February 16, 2011

AVIS BUDGET GROUP REPORTS INCREASED REVENUE, EARNINGS AND MARGINS FOR FOURTH QUARTER AND FULL YEAR 2010

  • Full year Adjusted EBITDA increased 69% to $410 million, excluding certain items.
  • Full year pretax income increased to $158 million, excluding certain items, and $72 million on a reported basis.

PARSIPPANY, N.J.--(Marketwire - February 16, 2011) - Avis Budget Group, Inc. (NASDAQ: CAR) today reported results for its fourth quarter and full year ended December 31, 2010. The Company reported full year revenue of $5.2 billion, an increase of 1% compared with 2009. Excluding certain items, Adjusted EBITDA increased 69% to $410 million and pretax income increased to $158 million. Reported pretax income, which includes debt extinguishment costs, was $72 million. All three of the Company's operating segments reported significant growth in Adjusted EBITDA in 2010, and the Company's Adjusted EBITDA margin expanded by 320 basis points compared to the prior year, excluding certain items.

For the fourth quarter, the Company reported revenue of $1.2 billion, a 6% increase compared with the prior year fourth quarter. Excluding certain items, Adjusted EBITDA was $54 million compared with $14 million in fourth quarter 2009, with margins expanding by 320 basis points. The Company reported a pretax loss of $35 million in the traditionally slower fourth quarter compared with a pretax loss of $88 million in fourth quarter 2009.

"We delivered strong earnings growth in 2010 as a result of the strength of our customer value proposition, the rebound in commercial and leisure travel demand, and our vigilant focus on cost containment," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "Our momentum accelerated in the back half of the year resulting in our full year 2010 Adjusted EBITDA equaling pre-recession levels, despite revenue that was $800 million lower. As we move into 2011, we look to invest in initiatives that will allow us to continue to grow revenue, earnings and margins."

Executive Summary

Revenue increased 6% in fourth quarter 2010 compared to fourth quarter 2009 primarily due to a 7% increase in rental day volume, partially offset by 2% lower pricing. Ancillary revenues, excluding gas and customer recoveries, grew 10%. Fourth quarter Adjusted EBITDA more than tripled to $54 million, excluding certain items, with margins improving by 320 basis points. The increase in margin was primarily due to a 12% decline in per-unit fleet costs, lower vehicle financing costs and incremental savings from our cost-saving initiatives.

Full year revenue increased 1% year-over-year due to a 1% increase in average daily rate and a 6% increase in ancillary revenues excluding gas and customer recoveries, partially offset by a 2% decrease in volume. Full year Adjusted EBITDA margin improved 320 basis points, excluding certain items. The increase in margin was primarily due to a 9% decline in per-unit fleet costs and a 60 basis point improvement in direct operating expenses as a percentage of revenue.

Business Segment Discussion

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

 

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

                       2010     2009    % change
                      ------  -------  --------
Revenue               $  905  $   867         4%
                      ------  -------  --------
Adjusted EBITDA       $   20  $   (20)       NA
                      ------  -------  --------


Revenue increased 4% primarily due to a 7% increase in volume, partially offset by a 3% year-over-year decline in pricing. The decline in pricing reflects difficult comparisons with the prior year's fourth quarter, when our average daily rate increased 9%. Adjusted EBITDA increased $40 million driven by a 16% decrease in per-unit fleet costs, 5% growth in ancillary revenues on a per-rental-day basis, and our cost-saving initiatives. Adjusted EBITDA includes $2 million of restructuring costs in fourth quarter 2010 compared with $4 million in fourth quarter 2009.

 


 

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

                       2010     2009    % change
                      ------  -------  --------
Revenue               $  235  $   211        11%
                      ------  -------  --------
Adjusted EBITDA       $   32  $    33        (3)%
                      ------  -------  --------

Revenue increased 11% primarily due to a 7% increase in rental days and a 4% increase in pricing; excluding foreign-exchange effects, average daily rate declined 2%. The decline in average daily rate reflects difficult comparisons with the prior year's fourth quarter, when average daily rate increased 10%, excluding foreign-exchange effects. Excluding exchange-rate effects, Adjusted EBITDA increased slightly. Adjusted EBITDA includes $1 million of restructuring costs in fourth quarter 2009.

 

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

                       2010     2009   % change
                      ------  -------  --------
Revenue               $   85  $    81         5%
                      ------  -------  --------
Adjusted EBITDA       $    3  $     1       200%
                      ------  -------  --------

Truck rental revenue increased 5% primarily due to a 13% increase in rental days and a 4% decline in pricing. The decline in pricing was primarily due to strong growth in commercial rentals, which have a lower rate and longer length of rental than local consumer and one-way rentals. Adjusted EBITDA improved primarily as a result of increased revenue and increased vehicle utilization.

Other Items

 

--  Potential Acquisition of Dollar Thrifty - The Company continues to
pursue the acquisition of Dollar Thrifty Automotive Group, Inc.
(NYSE: DTG), the fourth largest car rental company in the United States.
Avis Budget Group and Dollar Thrifty have been working together to obtain
antitrust clearance for the proposed acquisition.  In the fourth quarter,
we incurred $15 million of expense related to this potential transaction,
including approximately $8 million of acquisition-related interest expense.

--  Corporate Debt - In the fourth quarter, the Company issued $600 million
of corporate debt securities due 2019, redeemed $175 million of corporate
debt securities due 2014, and repaid $52 million of term loan borrowings
and associated swaps.  The remaining $349 million of proceeds from the
fourth quarter debt offerings will be used either to help fund the
acquisition of Dollar Thrifty or to repay additional corporate debt.
Interest expense on such debt, the proceeds of which have not been
deployed, is excluded in calculating income excluding certain items.  The
Company's year-end cash balance was more than $900 million.

--  Annual Stockholders Meeting - We have scheduled our 2011 Annual Meeting
of Stockholders for May 20, 2011 in Wilmington, Del.  Stockholders of
record as of the close of business on March 24, 2011 will be entitled to
vote at the annual meeting.

Outlook

Avis Budget generally does not provide projections of volume, price, revenue or income. The Company does expect that its car rental fleet size will move in tandem with rental day volume, which will result in year-over-year utilization comparisons remaining fairly steady. The Company estimates its per-unit domestic vehicle depreciation costs will be consistent with, and possibly lower than, its prior-year costs. In addition, the Company expects that no single manufacturer will account for more than approximately 30% of its U.S. rental car fleet, and that vehicles obtained under manufacturer repurchase programs will continue to represent approximately half of its average vehicle fleet.

The Company is continuing its efforts to reduce costs and enhance productivity and expects that such initiatives will provide $45-55 million of incremental savings in 2011 compared to 2010, bringing the annual savings from the Company's actions since 2008 to more than $550 million. The Company also expects that its effective tax rate in 2011 will be approximately 38-40%.

Investor Conference Call

Avis Budget Group will host a conference call to discuss fourth quarter results on February 17, 2011, at 9:00 a.m. (ET). Investors may access the call live at www.avisbudgetgroup.com or by dialing (210) 234-0038 and providing the access code "Avis Budget." Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at www.avisbudgetgroup.com following the call. A telephone replay will be available from 12:00 p.m. (ET) on February 17 until 8:00 p.m. (ET) on February 24 at (402) 998-1544, access code: "Avis Budget."

About Avis Budget Group, Inc.

Avis Budget Group is a leading vehicle rental operator in the United States, Canada, Australia, New Zealand and certain other regions through its Avis and Budget brands. The Company also licenses its vehicle rental brands in more than 100 countries, enabling Avis and Budget to serve commercial and leisure travelers throughout the world. Avis Budget Group is headquartered in Parsippany, N.J. and has more than 21,000 employees. For more information about Avis Budget Group, visit www.avisbudgetgroup.com.

Forward-Looking Statements

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

Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, the ability, terms, and timing to consummate the potential transaction between the Company and Dollar Thrifty and the ability and timing to obtain regulatory approvals and financing (and any conditions thereto), the Company's ability to promptly and effectively integrate the businesses of Dollar Thrifty and Avis Budget, a weaker-than-anticipated economic environment, the high level of competition in the vehicle rental industry, greater-than-expected costs for new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers of our cars, lower-than-anticipated airline passenger traffic, an occurrence or threat of terrorism, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our operations, including the funding of our vehicle fleet via the asset-backed securities market and the financial condition of financial-guaranty firms that have insured a portion of our outstanding vehicle-backed debt, higher-than-expected fuel costs, fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, the Company's ability to meet or amend financial covenants associated with its borrowings, and the Company's ability to accurately estimate its future results and implement its strategy for cost savings and growth. Other unknown or unpredictable factors also could have material adverse effects on Avis Budget Group's performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Avis Budget Group's Annual Report on Form 10-K for the year ended December 31, 2009 and Avis Budget Group's Quarterly Report on Form 10-Q for the three months ended September 30, 2010, included under headings such as "Forward-Looking Statements", "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in other filings and furnishings made by the Company with the SEC from time to time. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.

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

 


 

                                                                   Table 1
                          Avis Budget Group, Inc.
                            SUMMARY DATA SHEET
                   (In millions, except per share data)

                            Three Months Ended
                               December 31,        Year Ended December 31,
                         ------------------------  ------------------------
                                             %                        %
                           2010     2009   Change   2010     2009   Change
                         -------  -------  ------  ------- -------  ------
Income Statement Items
  Net revenues           $ 1,226  $ 1,160       6% $ 5,185 $ 5,131       1%
  Income (loss) before
   income taxes              (35)     (88)      *       72     (77)      *
  Net income (loss)          (24)     (49)      *       54     (47)      *
  Earnings (loss) per
   share - Diluted         (0.23)   (0.47)      *     0.49   (0.46)      *

  Excluding Certain
   Items (non-GAAP) (A)
  Net revenues           $ 1,226  $ 1,160       6% $ 5,185 $ 5,131       1%
  Income (loss) before
   income taxes               (6)     (51)      *      158      (6)      *
  Net income (loss)           (6)     (27)      *      107      (4)      *
  Earnings (loss) per
   share - Diluted         (0.06)   (0.25)      *     0.90   (0.04)      *


                         As of December 31,
                         -----------------
                           2010     2009
                          ------  -------
Balance Sheet Items
  Cash and cash
   equivalents           $   911  $   482
  Vehicles, net            6,422    5,967
  Debt under vehicle
   programs                4,515    4,374
  Corporate debt           2,502    2,131
  Stockholders' equity       410      222



Segment Results


                          Three Months Ended
                            December 31,          Year Ended December 31,
                      -------------------------  -------------------------
                                           %                          %
                        2010     2009   Change     2010     2009   Change
                      -------  -------  -------  -------  -------  -------
Net Revenues
Domestic Car Rental   $   905  $   867        4% $ 3,893  $ 3,967      (2%)
International Car
 Rental                   235      211       11%     922      808       14%
Truck Rental               85       81        5%     367      354        4%
Corporate and Other         1        1        *        3        2        *
                      -------  -------           -------  -------
Total Company         $ 1,226  $ 1,160        6% $ 5,185  $ 5,131        1%
                      =======  =======           =======  =======

Adjusted EBITDA (B)
Domestic Car Rental   $    20  $   (20)       *  $   225  $   108      108%
International Car
 Rental                    32       33       (3%)    155      126       23%
Truck Rental                3        1      200%      34       13      162%
Corporate and Other       (10)      (5)       *      (30)     (42)       *
                      -------  -------           -------  -------
Total Company         $    45  $     9        *  $   384  $   205       87%
                      =======  =======           =======  =======

Reconciliation of
 Adjusted EBITDA to
 Pretax Income (loss)
Total Company
 Adjusted EBITDA      $    45  $     9           $   384  $   205
Less: Non-vehicle
       related
       depreciation
       and amortization    20       24                90       96
      Interest expense
       related to corporate
       debt, net

        Interest
         expense           48       41               170      153
        Early
         extinguish-
         ment of debt      12        -                52        -
      Impairment            -       32                 -       33
                      -------  -------           -------  -------
Income (loss) before
 income taxes         $   (35) $   (88)       *  $    72  $   (77)       *
                      =======  =======           =======  =======
_________
*  Not meaningful.
(A) During the three months and year ended December 31, 2010, we recorded
certain items of $29 million and $86 million. For the three months ended
December 31, 2010, these items consisted of (i) $12 million ($8 million,
net of tax) in expense related to the early extinguishment of corporate
debt, (ii) $8 million ($5 million, net of tax) of interest expense and $7
million ($4 million, net of tax) of general and administrative expenses
related to the potential acquisition of Dollar Thrifty and (iii) $2 million
($1 million, net of tax) in restructuring charges. For the year ended
December 31, 2010, these items consisted of (i) $52 million ($32 million,
net of tax) in expense related to the early extinguishment of corporate
debt, (ii) $14 million ($8 million, net of tax) of general and
administrative expenses and $8 million ($5 million, net of tax) of interest
expense related to the potential acquisition of Dollar Thrifty, (iii) $11
million ($7 million, net of tax) in restructuring charges, and (iv) $1
million ($1 million, net of tax) of expense for an adverse litigation
judgment related to the acquisition of our Budget vehicle rental business
in 2002.
During the three months and year ended December 31, 2009, we recorded
certain items of $37 million and $71 million, respectively. For the
three months ended December 31, 2009, these items consist of $5
million ($3 million, net of tax) in restructuring charges related to
our cost-reduction and efficiency improvement plan and $32 million
($19 million, net of tax) for the impairment of our investment in
Carey Holdings, Inc. For the year ended December 31, 2009, these
items consist of (i) $20 million ($12 million, net of tax) in
restructuring charges related to our cost-reduction and efficiency
improvement plan, (ii) $18 million ($11 million, net of tax) for an
adverse litigation judgment and (iii) $33 million ($20 million, net
of tax) for investment impairments.
(B) See Table 5 for a description of Adjusted EBITDA. Adjusted EBITDA
includes stock-based compensation expense and deferred financing fee
amortization of $11 million and $12 million in fourth quarter 2010 and
2009, respectively, and $40 million and $44 million in the year ended
December 31, 2010 and 2009, respectively.



                                                                   Table 2


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



                               Three Months Ended
                                  December 31,      Year Ended December 31,
                              --------------------  -----------------------
                                2010       2009        2010        2009
                              ---------  ---------  ----------- ----------
Revenues
  Vehicle rental              $     910  $     869  $     3,882 $    3,906
  Other                             316        291        1,303      1,225
                              ---------  ---------  ----------- ----------
Net revenues                      1,226      1,160        5,185      5,131
                              ---------  ---------  ----------- ----------

Expenses
  Operating (A)                     660        617        2,616      2,636
  Vehicle depreciation and
   lease charges, net               299        320        1,287      1,425
  Selling, general and
   administrative                   146        130          583        551
  Vehicle interest, net              74         79          304        294
  Non-vehicle related
   depreciation and
   amortization                      20         24           90         96
  Interest expense related to
   corporate debt, net
    Interest expense                 48         41          170        153
    Early extinguishment of
     debt                            12          -           52          -
  Restructuring charges               2          5           11         20
  Impairment                          -         32            -         33
                              ---------  ---------  ----------- ----------
Total expenses                    1,261      1,248        5,113      5,208
                              ---------  ---------  ----------- ----------

Income (loss) before income
 taxes                              (35)       (88)          72        (77)
Provision for (benefit from)
 income taxes                       (11)       (39)          18        (30)
                              ---------  ---------  ----------- ----------
Net income (loss)             $     (24) $     (49) $        54 $      (47)
                              =========  =========  =========== ==========

Earnings (loss) per share
  Basic                       $   (0.23) $   (0.47) $      0.53 $    (0.46)
  Diluted (B)                 $   (0.23) $   (0.47) $      0.49 $    (0.46)

Weighted average shares
 outstanding
  Basic                           103.3      102.3        103.1      102.2
  Diluted (B)                     103.3      102.3        126.6      102.2
_________
(A) Operating expenses for year ended December 31, 2009 include $18 million
for an adverse litigation judgment.
(B) For the year ended December 31, 2010, diluted earnings per share and
diluted weighted average shares outstanding include the dilutive effect of
shares issuable upon conversion of the Company's senior convertible
debentures, stock options and restricted stock units.








                                                                   Table 3

                          Avis Budget Group, Inc.
                      SEGMENT REVENUE DRIVER ANALYSIS



                          Three Months Ended
                             December 31,         Year Ended December 31,
                       -------------------------  -------------------------
                                           %                          %
                         2010     2009   Change     2010     2009   Change
                       --------- ------- ------   --------- ------- ------
CAR RENTAL

  Domestic Car
   Rental Segment

      Rental Days
       (000's)            16,600  15,581      7%     71,158  72,811   (2%)
      Time and Mileage
       Revenue per Day $   41.20 $ 42.69     (3%) $   41.70 $ 42.22   (1%)
      Average Rental
       Fleet             251,919 235,771      7%    267,522 270,223   (1%)

  International Car
   Rental Segment

      Rental Days
       (000's)             3,149   2,955      7%     13,008  13,021   (0%)
      Time and Mileage
       Revenue per Day
       (A)             $   49.70 $ 47.60      4%  $   47.75 $ 42.36   13%
      Average Rental
       Fleet              50,068  47,905      5%     51,008  51,109   (0%)

  Total Car Rental

      Rental Days
       (000's)            19,749  18,536      7%     84,166  85,832   (2%)
      Time and Mileage
       Revenue per Day $   42.55 $ 43.47     (2%) $   42.63 $ 42.24    1%
      Average Rental
       Fleet             301,987 283,676      6%    318,530 321,332   (1%)

TRUCK RENTAL SEGMENT

      Rental Days
       (000's)             1,080     958     13%      4,022   3,840    5%
      Time and Mileage
       Revenue per Day $   64.26 $ 67.27     (4%) $   73.06 $ 73.08   (0%)
      Average Rental
       Fleet              26,517  28,366     (7%)    26,623  28,988   (8%)

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

(A) Of the change in time and mileage revenue per day, 6 percentage points
and 12 percentage points are due to changes in foreign exchange rates in
the three months and for the year ended December 31, 2010, respectively,
with time and mileage revenue per day decreasing 2 percentage points in
the three months ended December 31, 2010 and increasing 1 percentage point
for the year ended December 31, 2010, excluding foreign-exchange effects.




                                                                   Table 4

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


                    CONSOLIDATED SCHEDULE OF CASH FLOWS


                                                            Year Ended
                                                        December 31, 2010
                                                        ------------------
Operating Activities
  Net cash provided by operating activities exclusive
   of vehicle programs                                  $              363
  Net cash provided by operating activities of vehicle
   programs                                                          1,277
                                                        ------------------
  Net cash provided by operating activities                          1,640
                                                        ------------------

Investing Activities
  Net cash used in investing activities exclusive of
   vehicle programs                                                    (55)
  Net cash used in investing activities of vehicle
   programs                                                         (1,548)
                                                        ------------------
  Net cash used in investing activities                             (1,603)
                                                        ------------------

Financing Activities
  Net cash provided by financing activities exclusive
   of vehicle programs                                                 322
  Net cash provided by financing activities of vehicle
   programs                                                             58
                                                        ------------------
  Net cash provided by financing activities                            380
                                                        ------------------

Effect of changes in exchange rates on cash and cash
 equivalents                                                            12
                                                        ------------------
Net increase in cash and cash equivalents                              429
Cash and cash equivalents, beginning of period                         482
                                                        ------------------
Cash and cash equivalents, end of period                $              911
                                                        ==================




         CONSOLIDATED SCHEDULE OF FREE CASH FLOWS (A)
                                                            Year Ended
                                                         December 31, 2010
                                                        ------------------
Pretax income                                           $               72
Add-back of non-vehicle related depreciation and
 amortization                                                           90
Add-back of early extinguishment of debt                                52
Working capital and other (B)                                          261
Capital expenditures                                                   (61)
Tax payments, net of refunds (C)                                       (28)
Vehicle programs and (gain) loss on vehicle sales (D)                 (237)
                                                        ------------------
Free Cash Flow                                                         149

Early extinguishment of debt (E)                                       (46)
Borrowings, net                                                        358
Financing costs, foreign exchange effects and other                    (32)
                                                        ------------------
Net increase in cash and cash equivalents (per above)   $              429
                                                        ==================

_____________________________
(A) See Table 5 for a description of Free Cash Flow.
(B) Working capital and other includes a reimbursement from Wyndham of $89
million for certain tax attributes in connection with the conclusion of our
2003-06 federal tax audit.
(C) Tax payments, net of refunds excludes $114 million in net payments
reimbursed by Realogy and Wyndham.
(D) Primarily reflects vehicle-backed borrowings (repayments) that are
incremental to vehicle-backed borrowings (repayments) required to fund
incremental (reduced) vehicle and vehicle-related assets.
(E)  Primarily represents cash paid for the termination of interest rate
swaps in connection with the early extinguishment of a portion of our
floating rate term loan.





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



                                                            Year Ended
                                                        December 31, 2010
                                                        ------------------
Free Cash Flow (per above)                              $              149
Cash (inflows) outflows included in Free Cash Flow but
 not reflected in
  Net Cash Provided by Operating Activities (per
   above)
    Investing activities of vehicle programs                         1,548
    Financing activities of vehicle programs                           (58)
    Capital expenditures                                                61
    Proceeds received on asset sales                                   (14)
    Early extinguishment of debt                                       (46)
                                                        ------------------
Net Cash Provided by Operating Activities (per above)   $            1,640
                                                        ==================



                                                                 Table 5

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

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

                      DEFINITIONS

Adjusted EBITDA
The accompanying press release and Table 1 present Adjusted EBITDA,
which represents income before non-vehicle related depreciation and
amortization, any impairment charge, non-vehicle related interest
and income taxes. We believe that Adjusted EBITDA is useful as a
supplemental measure in evaluating the aggregate performance of our
operating businesses. Adjusted EBITDA is the measure that is used by our
management, including our chief operating decision maker, to perform such
evaluation. It is also a component of our financial covenant calculations
under our credit facilities, subject to certain adjustments. Adjusted
EBITDA should not be considered in isolation or as a substitute for net
income or other income statement data prepared in accordance with GAAP
and our presentation of Adjusted EBITDA may not be comparable to
similarly-titled measures used by other companies.

A reconciliation of Adjusted EBITDA to income (loss) before income taxes
can be found on Table 1 and a reconciliation of income (loss) before income
taxes to net income (loss) can be found on Table 2.

Certain items
The accompanying press release and tables present Adjusted EBITDA, income
(loss) before income taxes, net income (loss) and diluted earnings per
share for the three months and year ended December 31, 2010, excluding
certain items. For the three months ended December 31, 2010, certain items
consisted of (i) $12 million ($8 million, net of tax) in expense related to
the early extinguishment of corporate debt, (ii) $8 million ($5 million,
net of tax) of interest expense and $7 million ($4 million, net of tax) of
general and administrative expenses related to the potential acquisition of
Dollar Thrifty and (iii) $2 million ($1 million, net of tax) for
restructuring expenses.

For the year ended December 31, 2010, certain items consisted of (i) $52
million ($32 million, net of tax) in expense related to the early
extinguishment of corporate debt, (ii) $14 million ($8 million, net of tax)
of general and administrative expenses and $8 million ($5 million, net of
tax) of interest expense related to the potential acquisition of Dollar
Thrifty, (iii) $11 million ($7 million, net of tax) in restructuring
charges and (iv) $1 million ($1 million, net of tax) of expense for
an adverse litigation judgment related to the acquisition of our Budget
vehicle rental business in 2002. Reconciliations of Adjusted EBITDA and net
income (loss), excluding certain items to net income (loss) are presented
below.

We believe that the measures referred to above are useful as supplemental
measures in evaluating the aggregate performance of the Company. We
exclude restructuring-related expenses, costs related to early
extinguishment of debt and other certain items as such items are
not representative of the results of operations of our business for
the three months and year ended December 31, 2010.


Reconciliation of Avis Budget Group, Inc. Adjusted
 EBITDA, excluding certain items to net income (loss):

                                                        Three
                                                        Months
                                                        Ended    Year Ended
                                                      December   December
                                                      31, 2010   31, 2010
                                                      ---------  ----------
  Adjusted EBITDA, excluding certain items            $      54  $      410

  Less: Non-vehicle related depreciation and
         amortization                                        20          90
        Interest expense related to corporate debt,
         net (excluding debt extinguishment costs and
         interest related to possible acquisition
         of DTG)                                             40         162
                                                      ---------  ----------
  Income (loss) before income taxes, excluding certain
   items                                                     (6)        158

  Less certain items:
    Early extinguishment of debt                             12          52
    Acquisition-related expenses                              7          14
    Acquisition-related interest                              8           8
    Restructuring charges                                     2          11
    Litigation costs                                          -           1
                                                      ---------  ----------
  Income (loss) before income taxes                         (35)         72
  Provision for (benefit from) income taxes                 (11)         18
                                                      ---------  ----------
  Net income (loss)                                   $     (24) $       54
                                                      =========  ==========

Reconciliation of net income (loss), excluding
 certain items to net income (loss):

  Net income (loss), excluding certain items          $      (6) $      107
  Less certain items, net of tax:
    Early extinguishment of debt                              8          32
    Acquisition-related expenses                              4           8
    Acquisition-related interest                              5           5
    Restructuring charges                                     1           7
    Litigation costs                                          -           1
                                                      ---------  ----------
  Net income (loss)                                   $     (24) $       54
                                                      =========  ==========

  Earnings (loss) per share, excluding certain items
   (diluted)                                          $   (0.06) $     0.90
                                                      ---------  ---------

  Earnings (loss) per share (diluted)                 $   (0.23) $     0.49
                                                      ---------  ---------

  Shares used to calculate Earnings (loss) per share,
   excluding certain items (diluted)                      103.3       126.6
                                                      ---------  ---------

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

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


Reconciliation of Avis Budget Group, Inc. Adjusted
 EBITDA, excluding certain items to net loss:
                                                        Three
                                                        Months     Year
                                                        Ended      Ended
                                                      December   December
                                                      31, 2009   31, 2009
                                                      ---------  ---------
  Adjusted EBITDA, excluding certain items            $      14  $     243

  Less: Non-vehicle related depreciation and
         amortization                                        24         96
        Interest expense related to corporate
         debt, net                                           41        153
                                                      ---------  ---------
  Loss before income taxes, excluding certain items         (51)        (6)

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

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

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

  Earnings (loss) per share, excluding certain items
   (diluted)                                          $   (0.25) $   (0.04)
                                                      ---------  ---------

  Earnings (loss) per share (diluted)                 $   (0.47) $   (0.46)
                                                      ---------  ---------

  Shares used to calculate Earnings (loss) per
   share, excluding certain items (diluted)               102.3      102.2
                                                      ---------  ---------

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

 

Contacts

Media Contact:
John Barrows
(973) 496-7865
PR@avisbudget.com

Investor Contact:
Neal Goldner
(973) 496-5086
IR@avisbudget.com

 

 


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