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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Form 10-Q
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

Commission File No. 001-10308
 
Avis Budget Group, Inc.
(Exact name of registrant as specified in its charter) 
Delaware06-0918165
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
6 Sylvan Way
Parsippany,NJ07054
(Address of principal executive offices)(Zip Code)
(973)496-4700
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01CARThe NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by 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      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated FilerNon-accelerated Filer
Smaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

The number of shares outstanding of the issuer’s common stock was 69,858,812 shares as of April 30, 2021.


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Table of Contents
 Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.


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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q may be considered “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by any such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such as “believes,” “expects,” “anticipates,” “will,” “should,” “could,” “may,” “would,” “intends,” “projects,” “estimates,” “plans,” and similar words, expressions or phrases. 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. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the Coronavirus (“COVID-19”) outbreak, and the continued restrictions that have been placed on travel in many countries as a result of the outbreak and the adverse impact on the global economy from the outbreak. These factors include, but are not limited to:

the COVID-19 outbreak and resulting economic conditions, which had, and is expected to continue to have, a significant impact on our operations, including an unprecedented decline in demand, as well as its current, and uncertain future impact, including, but not limited to, its effect on the ability or desire of people to travel due to travel restrictions, and other restrictions and orders, which may continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price;

the high level of competition in the mobility industry, including from new companies or technology, and the impact such competition may have on pricing and rental volume;

a change in our fleet costs, including as a result of a change in the cost of new vehicles, manufacturer recalls, disruption in the supply of new vehicles, shortages in semiconductors used in new vehicle production, and/or a change in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;

the results of operations or financial condition of the manufacturers of our vehicles, which could impact their ability to perform their payment obligations under our agreements with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make vehicles available to us or the mobility industry as a whole on commercially reasonable terms or at all particularly when COVID-19 related restrictions are lifted and travel demand increases;

the significant decline in travel demand as a result of COVID-19, including the current and any future disruptions in airline passenger traffic;

the absence of an improvement in, or further deterioration of, economic conditions, particularly during our peak season or in key market segments;

an occurrence or threat of terrorism, the current and any future pandemic diseases, natural disasters, military conflict, civil unrest or political instability in the locations in which we operate;

any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business including the current and any future impacts as a result of COVID-19;

our ability to continue to successfully implement our business strategies, achieve and maintain cost savings and adapt our business to changes in mobility;

political, economic or commercial instability in the countries in which we operate, and our ability to conform to multiple and conflicting laws or regulations in those countries;

our dependence on third-party distribution channels, third-party suppliers of other services and co-marketing arrangements with third parties;
1

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our dependence on the performance and retention of our senior management and key employees;

risks related to completed or future acquisitions or investments that we may pursue, including the incurrence of incremental indebtedness to help fund such transactions and our ability to promptly and effectively integrate any acquired businesses or capitalize on joint ventures, partnerships and other investments;

our ability to utilize derivative instruments, and the impact of derivative instruments we utilize, which can be affected by fluctuations in interest rates, gasoline prices and exchange rates, changes in government regulations and other factors;

our exposure to uninsured or unpaid claims in excess of historical levels and our ability to obtain insurance at desired levels and the cost of that insurance;

risks associated with litigation, governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and consumer privacy, labor and employment, and tax;

risks related to protecting the integrity of, and preventing unauthorized access to, our information technology systems or those of our third-party vendors, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, and compliance with privacy and data protection regulation;

any impact on us from the actions of our licensees, dealers, third-party vendors and independent operators and independent contractors and/or disputes that may arise out of our agreements with such parties;

any major disruptions in our communication networks or information systems;

risks related to tax obligations and the effect of future changes in tax laws and accounting standards;

risks related to our indebtedness, including our substantial outstanding debt obligations, potential interest rate increases, recent and potential further downgrades by rating agencies and our ability to incur substantially more debt;

our ability to obtain financing for our global operations, including the funding of our vehicle fleet through the issuance of asset-backed securities and use of the global lending markets;

our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, or to obtain a waiver or amendment of such covenants should we be unable to meet such covenants;

our ability to accurately estimate our future results;

failure to achieve our business plans, a further deterioration in general economic conditions of the countries in which we operate, or significant changes in the assumptions and estimates that are used in our impairment testing for goodwill or intangible assets, which could result in a significant impairment of our goodwill; and

other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.

We operate in a continuously changing business environment and new risk factors emerge from time to time. New risk factors, factors beyond our control, or changes in the impact of identified risk factors may cause actual results to differ materially from those set forth in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Moreover, we do not assume responsibility for the
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accuracy and completeness of those statements. Other factors and assumptions not identified above, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and “Risk Factors” in Item 1A and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 17, 2021 (the “2020 Form 10-K”), may cause actual results to differ materially from those projected in any forward-looking statements.

Although we believe that our assumptions are reasonable, any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual results could differ materially from past results and/or those anticipated, estimated or projected. We undertake no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. 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.

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PART I — FINANCIAL INFORMATION
Item 1.    Financial Statements
Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In millions, except per share data)
(Unaudited)

Three Months Ended 
March 31,
20212020
Revenues$1,372 $1,753 
Expenses
Operating832 1,058 
Vehicle depreciation and lease charges, net254 459 
Selling, general and administrative182 251 
Vehicle interest, net75 83 
Non-vehicle related depreciation and amortization68 69 
Interest expense related to corporate debt, net:
Interest expense61 48 
Early extinguishment of debt129 4 
Restructuring and other related charges20 44 
Transaction-related costs, net1 2 
Total expenses1,622 2,018 
Loss before income taxes(250)(265)
Benefit from income taxes(80)(107)
Net loss$(170)$(158)
Comprehensive loss$(146)$(257)
Loss per share
Basic$(2.43)$(2.16)
Diluted$(2.43)$(2.16)
See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions, except par value)
(Unaudited)
March 31, 
2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents$576 $692 
Receivables, net786 647 
Other current assets506 456 
Total current assets1,868 1,795 
Property and equipment, net611 657 
Operating lease right-of-use assets2,510 2,560 
Deferred income taxes1,348 1,198 
Goodwill1,121 1,137 
Other intangibles, net750 774 
Other non-current assets266 244 
Total assets exclusive of assets under vehicle programs8,474 8,365 
Assets under vehicle programs:
Program cash61 72 
Vehicles, net9,101 8,153 
Receivables from vehicle manufacturers and other307 281 
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party666 667 
10,135 9,173 
Total assets$18,609 $17,538 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other current liabilities$2,171 $2,034 
Short-term debt and current portion of long-term debt19 19 
Total current liabilities2,190 2,053 
Long-term debt4,264 4,191 
Long-term operating lease liabilities2,025 2,078 
Other non-current liabilities681 731 
Total liabilities exclusive of liabilities under vehicle programs9,160 9,053 
Liabilities under vehicle programs:
Debt1,652 1,777 
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party6,149 5,080 
Deferred income taxes1,470 1,383 
Other494 400 
9,765 8,640 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, respectively
  
Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively
1 1 
Additional paid-in capital6,642 6,668 
Accumulated deficit(1,640)(1,470)
Accumulated other comprehensive loss(163)(187)
Treasury stock, at cost— 67 shares, respectively
(5,156)(5,167)
Total stockholders’ equity(316)(155)
Total liabilities and stockholders’ equity$18,609 $17,538 

See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited) 
 Three Months Ended 
March 31,
 20212020
Operating activities
Net loss$(170)$(158)
Adjustments to reconcile net loss to net cash provided by operating activities:
Vehicle depreciation259 414 
Amortization of right-of-use assets236 231 
(Gain) loss on sale of vehicles, net(49)(11)
Non-vehicle related depreciation and amortization68 69 
Stock-based compensation4 (2)
Amortization of debt financing fees8 8 
Early extinguishment of debt costs129 4 
Net change in assets and liabilities:
Receivables24 163 
Income taxes and deferred income taxes(80)(112)
Accounts payable and other current liabilities181 (96)
Operating lease liabilities(234)(230)
Other, net(40)90 
Net cash provided by operating activities336 370 
Investing activities
Property and equipment additions(12)(43)
Proceeds received on asset sales2 2 
Net assets acquired (net of cash acquired)(4)(51)
Net cash used in investing activities exclusive of vehicle programs(14)(92)
Vehicle programs:
Investment in vehicles(3,032)(3,751)
Proceeds received on disposition of vehicles1,679 2,497 
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party
(24)(175)
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party
25 39 
(1,352)(1,390)
Net cash used in investing activities(1,366)(1,482)

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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
 Three Months Ended 
March 31,
 20212020
Financing activities
Proceeds from long-term borrowings1,100 184 
Payments on long-term borrowings(1,101)(92)
Issuance of common stock 15 
Repurchases of common stock(19)(118)
Debt financing fees(12)(3)
Net cash used in financing activities exclusive of vehicle programs(32)(14)
Vehicle programs:
Proceeds from borrowings3,481 5,461 
Payments on borrowings(2,535)(4,479)
Debt financing fees (6)
946 976 
Net cash provided by financing activities914 962 
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash
(10)(29)
Net decrease in cash and cash equivalents, program and restricted cash(126)(179)
Cash and cash equivalents, program and restricted cash, beginning of period765 900 
Cash and cash equivalents, program and restricted cash, end of period$639 $721 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited) 
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 2020137.1 $1 $6,668 $(1,470)$(187)(67.3)$(5,167)$(155)
Comprehensive loss:
Net loss— — — (170)— — — 
Other comprehensive income— 24 — — 
Total comprehensive loss(146)
Net activity related to restricted stock units— — (26)— — 0.2 21 (5)
Repurchases of common stock— — — — — (0.1)(10)(10)
Balance at March 31, 2021137.1 $1 $6,642 $(1,640)$(163)(67.2)$(5,156)$(316)
Balance at December 31, 2019137.1 $1 $6,741 $(785)$(157)(63.2)$(5,144)$656 
Cumulative effect of accounting change— — — (1)— — — (1)
Comprehensive loss:
Net loss— — — (158)— — — 
Other comprehensive loss— — — — (99)— — 
Total comprehensive loss(257)
Net activity related to restricted stock units— — (79)— — 0.3 71 (8)
Issuance of common stock— — 15 — — 0.4 — 15 
Repurchases of common stock— — — — — (5.0)(113)(113)
Balance at March 31, 2020137.1 $1 $6,677 $(944)$(256)(67.5)$(5,186)$292 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Unless otherwise noted, all dollar amounts in tables are in millions, except per share amounts)


1.    Basis of Presentation

Avis Budget Group, Inc. provides mobility solutions to businesses and consumers worldwide. The accompanying unaudited Consolidated Condensed Financial Statements include the accounts and transactions of Avis Budget Group, Inc. and its subsidiaries, as well as entities in which Avis Budget Group, Inc. directly or indirectly has a controlling financial interest (collectively, the “Company”), and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting.
The Company operates the following reportable business segments:

Americas—consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which the Company does not operate directly.

International—consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which the Company does not operate directly.

The operating results of acquired businesses are included in the accompanying Consolidated Condensed Financial Statements from the dates of acquisition. Differences between the preliminary allocation of purchase price and the final allocation for the Company’s 2020 acquisitions of various licensees were not material.

In presenting the Consolidated Condensed Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management makes 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. In management’s opinion, the Consolidated Condensed Financial Statements contain all adjustments necessary for a fair presentation of interim results reported. 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. These financial statements should be read in conjunction with the Company’s 2020 Form 10-K.

Liquidity and Management’s Plans

The continuing cases of COVID-19 and the developments surrounding the pandemic are having a material impact on certain aspects of the Company’s business. Significant events affecting travel and the overall economy have historically had an impact on vehicle rental volumes, with the full extent of the impact generally determined by the length of time the event influences travel decisions as well as general economic conditions. The Company believes the ongoing effects of COVID-19 and resulting economic conditions have had, and will continue to have, an adverse impact on its operations and vehicle rental volumes, and on its financial results and liquidity.

The Company cannot assure its assumptions used to estimate its liquidity requirements will be correct because it has never previously experienced such a change in demand, and as a consequence, its ability to be predictive is uncertain. In addition, the duration of the pandemic is uncertain. Therefore, the Company has taken actions to manage its liquidity, including reducing capital expenditures, operating expenses and the number of vehicles in its fleet. The Company has no meaningful corporate debt maturities until 2023. The Company plans to finance the routine Asset Backed Securities (“ABS”) maturities with program cash on hand, available revolving debt capacity, new term note issuances and fleet sales. As a result, based on current operational assumptions, the Company believes it has adequate liquidity beyond the next twelve months.
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In April 2020, the Company entered into an amendment (the “Amendment”) to its senior credit facilities, consisting of an approximately $1.2 billion term loan maturing in 2027 and a $1.8 billion revolving credit facility maturing in 2023, which remain in place after the Amendment. The Amendment provides for relief from the quarterly-tested leverage covenant contained in the credit agreement governing the senior credit facilities until the end of a specific relief period, including a holiday from such leverage covenant through June 30, 2021, during which time (i) certain negative covenant exceptions are not available to the Company, (ii) pricing on the senior credit facilities is increased, (iii) the Company must comply with a liquidity covenant and additional reporting requirements and (iv) the Company must meet additional conditions to borrow under the revolving credit facility. In February 2021, the Company subsequently amended the credit agreement to permit refinancing of certain existing indebtedness.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are fully described in Note 2, “Summary of Significant Accounting Policies,” in the 2020 Form 10-K.

Cash and cash equivalents, Program cash and Restricted cash. The following table provides a detail of cash and cash equivalents, program and restricted cash reported within the Consolidated Condensed Balance Sheets to the amounts shown in the Consolidated Condensed Statements of Cash Flows.
As of March 31,
20212020
Cash and cash equivalents$576 $679 
Program cash61 39 
Restricted cash (a)
2 3 
Total cash and cash equivalents, program and restricted cash$639 $721 
________
(a)Included within other current assets.

Vehicle Programs. The Company presents separately the financial data of its vehicle programs. These programs are distinct from the Company’s other activities since the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of the Company’s vehicle programs. The Company believes it is appropriate to segregate the financial data of its vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.

Transaction-related costs, net. Transaction-related costs, net are classified separately in the Consolidated Condensed Statements of Comprehensive Income. These costs are comprised of expenses related to acquisition-related activities such as due diligence and other advisory costs, expenses related to the integration of the acquiree’s operations with those of the Company, including the implementation of best practices and process improvements, non-cash gains and losses related to re-acquired rights, expenses related to pre-acquisition contingencies and contingent consideration related to acquisitions.

Currency Transactions. The Company records the gain or loss on foreign-currency transactions on certain intercompany loans and the gain or loss on intercompany loan hedges within interest expense related to corporate debt, net. During the three months ended March 31, 2021 and 2020, the Company recorded an immaterial amount and a loss of $5 million, respectively, related to such items.

Divestitures. In March 2021, the Company entered into a stock purchase agreement with Urbiz S.A. to sell the Company’s assets in Argentina. Upon completion of the sale, Urbiz S.A. will pay approximately $4 million, plus interest, over two years for the right to operate the Avis and Budget brand. The Company had assets held for sale of $15 million within current and non-current assets and liabilities held for sale of $6 million within non-current liabilities. The Company assessed the fair value of the net assets and recorded a loss of $13 million within restructuring and other related charges during the three months ended March 31, 2021. Argentina’s operations are reported within the Company’s Americas segment.
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Investments. As of March 31, 2021 and December 31, 2020, the Company had equity method investments with a carrying value of $64 million and $63 million, respectively, which are recorded within other non-current assets. Earnings from the Company’s equity method investments are reported within operating expenses. For the three months ended March 31, 2021 and 2020, the Company recorded an immaterial amount related to its equity method investments.

Nonmarketable Equity Securities. As of March 31, 2021 and December 31, 2020, the Company had nonmarketable equity securities with a carrying value of $8 million, respectively, which are recorded within other non-current assets. No adjustments were made to the carrying amounts during the three months ended March 31, 2021 and 2020.

Revenues. Revenues are recognized under “Leases (Topic 842),” with the exception of royalty fee revenue derived from the Company’s licensees and revenue related to the Company’s customer loyalty program, which were approximately $40 million and $32 million during the three months ended March 31, 2021 and 2020, respectively.

The following table presents the Company’s revenues disaggregated by geography.
 Three Months Ended 
March 31,
20212020
Americas$1,080 $1,257 
Europe, Middle East and Africa203 357 
Asia and Australasia89 139 
Total revenues$1,372 $1,753 

The following table presents the Company’s revenues disaggregated by brand.
Three Months Ended 
March 31,
20212020
Avis$717 $985 
Budget524 619 
Other131 149 
Total revenues$1,372 $1,753 
________
Other includes Zipcar and other operating brands.

Adoption of New Accounting Pronouncements

Simplifying the Accounting for Income Taxes

On January 1, 2021, as the result of a new accounting pronouncement, the Company adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions and improving the application of existing guidance. The adoption of this accounting pronouncement did not have a material impact on the Company's Consolidated Financial Statements.

Compensation—Retirement Benefits—Defined Benefit Plans

On January 1, 2021, as the result of a new accounting pronouncement, the Company adopted ASU 2018-14, “Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans,” which adds, removes, and clarifies disclosure requirements related to defined benefit pension and other postretirement plans. These changes are part of the FASB’s disclosure framework project, which the Board launched in 2014 to improve the effectiveness of disclosures in notes to financial statements. The adoption of this accounting pronouncement did not have a material impact on the Company's Consolidated Financial
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Statements.

2.    Leases
Lessor

The following table presents the Company’s lease revenues disaggregated by geography.
Three Months Ended 
March 31,
20212020
Americas$1,054 $1,244 
Europe, Middle East and Africa192 342 
Asia and Australasia86 135 
Total lease revenues$1,332 $1,721 

The following table presents the Company’s lease revenues disaggregated by brand.
Three Months Ended 
March 31,
20212020
Avis$690 $968 
Budget516 608 
Other126 145 
Total lease revenues$1,332 $1,721 
_______
Other includes Zipcar and other operating brands.

Lessee

The Company has operating and finance leases for rental locations, corporate offices, vehicle rental fleet and equipment. Many of the Company’s operating leases for rental locations contain concession agreements with various airport authorities that allow the Company to conduct its vehicle rental operations on site. In general, concession fees for airport locations are based on a percentage of total commissionable revenue as defined by each airport authority, some of which are subject to minimum annual guaranteed amounts. Concession fees other than minimum annual guaranteed amounts are not included in the measurement of operating lease Right of Use (“ROU”) assets and operating lease liabilities, and are recorded as variable lease expense as incurred. The Company’s operating leases for rental locations often also require the Company to pay or reimburse operating expenses.

The components of lease expense are as follows:
Three Months Ended 
March 31,
20212020
Property leases (a)
Operating lease expense$139 $185 
Variable lease expense54 36 
Total property lease expense$193 $221 
__________
(a)    Primarily included in operating expense and includes $19 million of minimum annual guaranteed rent in excess of concession fees as defined in our rental concession agreement for the three months ended March 31, 2021.



Supplemental balance sheet information related to leases is as follows:
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As of 
March 31, 2021
As of 
December 31, 2020
Property leases
Operating lease ROU assets$2,510 $2,560 
Short-term operating lease liabilities (a)
$519 $514 
Long-term operating lease liabilities2,025 2,078 
Operating lease liabilities$2,544 $2,592 
Weighted average remaining lease term8.3 years8.4 years
Weighted average discount rate3.85 %3.86 %
_________
(a)    Included in Accounts payable and other current liabilities.

Supplemental cash flow information related to leases is as follows:
Three Months Ended 
March 31,
20212020
Cash payments for lease liabilities within operating activities:
Property operating leases$202 $170 
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:
Property operating leases169 296 

3.     Restructuring and Other Related Charges

Restructuring

During first quarter 2021, the Company initiated a global restructuring plan to focus on cost discipline by reviewing headcounts, facilities and contractor agreements. The Company is transforming its business as it prepares to exit the COVID-19 crisis by controlling fixed costs and matching variable costs to demand (“T21”). During the three months ended March 31, 2021, as part of this process, the Company formally communicated the termination of employment to approximately 80 employees, and as of March 31, 2021, the Company terminated approximately 60 of these employees. The Company expects further restructuring expense of approximately $55 million related to this initiative to be incurred in 2021.

During first quarter 2020, the Company initiated a global restructuring plan to reduce operating costs, such as headcount and facilities, due to declining reservations and revenue resulting from the COVID-19 outbreak (“2020 Optimization Plan”). The Company expects no further restructuring expense related to this initiative.
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The following tables summarize the changes to our restructuring-related liabilities and identifies the amounts recorded within the Company’s reporting segments for restructuring charges and corresponding payments and utilizations:
AmericasInternationalTotal
Balance as of January 1, 2021$3 $6 $9 
Restructuring expense:
T211 6 7 
Restructuring payment/utilization:
T21(1)(4)(5)
2020 Optimization Plan(2)(2)(4)
Balance as of March 31, 2021$1 $6 $7 
 PersonnelFacility
Related
Other (a)
Total
Balance as of January 1, 2021$4 $2 $3 $9 
Restructuring expense:
T215 2  7 
Restructuring payment/utilization:
T21(3)(2) (5)
2020 Optimization Plan(3) (1)(4)
Balance as of March 31, 2021$3 $2 $2 $7 
__________
(a)Includes expenses primarily related to the disposition of vehicles.

Other Related Charges

Limited Voluntary Opportunity Plan (“LVOP”)

During 2020, the Company offered a voluntary termination program to certain employees in field operations, shared services, and general and administrative functions for a limited time. These employees, if qualified, elected resignation from employment in return for enhanced severance benefits to be settled in cash. During the three months ended March 31, 2020, the Company recorded other related charges of approximately $15 million in connection with the LVOP.

Officer Separation Costs

In March 2020, the Company announced the departure of Michael K. Tucker as Executive Vice President, General Counsel effective March 27, 2020. In connection with Mr. Tucker’s separation, the Company recorded other related charges of approximately $2 million for the three months ended March 31, 2020.

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4.    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (“EPS”) (shares in millions): 
Three Months Ended 
March 31,
20212020
Net loss for basic and diluted EPS$(170)$(158)
Basic weighted average shares outstanding69.9 72.9 
Non-vested stock (a)
  
Diluted weighted average shares outstanding69.9 72.9 
Loss per share:
Basic$(2.43)$(2.16)
Diluted$(2.43)$(2.16)
__________
(a)As the Company incurred a net loss for the three months ended March 31, 2021 and 2020, 1.1 million and 1.3 million non-vested stock awards, respectively, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.

5.    Other Current Assets

Other current assets consisted of:
As of 
March 31, 
2021
As of December 31, 2020
Prepaid expenses$204 $161 
Sales and use taxes139 147 
Other163 148 
Other current assets$506 $456 

6.    Intangible Assets

Intangible assets consisted of:
 As of March 31, 2021As of December 31, 2020
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortized Intangible Assets
License agreements$275 $159 $116 $280 $151 $129 
Customer relationships261 198 63 268 196 72 
Other52 33 19 54 33 21 
Total$588 $390 $198 $602 $380 $222 
Unamortized Intangible Assets
Goodwill$1,121 $1,137 
Trademarks$552 $552 
For the three months ended March 31, 2021 and 2020, amortization expense related to amortizable intangible assets was approximately $18 million and $13 million, respectively. Based on the Company’s amortizable intangible assets at March 31, 2021, the Company expects amortization expense of approximately $40 million for the remainder of 2021, $34 million for 2022, $25 million for 2023, $22 million for 2024, $17 million for 2025 and $15 million for 2026, excluding effects of currency exchange rates.

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7.    Vehicle Rental Activities

The components of vehicles, net within assets under vehicle programs were as follows: 
As ofAs of
March 31,December 31,
20212020
Rental vehicles$10,251 $9,210 
Less: Accumulated depreciation(1,288)(1,337)
8,963 7,873 
Vehicles held for sale138 280 
Vehicles, net$9,101 $8,153 
The components of vehicle depreciation and lease charges, net are summarized below: 
 Three Months Ended 
March 31,
20212020
Depreciation expense$259 $414 
Lease charges44 56 
(Gain) loss on sale of vehicles, net (49)(11)
Vehicle depreciation and lease charges, net$254 $459 

At March 31, 2021 and 2020, the Company had payables related to vehicle purchases included in liabilities under vehicle programs - other of $344 million and $240 million, respectively, and receivables related to vehicle sales included in assets under vehicle programs - receivables from vehicle manufacturers and other of $195 million and $491 million, respectively.

8.    Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2021 and 2020 were benefits of 32.0% and 40.4%, respectively. Such rates differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes.

9.    Accounts Payable and Other Current Liabilities

Accounts payable and other current liabilities consisted of: 
As ofAs of
March 31,December 31,
20212020
Short-term operating lease liabilities$519 $514 
Accounts payable458 394 
Accrued sales and use taxes214 215 
Public liability and property damage insurance liabilities – current166 162 
Deferred lease revenues – current151 70 
Accrued payroll and related136 117 
Accrued advertising and marketing124 122 
Other403 440 
Accounts payable and other current liabilities$2,171 $2,034 

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10.    Long-term Corporate Debt and Borrowing Arrangements

Long-term corporate debt and borrowing arrangements consisted of:
As ofAs of
Maturity
Date
March 31,December 31,
20212020
6.375% Senior Notes
April 2024$ $350 
4.125% euro-denominated Senior Notes
November 2024351 366 
5.250% Senior Notes
March 2025235 375 
4.500% euro-denominated Senior Notes
May 2025293 305 
10.500% Senior Secured Notes
May 2025 487 
4.750% euro-denominated Senior Notes
January 2026410 428 
5.750% Senior Notes
July 2027725 724 
4.750% Senior Notes
April 2028500  
5.375% Senior Notes
March 2029600  
Floating Rate Term Loan (a)
August 20271,196 1,199 
Other (b)
22 24 
Deferred financing fees(49)(48)
Total4,283 4,210 
Less: Short-term debt and current portion of long-term debt19 19 
Long-term debt$4,264 $4,191 
__________
(a)The floating rate term loan is part of the Company’s senior revolving credit facility, which is secured by pledges of capital stock of certain subsidiaries of the Company, and liens on substantially all of the Company’s intellectual property and certain other real and personal property. As of March 31, 2021, the floating rate term loan due 2027 bears interest at one-month LIBOR plus 225 basis points, for an aggregate rate of 2.36%. The Company has entered into a swap to hedge $700 million of its interest rate exposure related to the floating rate term loan at an aggregate rate of 4.58%.
(b)Primarily includes finance leases which are secured by liens on the related assets.

In March 2021, the Company issued $600 million of 5.375% Senior Notes due March 2029, at par, with interest paid semiannually. Net proceeds, together with cash on hand, were used to redeem all of the outstanding 10.5% Senior Secured Notes due 2025 for $599 million plus accrued interest.

In March 2021, the Company issued $500 million of 4.75% Senior Notes due March 2028, at par, with interest paid semiannually. Net proceeds, together with cash on hand, were used to redeem all of the outstanding 6.375% Senior Notes due 2024 for $356 million plus accrued interest and a portion of its outstanding 5.25% Senior Notes due 2025 for $142 million plus accrued interest.

The 5.375% and 4.75% notes are guaranteed on a senior unsecured basis by the Company and certain of the Company’s subsidiaries.

Committed Credit Facilities and Available Funding Arrangements

At March 31, 2021, the committed corporate credit facilities available to the Company and/or its subsidiaries were as follows: 
Total
Capacity
Outstanding
Borrowings
Letters of Credit IssuedAvailable
Capacity
Senior revolving credit facility maturing 2023 (a)
$1,800 $ $1,230 $570 
__________
(a)The senior revolving credit facility bears interest at one-month LIBOR plus 250 basis points and is part of the Company’s senior credit facilities, which include the floating rate term loan and the senior revolving credit facility, and which are secured by pledges of capital stock of certain subsidiaries of the Company, liens on substantially all of the Company’s intellectual property and certain other real and personal property.

Debt Covenants

The agreements governing the Company’s indebtedness contain restrictive covenants, including restrictions on dividends paid to the Company by certain of its subsidiaries, the incurrence of additional indebtedness by the Company and certain of its subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback
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transactions. The Company’s senior credit facility also contains a maximum leverage ratio requirement which has been amended to provide a holiday from such leverage covenant through June 30, 2021 (See Note 1 Basis of Presentation). As of March 31, 2021, the Company was in compliance with the financial covenants governing its indebtedness.

11.    Debt Under Vehicle Programs and Borrowing Arrangements

Debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”), consisted of:
As ofAs of
March 31,December 31,
20212020
Americas - Debt due to Avis Budget Rental Car Funding$6,181 $5,116 
Americas - Debt borrowings 499 509 
International - Debt borrowings 1,020 1,115 
International - Finance leases 140 162 
Deferred financing fees (a)
(39)(45)
Total$7,801 $6,857 
__________
(a)Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of March 31, 2021 and December 31, 2020 were $32 million and $36 million, respectively.

Debt Maturities

The following table provides the contractual maturities of the Company’s debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding, at March 31, 2021.
 
Debt under Vehicle Programs (a)
Within 1 year (b)
$1,858 
Between 1 and 2 years (c)
2,171 
Between 2 and 3 years (d)
1,253 
Between 3 and 4 years1,598 
Between 4 and 5 years960 
Thereafter 
Total$7,840 
__________
(a)    Vehicle-backed debt primarily represents asset-backed securities.
(b)    Includes $0.4 billion of bank and bank-sponsored facilities.
(c)    Includes $0.9 billion of bank and bank-sponsored facilities.
(d)    Includes $0.1 billion of bank and bank-sponsored facilities.

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Committed Credit Facilities and Available Funding Arrangements

As of March 31, 2021, available funding under the Company’s vehicle programs, including related party debt due to Avis Budget Rental Car Funding, consisted of:
Total
Capacity (a)
Outstanding
Borrowings (b)
Available
Capacity
Americas - Debt due to Avis Budget Rental Car Funding
$9,011 $6,181 $2,830 
Americas - Debt borrowings746 499 247 
International - Debt borrowings2,713 1,020 1,693 
International - Finance leases204 140 64 
Total$12,674 $7,840 $4,834 
__________
(a)    Capacity is subject to maintaining sufficient assets to collateralize debt.
(b)    The outstanding debt is collateralized by vehicles and related assets of $7.4 billion for Americas - Debt due to Avis Budget Rental Car Funding; $0.7 billion for Americas - Debt borrowings; $1.2 billion for International - Debt borrowings; and $0.2 billion for International - Finance leases.

Debt Covenants

The agreements under the Company’s vehicle-backed funding programs contain restrictive covenants, including restrictions on dividends paid to the Company by certain of its subsidiaries and restrictions on indebtedness, mergers, liens, liquidations, and sale and leaseback transactions and in some cases also require compliance with certain financial requirements. As of March 31, 2021, the Company is not aware of any instances of non-compliance with any of the financial covenants contained in the debt agreements under its vehicle-backed funding programs.

12.    Commitments and Contingencies

Contingencies

In 2006, the Company completed the spin-offs of its Realogy and Wyndham subsidiaries. The Company does not believe that the impact of any resolution of pre-existing contingent liabilities in connection with the spin-offs should result in a material liability to the Company in relation to its consolidated financial position or liquidity, as Realogy and Wyndham each have agreed to assume responsibility for these liabilities. The Company is also named in litigation that is primarily related to the businesses of its former subsidiaries, including Realogy and Wyndham. The Company is entitled to indemnification from such entities for any liability resulting from such litigation.

In February 2017, following state court trials in Georgia, the Company was found liable for damages in two cases brought by plaintiffs who were injured in a vehicle accident allegedly caused by an employee of an independent contractor of the Company who was acting outside of the scope of employment. In fourth quarter 2019, the Company appealed both verdicts resulting in a reversal of the judgments rendered. The Georgia Supreme Court granted the plaintiffs’ application to review the appellate court’s reversal of the judgements entered at the trial court. The Georgia Supreme Court heard oral arguments in December 2020 and on May 3, 2021 issued a decision affirming the appellate court’s judgments. Following the issuance of this decision, plaintiffs have the ability to file a motion for reconsideration. The Company has recognized a liability related to these cases, net of recoverable insurance proceeds, of approximately $12 million.

The Company is currently involved, and in the future may be involved, in claims, legal proceedings, including class actions, and governmental inquiries that are incidental to its vehicle rental and car sharing operations, including, among others, contract and licensee disputes, competition matters, employment and wage-and-hour claims, insurance and liability claims, intellectual property claims, business practice disputes and other regulatory, environmental, commercial and tax matters. Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable resolutions could occur. The Company estimates that the potential exposure resulting from adverse outcomes of current legal proceedings in which it is reasonably possible that a loss may be incurred could, in the aggregate, be up to approximately $40 million in excess of amounts accrued as of
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March 31, 2021. The Company does not believe that the impact should result in a material liability to the Company in relation to its consolidated financial condition or results of operations.

Commitments to Purchase Vehicles

The Company maintains agreements with vehicle manufacturers under which the Company has agreed to purchase approximately $6.4 billion of vehicles from manufacturers over the next 12 months, a $2.3 billion decrease compared to December 31, 2020, financed primarily through the issuance of vehicle-backed debt and cash received upon the disposition of vehicles. Certain of these commitments are subject to the vehicle manufacturers satisfying their obligations under their respective repurchase and guaranteed depreciation agreements.

Concentrations

Concentrations of credit risk at March 31, 2021 include (i) risks related to the Company’s repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers, primarily with respect to receivables for program cars that have been disposed but for which the Company has not yet received payment from the manufacturers and (ii) risks related to Realogy and Wyndham, including receivables of $25 million and $15 million, respectively, related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with their disposition.

13.    Stockholders’ Equity

Share Repurchases

The Company’s Board of Directors has authorized the repurchase of up to $1.8 billion of its common stock under a plan originally approved in 2013 and subsequently expanded, most recently in August 2019. During the first quarter of 2021, the Company has repurchased approximately 0.1 million shares of common stock at a cost of approximately $10 million under the program. As of March 31, 2021, approximately $66 million of authorization remains available to repurchase common stock under this plan.

Share Issuances

On February 10, 2020, the Company announced it had appointed a new Chairman of the Board of Directors and in connection with this appointment, the new Chairman purchased an aggregate $15 million of unregistered shares of the Company’s common stock at a price per share equal to the closing price of the Company’s common stock on February 7, 2020.

Total Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income (loss).

The components of other comprehensive income (loss) were as follows: 
 Three Months Ended 
March 31,
 20212020
Net loss$(170)$(158)
Other comprehensive income (loss):
Currency translation adjustments (net of tax of $(12) and $(4), respectively)
(14)(83)
Net unrealized gain (loss) on cash flow hedges (net of tax of $3 and $6, respectively)
35 (18)
Minimum pension liability adjustment (net of tax of $0 and $0, respectively)
3 2 
24 (99)
Comprehensive loss$(146)$(257)
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__________
Currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) were as follows: 
Currency
Translation
Adjustments
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges(a)
Minimum
Pension
Liability
Adjustment(b)
Accumulated
Other
Comprehensive
Income (Loss)
Balance, January 1, 2021$40 $(51)$(176)$(187)
Other comprehensive income (loss) before reclassifications
(14)32 1 19 
Amounts reclassified from accumulated other comprehensive income (loss)
 3 2 5 
Net current-period other comprehensive income (loss)
(14)35 3 24 
Balance, March 31, 2021$26 $(16)$(173)$(163)
Balance, January 1, 2020$9 $(20)$(146)$(157)
Other comprehensive income (loss) before reclassifications(83)(18)1 (100)
Amounts reclassified from accumulated other comprehensive income (loss)  1 1 
Net current-period other comprehensive income (loss)(83)(