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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 September 30, 2023

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 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 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 36,221,336 shares as of October 31, 2023.


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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 5.
Item 6.


Table of Contents


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,” “forecasts,” “guidance,” 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. These factors include, but are not limited to:

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, resulting from inflation or otherwise, manufacturer recalls, disruption in the supply of new vehicles, including due to labor actions by the United Auto Workers or otherwise, 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;

levels of and volatility in travel demand, including future volatility in airline passenger traffic;

a deterioration in economic conditions, resulting in a recession or otherwise, 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, including the ongoing military conflict between Russia and Ukraine, or civil unrest in the locations in which we operate, and the potential effects of sanctions on the world economy and markets and/or international trade;

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 as a result of COVID-19, inflation, the ongoing military conflicts in the Middle East and Eastern Europe, and any embargoes on oil sales imposed on or by the Russian government;

our ability to continue to successfully implement or achieve our business plans and 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;

the performance of the used-vehicle market from time to time, including our ability to dispose of vehicles in the used-vehicle market on attractive terms;

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

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
1

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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 or 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, licensees, dealers, independent operators and independent contractors, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, compliance with privacy and data protection regulation, and the effects of any potential increase in cyberattacks on the world economy and markets and/or international trade;

any impact on us from the actions of our third-party vendors, licensees, dealers, 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, recent and future interest rate increases, which increase our financing costs, 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;

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 or intangible assets; 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 if future results are materially different from those forecasted or anticipated. 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 in this quarterly report and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2023 (the “2022 Form 10-K”), may cause actual results to differ materially from those projected in any forward-looking statements.

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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.

3

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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 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Revenues$3,564 $3,547 $9,244 $9,223 
Expenses
Operating1,543 1,464 4,325 3,960 
Vehicle depreciation and lease charges, net517 134 1,157 479 
Selling, general and administrative397 384 1,099 1,026 
Vehicle interest, net208 107 513 281 
Non-vehicle related depreciation and amortization55 59 163 168 
Interest expense related to corporate debt, net:
Interest expense80 64 221 181 
Early extinguishment of debt1  1  
Restructuring and other related charges2 2 7 16 
Transaction-related costs, net3  3 1 
Other (income) expense, net1 (9)3 (9)
Total expenses2,807 2,205 7,492 6,103 
Income before income taxes757 1,342 1,752 3,120 
Provision for income taxes130 311 377 788 
Net income627 1,031 1,375 2,332 
Less: net income (loss) attributable to non-controlling interests1 (3)2 (9)
Net income attributable to Avis Budget Group, Inc.
$626 $1,034 $1,373 $2,341 
Comprehensive income attributable to Avis Budget Group, Inc.
$586 $979 $1,344 $2,289 
Earnings per share
Basic$16.96 $22.08 $35.11 $47.34 
Diluted$16.78 $21.67 $34.71 $46.32 









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)

September 30, 
2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents$572 $570 
Receivables, net918 810 
Other current assets736 506 
Total current assets2,226 1,886 
Property and equipment, net647 594 
Operating lease right-of-use assets2,661 2,405 
Deferred income taxes1,472 1,379 
Goodwill1,081 1,070 
Other intangibles, net658 666 
Other non-current assets475 499 
Total assets exclusive of assets under vehicle programs9,220 8,499 
Assets under vehicle programs:
Program cash146 70 
Vehicles, net21,247 15,961 
Receivables from vehicle manufacturers and other519 421 
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party1,172 976 
23,084 17,428 
Total Assets$32,304 $25,927 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other current liabilities$2,733 $2,547 
Short-term debt and current portion of long-term debt30 27 
Total current liabilities2,763 2,574 
Long-term debt4,736 4,644 
Long-term operating lease liabilities2,178 1,884 
Other non-current liabilities520 554 
Total liabilities exclusive of liabilities under vehicle programs10,197 9,656 
Liabilities under vehicle programs:
Debt3,538 2,534 
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party15,115 11,275 
Deferred income taxes3,092 2,754 
Other390 408 
22,135 16,971 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, respectively
  
Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively
1 1 
Additional paid-in capital6,626 6,666 
Retained earnings3,952 2,579 
Accumulated other comprehensive loss(130)(101)
Treasury stock, at cost—100 and 98 shares, respectively
(10,482)(9,848)
Stockholders’ equity attributable to Avis Budget Group, Inc.
(33)(703)
Non-controlling interests5 3 
Total stockholders’ equity(28)(700)
Total Liabilities and Stockholders’ Equity$32,304 $25,927 

See Notes to Consolidated Condensed Financial Statements (Unaudited).
5

Table of Contents

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

 Nine Months Ended 
September 30,
 20232022
Operating activities
Net income$1,375 $2,332 
Adjustments to reconcile net income to net cash provided by operating activities:
Vehicle depreciation1,631 1,232 
Amortization of right-of-use assets824 637 
(Gain) loss on sale of vehicles, net(600)(856)
Non-vehicle related depreciation and amortization163 168 
Stock-based compensation24 19 
Amortization of debt financing fees29 25 
Early extinguishment of debt costs1  
Net change in assets and liabilities:
Receivables(84)(194)
Income taxes and deferred income taxes251 640 
Accounts payable and other current liabilities28 415 
Operating lease liabilities(821)(639)
Other, net214 83 
Net cash provided by operating activities3,035 3,862 
Investing activities
Property and equipment additions(180)(120)
Proceeds received on asset sales1 2 
Net assets acquired (net of cash acquired)(52)(1)
Cash disposed upon deconsolidation of subsidiary (55)
Other, net 22 
Net cash used in investing activities exclusive of vehicle programs(231)(152)
Vehicle programs:
Investment in vehicles(12,609)(7,946)
Proceeds received on disposition of vehicles6,106 4,608 
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party(425)(351)
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party229 265 
(6,699)(3,424)
Net cash used in investing activities(6,930)(3,576)

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Table of Contents

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)

 Nine Months Ended 
September 30,
 20232022
Financing activities
Proceeds from long-term borrowings$439 $729 
Payments on long-term borrowings(343)(17)
Net change in short-term borrowings (1)
Repurchases of common stock(690)(2,574)
Debt financing fees(9)(7)
Contributions from non-controlling interests 40 
Net cash used in financing activities exclusive of vehicle programs(603)(1,830)
Vehicle programs:
Proceeds from borrowings18,214 13,075 
Payments on borrowings(13,594)(11,360)
Debt financing fees(39)(23)
4,581 1,692 
Net cash provided by (used in) financing activities3,978 (138)
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash(4)(53)
Net increase in cash and cash equivalents, program and restricted cash79 95 
Cash and cash equivalents, program and restricted cash, beginning of period642 626 
Cash and cash equivalents, program and restricted cash, end of period$721 $721 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
7

Table of Contents

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Treasury Stock
Stockholders’ Equity Attributable to Avis Budget Group, Inc.
Non-controlling InterestsTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at June 30, 2023137.1 $1 $6,625 $3,326 $(90)(98.0)$(9,991)$(129)$4 $(125)
Comprehensive income (loss):
Net income (loss)— — — 626 — — — 626 1 627 
Other comprehensive income (loss)— — — — (40)— — (40)— (40)
Total comprehensive income (loss)626 (40)586 1 587 
Net activity related to restricted stock units— — 1 — — — — 1 — 1 
Repurchases of common stock (a)
— — — — — (2.2)(491)(491)— (491)
Balance at September 30, 2023137.1 $1 $6,626 $3,952 $(130)(100.2)$(10,482)$(33)$5 $(28)
Balance at June 30, 2022137.1 $1 $6,643 $1,122 $(130)(88.8)$(8,290)$(654)$5 $(649)
Comprehensive income (loss):
Net income (loss)— — — 1,034 — — — 1,034 (3)1,031 
Other comprehensive income (loss)— — — — (55)— — (55)— (55)
Total comprehensive income (loss)1,034 (55)979 (3)976 
Contributions from non-controlling interests— — 40 — — — — 40 — 40 
Net activity related to restricted stock units— — (7)— — — 1 (6)— (6)
Repurchases of common stock(5.3)(868)(868)(868)
Balance at September 30, 2022137.1 $1 $6,676 $2,156 $(185)(94.1)$(9,157)$(509)$2 $(507)

Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Treasury Stock
Stockholders’ Equity Attributable to Avis Budget Group, Inc.
Non-controlling InterestsTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 2022137.1 $1 $6,666 $2,579 $(101)(97.6)$(9,848)$(703)$3 $(700)
Comprehensive income (loss):
Net income (loss)— — — 1,373 — — — 1,373 2 1,375 
Other comprehensive income (loss)— — — — (29)— — (29)— (29)
Total comprehensive income (loss)1,373 (29)1,344 2 1,346 
Net activity related to restricted stock units— — (40)— — 0.3 3 (37)— (37)
Repurchases of common stock (a)
— — — — — (2.9)(637)(637)— (637)
Balance at September 30, 2023137.1 $1 $6,626 $3,952 $(130)(100.2)$(10,482)$(33)$5 $(28)
Balance at December 31, 2021137.1 $1 $6,676 $(185)$(133)(81.2)$(6,579)$(220)$11 $(209)
Comprehensive income (loss):
Net income (loss)— — — 2,341 — — — 2,341 (9)2,332 
Other comprehensive income (loss)— — — — (52)— — (52)— (52)
Total comprehensive income (loss)2,341 (52)2,289 (9)2,280 
Contributions from non-controlling interests— — 40 — — — — 40 — 40 
Net activity related to restricted stock units— — (40)— — 0.3 (2)(42)— (42)
Repurchases of common stock(13.2)(2,576)(2,576)(2,576)
Balance at September 30, 2022137.1 $1 $6,676 $2,156 $(185)(94.1)$(9,157)$(509)$2 $(507)
__________
(a) Amount includes excise taxes due under the Inflation Reduction Act of 2022.
See Notes to Consolidated Condensed Financial Statements (Unaudited).
8


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, “we”, “our”, “us”, or the “Company”), and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting.

We operate 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 we do 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 we do 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 our 2022 acquisitions of various licensees were not material. We consolidate joint venture activities when we have a controlling interest and record non-controlling interests within stockholders’ equity and the statement of comprehensive income equal to the percentage of ownership interest retained in such entities by the respective non-controlling party.

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 our 2022 Annual Report on Form 10-K (the “2022 Form 10-K”).

Summary of Significant Accounting Policies

Our significant accounting policies are fully described in Note 2 – Summary of Significant Accounting Policies in our 2022 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 September 30,
20232022
Cash and cash equivalents$572 $581 
Program cash146 139 
Restricted cash (a)
3 1 
Total cash and cash equivalents, program and restricted cash$721 $721 
________
(a)Included within other current assets.
9



Vehicle Programs. We present separately the financial data of our vehicle programs. These programs are distinct from our 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 our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.

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 primarily 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 our operations, 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. We record 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.

Divestitures. In February 2022, we completed the sale of our operations in the United States Virgin Islands for $13 million, for the right to operate the Avis brand. During the nine months ended September 30, 2022, we recorded a gain of $2 million within restructuring and other related charges.

In March 2022, we completed the sale of our operations in the Netherlands for $15 million, subject to working capital adjustments, for the right to operate the Avis and Budget brands. During the nine months ended September 30, 2022, we recorded a loss of $7 million, net of impact of foreign currency adjustments, within restructuring and other related charges. The Netherlands operations were reported within our International reporting segment.

Variable Interest Entity (“VIE”). We review our investments to determine if they are VIEs. A VIE is an entity in which either (i) the equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. Entities that are determined to be VIEs are consolidated if we are the primary beneficiary of the entity. The primary beneficiary possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. We will reconsider our original assessment of a VIE upon the occurrence of certain events such as contributions and redemptions, either by us, or third parties, or amendments to an entity’s governing documents. On an ongoing basis, we reconsider whether we are deemed to be a VIE’s primary beneficiary. See Note 15 – Related Party Transactions for our VIE investment in our former subsidiary.

Investments. As of September 30, 2023 and December 31, 2022, we had equity method investments with a carrying value of $89 million and $77 million, respectively, which are included in other non-current assets. Earnings from our equity method investments are included within operating expenses. For the three months ended September 30, 2023 and 2022, we recorded $7 million related to our equity method investments in each period. For the nine months ended September 30, 2023 and 2022, we recorded $11 million and $10 million related to our equity method investments, respectively. See Note 15 – Related Party Transactions for our equity method investment in our former subsidiary.

Revenues. Revenues are recognized under “Leases (Topic 842),” with the exception of royalty fee revenue derived from our licensees and revenue related to our customer loyalty program, which were approximately $53 million and $51 million during the three months ended September 30, 2023 and 2022, respectively, and $139 million and $127 million during the nine months ended September 30, 2023 and 2022, respectively.


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The following table presents our revenues disaggregated by geography:
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Americas$2,736 $2,703 $7,180 $7,270 
Europe, Middle East and Africa672 678 1,582 1,527 
Asia and Australasia156 166 482 426 
Total revenues$3,564 $3,547 $9,244 $9,223 

The following table presents our revenues disaggregated by brand:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Avis$2,043 $1,958 $5,206 $4,992 
Budget1,314 1,371 3,471 3,637 
Other207 218 567 594 
Total revenues$3,564 $3,547 $9,244 $9,223 
________
Other includes Zipcar and other operating brands.

Recently Issued Accounting Pronouncements

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which amends Topic 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2021-08 became effective for us on January 1, 2023. The adoption of this accounting pronouncement did not have a material impact on our Consolidated Condensed Financial Statements.

 2.    Leases
Lessor

The following table presents our lease revenues disaggregated by geography:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Americas$2,715 $2,682 $7,120 $7,216 
Europe, Middle East and Africa646 654 1,518 1,468 
Asia and Australasia150 160 467 412 
Total lease revenues$3,511 $3,496 $9,105 $9,096 

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The following table presents our lease revenues disaggregated by brand:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Avis$2,011 $1,926 $5,120 $4,915 
Budget1,298 1,356 3,430 3,598 
Other202 214 555 583 
Total lease revenues$3,511 $3,496 $9,105 $9,096 
_______
Other includes Zipcar and other operating brands.

Lessee

We have operating and finance leases for rental locations, corporate offices, vehicle rental fleet and equipment. Many of our operating leases for rental locations contain concession agreements with various airport authorities that allow us to conduct our 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. Our operating leases for rental locations often also require us to pay or reimburse operating expenses.

The components of lease expense are as follows:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Property leases (a)
Operating lease expense$212 $184 $631 $513 
Variable lease expense136 169 327 423 
Total property lease expense$348 $353 $958 $936 
__________
(a)    Primarily within operating expenses.

Supplemental balance sheet information related to leases is as follows:
As of 
September 30, 2023
As of 
December 31, 2022
Property leases
Operating lease ROU assets$2,661$2,405
Short-term operating lease liabilities (a)
$521$555
Long-term operating lease liabilities2,1781,884
Operating lease liabilities$2,699$2,439
Weighted average remaining lease term8.4 years8.2 years
Weighted average discount rate4.74 %4.30 %
_________
(a)    Included in accounts payable and other current liabilities.

12


Supplemental cash flow information related to leases is as follows:
Nine Months Ended 
September 30,
20232022
Cash payments for lease liabilities within operating activities:
Property operating leases$645 $537 
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:
Property operating leases$914 $508 

 3.    Restructuring and Other Related Charges

During second quarter 2022, we initiated a restructuring plan to focus on consolidating our global operations by designing new processes and implementing new systems (“Cost Optimization”). As of September 30, 2023, we formally communicated the termination of employment to approximately 300 employees as part of this process and terminated approximately 275 of these employees. We expect further restructuring expense of approximately $1 million related to this initiative to be incurred this year.

The following table presents our restructuring liabilities and related activities by reportable segment as it relates to our Cost Optimization plan, which are all personnel related in nature:
AmericasInternationalTotal
Balance as of January 1, 2023$1 $3 $4 
Restructuring expense5 2 7 
Restructuring payments and utilization(5)(3)(8)
Balance as of September 30, 2023$1 $2 $3 

 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 September 30,Nine Months Ended September 30,
2023202220232022
Net income attributable to Avis Budget Group, Inc. for basic and diluted EPS
$626 $1,034 $1,373 $2,341 
Basic weighted average shares outstanding36.9 46.8 39.1 49.5 
Non-vested stock (a)
0.4 0.9 0.4 1.1 
Diluted weighted average shares outstanding37.3 47.7 39.5 50.6 
Earnings per share:
Basic$16.96 $22.08 $35.11 $47.34 
Diluted$16.78 $21.67 $34.71 $46.32 
________
(a)    For the three and nine months ended September 30, 2023, an immaterial amount and 0.1 million non-vested stock awards, respectively, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding. For the three and nine months ended September 30, 2022, 0.1 million non-vested stock awards, in each period, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.

13


 5.    Other Current Assets

Other current assets consisted of:
As of September 30, 2023As of December 31, 2022
Prepaid expenses$300 $252 
Sales and use taxes276 142 
Other160 112 
Other current assets$736 $506 

 6.    Acquisitions

In June 2023, we completed the acquisition of a licensee in North America for approximately $14 million, plus approximately $20 million for acquired fleet. This investment is in-line with our strategy to re-acquire licensees when advantageous to expand our footprint of Company-operated locations. The acquired fleet was financed under our existing financing arrangements. In connection with this acquisition, approximately $14 million was recorded to other intangibles related to franchise agreements. The license agreements are being amortized over a weighted average useful life of approximately five years. The fair value of the assets acquired and liabilities assumed has not yet been finalized and is therefore subject to change.

In September 2023, we completed the acquisition of McNicoll Vehicle Hire, a vehicle rental company in Scotland specializing in van and car rentals, for approximately $17 million, net of acquired cash. The investment enabled the Company to expand its footprint of vehicle rental services in Scotland. The fair value of the assets acquired and liabilities assumed has not yet been finalized and is therefore subject to change.

 7.    Intangible Assets

Intangible assets consisted of:
 As of September 30, 2023As of December 31, 2022
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortized Intangible Assets
License agreements$301 $226 $75 $290 $217 $73 
Customer relationships245 212 33 247 207 40 
Other49 43 6 48 39 9 
Total$595 $481 $114 $585 $463 $122 
Unamortized Intangible Assets
Goodwill$1,081 $1,070 
Trademarks$544 $544 

For the three months ended September 30, 2023 and 2022, amortization expense related to amortizable intangible assets was approximately $6 million and $9 million, respectively. For the nine months ended September 30, 2023 and 2022, amortization expense related to amortizable intangible assets was approximately $20 million and $35 million, respectively. Based on our amortizable intangible assets at September 30, 2023, we expect amortization expense of approximately $7 million for the remainder of 2023, $25 million for 2024, $19 million for 2025, $17 million for 2026, $14 million for 2027 and $10 million for 2028, excluding effects of currency exchange rates.

14


 8.    Vehicle Rental Activities

The components of vehicles, net within assets under vehicle programs are as follows: 
As ofAs of
September 30,December 31,
20232022
Rental vehicles$23,168 $17,819 
Less: Accumulated depreciation(2,510)(2,211)
20,658 15,608 
Vehicles held for sale563 317 
Vehicles, net investment in lease (a)
26 36 
Vehicles, net$21,247 $15,961 
________
(a)    See Note 15 – Related Party Transactions.

The components of vehicle depreciation and lease charges, net are summarized below: 
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2023202220232022
Depreciation expense$614 $455 $1,631 $1,232 
Lease charges48 38 126 103 
(Gain) loss on sale of vehicles, net (145)(359)(600)(856)
Vehicle depreciation and lease charges, net$517 $134 $1,157 $479 

At September 30, 2023 and 2022, we had payables related to vehicle purchases included in liabilities under vehicle programs - other of $206 million and $154 million, respectively, and receivables related to vehicle sales included in assets under vehicle programs - receivables from vehicle manufacturers and other of $252 million and $225 million, respectively.

 9.    Income Taxes

Our effective tax rate for the nine months ended September 30, 2023 was a provision of 21.5%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes, partially offset by the effect of certain tax credits and favorable adjustments related to stock-based compensation.

Our effective tax rate for the nine months ended September 30, 2022 was a provision of 25.3%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes.

15


 10.    Accounts Payable and Other Current Liabilities

Accounts payable and other current liabilities consisted of:
As ofAs of
September 30,December 31,
20232022
Accounts payable$514 $466 
Short-term operating lease liabilities521 555 
Accrued sales and use taxes329 246 
Accrued advertising and marketing285 268 
Deferred lease revenues - current228 188 
Accrued payroll and related201 205 
Public liability and property damage insurance liabilities – current176 174 
Other479 445 
Accounts payable and other current liabilities$2,733 $2,547 

 11.    Long-term Corporate Debt and Borrowing Arrangements

Long-term corporate debt and borrowing arrangements consisted of:
As ofAs of
Maturity
Date
September 30,December 31,
20232022
4.125% euro-denominated Senior Notes
November 2024$ $321 
4.500% euro-denominated Senior Notes
May 2025264 268 
4.750% euro-denominated Senior Notes
January 2026370 375 
5.750% Senior Notes
July 2027735 732 
4.750% Senior Notes
April 2028500 500 
5.375% Senior Notes
March 2029600 600 
7.250% euro-denominated Senior Notes
July 2030423  
Floating Rate Term Loan (a)
August 20271,167 1,176 
Floating Rate Term Loan (b)
March 2029722 725 
Other (c)
28 18 
Deferred financing fees(43)(44)
Total4,766 4,671 
Less: Short-term debt and current portion of long-term debt30 27 
Long-term debt$4,736 $4,644 
__________
(a)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of September 30, 2023, the floating rate term loan due 2027 bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 175 basis points, for an aggregate rate of 7.18%. We have entered into a swap to hedge $750 million of interest rate exposure related to the floating rate term loan at an aggregate rate of 3.26%.
(b)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of September 30, 2023, the floating rate term loan due 2029 bears interest at one-month SOFR plus 350 basis points for an aggregate rate of 8.92%.
(c)Primarily includes finance leases, which are secured by liens on the related assets.

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In July 2023, we issued €400 million of 7.25% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually. In September 2023, we used net proceeds from the offering primarily to redeem €300 million of our outstanding 4.125% euro-denominated Senior Notes due November 2024 plus accrued interest.

Committed Credit Facilities and Available Funding Arrangements

As of September 30, 2023, the committed corporate credit facilities available to us and/or our subsidiaries were as follows: 
Total
Capacity
Outstanding
Borrowings
Letters of Credit IssuedAvailable
Capacity
Senior revolving credit facility maturing 2026 (a)
$2,000 $ $1,536 $464 
__________
(a)The senior revolving credit facility bears interest at one-month SOFR plus 175 basis points and is part of our 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 of our subsidiaries, liens on substantially all of our intellectual property and certain other real and personal property.

Debt Covenants

The agreements governing our indebtedness contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries, the incurrence of additional indebtedness and/or liens by us and certain of our subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback transactions. Our senior credit facility also contains a maximum leverage ratio requirement. As of September 30, 2023, we were in compliance with the financial covenants governing our indebtedness.

 12.    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
September 30,December 31,
20232022
Americas - Debt due to Avis Budget Rental Car Funding$15,182 $11,322 
Americas - Debt borrowings 889 598 
International - Debt borrowings 2,385 1,700 
International - Finance leases 184 176 
Other86 65 
Deferred financing fees (a)
(73)(52)
Total$18,653 $13,809 
__________
(a)Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of September 30, 2023 and December 31, 2022 were $67 million and $47 million, respectively.

In January 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $500 million and $350 million of asset-backed notes to investors with an expected final payment date of April 2028 and October 2026, respectively, and a weighted average interest rate of 5.36% and 5.31%, respectively.

In April 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $450 million and $550 million of asset-backed notes to investors with an expected final payment date of February 2027 and June 2028, respectively, and a weighted average interest rate of 5.67% and 5.76%, respectively.

In June 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $476 million and $526 million of asset-backed notes to investors with an expected final payment date of April 2027 and December 2028, respectively, and a weighted average interest rate of 5.91% and 5.98%, respectively.

In September 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $300 million and
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$700 million of asset-backed notes to investors with an expected final payment date of August 2027 and February 2029, respectively, and a weighted average interest rate of 6.09% and 6.21%, respectively.

Debt Maturities

The following table provides the contractual maturities of our debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding, at September 30, 2023:
 
Debt under Vehicle Programs (a)
Within 1 year (b)
$4,343 
Between 1 and 2 years (c)
5,646 
Between 2 and 3 years
2,924 
Between 3 and 4 years
2,794 
Between 4 and 5 years (d)
1,939 
Thereafter1,080 
Total$18,726 
__________
(a)    Vehicle-backed debt primarily represents asset-backed securities.
(b)    Includes $2.7 billion of bank and bank-sponsored facilities.
(c)    Includes $3.7 billion of bank and bank-sponsored facilities.
(d)    Includes $0.1 billion of bank and bank-sponsored facilities.

Committed Credit Facilities and Available Funding Arrangements

As of September 30, 2023, available funding under our debt arrangements related to our 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$15,896 $15,182 $714 
Americas - Debt borrowings940 889 51 
International - Debt borrowings2,625 2,385 240 
International - Finance leases249 184 65 
Other86 86  
Total$19,796 $18,726 $1,070 
__________
(a)    Capacity is subject to maintaining sufficient assets to collateralize debt. The total capacity for Americas - Debt due to Avis Budget Rental Car Funding includes increases from an amendment and renewal of our asset-backed variable-funding financing facilities during March 2023 and was subsequently amended during July 2023.
(b)    The outstanding debt is collateralized by vehicles and related assets of $17.5 billion for Americas - Debt due to Avis Budget Rental Car Funding; $1.4 billion for Americas - Debt borrowings; $3.1 billion for International - Debt borrowings; and $0.2 billion for International - Finance leases.

Debt Covenants

The agreements under our vehicle-backed funding programs contain restrictive covenants, including restrictions on dividends paid to us by certain of our 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 September 30, 2023, we are not aware of any instances of non-compliance with any of the financial or restrictive covenants contained in the debt agreements under our vehicle-backed funding programs.

 13.    Commitments and Contingencies

Contingencies

In 2006, we completed the spin-offs of our Realogy and Wyndham subsidiaries (now known as Anywhere
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Real Estate, Inc., and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co., respectively). We do 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 us in relation to our consolidated financial position or liquidity, as Anywhere Real Estate, Inc., Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have agreed to assume responsibility for these liabilities.

In March 2023, the California Office of Tax Appeals (“OTA”) issued an opinion in a case involving notices of proposed assessment of California corporation franchise tax for tax year 1999 issued to us. The case involves whether (i) the notices of proposed assessment were barred by the statute of limitations; and (ii) a transaction undertaken by us in tax year 1999 constituted a tax-free reorganization under the Internal Revenue Code (“IRC”). The OTA concluded that the notices of proposed assessment were not barred by the statute of limitations and that the 1999 transaction was not a tax-free reorganization under the IRC. Anywhere Real Estate, Inc. has assumed 62.5%, and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have assumed 37.5% of the potential tax liability in this matter, respectively. We have filed a petition for rehearing and intend to vigorously pursue this matter.

We are also named in litigation that is primarily related to the businesses of our former subsidiaries, including Realogy and Wyndham. We are entitled to indemnification from such entities for any liability resulting from such litigation.

In September 2014, Dawn Valli et al. v. Avis Budget Group Inc., et al. was filed in U.S. District Court for the District of New Jersey. The plaintiffs seek to represent a purported nationwide class of certain renters of vehicles from our Avis and Budget subsidiaries from September 30, 2008 through the present. The plaintiffs seek damages in connection with claims relating to alleged misrepresentations and omissions concerning charging customers for traffic infractions and related administrative fees. On October 10, 2023, plaintiffs’ motion for class certification was denied as to their proposed nationwide class and granted as to a subclass, created at the Court’s discretion, of Avis Preferred and Budget Fastbreak members. On October 24, 2023, we filed an appeal with the U.S. Court of Appeals for the Third Circuit. We have been named as a defendant in other purported consumer class action lawsuits, including two class actions filed against us in New Jersey, one seeking damages in connection with a breach of contract claim and another related to ancillary charges at our Payless subsidiary.

We are currently involved, and in the future may be involved, in claims and/or legal proceedings, including class actions, and governmental inquiries that are incidental to our 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 we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable resolutions could occur. We estimate 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 $35 million in excess of amounts accrued as of September 30, 2023. We do not believe that the impact should result in a material liability to us in relation to our consolidated financial condition or results of operations.

Commitments to Purchase Vehicles

We maintain agreements with vehicle manufacturers under which we have agreed to purchase approximately $6.3 billion of vehicles from manufacturers over the next 12 months, a $0.4 billion decrease compared to December 31, 2022, 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.

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Concentrations

Concentrations of credit risk as of September 30, 2023 include (i) risks related to our repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers and primarily with respect to receivables for program cars that have been disposed but for which we have not yet received payment from the manufacturers and (ii) risks related to Realogy and Wyndham, including receivables of $37 million and $22 million, respectively, related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with their disposition.

 14.    Stockholders' Equity

Share Repurchases

Our Board of Directors has authorized the repurchase of up to $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in February 2023 (the “Stock Repurchase Program”). During the nine months ended September 30, 2023, we repurchased approximately 2.9 million shares of common stock at a cost of approximately $633 million (excluding excise taxes due under the Inflation Reduction Act of 2022) under the program. As of September 30, 2023, approximately $1.1 billion of authorization remains available to repurchase common stock under the program.

Total Comprehensive Income (Loss)

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

The components of other comprehensive income (loss) were as follows: 
 Three Months Ended 
September 30,
Nine Months Ended
September 30,
 2023202220232022
Net income$627 $1,031 $1,375 $2,332 
Less: net income (loss) attributable to non-controlling interests1 (3)2 (9)
Net income attributable to Avis Budget Group, Inc.
626 1,034 1,373 2,341 
Other comprehensive income (loss):
Currency translation adjustments (net of tax of $(8), $(16), $(3) and $(33), respectively)
(43)(78)(41)(121)
Net unrealized gain (loss) on cash flow hedges (net of tax of $(1), $(8), $(3) and $(23), respectively)
2 22 9 65 
Minimum pension liability adjustment (net of tax of $(1), $0, $(1), $0, respectively)
1 1 3 4 
(40)(55)(29)(52)
Comprehensive income attributable to Avis Budget Group, Inc.
$586 $979 $1,344 $2,289 
__________
Currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries.

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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, 2023$(30)$45 $(116)$(101)
Other comprehensive income (loss) before reclassifications(41)17  (24)
Amounts reclassified from accumulated other comprehensive income (loss) (8)3 (5)
Net current-period other comprehensive income (loss)(41)9 3 (29)
Balance, September 30, 2023
$(71)$54 $(113)$(130)
Balance, January 1, 2022$16 $(19)$(130)$(133)
Other comprehensive income (loss) before reclassifications(121)57 1 (63)
Amounts reclassified from accumulated other comprehensive income (loss) 8 3 11 
Net current-period other comprehensive income (loss)(121)65 4 (52)
Balance, September 30, 2022
$(105)$46 $(126)$(185)
__________
All components of accumulated other comprehensive income (loss) are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries and include $123 million gain, net of tax, as of September 30, 2023 related to our hedge of our investment in euro-denominated foreign operations (see Note 17 – Financial Instruments).
(a)For the three months ended September 30, 2023 and 2022, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were gains of $2 million ($2 million, net of tax) and losses of $1 million ($1 million, net of tax), respectively. For the nine months ended September 30, 2023 and 2022, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were gains of $10 million ($8 million, net of tax) and losses of $10 million ($8 million, net of tax), respectively.
(b)For the three months ended September 30, 2023 and 2022, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were losses of $1 million ($1 million, net of tax) and losses of $1 million ($1 million, net of tax), respectively. For the nine months ended September 30, 2023 and 2022, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were losses of $4 million ($3 million, net of tax) and losses of $4 million ($3 million, net of tax), respectively.

 15.    Related Party Transactions

SRS Mobility Ventures, LLC

In 2021, SRS Mobility Ventures, LLC acquired a 33 1/3% Class A Membership Interest in one of our subsidiaries at fair value of $37.5 million. SRS Mobility Ventures, LLC is an affiliate of our largest shareholder, SRS Investment Management, LLC.

On September 1, 2022, through the issuance of Class B Preferred Voting Membership Interests, SRS Mobility Ventures, LLC increased their ownership in this subsidiary to 51% at a fair value of $62 million. As a result, we deconsolidated our former subsidiary, Avis Mobility Ventures LLC (“AMV”), from our financial statements and began reporting our proportional share of the former subsidiary’s income or loss within other (income) expense, net in our Consolidated Condensed Statements of Comprehensive Income as we no longer have the ability to direct the significant activities of the former subsidiary and are therefore no longer primary beneficiary of the VIE. In August 2023, SRS made a capital contribution to AMV, increasing their ownership to approximately 60%.

In accordance with ASC Topic 810-10-40, we must deconsolidate a subsidiary as of the date we cease to have a controlling interest in that subsidiary and recognize the gain or loss in net income at that time. The fair value of our retained investment was determined utilizing a discounted cash flow methodology based on various assumptions, including projections of future cash flows, which include forecast of future revenue and EBITDA. Upon deconsolidation, our former subsidiary had a net asset carrying amount of $49 million resulting in a gain of $10 million.