Changes in Accounting Policies

        On January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", in its entirety. In connection with the adoption of SFAS No. 142, the Company has not amortized any goodwill or indefinite-lived intangible assets during 2002. Prior to the adoption of SFAS No. 142, all intangible assets were amortized on a straight-line basis over their estimated periods to be benefited. Subsequent toTherefore, the adoption,results of operations for 2001 reflect the Company did not amortize anyamortization of goodwill or indefinite-livedand indefinite lived intangible assets, while the results of operations for 2002 do not reflect such amortization (see Note 5—Intangible Assets for a pro forma disclosure depicting the Company's results of operations during 2002.2001 after applying the non-amortization provisions of SFAS No. 142).

        In 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 2002. The Company will perform its annual impairment test during fourth quarter of 2002.

Stock-Based Compensation

        As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the Company currently measures its stock-based compensation using the intrinsic value approach under Accounting Principles Board ("APB") Opinion No. 25. Accordingly, the Company does not recognize compensation expense upon the issuance of its stock options because the option terms are fixed and the exercise price equals the market price of the underlying Cendant common stock on the grant date. The Company complies with the provision of SFAS No. 123 by providing pro forma disclosures of net income and related per share data giving consideration to the fair value method provisions of SFAS No. 123.

7        On January 1, 2003, the Company plans to adopt the fair value method of accounting for stock-based compensation provisions of SFAS No. 123, which is considered by the Financial Accounting Standards Board ("FASB") to be the preferable accounting method for stock-based employee compensation. Subsequent to adoption of the fair value method provisions of SFAS No. 123, the Company will expense all future employee stock options (and similar awards) over the vesting period based on the fair value of the award on the date of grant. The Company does not expect its results of operations to be impacted in the current year from this prospective change in accounting policy based on the current accounting guidance related to this adoption, which is currently under review by the FASB.

        The impact of recording compensation expense at fair value in prior periods have been included in the pro forma disclosures, as required by SFAS No. 123, provided in the Company's Annual Report on Form 10-K filed on March 29, 2002. Prior period compensation expense is not necessarily indicative of future compensation expense that would be recorded by the Company upon its adoption of the fair value method provisions of SFAS No. 123. Future expense may vary based upon factors such as the number of options granted by the Company and the then-current fair market value of such options.

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Recently Issued Accounting Pronouncements

        During April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." Such standard requires any gain or loss on extinguishments of debt to be presented as a component of continuing operations (unless specific criteria is met) whereas SFAS No. 4 required that such gains and losses be classified as an extraordinary item in determining net income. Upon adoption of SFAS No. 145, the Company expects to reclassify its extraordinary gains or losses on the extinguishments of debt to continuing operations. The Company will adopt these provisions on January 1, 2003.

        During June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." Such standard requires costs associated with exit or disposal activities (including restructurings), to be recognized when the costs are incurred, rather than at a date of commitment to an exit or disposal plan. SFAS No. 146 nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a liability related to an exit or disposal activity is not recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 a liability was recognized at the time of a commitment to an exit or disposal plan. The provisions of this standard are effective for disposal activities initiated after December 31, 2002.

2. Related Party Transactions

        Expenses of the Company include the following items charged by Cendant and affiliates, which include allocations from Cendant for services provided to the Company:

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        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, net and interest expense is included within non-vehicle interest, net. These charges, including corporate overhead allocations, are determined in accordance with various intercompany agreements, which are based upon factors, such as square footage, employee salaries and computer usage time.

3. Restricted CashUnusual Charges

        Restricted cash includes cash and investments that are not readily available for normalDuring the three months ended September 30, 2001, the Company disbursements that have been set aside as required underincurred unusual charges of $60 million related to the September 11, 2001 terrorist attacks. The unusual charges primarily resulted from the rationalization of the Company's debt covenants.fleet and related car rental operations.

4. Acquisition Related

        In connection with the acquisition of the Company by Cendant on March 1, 2001, the Company recorded purchase accounting adjustments for costs associated with exiting activities. The restricted cash balance at December 31, 2001 was heldrecognition of such costs and the corresponding utilization are summarized by category as collateral for outstanding vehicle debt that was not callablefollows:

        The Company closed its headquarters, relocated employees and therefore, could not be immediately repaid. Duringabandoned assets and involuntarily terminated employees in connection with such relocation. The Company formally communicated the termination of employment and paid severance to approximately 475 employees, representing a wide range of employee groups, and as of September 30, 2002, the restricted cash was depleted throughCompany had terminated all such employees. The majority of the normal purchaseremaining personnel related costs are expected to be paid by the end of vehicles.fourth quarter 2002.

4.5. Intangible Assets

        Intangible assets consisted of:

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        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 sixnine months ended JuneSeptember 30, 2002 was approximately $240 thousand and $480$720 thousand, respectively.

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Amortization expense relating to all intangible assets during the three months ended September 30, 2001, the two months ended February 28, 2001 and the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001, was approximately $8.1 million, $2.1 million and $10.5$18.6 million, respectively, including the amortization of goodwill of $7.9 million, $2.1 million and $10.2$18.0 million, respectively. The Company expects amortization expense on intangible assets for the remainder of 2002 to approximate $480$240 thousand and $1 million for each of the succeeding five years.

        The changes in the carrying amount of goodwill for 2002 are as follows:

        Had the Company applied the non-amortization provisions of SFAS No. 142 for the three months ended JuneSeptember 30, 2001, and for the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001 and the two months ended February 28, 2001, net income (loss) would have been as follows:

5.6. Non-Vehicle Debt

        Non-vehicle debt consisted of:

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        The change in the balance of the 11% senior subordinated notes reflects the redemption of $10.0 million in face value of these notes, with a carrying value of $11.4 million, for $10.9 million in cash and $18.2 million related to the amortization of a premium. In connection with such redemption, the Company recorded an extraordinary gain of approximately $470 thousand ($274 thousand, after tax).

7. Vehicle Debt

        Vehicle debt consisted of:

        As of JuneSeptember 30, 2002, the Company's asset-backed funding arrangements under the AESOP Funding program provided for the issuance of up to $4.14$4.69 billion of debt. Amounts outstanding under the AESOP Funding program approximated $3.85$4 billion. As of JuneSeptember 30, 2002, the Company had an additional $291$690 million of availability under the AESOP Funding program. In addition, the Company had other outstanding vehicle debt of approximately $265$262 million and availability of approximately $112$127 million under other funding arrangements as of JuneSeptember 30, 2002.

        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 $250 million of such notes bear interest at a floating rate of LIBOR plus 29 basis points.

        In September 2002, the Company issued $110 million of variable funding rental car asset-backed notes under the AESOP Funding program and repaid all amounts outstanding in commercial paper notes.

6.8. Commitments and Contingencies

        The Company is involved in pending litigation in the usual course of business. In the opinion of management, such litigation will not have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

99. Stock Plans

        During third quarter 2002, the Cendant's Board of Directors accelerated the vesting of certain options previously granted with exercise prices greater than or equal to $15.1875. Cendant's senior executive officers were not eligible for this modification. In connection with such action, approximately

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3 million options, which were scheduled to become exercisable substantially between September 2002 and January 2004, became exercisable as of August 27, 2002. In addition, the post-employment exercise period for the modified options was reduced from one year to thirty days. However, if the employee remains employed by the Company through the date on which the option was originally scheduled to become vested, the post-employment exercise period will be one year.

        In accordance with the provisions of the FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation (an Interpretation of APB Opinion No. 25)," there is no charge associated with this modification since none of the modified options had intrinsic value because the market price of the underlying Cendant common stock on August 27, 2002 was less than the exercise price of the modified options.

7.10. Comprehensive Income (Loss)

        The components of comprehensive income (loss) are summarized as follows:

        The after-tax components of accumulated other comprehensive income (loss) for the sixnine months ended JuneSeptember 30, 2002 are as follows:

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        The increase in unrealized losses on cash flow hedges, net of tax, for the three months ended September 30, 2002 is primarily the result of the effect of the decrease in interest rates during the period

8.11. Subsequent EventEvents

        On July 25,During October 2002, the Company issued $750redeemed approximately $18 million of rental car asset backedits 11% senior subordinated notes under its AESOP Funding Program. Approximately $500with a face value of approximately $16 million for approximately $17 million in cash.

        On October 28, 2002, the Company entered into an agreement to acquire the licensing rights and vehicles of such notes bear interest at a fixed rate of 3.85% anddomestic licensee for approximately $250 million of such notes bear interest at a floating rate of LIBOR plus 29 basis points.$13 million.

9.12. Guarantor and Non-Guarantor Consolidating Condensed Financial Statements

        The following consolidating condensed financial information presents the Consolidating Condensed Balance Sheets as of JuneSeptember 30, 2002 and December 31, 2001, the Consolidated Condensed Statements of Operations for the three months ended JuneSeptember 30, 2002 and JuneSeptember 30, 2001 and the Consolidating Condensed Statements of Operations and Statements of Cash Flows for the sixnine months ended JuneSeptember 30, 2002, the period March 1, 2001 (Date of Acquisition) to JuneSeptember 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.

1014

Avis Group Holdings, Inc. and Subsidiaries

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

For the Three Months ended JuneEnded September 30, 2002

15

Avis Group Holdings, Inc. and Subsidiaries

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

For the Three Months Ended JuneSeptember 30, 2001

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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