVIS GROUP GUARANTOR GUARANTOR HOLDINGS, INC. PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED ----------- -------------- ------------- ------------ ---------------ASSETS Cash and cash equivalents $ 10 $ 4,228 $ 10,262 $ -- $ 14,500 Receivables, net -- 129,964 28,401 -- 158,365 Prepaid expenses -- 32,417 7,189 -- 39,606 Due from affiliate (347,045) 218,967 128,078 -- -- Deferred income taxes 216,944 338,737 (312) -- 555,369 Property and equipment, net -- 195,583 12,528 -- 208,111 Investment in consolidated subsidiaries 693,309 631,939 -- (1,325,248) -- Goodwill 815,959 444,563 2,974 -- 1,263,496 Other assets 15,780 36,704 92,557 -- 145,041 ----------- ----------- ----------- ----------- ----------- Total assets exclusive of assets under management programs 1,394,957 2,033,102 281,677 (1,325,248) 2,384,488 ----------- ----------- ----------- ----------- ----------- Assets under management programs: Restricted cash -- 319 275,579 -- 275,898 Vehicles, net -- (87,382) 3,715,535 -- 3,628,153 Due from vehicle manufacturers -- 3,765 57,360 -- 61,125 ----------- ----------- ----------- ----------- ----------- -- (83,298) 4,048,474 -- 3,965,176 ----------- ----------- ----------- ----------- ----------- TOTAL ASSETS $ 1,394,957 $ 1,949,804 $ 4,330,151 $(1,325,248) $ 6,349,664 =========== =========== =========== =========== ===========LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities:Accounts payable $ (15,114) $ 150,440 $ 28,794 $ -- $ 164,120 Accrued liabilities 122,887 325,614 29,074 -- 477,575 Due to Cendant Corporation and affiliates, net 380,000 290,589 (170,730) -- 499,859 Non-vehicle debt 577,466 4,592 -- -- 582,058 Public liability, property damage and other insurance liabilities -- 147,029 67,114 -- 214,143 ----------- ----------- ----------- ----------- ----------- Total liabilities exclusive of liabilities under management programs 1,065,239 918,264 (45,748) -- 1,937,755 ----------- ----------- ----------- ----------- ----------- Liabilities under management programs: Vehicle debt -- 60,521 3,706,075 -- 3,766,596 Deferred income taxes -- 277,710 37,885 -- 315,595 ----------- ----------- ----------- ----------- ----------- -- 338,231 3,743,960 -- 4,082,191 ----------- ----------- ----------- ----------- ----------- Stockholder's equity 329,718 693,309 631,939 (1,325,248) 329,718 ----------- ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,394,957 $ 1,949,804 $ 4,330,151 $(1,325,248) $ 6,349,664 =========== =========== =========== =========== ===========11AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedASSETS Cash and cash equivalents $ 98 $ 7,887 $ 32,684 $ — $ 40,669 Receivables, net — 135,094 30,661 — 165,755 Prepaid expenses — 33,109 7,857 — 40,966 Due from affiliate (328,977 ) 178,602 150,375 — — Deferred income taxes 218,280 336,241 1,627 — 556,148 Property and equipment, net — 241,383 14,834 — 256,217 Investment in consolidated subsidiaries 707,986 644,419 — (1,352,405 ) — Goodwill 806,809 444,667 3,433 — 1,254,909 Other assets 15,541 34,113 95,400 — 145,054 Total assets exclusive of assets under management programs 1,419,737 2,055,515 336,871 (1,352,405 ) 2,459,718 Assets under management programs: Restricted cash — 174 9,132 — 9,306 Vehicles, net — (97,824 ) 4,324,399 — 4,226,575 Due from vehicle manufacturers — 5,399 59,093 — 64,492 — (92,251 ) 4,392,624 — 4,300,373 Total assets $ 1,419,737 $ 1,963,264 $ 4,729,495 $ (1,352,405 ) $ 6,760,091 LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accounts payable $ (16,459 ) $ 166,744 $ 94,847 $ — $ 245,132 Accrued liabilities 107,466 306,005 33,870 — 447,341 Due to Cendant Corporation and affiliates, net 418,617 275,723 (180,333 ) — 514,007 Non-vehicle debt 571,391 4,465 — — 575,856 Public liability, property damage and other insurance liabilities — 144,141 71,736 — 215,877 Total liabilities exclusive of liabilities under management programs 1,081,015 897,078 20,120 — 1,998,213 Liabilities under management programs: Vehicle debt — 80,490 4,035,370 — 4,115,860 Deferred income taxes — 277,710 29,586 — 307,296 — 358,200 4,064,956 — 4,423,156 Stockholder's equity 338,722 707,986 644,419 (1,352,405 ) 338,722 Total liabilities and stockholder's equity $ 1,419,737 $ 1,963,264 $ 4,729,495 $ (1,352,405 ) $ 6,760,091 14
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED BALANCE SHEETDECEMBER
December 31, 2001
NON- AVIS GROUP GUARANTOR GUARANTOR HOLDINGS, INC. PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED ----------- ------------- ------------ ------------ ---------------ASSETS Cash and cash equivalents $ 18 $ 5,210 $ 8,083 $ -- $ 13,311 Receivables, net -- 142,386 25,986 -- 168,372 Prepaid expenses -- 34,569 7,974 -- 42,543 Deferred income tax 221,741 326,332 14 -- 548,087 Property and equipment, net -- 190,319 12,913 -- 203,232 Investment in consolidated subsidiaries 677,401 628,280 -- (1,305,681) -- Goodwill, net 825,234 443,000 2,958 -- 1,271,192 Other assets 16,020 34,791 95,797 -- 146,608 ----------- ----------- ----------- ----------- ----------- Total assets exclusive of assets under management programs 1,740,414 1,804,887 153,725 (1,305,681) 2,393,345 ----------- ----------- ----------- ----------- ----------- Assets under management programs: Restricted cash -- 9,457 571,730 -- 581,187 Vehicles, net -- (88,822) 3,559,759 -- 3,470,937 Due from vehicle manufacturers -- 7,855 84,759 -- 92,614 ----------- ----------- ----------- ----------- ----------- -- (71,510) 4,216,248 -- 4,144,738 ----------- ----------- ----------- ----------- ----------- TOTAL ASSETS $ 1,740,414 $ 1,733,377 $ 4,369,973 $(1,305,681) $ 6,538,083 =========== =========== =========== =========== ===========LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities:Accounts payable $ -- $ 151,379 $ 212,512 $ -- $ 363,891 Accrued liabilities 109,143 300,337 25,185 -- 434,665 Due to Cendant Corporation and affiliates, net 726,645 63,214 (275,426) -- 514,433 Non-vehicle debt 583,540 4,719 -- -- 588,259 Public liability, property damage and other insurance liabilities -- 166,432 62,071 -- 228,503 ----------- ----------- ----------- ----------- ----------- Total liabilities exclusive of liabilities under management programs 1,419,328 686,081 24,342 -- 2,129,751 ----------- ----------- ----------- ----------- ----------- Liabilities under management programs: Vehicle debt -- 86,004 3,685,337 -- 3,771,341 Deferred income taxes -- 283,891 32,014 -- 315,905 ----------- ----------- ----------- ----------- ----------- -- 369,895 3,717,351 -- 4,087,246 ----------- ----------- ----------- ----------- ----------- Stockholder's equity 321,086 677,401 628,280 (1,305,681) 321,086 ----------- ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,740,414 $ 1,733,377 $ 4,369,973 $(1,305,681) $ 6,538,083 =========== =========== =========== =========== ===========12AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Parent Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Avis Group
Holdings, Inc.
ConsolidatedASSETS Cash and cash equivalents $ 18 $ 5,210 $ 8,083 $ — $ 13,311 Receivables, net — 142,386 25,986 — 168,372 Prepaid expenses — 34,569 7,974 — 42,543 Deferred income tax 221,741 326,332 14 — 548,087 Property and equipment, net — 230,429 14,847 — 245,276 Investment in consolidated subsidiaries 677,401 628,280 — (1,305,681 ) — Goodwill 825,234 443,000 2,958 — 1,271,192 Other assets 16,020 34,791 95,797 — 146,608 Total assets exclusive of assets under management programs 1,740,414 1,844,997 155,659 (1,305,681 ) 2,435,389 Assets under management programs: Restricted cash — 9,457 571,730 — 581,187 Vehicles, net — (128,932 ) 3,557,825 — 3,428,893 Due from vehicle manufacturers — 7,855 84,759 — 92,614 — (111,620 ) 4,214,314 — 4,102,694 Total assets $ 1,740,414 $ 1,733,377 $ 4,369,973 $ (1,305,681 ) $ 6,538,083 LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accounts payable $ — $ 151,379 $ 212,512 $ — $ 363,891 Accrued liabilities 109,143 300,337 25,185 — 434,665 Due to Cendant Corporation and affiliates, net 726,645 63,214 (275,426 ) — 514,433 Non-vehicle debt 583,540 4,719 — — 588,259 Public liability, property damage and other insurance liabilities — 166,432 62,071 — 228,503 Total liabilities exclusive of liabilities under management programs 1,419,328 686,081 24,342 — 2,129,751 Liabilities under management programs: Vehicle debt — 86,004 3,685,337 — 3,771,341 Deferred income taxes — 283,891 32,014 — 315,905 — 369,895 3,717,351 — 4,087,246 Stockholder's equity 321,086 677,401 628,280 (1,305,681 ) 321,086 Total liabilities and stockholder's equity $ 1,740,414 $ 1,733,377 $ 4,369,973 $ (1,305,681 ) $ 6,538,083 15
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31,
For the Six Months Ended June 30, 2002
AVIS GROUP NON- HOLDINGS, INC. PARENT GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED ------------ ------------- ------------- ------------ --------------OPERATING ACTIVITIES Net income (loss) $ (2,409) $ 1,571 $ 2,064 $ (3,635) $ (2,409) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities exclusive of management programs (1,423) (15,987) 21,712 -- 4,302 ----------- ----------- ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (3,832) (14,416) 23,776 (3,635) 1,893 ----------- ----------- ----------- ----------- ----------- MANAGEMENT PROGRAMS: Vehicle depreciation -- 145,070 9,680 -- 154,750 ----------- ----------- ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (3,832) 130,654 33,456 (3,635) 156,643 ----------- ----------- ----------- ----------- ----------- INVESTING ACTIVITIES Property and equipment additions -- (10,465) (233) -- (10,698) Retirements of property and equipment -- (2) 2 -- -- Payment for purchase of rental car franchise licensees -- (2,835) -- -- (2,835) Investment in subsidiaries (1,571) (2,064) -- 3,635 -- ----------- ----------- ----------- ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (1,571) (15,366) (231) 3,635 (13,533) ----------- ----------- ----------- ----------- ----------- MANAGEMENT PROGRAMS: Decrease in restricted cash -- 9,138 296,151 -- 305,289 Decrease in due from vehicle manufacturers -- 4,090 27,089 -- 31,179 Investment in vehicles -- (3,637) (1,187,195) -- (1,190,832) Payments received on investment in vehicles -- (129,019) 835,234 -- 706,215 ----------- ----------- ----------- ----------- ----------- -- (119,428) (28,721) -- (148,149) ----------- ----------- ----------- ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (1,571) (134,794) (28,952) 3,635 (161,682) ----------- ----------- ----------- ----------- ----------- FINANCING ACTIVITIES Net decrease in non-vehicle debt -- (125) -- -- (125) Increase (decrease) in due to Cendant Corporation and affiliates, net 5,394 3,400 (22,691) -- (13,897) Payments for debt issuance costs -- (115) -- -- (115) ----------- ----------- ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS 5,394 3,160 (22,691) -- (14,137) ----------- ----------- ----------- ----------- ----------- MANAGEMENT PROGRAMS: Net increase in vehicle debt -- -- 20,247 -- 20,247 ----------- ----------- ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 5,394 3,160 (2,444) -- 6,110 ----------- ----------- ----------- ----------- ----------- Effect of changes in exchange rates on cash and cash equivalents -- -- 118 -- 118 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (9) (980) 2,178 -- 1,189 Cash and cash equivalents, beginning of period 18 5,210 8,083 -- 13,311 ----------- ----------- ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9 $ 4,230 $ 10,261 $ -- $ 14,500 =========== =========== =========== =========== ===========13AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES
Parent Guarantor Non-
GuarantorEliminations Avis Group
Holdings, Inc.
ConsolidatedOperating Activities Net income $ 20,401 $ 27,737 $ 5,614 $ (33,351 ) $ 20,401 Adjustments to reconcile net income to net cash provided by (used in) operating activities exclusive of management programs (27,692 ) (6,266 ) 19,384 — (14,574 ) Net cash provided by (used in) operating activities exclusive of management programs (7,291 ) 21,471 24,998 (33,351 ) 5,827 Management programs: Vehicle depreciation — 291,352 20,869 — 312,221 Net cash provided by (used in) operating activities (7,291 ) 312,823 45,867 (33,351 ) 318,048 Investing Activities Property and equipment additions — (23,278 ) (1,529 ) — (24,807 ) Retirements of property and equipment — 89 689 — 778 Payment for purchase of rental car franchise licensees — (2,835 ) (252 ) — (3,087 ) Investment in subsidiaries (27,737 ) (5,614 ) — 33,351 — Net cash used in investing activities exclusive of management programs (27,737 ) (31,638 ) (1,092 ) 33,351 (27,116 ) Management programs: Decrease in restricted cash — 9,283 562,598 — 571,881 Decrease in due from vehicle manufacturers — 2,456 26,892 — 29,348 Investment in vehicles — (57,042 ) (2,627,781 ) — (2,684,823 ) Payments received on investment in vehicles — (248,886 ) 1,720,919 — 1,472,033 — (294,189 ) (317,372 ) — (611,561 ) Net cash used in investing activities (27,737 ) (325,827 ) (318,464 ) 33,351 (638,677 ) Financing Activities Net decrease in non-vehicle debt — (253 ) — — (253 ) Increase (decrease) in due to Cendant Corporation and affiliates, net 35,108 16,065 (53,840 ) — (2,667 ) Payments for debt issuance costs — (131 ) — — (131 ) Net cash provided by (used in) financing activities exclusive of management programs 35,108 15,681 (53,840 ) — (3,051 ) Management programs: Net increase in vehicle debt — — 350,613 — 350,613 Net cash provided by financing activities 35,108 15,681 296,773 — 347,562 Effect of changes in exchange rates on cash and cash equivalents — — 425 — 425 Net increase in cash and cash equivalents 80 2,677 24,601 — 27,358 Cash and cash equivalents, beginning of period 18 5,210 8,083 — 13,311 Cash and cash equivalents, end of period $ 98 $ 7,887 $ 32,684 $ — $ 40,669 16
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWSFOR THE PERIOD MARCH
For the Period March 1,2001(DATE OF ACQUISITION) TO MARCH 31,2001
AVIS GROUP NON- HOLDINGS, INC. PARENT GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED ----------- ----------- --------- ------------ ---------------OPERATING ACTIVITIES Net income $ 8,695 $ 11,488 $ 1,029 $ (12,517) $ 8,695 Adjustments to reconcile net income to net cash provided by (used in) operating activities exclusive of management programs (81,697) 95,426 3,057 -- 16,786 --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (73,002) 106,914 4,086 (12,517) 25,481 --------- --------- --------- --------- --------- MANAGEMENT PROGRAMS: Vehicle depreciation -- 47,411 4,025 -- 51,436 --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (73,002) 154,325 8,111 (12,517) 76,917 --------- --------- --------- --------- --------- INVESTING ACTIVITIES Property and equipment additions -- (5,205) (119) -- (5,324) Retirements of property and equipment -- 172 143 -- 315 Investment in subsidiaries (11,488) (1,029) -- 12,517 -- --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (11,488) (6,062) 24 12,517 (5,009) --------- --------- --------- --------- --------- MANAGEMENT PROGRAMS: Increase in restricted cash -- -- (33,868) -- (33,868) Decrease in due from vehicle -- 15,980 131,432 -- 147,412 manufacturers Investment in vehicles -- (17,490) (472,648) -- (490,138) Payments received on investment in vehicles -- (38,398) 391,614 -- 353,216 --------- --------- --------- --------- --------- -- (39,908) 16,530 -- (23,378) --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (11,488) (45,970) 16,554 12,517 (28,387) --------- --------- --------- --------- --------- FINANCING ACTIVITIES Net decrease in non-vehicle debt (17,000) (39) -- -- (17,039) Increase (decrease) in due to Cendant Corporation and affiliates, net 101,574 (94,448) 90,090 -- 97,216 Payments for debt issuance costs -- (3,621) -- -- (3,621) --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS 84,574 (98,108) 90,090 -- 76,556 --------- --------- --------- --------- --------- MANAGEMENT PROGRAMS: Net decrease in vehicle debt -- -- (126,488) -- (126,488) --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 84,574 (98,108) (36,398) -- (49,932) --------- --------- --------- --------- --------- Effect of changes in exchange rates on cash and cash equivalents -- -- (923) -- (923) --------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents 84 10,247 (12,656) -- (2,325) Cash and cash equivalents, beginning of period 141 36,745 29,219 -- 66,105 --------- --------- --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 225 $ 46,992 $ 16,563 $ -- $ 63,780 ========= ========= ========= ========= =========14AVIS GROUP HOLDINGS, INC. AND SUBSIDIARIES(Date of Acquisition) to June 30, 2001
Parent Guarantor Non-
GuarantorEliminations Avis Group
Holdings, Inc.
ConsolidatedOperating Activities Net income $ 18,594 $ 25,759 $ 6,022 $ (31,781 ) $ 18,594 Adjustments to reconcile net income to net cash provided by (used in) operating activities exclusive of management programs (118,194 ) 130,934 (24,982 ) — (12,242 ) Net cash provided by (used in) operating activities exclusive of management programs (99,600 ) 156,693 (18,960 ) (31,781 ) 6,352 Management programs: Vehicle depreciation — 195,458 16,144 — 211,602 Net cash provided by (used in) operating activities (99,600 ) 352,151 (2,816 ) (31,781 ) 217,954 Investing Activities Property and equipment additions — (24,781 ) (877 ) — (25,658 ) Retirements of property and equipment — 8,169 206 — 8,375 Payment for purchase of rental car franchise licensees — (18,748 ) (299 ) — (19,047 ) Investment in subsidiaries (25,759 ) (6,022 ) — 31,781 — Net cash used in investing activities exclusive of management programs (25,759 ) (41,382 ) (970 ) 31,781 (36,330 ) Management programs: Decrease in restricted cash — — 5,208 — 5,208 (Increase) decrease in due from vehicle manufacturers — (3,443 ) 135,256 — 131,813 Investment in vehicles — (41,397 ) (1,858,655 ) — (1,900,052 ) Payments received on investment in vehicles — (182,724 ) 1,595,543 — 1,412,819 — (227,564 ) (122,648 ) — (350,212 ) Net cash used in investing activities (25,759 ) (268,946 ) (123,618 ) 31,781 (386,542 ) Financing Activities Net decrease in non-vehicle debt (317,650 ) (156 ) — — (317,806 ) Increase (decrease) in due to Cendant Corporation and affiliates, net 443,173 (102,192 ) (24,099 ) — 316,882 Payments for debt issuance costs — (4,231 ) — — (4,231 ) Net cash provided by (used in) financing activities exclusive of management programs 125,523 (106,579 ) (24,099 ) — (5,155 ) Management programs: Net (decrease) increase in vehicle debt — (8,744 ) 138,907 — 130,163 Net cash provided by (used in) financing activities 125,523 (115,323 ) 114,808 — 125,008 Effect of changes in exchange rates on cash a cash equivalents — — (117 ) — (117 ) Net increase (decrease) in cash and cash equivalents 164 (32,118 ) (11,743 ) — (43,697 ) Cash and cash equivalents, beginning of period 141 36,745 29,219 — 66,105 Cash and cash equivalents, end of period $ 305 $ 4,627 $ 17,476 $ — $ 22,408 17
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS(PREDECESSOR COMPANIES) FOR THE TWO MONTHS ENDED FEBRUARY
(Predecessor Companies)
For the Two Months Ended February 28, 2001
AVIS GROUP NON- HOLDINGS, INC. PARENT GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED ---------- ----------- ----------- ------------ -------------OPERATING ACTIVITIES Net income (loss) $ (29,119) $ (25,645) $ 9,950 $ 15,695 $ (29,119) Adjustments to arrive at income (loss) from continuing operations -- 9,029 (6,364) -- 2,665 --------- --------- --------- --------- --------- Income (loss) from continuing operations (29,119) (16,616) 3,586 15,695 (26,454) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities exclusive of management programs 425 75,609 (119,640) -- (43,606) --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (28,694) 58,993 (116,054) 15,695 (70,060) --------- --------- --------- --------- --------- MANAGEMENT PROGRAMS: Vehicle depreciation -- 97,909 8,019 -- 105,928 --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (28,694) 156,902 (108,035) 15,695 35,868 --------- --------- --------- --------- --------- INVESTING ACTIVITIES Property and equipment additions -- (2,948) (330) -- (3,278) Retirements of property and equipment -- (400) 20 -- (380) Investment in subsidiaries 25,645 (9,950) -- (15,695) -- --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS 25,645 (13,298) (310) (15,695) (3,658) --------- --------- --------- --------- --------- MANAGEMENT PROGRAMS: Decrease in restricted cash -- -- 10,978 -- 10,978 Decrease in due from vehicle manufacturers -- -- 16,368 -- 16,368 Investment in vehicles -- (1,843) (941,259) -- (943,102) Payments received on investment in vehicles -- (82,138) 895,598 -- 813,460 --------- --------- --------- --------- --------- -- (83,981) (18,315) -- (102,296) --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 25,645 (97,279) (18,625) (15,695) (105,954) --------- --------- --------- --------- --------- FINANCING ACTIVITIES Net decrease in non-vehicle debt -- (77) -- -- (77) Increase (decrease) in due to Cendant Corporation and affiliates, net (89,023) 43,123 82 -- (45,818) Payments for debt issuance costs -- (12) -- -- (12) Repurchases of common stock 140 -- -- -- 140 --------- --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES EXCLUSIVE OF MANAGEMENT PROGRAMS (88,883) 43,034 82 -- (45,767) --------- --------- --------- --------- --------- MANAGEMENT PROGRAMS: Net increase (decrease) in vehicle debt 92,000 (2) 9,209 -- 101,207 --------- --------- --------- --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 3,117 43,032 9,291 -- 55,440 --------- --------- --------- --------- --------- Effect of changes in net assets of discontinued operations -- (131,512) 131,906 -- 394 --------- --------- --------- --------- --------- Effect of changes in exchange rates on cash and cash equivalents -- -- (11) -- (11) --------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents 68 (28,857) 14,526 -- (14,263) Cash and cash equivalents, beginning of period 73 65,602 14,693 -- 80,368 --------- --------- --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 141 $ 36,745 $ 29,219 $ -- $ 66,105 ========= ========= ========= ========= =========15
Parent Guarantor Non-
GuarantorEliminations Avis Group
Holdings, Inc.
ConsolidatedOperating Activities Net income (loss) $ (29,119 ) $ (25,645 ) $ 9,950 $ 15,695 $ (29,119 ) Adjustments to arrive at income (loss) from continuing operations — 9,029 (6,364 ) — 2,665 Income (loss) from continuing operations (29,119 ) (16,616 ) 3,586 15,695 (26,454 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities exclusive of management programs 425 77,124 (119,563 ) — (42,014 ) Net cash provided by (used in) operating activities exclusive of management programs (28,694 ) 60,508 (115,977 ) 15,695 (68,468 ) Management programs: Vehicle depreciation — 96,394 7,942 — 104,336 Net cash provided by (used in) operating activities (28,694 ) 156,902 (108,035 ) 15,695 35,868 Investing Activities Property and equipment additions — (5,169 ) (652 ) — (5,821 ) Retirements of property and equipment — 165 268 — 433 Investment in subsidiaries 25,645 (9,950 ) — (15,695 ) — Net cash provided by (used in) investing activities exclusive of management programs 25,645 (14,954 ) (384 ) (15,695 ) (5,388 ) Management programs: Decrease in restricted cash — — 10,978 — 10,978 Decrease in due from vehicle manufacturers — — 16,368 — 16,368 Investment in vehicles — 378 (940,937 ) — (940,559 ) Payments received on investment in vehicles — (82,703 ) 895,350 — 812,647 — (82,325 ) (18,241 ) — (100,566 ) Net cash provided by (used in) investing activities 25,645 (97,279 ) (18,625 ) (15,695 ) (105,954 ) Financing Activities Net decrease in non-vehicle debt — (77 ) — — (77 ) Increase (decrease) in due to Cendant Corporation and affiliates, net (89,023 ) 43,123 82 — (45,818 ) Payments for debt issuance costs — (12 ) — — (12 ) Issuances of common stock 140 — — — 140 Net cash provided by (used in) financing activities exclusive of management programs (88,883 ) 43,034 82 — (45,767 ) Management programs: Net increase (decrease) in vehicle debt 92,000 (2 ) 9,209 — 101,207 Net cash provided by financing activities 3,117 43,032 9,291 — 55,440 Effect of changes in net assets of discontinued operations — (131,512 ) 131,906 — 394 Effect of changes in exchange rates on cash and cash equivalents — — (11 ) — (11 ) Net increase (decrease) in cash and cash equivalents 68 (28,857 ) 14,526 — (14,263 ) Cash and cash equivalents, beginning of period 73 65,602 14,693 — 80,368 Cash and cash equivalents, end of period $ 141 $ 36,745 $ 29,219 $ — $ 66,105 18
Item 2. Management's Narrative Analysis of the Results of Operations
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES THERETO INCLUDED ELSEWHERE HEREIN. UNLESS OTHERWISE NOTED, ALL DOLLAR AMOUNTS ARE IN THOUSANDS AND PRESENTED BEFORE TAXES (AS APPROPRIATE)The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes thereto included elsewhere herein. Unless otherwise noted, all dollar amounts are in thousands and presented before taxes (as appropriate).
We are the second largest general use car rental brand in the world. On March 1, 2001, all of our outstanding common stock not
then ownedthen-owned by Cendant Corporation ("Cendant") was acquired by a subsidiary of PHH Corporation ("PHH"), a wholly-owned subsidiary of Cendant, for approximately $994 million and we emerged as the surviving legal entity. At such time, our fleet management and fuel card businesses were sold to PHH and, therefore, are presented as a discontinued operation in the accompanying Consolidated Condensed Financial Statements. Accordingly, we are now a wholly-owned subsidiary of Cendant.RESULTS OF OPERATIONS
The acquisition of us by Cendant resulted in significant changes to the valuation of certain of our assets, liabilities and stockholder's equity. The periods prior to the acquisition have been designated "Predecessor Companies" and the period subsequent to the acquisition has been designated "Successor Company". The results of the Predecessor Companies and the Successor Company have been combined for the
threesix months endedMarch 31,June 30, 2001 since we believe that separate discussions for the two months ended February 28, 2001 and theone monthfour months endedMarch 31,June 30, 2001 are not meaningful in terms of our operating results or comparisons to the prior period.Three Months Ended June 30, 2002 vs. Three Months Ended June 30, 2001
Our comparative results of operations, excluding our former fleet management and fuel card businesses, comprised the following:
2002 2001 Change Revenues $ 650,631 $ 628,893 $ 21,738 Expenses, excluding non-vehicle interest 600,480 590,664 9,816 Non-vehicle interest, net 10,823 14,577 (3,754 ) Total expenses 611,303 605,241 6,062 Income before income taxes 39,328 23,652 15,676 Provision for income taxes 16,518 13,753 2,765 Income from continuing operations $ 22,810 $ 9,899 $ 12,911 Total revenue increased 3.5% primarily due to a 4.1% increase in vehicle rental revenue per day, which was due principally to strong pricing in our leisure business.
Total expenses increased 1.0% primarily due to higher commission-related expenses associated with higher revenues, the launch of an advertising campaign during the second quarter of 2002 and severance costs related to the relocation of our information technology operations from Garden City, New York to Parsippany, New Jersey.
Non-vehicle interest, net decreased 25.8% primarily due to a decrease in interest rates and the repayment of all amounts outstanding under a revolving credit facility during 2001.
Our overall effective tax rate was 42.0% and 58.1% for the three months ended
March 31,June 30, 2002 and 2001, respectively. The lower tax rate for the three months ended June 30, 2002 was primarily due to the elimination of goodwill amortization expense.As a result of the above-mentioned items, income from continuing operations increased $12.9 million, or 130%, in the second quarter 2002.
19
Six Months Ended June 30, 2002 vs. Six Months Ended June 30, 2001
Our comparative results of operations, excluding our former fleet management and fuel card businesses comprised the following:
2002 2001 CHANGE --------- --------- ---------Revenues $ 564,603 $ 603,817 $ (39,214) --------- --------- --------- Expenses, excluding non-vehicle interest 557,961 615,207 (57,246) Non-vehicle interest, net 10,795 14,253 (3,458) --------- --------- --------- Total expenses 568,756 629,460 (60,704) --------- --------- --------- Loss before income taxes (4,153) (25,643) 21,490 Benefit from income taxes (1,744) (7,884) 6,140 --------- --------- --------- Loss from continuing operations $ (2,409) $ (17,759) $ 15,350 ========= ========= =========
2002 2001 Change Revenues $ 1,215,234 $ 1,232,710 $ (17,476 ) Expenses, excluding non-vehicle interest 1,158,441 1,205,871 (47,430 ) Non-vehicle interest, net 21,618 28,830 (7,212 ) Total expenses 1,180,059 1,234,701 (54,642 ) Income (loss) before income taxes 35,175 (1,991 ) 37,166 Provision for income taxes 14,774 5,869 8,905 Income (loss) from continuing operations $ 20,401 $ (7,860 ) $ 28,261 Total revenue decreased
6.5%1.4% primarily due to a reduction in car rental transaction volume, which resulted primarily from the residual effect of reduced commercial air travel due to the September11th11th terrorist attacks.Total expenses decreased
9.6% principally4.4% primarily due to a decrease in operating expensescaused byderived from our ability toright-sizereduce ouroperations in anticipationoperating expenses as a result of reduced car rental transaction volume during the first quarter of 2002. Vehicle depreciation anda decrease inlease charges and vehicle interest expense also decreased due to a corresponding reduction in average fleet size and the related decrease in average vehicle debt supporting such fleet.Our overall effective tax rate was 42.0% and 30.7% for the three months ended March 31, 2002 and 2001, respectively. The higher tax rate for the three months ended March 31, 2002 wasNon-vehicle interest, net decreased 25.0% primarily due to a decrease in interest rates and the repayment of all amounts outstanding under a revolving credit facility during 2001.
The provision for income taxes for the six months ended June 30, 2002 reflects our overall effective tax rate of 42.0% for 2002. The increase in the provision was primarily due to the Company reporting pretax income in 2002 versus a pretax loss of $42.2 million for the two months ended February 28, 2001 at an effective tax rate of 37.4% offset by a pre-tax
lossincome of $40.2 million for the period March 1, 2001 (Date of Acquisition) to June 30, 2001 at an effective tax rate of 53.8% and the elimination ofnon-deductiblegoodwill amortization expense.As a result of the above-mentioned items,
lossincome from continuing operationsdecreased $15increased $28 millionor 86%, infor thefirst quartersix months ended June 30, 2002.16Forward-lookingForward-Looking Statements
Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives.
Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "project", "estimates", "plans", "may increase", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forwardlooking in nature and not historical facts. You should understand that the following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:
o the impacts of
- •
- terrorist attacks, such as the September 11, 2001 terrorist attacks on New York City and Washington, D.C.
on the travel industry in general, and our travel business in particular, are not fully known at this time, but are expected to include negative impacts on financial results due to reduced demand for travel in the near term;, other attacks, acts of war; or measures taken by governments in response thereto may negatively affect the travel industry, our financial results and could also result in a disruption in our business;o- •
- the effect of economic conditions and interest rate changes on the economy on a national, regional or international basis and the impact thereof on our business;
o- •
- the effects of a decline in travel, due to political instability, adverse economic conditions or otherwise, on our business;
o- •
- the effects of changes in current interest rates;
o20
- •
- competition in the car rental industry and the financial resources of, and products available to, competitors;
o- •
- our failure to provide fully integrated disaster recovery technology solutions in the event of a disaster;
o our ability to integrate and operate successfully as an acquired and merged business, including the compatibility of the operating systems, and the degree to which our existing administrative and back-office functions and costs are complementary or redundant; o- •
- our ability to obtain financing on acceptable terms to finance our growth strategy and to operate within the limitations imposed by financing arrangements and to maintain our credit ratings;
o- •
- our ability to obtain external financing in the event we are unable to obtain financing from Cendant;
o- •
- competitive and pricing pressures in the car rental industry;
o- •
- changes in vehicle manufacturer repurchase arrangements in the event that used vehicle values decrease;
o- •
- and changes in laws and regulations, including changes in accounting standards and privacy policy regulation.
Other factors and assumptions not identified above were also involved in the derivation of these forward looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control.
You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
1721
Item 3. Quantitative
andAnd Qualitative Disclosure About Market RisksAs previously discussed in our 2001 Annual Report on Form 10-K, we assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential loss in earnings, fair values, and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. We used
March 31,June 30, 2002 market rates to perform a sensitivity analysis separately for each of our market risk exposures. The estimates assume instantaneous, parallel shifts in interest rate yield curves. We have determined, through such analyses, that the impact of a 10% change in interestrateson our earnings, fair values and cash flows would not be material.1822
PARTII -II—OTHER INFORMATIONITEMItem 6.
EXHIBITS AND REPORTS ON FORMExhibits and Reports on Form 8-K(A) EXHIBITS
- (a)
- Exhibits
See Exhibit Index
(B) REPORTS ON FORM
- (b)
- Reports on Form 8-K
None
1923
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AVIS GROUP HOLDINGS, INC. By: /s/ F. ROBERT SALERNO ------------------------------------- F. Robert Salerno PRESIDENT AND CHIEF OPERATING OFFICER Date: May 10,
AVIS GROUP HOLDINGS, INC.
By:
/s/ F. ROBERT SALERNO
F. Robert Salerno
President and Chief Operating Officer
Date: August 14, 2002Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JOHN W. CHIDSEY Executive Vice President and Director May 10, 2002 - ------------------------- (John W. Chidsey) /s/ F. ROBERT SALERNO President, Chief Operating Officer and May 10, 2002 - ------------------------- Director (Principal Executive Officer) (F. Robert Salerno) /s/ KURT FREUDENBERG Senior Vice President and Controller May 10, 2002 - ------------------------- (Principal Financial Officer) (Kurt Freudenberg) 20
Signature Title Date /s/ JOHN W. CHIDSEY
(John W. Chidsey)Chief Executive Officer August 14, 2002
/s/ F. ROBERT SALERNO
(F. Robert Salerno)
President, Chief Operating Officer and Director (Principal Executive Officer)
August 14, 2002
/s/ KURT FREUDENBERG
(Kurt Freudenberg)
Senior Vice President and Controller (Principal Financial Officer)
August 14, 200224
EXHIBIT INDEXEXHIBIT NO. DESCRIPTION - ----------- -------------------------------------------------------------- 3.1 Certificate of Incorporation of Avis Rent A Car, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998). 3.2
Exhibit No. Description 3.1 Certificate of Incorporation of Avis Rent A Car, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998).
3.2
By-Laws of Avis Group Holdings, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998).
12
Statement Re: Computation of Ratio of Earnings to Fixed Charges.Index
Avis Group Holdings, Inc.(Incorporated by referenceand Subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands)
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands)
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except share data)
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
Avis Group Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unless otherwise noted, all amounts are in thousands)
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS For the Three Months ended June 30, 2002
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS For the Three Months Ended June 30, 2001
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS For the Six Months ended June 30, 2002
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS For the Period March 1, 2001 (Date of Acquisition) to June 30, 2001
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS (Predecessor Companies) For theCompany's Registration Statement on Form S-1, Registration No. 333-46737, datedTwo Months Ended February23, 1998). 12 Statement Re: Computation28, 2001
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED BALANCE SHEET June 30, 2002
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED BALANCE SHEET December 31, 2001
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2002
Avis Group Holdings, Inc. and Subsidiaries CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS For the Period March 1, 2001 (Date ofRatio of EarningsAcquisition) toFixed Charges. 21