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 JuneSeptember 30, 2002
COMMISSION FILE NUMBER: 1-13315
AVIS GROUP HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE (State or other jurisdiction of incorporation or organization) | 11-3347585 (I.R.S. Employer Identification No.) | |
6 SYLVAN WAY PARSIPPANY, NJ (Address of principal executive offices) | 07054 (Zip Code) |
(973) 496-3500
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed in Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements, for the past 90 days: Yes o No ý
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the Registrant's common stock was 5,537 shares as of JulyOctober 31, 2002.
Avis Group Holdings, Inc. meets the conditions set forth in General Instructions H (1) (a) and (b) to Form 10-Q and is therefore filing this form with the reduced disclosure format.
Avis Group Holdings, Inc. and Subsidiaries
| | Page | ||
---|---|---|---|---|
PART I | Financial Information | |||
Item 1. | Financial Statements | |||
Independent Accountants' Report | 1 | |||
Consolidated Condensed Statements of Operations for the three months ended | 2 | |||
Consolidated Condensed Statements of Operations for the | 3 | |||
Consolidated Condensed Balance Sheets as of | 4 | |||
Consolidated Condensed Statements of Cash Flows for the | 5 | |||
Notes to the Consolidated Condensed Financial Statements | 7 | |||
Item 2. | Management's Narrative Analysis of the Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosure about Market Risks | |||
Item 4. | Controls and Procedures | 27 | ||
PART II | Other Information | |||
Item 6. | Exhibits and Report on Form 8-K | |||
Signatures | ||||
Certifications | 30 |
Item 1. Financial Statements
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholder of
Avis Group Holdings, Inc.
Parsippany, New Jersey
We have reviewed the accompanying consolidated condensed balance sheet of Avis Group Holdings, Inc. and subsidiaries (successor to Avis Rent A Car System, Inc. and subsidiaries, Avis Fleet Leasing and Management Corp., and subsidiaries and Reserve Claims Management Co., collectively the "Predecessor Companies") (collectively referred to as the "Company") as of JuneSeptember 30, 2002, and the related consolidated condensed statements of operations and cash flows for the three and sixnine month period ended JuneSeptember 30, 2002, the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001, and as to the Predecessor Companies for the period January 1, 2001 to February 28, 2001 and the related consolidated condensed statement of cash flows for the nine month period ended September 30, 2002, the period March 1, 2001 (Date of Acquisition) to September 30, 2001, and as to the Predecessor Companies for the period January 1, 2001 to February 28, 2001. These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to such consolidated condensed financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of December 31, 2001, and the related consolidated statements of operations, common stockholders' equity, and cash flows for the period March 1, 2001 (Date of Acquisition) to December 31, 2001 and as to the Predecessor Companies, the consolidated related statements of operations, common stockholders' equity and cash flows for the period January 1, 2001 to February 28, 2001 (not presented herein); and in our report dated January 23, 2002, we expressed an unqualified opinion (and included an explanatory paragraph relating to a change in accounting for derivative instruments and hedging activities) on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 2001 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLPAugust 12,November 1, 2002
New York, New York
1
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands)
| | Three Months Ended June 30, 2002 | Three Months Ended June 30, 2001 | | Three Months Ended September 30, 2002 | Three Months Ended September 30, 2001 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | Revenues | $ | 650,631 | $ | 628,893 | Revenues | $ | 710,556 | $ | 650,368 | |||||
Expenses | Expenses | Expenses | |||||||||||||
Operating, net | 256,366 | 232,168 | Operating, net | 279,231 | 239,123 | ||||||||||
Vehicle depreciation and lease charges, net | 161,401 | 170,982 | Vehicle depreciation and lease charges, net | 178,099 | 191,592 | ||||||||||
Selling, general and administrative | 121,929 | 116,540 | Selling, general and administrative | 116,666 | 122,094 | ||||||||||
Vehicle interest, net | 51,339 | 55,899 | Vehicle interest, net | 54,241 | 57,948 | ||||||||||
Non-vehicle interest, net | 10,823 | 14,577 | Non-vehicle interest, net | 10,788 | 12,492 | ||||||||||
Non-vehicle depreciation and amortization | 9,445 | 15,075 | Non-vehicle depreciation and amortization | 9,789 | 15,836 | ||||||||||
Unusual charges | — | 60,062 | |||||||||||||
Total expenses | Total expenses | 611,303 | 605,241 | Total expenses | 648,814 | 699,147 | |||||||||
Income before income taxes | 39,328 | 23,652 | |||||||||||||
Provision for income taxes | 16,518 | 13,753 | |||||||||||||
Income (loss) before income taxes | Income (loss) before income taxes | 61,742 | (48,779 | ) | |||||||||||
Provision (benefit) for income taxes | Provision (benefit) for income taxes | 25,931 | (24,033 | ) | |||||||||||
Net income | $ | 22,810 | $ | 9,899 | |||||||||||
Income (loss) before extraordinary gains | Income (loss) before extraordinary gains | 35,811 | (24,746 | ) | |||||||||||
Extraordinary gains, net of tax | Extraordinary gains, net of tax | 274 | — | ||||||||||||
Net income (loss) | Net income (loss) | $ | 36,085 | $ | (24,746 | ) | |||||||||
See Notes to Consolidated Condensed Financial Statements.
2
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands)
| | | | Predecessor Companies | | | | Predecessor Companies | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | March 1, 2001 (Date of Acquisition) to June 30, 2001 | | | March 1, 2001 (Date of Acquisition) to September 30, 2001 | ||||||||||||||||
| | Six Months Ended June 30, 2002 | Two Months Ended February 28, 2001 | | Nine Months Ended September 30, 2002 | Two Months Ended February 28, 2001 | ||||||||||||||||
Revenues | Revenues | $ | 1,215,234 | $ | 846,889 | $ | 385,821 | Revenues | $ | 1,925,790 | $ | 1,497,258 | $ | 385,821 | ||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||
Operating, net | 759,632 | 550,101 | 174,087 | |||||||||||||||||||
Operating, net | 480,401 | 310,979 | 174,087 | Vehicle depreciation and lease charges, net | 499,350 | 416,765 | 110,117 | |||||||||||||||
Vehicle depreciation and lease charges, net | 321,251 | 225,172 | 110,117 | Selling, general and administrative | 353,526 | 276,213 | 83,229 | |||||||||||||||
Selling, general and administrative | 236,860 | 154,115 | 83,229 | Vehicle interest, net | 156,227 | 134,392 | 43,625 | |||||||||||||||
Vehicle interest, net | 101,986 | 76,446 | 43,625 | Non-vehicle interest, net | 32,406 | 32,155 | 9,167 | |||||||||||||||
Non-vehicle interest, net | 21,618 | 19,663 | 9,167 | Non-vehicle depreciation and amortization | 27,732 | 36,104 | 7,833 | |||||||||||||||
Non-vehicle depreciation and amortization | 17,943 | 20,268 | 7,833 | Unusual charges | — | 60,062 | — | |||||||||||||||
Total expenses | Total expenses | 1,180,059 | 806,643 | 428,058 | Total expenses | 1,828,873 | 1,505,792 | 428,058 | ||||||||||||||
Income (loss) before income taxes | Income (loss) before income taxes | 35,175 | 40,246 | (42,237 | ) | Income (loss) before income taxes | 96,917 | (8,534 | ) | (42,237 | ) | |||||||||||
Provision (benefit) for income taxes | Provision (benefit) for income taxes | 14,774 | 21,652 | (15,783 | ) | Provision (benefit) for income taxes | 40,705 | (2,381 | ) | (15,783 | ) | |||||||||||
Income (loss) from continuing operations | Income (loss) from continuing operations | 20,401 | 18,594 | (26,454 | ) | Income (loss) from continuing operations | 56,212 | (6,153 | ) | (26,454 | ) | |||||||||||
Income from discontinued operations, net of tax | Income from discontinued operations, net of tax | — | — | 4,947 | Income from discontinued operations, net of tax | — | — | 4,947 | ||||||||||||||
Income (loss) before extraordinary gains and cumulative effect of accounting change | Income (loss) before extraordinary gains and cumulative effect of accounting change | 56,212 | (6,153 | ) | (21,507 | ) | ||||||||||||||||
Extraordinary gains, net of tax | Extraordinary gains, net of tax | 274 | — | — | ||||||||||||||||||
Income (loss) before cumulative effect of accounting change | Income (loss) before cumulative effect of accounting change | 20,401 | 18,594 | (21,507 | ) | Income (loss) before cumulative effect of accounting change | 56,486 | (6,153 | ) | (21,507 | ) | |||||||||||
Cumulative effect of accounting change, net of tax | Cumulative effect of accounting change, net of tax | — | — | (7,612 | ) | Cumulative effect of accounting change, net of tax | — | — | (7,612 | ) | ||||||||||||
Net income (loss) | Net income (loss) | $ | 20,401 | $ | 18,594 | $ | (29,119 | ) | Net income (loss) | $ | 56,486 | $ | (6,153 | ) | $ | (29,119 | ) | |||||
See Notes to Consolidated Condensed Financial Statements.
3
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)
| | June 30, 2002 | December 31, 2001 | | September 30, 2002 | December 31, 2001 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ASSETS | ASSETS | ||||||||||||||
Cash and cash equivalents | $ | 40,669 | $ | 13,311 | Cash and cash equivalents | $ | 19,165 | $ | 13,311 | |||||||
Receivables, net | 165,755 | 168,372 | Receivables, net | 174,402 | 168,372 | |||||||||||
Prepaid expenses | 40,966 | 42,543 | Prepaid expenses | 47,375 | 42,543 | |||||||||||
Deferred income taxes | 556,148 | 548,087 | Deferred income taxes | 556,140 | 548,087 | |||||||||||
Property and equipment, net | 256,217 | 245,276 | Property and equipment, net | 252,767 | 245,276 | |||||||||||
Goodwill, net | 1,254,909 | 1,271,192 | Goodwill, net | 1,252,047 | 1,271,192 | |||||||||||
Other assets | 145,054 | 146,608 | Other assets | 159,876 | 146,608 | |||||||||||
Total assets exclusive of assets under management programs | Total assets exclusive of assets under management programs | 2,459,718 | 2,435,389 | Total assets exclusive of assets under management programs | 2,461,772 | 2,435,389 | ||||||||||
Assets under management programs: | Assets under management programs: | Assets under management programs: | ||||||||||||||
Restricted cash | 9,306 | 581,187 | Restricted cash | 255,252 | 581,187 | |||||||||||
Vehicles, net | 4,226,575 | 3,428,893 | Vehicles, net | 3,949,345 | 3,428,893 | |||||||||||
Due from vehicle manufacturers | 64,492 | 92,614 | Due from vehicle manufacturers | 242,955 | 92,614 | |||||||||||
4,300,373 | 4,102,694 | 4,447,552 | 4,102,694 | |||||||||||||
Total assets | Total assets | $ | 6,760,091 | $ | 6,538,083 | Total assets | $ | 6,909,324 | $ | 6,538,083 | ||||||
LIABILITIES AND STOCKHOLDER'S EQUITY | LIABILITIES AND STOCKHOLDER'S EQUITY | LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||||||||
Liabilities: | Liabilities: | Liabilities: | ||||||||||||||
Accounts payable | $ | 245,132 | $ | 363,891 | Accounts payable | $ | 226,641 | $ | 363,891 | |||||||
Accrued liabilities | 447,341 | 434,665 | Accrued liabilities | 433,149 | 434,665 | |||||||||||
Due to Cendant Corporation and affiliates, net | 514,007 | 514,433 | Due to Cendant Corporation and affiliates, net | 538,173 | 514,433 | |||||||||||
Non-vehicle debt | 575,856 | 588,259 | Non-vehicle debt | 558,334 | 588,259 | |||||||||||
Public liability, property damage and other insurance liabilities | 215,877 | 228,503 | Public liability, property damage and other insurance liabilities | 220,857 | 228,503 | |||||||||||
Total liabilities exclusive of liabilities under management programs | Total liabilities exclusive of liabilities under management programs | 1,998,213 | 2,129,751 | Total liabilities exclusive of liabilities under management programs | 1,977,154 | 2,129,751 | ||||||||||
Liabilities under management programs: | Liabilities under management programs: | Liabilities under management programs: | ||||||||||||||
Vehicle debt | 4,115,860 | 3,771,341 | Vehicle debt | 4,263,568 | 3,771,341 | |||||||||||
Deferred income taxes | 307,296 | 315,905 | Deferred income taxes | 306,222 | 315,905 | |||||||||||
4,423,156 | 4,087,246 | 4,569,790 | 4,087,246 | |||||||||||||
Commitments and contingencies (Note 6) | ||||||||||||||||
Commitments and contingencies (Note 8) | Commitments and contingencies (Note 8) | |||||||||||||||
Stockholder's equity: | Stockholder's equity: | Stockholder's equity: | ||||||||||||||
Common stock, $.01 par value—authorized 10,000 shares; issued 5,537 shares | — | — | Common stock, $.01 par value—authorized 10,000 shares; issued 5,537 shares | — | — | |||||||||||
Additional paid-in-capital | 168,832 | 168,832 | Additional paid-in-capital | 168,832 | 168,832 | |||||||||||
Retained earnings | 209,707 | 189,306 | Retained earnings | 245,792 | 189,306 | |||||||||||
Accumulated other comprehensive loss | (39,817 | ) | (37,052 | ) | Accumulated other comprehensive loss | (52,244 | ) | (37,052 | ) | |||||||
Total stockholder's equity | Total stockholder's equity | 338,722 | 321,086 | Total stockholder's equity | 362,380 | 321,086 | ||||||||||
Total liabilities and stockholder's equity | Total liabilities and stockholder's equity | $ | 6,760,091 | $ | 6,538,083 | Total liabilities and stockholder's equity | $ | 6,909,324 | $ | 6,538,083 | ||||||
See Notes to Consolidated Condensed Financial Statements.
4
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | Predecessor Companies | | | | Predecessor Companies | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | March 1, 2001 (Date of Acquisition) to June 30, 2001 | | | March 1, 2001 (Date of Acquisition) to September 30, 2001 | |||||||||||||||||||
| | Six Months Ended June 30, 2002 | Two Months Ended February 28, 2001 | | Nine Months Ended September 30, 2002 | Two Months Ended February 28, 2001 | |||||||||||||||||||
Operating Activities | Operating Activities | Operating Activities | |||||||||||||||||||||||
Net income (loss) | Net income (loss) | $ | 20,401 | $ | 18,594 | $ | (29,119 | ) | Net income (loss) | $ | 56,486 | $ | (6,153 | ) | $ | (29,119 | ) | ||||||||
Adjustments to arrive at income (loss) from continuing operations | Adjustments to arrive at income (loss) from continuing operations | — | — | 2,665 | Adjustments to arrive at income (loss) from continuing operations | (274 | ) | — | 2,665 | ||||||||||||||||
Income (loss) from continuing operations | Income (loss) from continuing operations | 20,401 | 18,594 | (26,454 | ) | Income (loss) from continuing operations | 56,212 | (6,153 | ) | (26,454 | ) | ||||||||||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: | |||||||||||||||||||||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | ||||||||||||||||||||||||
Non-vehicle depreciation and amortization | 17,943 | 20,268 | 7,833 | Non-vehicle depreciation and amortization | 27,732 | 36,104 | 7,833 | ||||||||||||||||||
Net change in operating assets and liabilities, excluding the impact of acquisitions and dispositions: | Net change in operating assets and liabilities, excluding the impact of acquisitions and dispositions: | ||||||||||||||||||||||||
Receivables | (12,664 | ) | (12,108 | ) | 10,108 | Receivables | 2,480 | 6,887 | 10,108 | ||||||||||||||||
Accounts payable | (9,766 | ) | (12,531 | ) | (30,518 | ) | Accounts payable | 34,901 | 72,632 | (30,518 | ) | ||||||||||||||
Accrued liabilities | 848 | (3,789 | ) | 1,486 | Accrued liabilities | (14,821 | ) | 114,432 | 1,486 | ||||||||||||||||
Other, net | (10,935 | ) | (4,082 | ) | (30,923 | ) | Other, net | (13,333 | ) | (30,273 | ) | (30,923 | ) | ||||||||||||
Net cash provided by (used in) operating activities exclusive of management programs | Net cash provided by (used in) operating activities exclusive of management programs | 5,827 | 6,352 | (68,468 | ) | Net cash provided by (used in) operating activities exclusive of management programs | 93,171 | 193,629 | (68,468 | ) | |||||||||||||||
Management programs: | Management programs: | Management programs: | |||||||||||||||||||||||
Vehicle depreciation | 312,221 | 211,602 | 104,336 | Vehicle depreciation | 478,918 | 390,720 | 104,336 | ||||||||||||||||||
Net cash provided by operating activities | Net cash provided by operating activities | 318,048 | 217,954 | 35,868 | Net cash provided by operating activities | 572,089 | 584,349 | 35,868 | |||||||||||||||||
Investing Activities | Investing Activities | Investing Activities | |||||||||||||||||||||||
Property and equipment additions | Property and equipment additions | (24,807 | ) | (25,658 | ) | (5,821 | ) | Property and equipment additions | (38,243 | ) | (33,496 | ) | (5,821 | ) | |||||||||||
Retirements of property and equipment | Retirements of property and equipment | 778 | 8,375 | 433 | Retirements of property and equipment | 3,777 | 15,484 | 433 | |||||||||||||||||
Payment for purchase of rental car franchise licensees | Payment for purchase of rental car franchise licensees | (3,087 | ) | (19,047 | ) | — | Payment for purchase of rental car franchise licensees | (3,099 | ) | (28,261 | ) | — | |||||||||||||
Net cash used in investing activities exclusive of management programs | Net cash used in investing activities exclusive of management programs | (27,116 | ) | (36,330 | ) | (5,388 | ) | Net cash used in investing activities exclusive of management programs | (37,565 | ) | (46,273 | ) | (5,388 | ) | |||||||||||
Management programs: | Management programs: | Management programs: | |||||||||||||||||||||||
Decrease in restricted cash | 571,881 | 5,208 | 10,978 | Decrease (increase) in restricted cash | 325,935 | (36,855 | ) | 10,978 | |||||||||||||||||
Decrease in due from vehicle manufacturers | 29,348 | 131,813 | 16,368 | (Increase) decrease in due from vehicle manufacturers | (150,084 | ) | (284,433 | ) | 16,368 | ||||||||||||||||
Investment in vehicles | (2,684,823 | ) | (1,900,052 | ) | (940,559 | ) | Investment in vehicles | (4,388,332 | ) | (3,396,879 | ) | (940,559 | ) | ||||||||||||
Payments received on investment in vehicles | 1,472,033 | 1,412,819 | 812,647 | Payments received on investment in vehicles | 3,209,581 | 3,044,736 | 812,647 | ||||||||||||||||||
(611,561 | ) | (350,212 | ) | (100,566 | ) | (1,002,900 | ) | (673,431 | ) | (100,566 | ) | ||||||||||||||
Net cash used in investing activities | Net cash used in investing activities | (638,677 | ) | (386,542 | ) | (105,954 | ) | Net cash used in investing activities | (1,040,465 | ) | (719,704 | ) | (105,954 | ) | |||||||||||
5
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
| | | | Predecessor Companies | | | | Predecessor Companies | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | March 1, 2001 (Date of Acquisition) to June 30, 2001 | | | March 1, 2001 (Date of Acquisition) to September 30, 2001 | ||||||||||||||||
| | Six Months Ended June 30, 2002 | Two Months Ended February 28, 2001 | | Nine Months Ended September 30, 2002 | Two Months Ended February 28, 2001 | ||||||||||||||||
Financing Activities | Financing Activities | Financing Activities | ||||||||||||||||||||
Proceeds from borrowings | Proceeds from borrowings | — | 140,000 | — | Proceeds from borrowings | — | 140,000 | — | ||||||||||||||
Principal payments on borrowings | Principal payments on borrowings | (253 | ) | (457,806 | ) | (77 | ) | Principal payments on borrowings | (11,270 | ) | (457,928 | ) | (77 | ) | ||||||||
Increase (decrease) in due to Cendant Corporation and affiliates, net | Increase (decrease) in due to Cendant Corporation and affiliates, net | (2,667 | ) | 316,882 | (45,818 | ) | Increase (decrease) in due to Cendant Corporation and affiliates, net | 20,942 | 224,390 | (45,818 | ) | |||||||||||
Capital contribution from Cendant | Capital contribution from Cendant | — | 125,000 | — | ||||||||||||||||||
Payments for debt issuance costs | Payments for debt issuance costs | (131 | ) | (4,231 | ) | (12 | ) | Payments for debt issuance costs | (5,369 | ) | (4,593 | ) | (12 | ) | ||||||||
Issuances of common stock | Issuances of common stock | — | — | 140 | Issuances of common stock | — | — | 140 | ||||||||||||||
Net cash used in financing activities exclusive of management programs | (3,051 | ) | (5,155 | ) | (45,767 | ) | ||||||||||||||||
Net cash provided by (used in) financing activities exclusive of management programs | Net cash provided by (used in) financing activities exclusive of management programs | 4,303 | 26,869 | (45,767 | ) | |||||||||||||||||
Management programs: | Management programs: | Management programs: | ||||||||||||||||||||
Proceeds from borrowings | 650,431 | 916,633 | 132,294 | Proceeds from borrowings | 1,629,009 | 1,111,524 | 132,294 | |||||||||||||||
Principal payments on borrowings | (299,818 | ) | (786,470 | ) | (31,087 | ) | Principal payments on borrowings | (1,159,281 | ) | (1,025,222 | ) | (31,087 | ) | |||||||||
350,613 | 130,163 | 101,207 | 469,728 | 86,302 | 101,207 | |||||||||||||||||
Net cash provided by financing activities | Net cash provided by financing activities | 347,562 | 125,008 | 55,440 | Net cash provided by financing activities | 474,031 | 113,171 | 55,440 | ||||||||||||||
Effect of changes in net assets of discontinued operations | Effect of changes in net assets of discontinued operations | — | — | 394 | Effect of changes in net assets of discontinued operations | — | — | 394 | ||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | Effect of changes in exchange rates on cash and cash equivalents | 425 | (117 | ) | (11 | ) | Effect of changes in exchange rates on cash and cash equivalents | 199 | (900 | ) | (11 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | Net increase (decrease) in cash and cash equivalents | 27,358 | (43,697 | ) | (14,263 | ) | Net increase (decrease) in cash and cash equivalents | 5,854 | (23,084 | ) | (14,263 | ) | ||||||||||
Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 13,311 | 66,105 | 80,368 | Cash and cash equivalents, beginning of period | 13,311 | 66,105 | 80,368 | ||||||||||||||
Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | $ | 40,669 | $ | 22,408 | $ | 66,105 | Cash and cash equivalents, end of period | $ | 19,165 | $ | 43,021 | $ | 66,105 | ||||||||
Supplemental disclosure of Cash Flow Information: | Supplemental disclosure of Cash Flow Information: | Supplemental disclosure of Cash Flow Information: | ||||||||||||||||||||
Interest payments | Interest payments | $ | 130,775 | $ | 108,764 | $ | 44,315 | Interest payments | $ | 185,854 | $ | 189,230 | $ | 44,315 | ||||||||
Income tax payments, net | Income tax payments, net | $ | 485 | $ | 8,889 | $ | 1,962 | Income tax payments, net | $ | 7,563 | $ | 11,690 | $ | 1,962 |
See Notes to Consolidated Condensed Financial Statements.
6
Avis Group Holdings, Inc. and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in thousands)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Consolidated Condensed Financial Statements include the accounts and transactions of Avis Group Holdings, Inc. and its subsidiaries (collectively, "the Company").
Avis Group Holdings, Inc. is a holding company that operates through a wholly-owned subsidiary, Avis Rent A Car System, Inc., the second largest general use car rental brand in the world. On March 1, 2001, all the Company's common stock not then-ownedthen- owned by Cendant Corporation ("Cendant") was acquired by a wholly-owned subsidiary of Cendant for approximately $994 million with the Company emerging as the surviving legal entity. Accordingly, the Consolidated Condensed Financial Statements as of and for the three and sixnine months ended JuneSeptember 30, 2002, for the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001 and as of December 31, 2001 include the financial statements of Avis Group Holdings, Inc. and its subsidiaries. The Consolidated Condensed Financial Statements for the two months ended February 28, 2001 include the financial statements of the Company and its former fleet management and fuel card businesses, which are presented as a discontinued operation (the "Predecessor Companies").
In management's opinion, the Consolidated Condensed Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. In addition, management is required to make estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. The Consolidated Condensed Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K dated March 29, 2002.
Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
Pursuant to certain covenant requirements in an indenture under which the Company issued debt, the Company continues to operate and maintain its status as a separate public reporting entity.
Assets used by the Company to generate revenue are classified as assets under management programs. Funding for such assets is primarily provided by secured financing arrangements, which are classified as liabilities under management programs. Revenues generated from these assets are used, in part, to repay the interest and principal associated with the debt. Cash inflows and outflows relating to the generation and acquisition of assets and the principal debt repayment or financing of such assets are classified as activities of the Company's management programs.
Restricted Cash
Restricted cash includes cash and investments that are not readily available for normal Company disbursements and which have been set aside as required under the Company's debt covenants. The restricted cash balance at December 31, 2001 was held as collateral for outstanding vehicle debt that was not callable and, therefore, could not be immediately repaid. During 2002, the restricted cash was depleted through the normal purchase of vehicles. These vehicles have replaced the restricted cash as collateral for outstanding vehicle debt.
7
Changes in Accounting Policies
On January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", in its entirety. In connection with the adoption of SFAS No. 142, the Company has not amortized any goodwill or indefinite-lived intangible assets during 2002. Prior to the adoption of SFAS No. 142, all intangible assets were amortized on a straight-line basis over their estimated periods to be benefited. Subsequent toTherefore, the adoption,results of operations for 2001 reflect the Company did not amortize anyamortization of goodwill or indefinite-livedand indefinite lived intangible assets, while the results of operations for 2002 do not reflect such amortization (see Note 5—Intangible Assets for a pro forma disclosure depicting the Company's results of operations during 2002.2001 after applying the non-amortization provisions of SFAS No. 142).
In connection with the implementation of SFAS No. 142, the Company is required to assess goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company reviewed the carrying value of all its goodwill and other intangible assets by comparing such amounts to their fair value and determined that the carrying amounts of such assets did not exceed their respective fair values. Accordingly, the initial implementation of this standard did not result in a charge and, as such, did not impact the Company's results of operations during 2002. The Company will perform its annual impairment test during fourth quarter of 2002.
Stock-Based Compensation
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the Company currently measures its stock-based compensation using the intrinsic value approach under Accounting Principles Board ("APB") Opinion No. 25. Accordingly, the Company does not recognize compensation expense upon the issuance of its stock options because the option terms are fixed and the exercise price equals the market price of the underlying Cendant common stock on the grant date. The Company complies with the provision of SFAS No. 123 by providing pro forma disclosures of net income and related per share data giving consideration to the fair value method provisions of SFAS No. 123.
7 On January 1, 2003, the Company plans to adopt the fair value method of accounting for stock-based compensation provisions of SFAS No. 123, which is considered by the Financial Accounting Standards Board ("FASB") to be the preferable accounting method for stock-based employee compensation. Subsequent to adoption of the fair value method provisions of SFAS No. 123, the Company will expense all future employee stock options (and similar awards) over the vesting period based on the fair value of the award on the date of grant. The Company does not expect its results of operations to be impacted in the current year from this prospective change in accounting policy based on the current accounting guidance related to this adoption, which is currently under review by the FASB.
The impact of recording compensation expense at fair value in prior periods have been included in the pro forma disclosures, as required by SFAS No. 123, provided in the Company's Annual Report on Form 10-K filed on March 29, 2002. Prior period compensation expense is not necessarily indicative of future compensation expense that would be recorded by the Company upon its adoption of the fair value method provisions of SFAS No. 123. Future expense may vary based upon factors such as the number of options granted by the Company and the then-current fair market value of such options.
8
Recently Issued Accounting Pronouncements
During April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." Such standard requires any gain or loss on extinguishments of debt to be presented as a component of continuing operations (unless specific criteria is met) whereas SFAS No. 4 required that such gains and losses be classified as an extraordinary item in determining net income. Upon adoption of SFAS No. 145, the Company expects to reclassify its extraordinary gains or losses on the extinguishments of debt to continuing operations. The Company will adopt these provisions on January 1, 2003.
During June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." Such standard requires costs associated with exit or disposal activities (including restructurings), to be recognized when the costs are incurred, rather than at a date of commitment to an exit or disposal plan. SFAS No. 146 nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a liability related to an exit or disposal activity is not recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 a liability was recognized at the time of a commitment to an exit or disposal plan. The provisions of this standard are effective for disposal activities initiated after December 31, 2002.
2. Related Party Transactions
Expenses of the Company include the following items charged by Cendant and affiliates, which include allocations from Cendant for services provided to the Company:
| Three Months Ended June 30, 2002 | Three Months Ended June 30, 2001 | ||||
---|---|---|---|---|---|---|
Royalties | $ | 27,977 | $ | 26,610 | ||
Reservations | 16,639 | 14,031 | ||||
Data processing | 9,475 | 15,657 | ||||
Rent, corporate overhead allocations and other | 15,300 | 10,957 | ||||
Interest, net | 2,959 | 7,011 | ||||
Total | $ | 72,350 | $ | 74,266 | ||
| | | Predecessor Companies | ||||||
---|---|---|---|---|---|---|---|---|---|
| | March 1, 2001 (Date of Acquisition) to June 30, 2001 | |||||||
| Six Months Ended June 30, 2002 | Two Months Ended February 28, 2001 | |||||||
Royalties | $ | 52,253 | $ | 35,810 | $ | 16,205 | |||
Reservations | 29,321 | 19,186 | 8,496 | ||||||
Data processing | 17,740 | 20,141 | 11,395 | ||||||
Rent, corporate overhead allocations and other | 29,079 | 11,629 | 1,456 | ||||||
Interest, net | 6,358 | 7,011 | — | ||||||
Total | $ | 134,751 | $ | 93,777 | $ | 37,552 | |||
| Three Months Ended September 30, 2002 | Three Months Ended September 30, 2001 | ||||
---|---|---|---|---|---|---|
Royalties | $ | 31,017 | $ | 27,495 | ||
Reservations | 14,050 | 14,487 | ||||
Data processing | 8,819 | 15,433 | ||||
Rent, corporate overhead allocations and other | 14,783 | 11,906 | ||||
Interest, net | 3,321 | 4,128 | ||||
Total | $ | 71,990 | $ | 73,449 | ||
| | | Predecessor Companies | ||||||
---|---|---|---|---|---|---|---|---|---|
| | March 1, 2001 (Date of Acquisition) to September 30, 2001 | |||||||
| Nine Months Ended September 30, 2002 | Two Months Ended February 28, 2001 | |||||||
Royalties | $ | 83,270 | $ | 63,305 | $ | 16,205 | |||
Reservations | 43,371 | 33,673 | 8,496 | ||||||
Data processing | 26,559 | 35,574 | 11,395 | ||||||
Rent, corporate overhead allocations and other | 43,862 | 23,535 | 1,456 | ||||||
Interest, net | 9,679 | 11,139 | — | ||||||
Total | $ | 206,741 | $ | 167,226 | $ | 37,552 | |||
9
On the Consolidated Condensed Statements of Operations, the royalty and reservation charges are included within selling, general and administration expenses, the rent and other and data processing expenses are included within operating, net and interest expense is included within non-vehicle interest, net. These charges, including corporate overhead allocations, are determined in accordance with various intercompany agreements, which are based upon factors, such as square footage, employee salaries and computer usage time.
3. Restricted CashUnusual Charges
Restricted cash includes cash and investments that are not readily available for normalDuring the three months ended September 30, 2001, the Company disbursements that have been set aside as required underincurred unusual charges of $60 million related to the September 11, 2001 terrorist attacks. The unusual charges primarily resulted from the rationalization of the Company's debt covenants.fleet and related car rental operations.
4. Acquisition Related
In connection with the acquisition of the Company by Cendant on March 1, 2001, the Company recorded purchase accounting adjustments for costs associated with exiting activities. The restricted cash balance at December 31, 2001 was heldrecognition of such costs and the corresponding utilization are summarized by category as collateral for outstanding vehicle debt that was not callablefollows:
| Costs | Cash Payments | Other Reductions | Balance at December 31, 2001 | Cash Payments | Other Additions | Balance at September 30, 2002 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Personnel related | $ | 35,925 | $ | (19,444 | ) | $ | — | $ | 16,481 | $ | (18,569 | ) | $ | 10,212 | $ | 8,124 | |||||
Asset fair value adjustments | 19,480 | — | (18,674 | ) | 806 | — | (806 | ) | — | ||||||||||||
Facility related | 7,692 | (136 | ) | — | 7,556 | (1,768 | ) | — | 5,788 | ||||||||||||
Total | $ | 63,097 | $ | (19,580 | ) | $ | (18,674 | ) | $ | 24,843 | $ | (20,337 | ) | $ | 9,406 | $ | 13,912 | ||||
The Company closed its headquarters, relocated employees and therefore, could not be immediately repaid. Duringabandoned assets and involuntarily terminated employees in connection with such relocation. The Company formally communicated the termination of employment and paid severance to approximately 475 employees, representing a wide range of employee groups, and as of September 30, 2002, the restricted cash was depleted throughCompany had terminated all such employees. The majority of the normal purchaseremaining personnel related costs are expected to be paid by the end of vehicles.fourth quarter 2002.
4.5. Intangible Assets
Intangible assets consisted of:
| June 30, 2002 | December 31, 2001 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||
Amortized Intangible Assets | |||||||||||||
Customer lists | $ | 18,952 | $ | 1,280 | $ | 18,952 | $ | 800 | |||||
Unamortized Intangible Assets | |||||||||||||
Goodwill | $ | 1,254,909 | $ | 1,297,774 | $ | 26,582 | |||||||
8
| September 30, 2002 | December 31, 2001 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||
Amortized Intangible Assets | |||||||||||||
Customer lists | $ | 18,952 | $ | 1,520 | $ | 18,952 | $ | 800 | |||||
Unamortized Intangible Assets | |||||||||||||
Goodwill | $ | 1,252,047 | $ | 1,297,774 | $ | 26,582 | |||||||
Customer lists are included in other assets on the Company's Consolidated Condensed Balance Sheet. Amortization expense relating to customer lists during the three and sixnine months ended JuneSeptember 30, 2002 was approximately $240 thousand and $480$720 thousand, respectively.
10
Amortization expense relating to all intangible assets during the three months ended September 30, 2001, the two months ended February 28, 2001 and the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001, was approximately $8.1 million, $2.1 million and $10.5$18.6 million, respectively, including the amortization of goodwill of $7.9 million, $2.1 million and $10.2$18.0 million, respectively. The Company expects amortization expense on intangible assets for the remainder of 2002 to approximate $480$240 thousand and $1 million for each of the succeeding five years.
The changes in the carrying amount of goodwill for 2002 are as follows:
Balance as of January 1, 2002 | $ | 1,271,192 | $ | 1,271,192 | ||||
Goodwill acquired during 2002 | 1,836 | 1,849 | ||||||
Other | (18,119 | ) | (20,994 | ) | ||||
Balance as of June 30, 2002 | $ | 1,254,909 | ||||||
Balance as of September 30, 2002 | $ | 1,252,047 | ||||||
Had the Company applied the non-amortization provisions of SFAS No. 142 for the three months ended JuneSeptember 30, 2001, and for the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001 and the two months ended February 28, 2001, net income (loss) would have been as follows:
| | | Predecessor Companies | | | Predecessor Companies | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | March 1, 2001 (Date of Acquisition) to June 30, 2001 | | March 1, 2001 (Date of Acquisition) to September 30, 2001 | ||||||||||||||||
| Three Months Ended June 30, 2001 | Two Months Ended February 28, 2001 | Three Months Ended September 30, 2001 | Two Months Ended February 28, 2001 | ||||||||||||||||
Reported net income (loss) | $ | 9,899 | $ | 18,594 | $ | (29,119 | ) | |||||||||||||
Reported net loss | $ | (24,746 | ) | $ | (6,153 | ) | $ | (29,119 | ) | |||||||||||
Add back: Goodwill amortization, net of tax | 3,108 | 4,708 | 1,307 | 7,803 | 18,031 | 1,307 | ||||||||||||||
Pro forma net income (loss) | $ | 13,007 | $ | 23,302 | $ | (27,812 | ) | $ | (16,943 | ) | $ | 11,878 | $ | (27,812 | ) | |||||
5.6. Non-Vehicle Debt
Non-vehicle debt consisted of:
| September 30, 2002 | December 31, 2001 | ||||
---|---|---|---|---|---|---|
11% senior subordinated notes | $ | 553,986 | $ | 583,541 | ||
Other | 4,348 | 4,718 | ||||
$ | 558,334 | $ | 588,259 | |||
11
The change in the balance of the 11% senior subordinated notes reflects the redemption of $10.0 million in face value of these notes, with a carrying value of $11.4 million, for $10.9 million in cash and $18.2 million related to the amortization of a premium. In connection with such redemption, the Company recorded an extraordinary gain of approximately $470 thousand ($274 thousand, after tax).
7. Vehicle Debt
Vehicle debt consisted of:
| June 30, 2002 | December 31, 2001 | September 30, 2002 | December 31, 2001 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial paper notes | $ | 299,030 | $ | 119,998 | $ | — | $ | 119,998 | ||||
Series 2002-2 variable funding rental car asset-backed notes | 110,000 | — | ||||||||||
Series 2001-2 auction rate rental car asset-backed notes | 385,000 | 40,000 | 400,000 | 40,000 | ||||||||
Series 1997-1B 6.40% asset-backed medium-term notes | 566,667 | 850,000 | 141,667 | 850,000 | ||||||||
Series 1998-1 6.14% asset-backed medium-term notes | 600,000 | 600,000 | 600,000 | 600,000 | ||||||||
Series 2000-1 floating rate rental car asset-backed notes | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||
Series 2000-2 floating rate rental car asset-backed notes | 300,000 | 300,000 | 300,000 | 300,000 | ||||||||
Series 2000-3 floating rate rental car asset-backed notes | 200,000 | 200,000 | 200,000 | 200,000 | ||||||||
Series 2000-4 floating rate rental car asset-backed notes | 500,000 | 500,000 | 500,000 | 500,000 | ||||||||
Series 2001-1 floating rate rental car asset-backed notes | 750,000 | 750,000 | 750,000 | 750,000 | ||||||||
Series 2002-1 3.85% asset-backed medium term notes | 499,775 | — | ||||||||||
Series 2002-1 floating rate rental car asset-backed notes | 250,000 | — | ||||||||||
Other | 265,163 | 161,343 | 262,126 | 161,343 | ||||||||
$ | 4,115,860 | $ | 3,771,341 | $ | 4,263,568 | $ | 3,771,341 | |||||
As of JuneSeptember 30, 2002, the Company's asset-backed funding arrangements under the AESOP Funding program provided for the issuance of up to $4.14$4.69 billion of debt. Amounts outstanding under the AESOP Funding program approximated $3.85$4 billion. As of JuneSeptember 30, 2002, the Company had an additional $291$690 million of availability under the AESOP Funding program. In addition, the Company had other outstanding vehicle debt of approximately $265$262 million and availability of approximately $112$127 million under other funding arrangements as of JuneSeptember 30, 2002.
On July 25, 2002, the Company issued $750 million of rental car asset backed notes under its AESOP Funding Program. Approximately $500 million of such notes bear interest at a fixed rate of 3.85% and $250 million of such notes bear interest at a floating rate of LIBOR plus 29 basis points.
In September 2002, the Company issued $110 million of variable funding rental car asset-backed notes under the AESOP Funding program and repaid all amounts outstanding in commercial paper notes.
6.8. Commitments and Contingencies
The Company is involved in pending litigation in the usual course of business. In the opinion of management, such litigation will not have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.
99. Stock Plans
During third quarter 2002, the Cendant's Board of Directors accelerated the vesting of certain options previously granted with exercise prices greater than or equal to $15.1875. Cendant's senior executive officers were not eligible for this modification. In connection with such action, approximately
12
3 million options, which were scheduled to become exercisable substantially between September 2002 and January 2004, became exercisable as of August 27, 2002. In addition, the post-employment exercise period for the modified options was reduced from one year to thirty days. However, if the employee remains employed by the Company through the date on which the option was originally scheduled to become vested, the post-employment exercise period will be one year.
In accordance with the provisions of the FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation (an Interpretation of APB Opinion No. 25)," there is no charge associated with this modification since none of the modified options had intrinsic value because the market price of the underlying Cendant common stock on August 27, 2002 was less than the exercise price of the modified options.
7.10. Comprehensive Income (Loss)
The components of comprehensive income (loss) are summarized as follows:
| Three Months Ended June 30, 2002 | Three Months Ended June 30, 2001 | ||||||
---|---|---|---|---|---|---|---|---|
Net income | $ | 22,810 | $ | 9,899 | ||||
Other comprehensive income (loss): | ||||||||
Currency translation adjustment | 3,660 | 2,239 | ||||||
Unrealized losses on cash flow hedges, net of tax | (17,466 | ) | (1,395 | ) | ||||
Total comprehensive income | $ | 9,004 | $ | 10,743 | ||||
| | | Predecessor Companies | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
| | March 1, 2001 (Date of Acquisition) to June 30, 2001 | |||||||||
| Six Months Ended June 30, 2002 | Two Months Ended February 28, 2001 | |||||||||
Net income (loss) | $ | 20,401 | $ | 18,594 | $ | (29,119 | ) | ||||
Other comprehensive income (loss): | |||||||||||
Currency translation adjustment | 4,451 | (1,175 | ) | (1,758 | ) | ||||||
Unrealized gains (losses) on cash flow hedges, net of tax | (5,880 | ) | (2,766 | ) | 561 | ||||||
Minimum pension liability adjustment | (1,336 | ) | — | — | |||||||
Cumulative effect from change in accounting policy for derivative instruments, net of tax | — | — | 1,464 | ||||||||
Total comprehensive income (loss) | $ | 17,636 | $ | 14,653 | $ | (28,852 | ) | ||||
| Three Months Ended September 30, 2002 | Three Months Ended September 30, 2001 | ||||||
---|---|---|---|---|---|---|---|---|
Net income (loss) | $ | 36,085 | $ | (24,746 | ) | |||
Other comprehensive income (loss): | ||||||||
Currency translation adjustment | (2,618 | ) | (2,197 | ) | ||||
Unrealized losses on cash flow hedges, net of tax | (9,875 | ) | (38,082 | ) | ||||
Minimum pension liability adjustments | 66 | — | ||||||
Total comprehensive income (loss) | $ | 23,658 | $ | (65,025 | ) | |||
| | | Predecessor Companies | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
| | March 1, 2001 (Date of Acquisition) to September 30, 2001 | |||||||||
| Nine Months Ended September 30, 2002 | Two Months Ended February 28, 2001 | |||||||||
Net income (loss) | $ | 56,486 | $ | (6,153 | ) | $ | (29,119 | ) | |||
Other comprehensive income (loss): | |||||||||||
Currency translation adjustment | 1,833 | (3,371 | ) | (1,758 | ) | ||||||
Unrealized gains (losses) on cash flow hedges, net of tax | (15,755 | ) | (40,848 | ) | 561 | ||||||
Minimum pension liability adjustment | (1,270 | ) | — | — | |||||||
Cumulative effect from change in accounting policy for derivative instruments, net of tax | — | — | 1,464 | ||||||||
Total comprehensive income (loss) | $ | 41,294 | $ | (50,372 | ) | $ | (28,852 | ) | |||
The after-tax components of accumulated other comprehensive income (loss) for the sixnine months ended JuneSeptember 30, 2002 are as follows:
| Currency Translation Adjustments | Unrealized Losses on Cash Flows Hedges | Minimum Pension Liability Adjustment | Accumulated Other Comprehensive Loss | Currency Translation Adjustments | Unrealized Losses on Cash Flows Hedges | Minimum Pension Liability Adjustment | Accumulated Other Comprehensive Loss | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance, January 1, 2002 | $ | (2,469 | ) | $ | (34,583 | ) | $ | — | $ | (37,052 | ) | $ | (2,469 | ) | $ | (34,583 | ) | $ | — | $ | (37,052 | ) | ||||
Current period change | 4,451 | (5,880 | ) | (1,336 | ) | (2,765 | ) | 1,833 | (15,755 | ) | (1,270 | ) | (15,192 | ) | ||||||||||||
Balance June 30, 2002 | $ | 1,982 | $ | (40,463 | ) | $ | (1,336 | ) | $ | (39,817 | ) | |||||||||||||||
Balance September 30, 2002 | $ | (636 | ) | $ | (50,338 | ) | $ | (1,270 | ) | $ | (52,244 | ) | ||||||||||||||
13
The increase in unrealized losses on cash flow hedges, net of tax, for the three months ended September 30, 2002 is primarily the result of the effect of the decrease in interest rates during the period
8.11. Subsequent EventEvents
On July 25,During October 2002, the Company issued $750redeemed approximately $18 million of rental car asset backedits 11% senior subordinated notes under its AESOP Funding Program. Approximately $500with a face value of approximately $16 million for approximately $17 million in cash.
On October 28, 2002, the Company entered into an agreement to acquire the licensing rights and vehicles of such notes bear interest at a fixed rate of 3.85% anddomestic licensee for approximately $250 million of such notes bear interest at a floating rate of LIBOR plus 29 basis points.$13 million.
9.12. Guarantor and Non-Guarantor Consolidating Condensed Financial Statements
The following consolidating condensed financial information presents the Consolidating Condensed Balance Sheets as of JuneSeptember 30, 2002 and December 31, 2001, the Consolidated Condensed Statements of Operations for the three months ended JuneSeptember 30, 2002 and JuneSeptember 30, 2001 and the Consolidating Condensed Statements of Operations and Statements of Cash Flows for the sixnine months ended JuneSeptember 30, 2002, the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001, and as to the Predecessor Companies for the two months ended February 28, 2001 of (a) Avis Group Holdings, Inc. ("the Parent"); (b) the guarantor subsidiaries; (c) the non-guarantor subsidiaries; (d) elimination entries necessary to consolidate the Parent with the guarantor and non-guarantor subsidiaries; and (e) the Company on a consolidated basis.
Investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the subsidiary guarantors have not been provided as management believes the following information is sufficient.
1014
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the Three Months ended JuneEnded September 30, 2002
| | Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | | Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | Revenues | $ | — | $ | 591,572 | $ | 59,059 | $ | — | $ | 650,631 | Revenues | $ | — | $ | 631,805 | $ | 78,751 | $ | — | $ | 710,556 | ||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||
Operating, net | — | 227,135 | 29,231 | — | 256,366 | Operating, net | — | 247,030 | 32,201 | — | 279,231 | |||||||||||||||||||||
Vehicle depreciation and lease charges, net | — | 146,991 | 14,410 | — | 161,401 | Vehicle depreciation and lease charges, net | — | 160,453 | 17,646 | — | 178,099 | |||||||||||||||||||||
Selling, general and administrative | — | 113,735 | 8,194 | — | 121,929 | Selling, general and administrative | — | 107,475 | 9,191 | — | 116,666 | |||||||||||||||||||||
Vehicle interest, net | 459 | 50,544 | 336 | — | 51,339 | Vehicle interest, net | 9,459 | 43,766 | 1,016 | — | 54,241 | |||||||||||||||||||||
Non-vehicle interest, net | 7,658 | 3,165 | — | — | 10,823 | Non-vehicle interest, net | 7,582 | 3,206 | — | — | 10,788 | |||||||||||||||||||||
Non-vehicle depreciation and amortization | 240 | 8,439 | 766 | — | 9,445 | Non-vehicle depreciation and amortization | 241 | 8,846 | 702 | — | 9,789 | |||||||||||||||||||||
Total expenses | Total expenses | 8,357 | 550,009 | 52,937 | — | 611,303 | Total expenses | 17,282 | 570,776 | 60,756 | — | 648,814 | ||||||||||||||||||||
Income (loss) before equity in earnings of subsidiaries | Income (loss) before equity in earnings of subsidiaries | (8,357 | ) | 41,563 | 6,122 | — | 39,328 | Income (loss) before equity in earnings of subsidiaries | (17,282 | ) | 61,029 | 17,995 | — | 61,742 | ||||||||||||||||||
Equity in earnings of subsidiaries | Equity in earnings of subsidiaries | 26,166 | 3,550 | — | (29,716 | ) | — | Equity in earnings of subsidiaries | 41,450 | 10,437 | — | (51,887 | ) | — | ||||||||||||||||||
Income before income taxes | Income before income taxes | 17,809 | 45,113 | 6,122 | (29,716 | ) | 39,328 | Income before income taxes | 24,168 | 71,466 | 17,995 | (51,887 | ) | 61,742 | ||||||||||||||||||
Provision (benefit) for income taxes | Provision (benefit) for income taxes | (5,001 | ) | 18,947 | 2,572 | — | 16,518 | Provision (benefit) for income taxes | (11,643 | ) | 30,016 | 7,558 | — | 25,931 | ||||||||||||||||||
Income before extraordinary gains | Income before extraordinary gains | 35,811 | 41,450 | 10,437 | (51,887 | ) | 35,811 | |||||||||||||||||||||||||
Extraordinary gains, net of tax | Extraordinary gains, net of tax | 274 | — | — | — | 274 | ||||||||||||||||||||||||||
Net income | Net income | $ | 22,810 | $ | 26,166 | $ | 3,550 | $ | (29,716 | ) | $ | 22,810 | Net income | $ | 36,085 | $ | 41,450 | $ | 10,437 | $ | (51,887 | ) | $ | 36,085 | ||||||||
15
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the Three Months Ended JuneSeptember 30, 2001
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 570,551 | $ | 58,342 | $ | — | $ | 628,893 | ||||||
Expenses | ||||||||||||||||
Operating, net | — | 206,665 | 25,503 | — | 232,168 | |||||||||||
Vehicle depreciation and lease charges, net | — | 158,512 | 12,470 | — | 170,982 | |||||||||||
Selling, general and administrative | — | 108,548 | 7,992 | — | 116,540 | |||||||||||
Vehicle interest, net | 3,459 | 52,015 | 425 | — | 55,899 | |||||||||||
Non-vehicle interest, net | 8,350 | 6,227 | — | — | 14,577 | |||||||||||
Non-vehicle depreciation and amortization | 4,746 | 9,505 | 824 | — | 15,075 | |||||||||||
Total expenses | 16,555 | 541,472 | 47,214 | — | 605,241 | |||||||||||
Income (loss) before equity in earnings of subsidiaries | (16,555 | ) | 29,079 | 11,128 | — | 23,652 | ||||||||||
Equity in earnings of subsidiaries | 14,176 | 4,674 | — | (18,850 | ) | — | ||||||||||
Income (loss) before income taxes | (2,379 | ) | 33,753 | 11,128 | (18,850 | ) | 23,652 | |||||||||
Provision (benefit) for income taxes | (12,278 | ) | 19,577 | 6,454 | — | 13,753 | ||||||||||
Net income | $ | 9,899 | $ | 14,176 | $ | 4,674 | $ | (18,850 | ) | $ | 9,899 | |||||
11
Avis Group Holdings, Inc. and SubsidiariesCONSOLIDATING CONDENSED STATEMENT OF OPERATIONSFor the Six Months ended June 30, 2002
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 1,098,987 | $ | 116,247 | $ | — | $ | 1,215,234 | ||||||
Expenses | ||||||||||||||||
Operating, net | — | 422,895 | 57,506 | — | 480,401 | |||||||||||
Vehicle depreciation and lease charges, net | — | 289,810 | 31,441 | — | 321,251 | |||||||||||
Selling, general and administrative | — | 221,329 | 15,531 | — | 236,860 | |||||||||||
Vehicle interest, net | 918 | 100,524 | 544 | — | 101,986 | |||||||||||
Non-vehicle interest, net | 15,315 | 6,303 | — | — | 21,618 | |||||||||||
Non-vehicle depreciation and amortization | 479 | 15,919 | 1,545 | — | 17,943 | |||||||||||
Total expenses | 16,712 | 1,056,780 | 106,567 | — | 1,180,059 | |||||||||||
Income (loss) before equity in earnings of subsidiaries | (16,712 | ) | 42,207 | 9,680 | — | 35,175 | ||||||||||
Equity in earnings of subsidiaries | 27,737 | 5,614 | — | (33,351 | ) | — | ||||||||||
Income before income taxes | 11,025 | 47,821 | 9,680 | (33,351 | ) | 35,175 | ||||||||||
Provision (benefit) for income taxes | (9,376 | ) | 20,084 | 4,066 | — | 14,774 | ||||||||||
Net income | $ | 20,401 | $ | 27,737 | $ | 5,614 | $ | (33,351 | ) | $ | 20,401 | |||||
Avis Group Holdings, Inc. and SubsidiariesCONSOLIDATING CONDENSED STATEMENT OF OPERATIONSFor the Period March 1, 2001 (Date of Acquisition) to June 30, 2001
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 767,986 | $ | 78,903 | $ | — | $ | 846,889 | ||||||
Expenses | ||||||||||||||||
Operating, net | — | 276,363 | 34,616 | — | 310,979 | |||||||||||
Vehicle depreciation and lease charges, net | — | 206,553 | 18,619 | — | 225,172 | |||||||||||
Selling, general and administrative | — | 143,494 | 10,621 | — | 154,115 | |||||||||||
Vehicle interest, net | 4,612 | 70,973 | 861 | — | 76,446 | |||||||||||
Non-vehicle interest, net | 11,634 | 8,029 | — | — | 19,663 | |||||||||||
Non-vehicle depreciation and amortization | 6,574 | 12,599 | 1,095 | — | 20,268 | |||||||||||
Total expenses | 22,820 | 718,011 | 65,812 | — | 806,643 | |||||||||||
Income (loss) before equity in earnings of subsidiaries | (22,820 | ) | 49,975 | 13,091 | — | 40,246 | ||||||||||
Equity in earnings of subsidiaries | 25,759 | 6,022 | — | (31,781 | ) | — | ||||||||||
Income before income taxes | 2,939 | 55,997 | 13,091 | (31,781 | ) | 40,246 | ||||||||||
Provision (benefit) for income taxes | (15,655 | ) | 30,238 | 7,069 | — | 21,652 | ||||||||||
Net income | $ | 18,594 | $ | 25,759 | $ | 6,022 | $ | (31,781 | ) | $ | 18,594 | |||||
12
Avis Group Holdings, Inc. and SubsidiariesCONSOLIDATING CONDENSED STATEMENT OF OPERATIONS(Predecessor Companies)For the Two Months Ended February 28, 2001
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 344,496 | $ | 41,325 | $ | — | $ | 385,821 | |||||||
Expenses | |||||||||||||||||
Operating, net | — | 154,747 | 19,340 | — | 174,087 | ||||||||||||
Vehicle depreciation and lease charges, net | — | 100,718 | 9,399 | — | 110,117 | ||||||||||||
Selling, general and administrative | — | 77,866 | 5,363 | — | 83,229 | ||||||||||||
Vehicle interest, net | 2,306 | 40,375 | 944 | — | 43,625 | ||||||||||||
Non-vehicle interest, net | 9,167 | — | — | — | 9,167 | ||||||||||||
Non-vehicle depreciation and amortization | — | 7,282 | 551 | — | 7,833 | ||||||||||||
Total expenses | 11,473 | 380,988 | 35,597 | — | 428,058 | ||||||||||||
Income (loss) before equity in earnings (losses) of subsidiaries | (11,473 | ) | (36,492 | ) | 5,728 | — | (42,237 | ) | |||||||||
Equity in earnings (losses) of subsidiaries | (25,645 | ) | 9,950 | — | 15,695 | — | |||||||||||
Income (loss) before income taxes | (37,118 | ) | (26,542 | ) | 5,728 | 15,695 | (42,237 | ) | |||||||||
Provision (benefit) for income taxes | (7,999 | ) | (9,926 | ) | 2,142 | — | (15,783 | ) | |||||||||
Income (loss) from continuing operations | (29,119 | ) | (16,616 | ) | 3,586 | 15,695 | (26,454 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | — | (6,358 | ) | 11,305 | — | 4,947 | |||||||||||
Income (loss) before cumulative effect of accounting change | (29,119 | ) | (22,974 | ) | 14,891 | 15,695 | (21,507 | ) | |||||||||
Cumulative effect of accounting change, net of tax | — | (2,671 | ) | (4,941 | ) | — | (7,612 | ) | |||||||||
Net income (loss) | $ | (29,119 | ) | $ | (25,645 | ) | $ | 9,950 | $ | 15,695 | $ | (29,119 | ) | ||||
13
Avis Group Holdings, Inc. and SubsidiariesCONSOLIDATING CONDENSED BALANCE SHEETJune 30, 2002
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 98 | $ | 7,887 | $ | 32,684 | $ | — | $ | 40,669 | ||||||
Receivables, net | — | 135,094 | 30,661 | — | 165,755 | |||||||||||
Prepaid expenses | — | 33,109 | 7,857 | — | 40,966 | |||||||||||
Due from affiliate | (328,977 | ) | 178,602 | 150,375 | — | — | ||||||||||
Deferred income taxes | 218,280 | 336,241 | 1,627 | — | 556,148 | |||||||||||
Property and equipment, net | — | 241,383 | 14,834 | — | 256,217 | |||||||||||
Investment in consolidated subsidiaries | 707,986 | 644,419 | — | (1,352,405 | ) | — | ||||||||||
Goodwill | 806,809 | 444,667 | 3,433 | — | 1,254,909 | |||||||||||
Other assets | 15,541 | 34,113 | 95,400 | — | 145,054 | |||||||||||
Total assets exclusive of assets under management programs | 1,419,737 | 2,055,515 | 336,871 | (1,352,405 | ) | 2,459,718 | ||||||||||
Assets under management programs: | ||||||||||||||||
Restricted cash | — | 174 | 9,132 | — | 9,306 | |||||||||||
Vehicles, net | — | (97,824 | ) | 4,324,399 | — | 4,226,575 | ||||||||||
Due from vehicle manufacturers | — | 5,399 | 59,093 | — | 64,492 | |||||||||||
— | (92,251 | ) | 4,392,624 | — | 4,300,373 | |||||||||||
Total assets | $ | 1,419,737 | $ | 1,963,264 | $ | 4,729,495 | $ | (1,352,405 | ) | $ | 6,760,091 | |||||
LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Accounts payable | $ | (16,459 | ) | $ | 166,744 | $ | 94,847 | $ | — | $ | 245,132 | |||||
Accrued liabilities | 107,466 | 306,005 | 33,870 | — | 447,341 | |||||||||||
Due to Cendant Corporation and affiliates, net | 418,617 | 275,723 | (180,333 | ) | — | 514,007 | ||||||||||
Non-vehicle debt | 571,391 | 4,465 | — | — | 575,856 | |||||||||||
Public liability, property damage and other insurance liabilities | — | 144,141 | 71,736 | — | 215,877 | |||||||||||
Total liabilities exclusive of liabilities under management programs | 1,081,015 | 897,078 | 20,120 | — | 1,998,213 | |||||||||||
Liabilities under management programs: | ||||||||||||||||
Vehicle debt | — | 80,490 | 4,035,370 | — | 4,115,860 | |||||||||||
Deferred income taxes | — | 277,710 | 29,586 | — | 307,296 | |||||||||||
— | 358,200 | 4,064,956 | — | 4,423,156 | ||||||||||||
Stockholder's equity | 338,722 | 707,986 | 644,419 | (1,352,405 | ) | 338,722 | ||||||||||
Total liabilities and stockholder's equity | $ | 1,419,737 | $ | 1,963,264 | $ | 4,729,495 | $ | (1,352,405 | ) | $ | 6,760,091 | |||||
14
Avis Group Holdings, Inc. and SubsidiariesCONSOLIDATING CONDENSED BALANCE SHEETDecember 31, 2001
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 18 | $ | 5,210 | $ | 8,083 | $ | — | $ | 13,311 | ||||||
Receivables, net | — | 142,386 | 25,986 | — | 168,372 | |||||||||||
Prepaid expenses | — | 34,569 | 7,974 | — | 42,543 | |||||||||||
Deferred income tax | 221,741 | 326,332 | 14 | — | 548,087 | |||||||||||
Property and equipment, net | — | 230,429 | 14,847 | — | 245,276 | |||||||||||
Investment in consolidated subsidiaries | 677,401 | 628,280 | — | (1,305,681 | ) | — | ||||||||||
Goodwill | 825,234 | 443,000 | 2,958 | — | 1,271,192 | |||||||||||
Other assets | 16,020 | 34,791 | 95,797 | — | 146,608 | |||||||||||
Total assets exclusive of assets under management programs | 1,740,414 | 1,844,997 | 155,659 | (1,305,681 | ) | 2,435,389 | ||||||||||
Assets under management programs: | ||||||||||||||||
Restricted cash | — | 9,457 | 571,730 | — | 581,187 | |||||||||||
Vehicles, net | — | (128,932 | ) | 3,557,825 | — | 3,428,893 | ||||||||||
Due from vehicle manufacturers | — | 7,855 | 84,759 | — | 92,614 | |||||||||||
— | (111,620 | ) | 4,214,314 | — | 4,102,694 | |||||||||||
Total assets | $ | 1,740,414 | $ | 1,733,377 | $ | 4,369,973 | $ | (1,305,681 | ) | $ | 6,538,083 | |||||
LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Accounts payable | $ | — | $ | 151,379 | $ | 212,512 | $ | — | $ | 363,891 | ||||||
Accrued liabilities | 109,143 | 300,337 | 25,185 | — | 434,665 | |||||||||||
Due to Cendant Corporation and affiliates, net | 726,645 | 63,214 | (275,426 | ) | — | 514,433 | ||||||||||
Non-vehicle debt | 583,540 | 4,719 | — | — | 588,259 | |||||||||||
Public liability, property damage and other insurance liabilities | — | 166,432 | 62,071 | — | 228,503 | |||||||||||
Total liabilities exclusive of liabilities under management programs | 1,419,328 | 686,081 | 24,342 | — | 2,129,751 | |||||||||||
Liabilities under management programs: | ||||||||||||||||
Vehicle debt | — | 86,004 | 3,685,337 | — | 3,771,341 | |||||||||||
Deferred income taxes | — | 283,891 | 32,014 | — | 315,905 | |||||||||||
— | 369,895 | 3,717,351 | — | 4,087,246 | ||||||||||||
Stockholder's equity | 321,086 | 677,401 | 628,280 | (1,305,681 | ) | 321,086 | ||||||||||
Total liabilities and stockholder's equity | $ | 1,740,414 | $ | 1,733,377 | $ | 4,369,973 | $ | (1,305,681 | ) | $ | 6,538,083 | |||||
15
Avis Group Holdings, Inc. and SubsidiariesCONSOLIDATING CONDENSED STATEMENT OF CASH FLOWSFor the Six Months Ended June 30, 2002
| Parent | Guarantor | Non- Guarantor | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | |||||||||||||||||
Net income | $ | 20,401 | $ | 27,737 | $ | 5,614 | $ | (33,351 | ) | $ | 20,401 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities exclusive of management programs | (27,692 | ) | (6,266 | ) | 19,384 | — | (14,574 | ) | |||||||||
Net cash provided by (used in) operating activities exclusive of management programs | (7,291 | ) | 21,471 | 24,998 | (33,351 | ) | 5,827 | ||||||||||
Management programs: | |||||||||||||||||
Vehicle depreciation | — | 291,352 | 20,869 | — | 312,221 | ||||||||||||
Net cash provided by (used in) operating activities | (7,291 | ) | 312,823 | 45,867 | (33,351 | ) | 318,048 | ||||||||||
Investing Activities | |||||||||||||||||
Property and equipment additions | — | (23,278 | ) | (1,529 | ) | — | (24,807 | ) | |||||||||
Retirements of property and equipment | — | 89 | 689 | — | 778 | ||||||||||||
Payment for purchase of rental car franchise licensees | — | (2,835 | ) | (252 | ) | — | (3,087 | ) | |||||||||
Investment in subsidiaries | (27,737 | ) | (5,614 | ) | — | 33,351 | — | ||||||||||
Net cash used in investing activities exclusive of management programs | (27,737 | ) | (31,638 | ) | (1,092 | ) | 33,351 | (27,116 | ) | ||||||||
Management programs: | |||||||||||||||||
Decrease in restricted cash | — | 9,283 | 562,598 | — | 571,881 | ||||||||||||
Decrease in due from vehicle manufacturers | — | 2,456 | 26,892 | — | 29,348 | ||||||||||||
Investment in vehicles | — | (57,042 | ) | (2,627,781 | ) | — | (2,684,823 | ) | |||||||||
Payments received on investment in vehicles | — | (248,886 | ) | 1,720,919 | — | 1,472,033 | |||||||||||
— | (294,189 | ) | (317,372 | ) | — | (611,561 | ) | ||||||||||
Net cash used in investing activities | (27,737 | ) | (325,827 | ) | (318,464 | ) | 33,351 | (638,677 | ) | ||||||||
Financing Activities | |||||||||||||||||
Net decrease in non-vehicle debt | — | (253 | ) | — | — | (253 | ) | ||||||||||
Increase (decrease) in due to Cendant Corporation and affiliates, net | 35,108 | 16,065 | (53,840 | ) | — | (2,667 | ) | ||||||||||
Payments for debt issuance costs | — | (131 | ) | — | — | (131 | ) | ||||||||||
Net cash provided by (used in) financing activities exclusive of management programs | 35,108 | 15,681 | (53,840 | ) | — | (3,051 | ) | ||||||||||
Management programs: | |||||||||||||||||
Net increase in vehicle debt | — | — | 350,613 | — | 350,613 | ||||||||||||
Net cash provided by financing activities | 35,108 | 15,681 | 296,773 | — | 347,562 | ||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | — | 425 | — | 425 | ||||||||||||
Net increase in cash and cash equivalents | 80 | 2,677 | 24,601 | — | 27,358 | ||||||||||||
Cash and cash equivalents, beginning of period | 18 | 5,210 | 8,083 | — | 13,311 | ||||||||||||
Cash and cash equivalents, end of period | $ | 98 | $ | 7,887 | $ | 32,684 | $ | — | $ | 40,669 | |||||||
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 575,914 | $ | 74,454 | $ | — | $ | 650,368 | |||||||
Expenses | |||||||||||||||||
Operating, net | — | 208,192 | 30,931 | — | 239,123 | ||||||||||||
Vehicle depreciation and lease charges, net | — | 174,038 | 17,554 | — | 191,592 | ||||||||||||
Selling, general and administrative | — | 113,750 | 8,344 | — | 122,094 | ||||||||||||
Vehicle interest, net | 3,459 | 52,792 | 1,697 | — | 57,948 | ||||||||||||
Non-vehicle interest, net | 7,657 | 4,835 | — | — | 12,492 | ||||||||||||
Non-vehicle depreciation and amortization | 5,037 | 9,949 | 850 | — | 15,836 | ||||||||||||
Unusual charges | — | 60,062 | — | 60,062 | |||||||||||||
Total expenses | 16,153 | 623,618 | 59,376 | — | 699,147 | ||||||||||||
Income (loss) before equity in earnings (losses) of subsidiaries | (16,153 | ) | (47,704 | ) | 15,078 | — | (48,779 | ) | |||||||||
Equity in earnings (losses) of subsidiaries | (20,320 | ) | 7,649 | — | 12,671 | — | |||||||||||
Income (loss) before income taxes | (36,473 | ) | (40,055 | ) | 15,078 | 12,671 | (48,779 | ) | |||||||||
Provision (benefit) for income taxes | (11,727 | ) | (19,735 | ) | 7,429 | — | (24,033 | ) | |||||||||
Net income (loss) | $ | (24,746 | ) | $ | (20,320 | ) | $ | 7,649 | $ | 12,671 | $ | (24,746 | ) | ||||
16
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWSOPERATIONS
For the Nine Months Ended September 30, 2002
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 1,730,792 | $ | 194,998 | $ | — | $ | 1,925,790 | ||||||
Expenses | ||||||||||||||||
Operating, net | — | 669,925 | 89,707 | — | 759,632 | |||||||||||
Vehicle depreciation and lease charges, net | — | 450,263 | 49,087 | — | 499,350 | |||||||||||
Selling, general and administrative | — | 328,804 | 24,722 | — | 353,526 | |||||||||||
Vehicle interest, net | 10,377 | 144,290 | 1,560 | — | 156,227 | |||||||||||
Non-vehicle interest, net | 22,897 | 9,509 | — | — | 32,406 | |||||||||||
Non-vehicle depreciation and amortization | 720 | 24,765 | 2,247 | — | 27,732 | |||||||||||
Total expenses | 33,994 | 1,627,556 | 167,323 | — | 1,828,873 | |||||||||||
Income (loss) before equity in earnings of subsidiaries | (33,994 | ) | 103,236 | 27,675 | — | 96,917 | ||||||||||
Equity in earnings of subsidiaries | 69,187 | 16,051 | — | (85,238 | ) | — | ||||||||||
Income before income taxes | 35,193 | 119,287 | 27,675 | (85,238 | ) | 96,917 | ||||||||||
Provision (benefit) for income taxes | (21,019 | ) | 50,100 | 11,624 | — | 40,705 | ||||||||||
Income before extraordinary gains | 56,212 | 69,187 | 16,051 | (85,238 | ) | 56,212 | ||||||||||
Extraordinary gains, net of tax | 274 | — | — | — | 274 | |||||||||||
Net income | $ | 56,486 | $ | 69,187 | $ | 16,051 | $ | (85,238 | ) | $ | 56,486 | |||||
17
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the Period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001
| Parent | Guarantor | Non- Guarantor | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | |||||||||||||||||
Net income | $ | 18,594 | $ | 25,759 | $ | 6,022 | $ | (31,781 | ) | $ | 18,594 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities exclusive of management programs | (118,194 | ) | 130,934 | (24,982 | ) | — | (12,242 | ) | |||||||||
Net cash provided by (used in) operating activities exclusive of management programs | (99,600 | ) | 156,693 | (18,960 | ) | (31,781 | ) | 6,352 | |||||||||
Management programs: | |||||||||||||||||
Vehicle depreciation | — | 195,458 | 16,144 | — | 211,602 | ||||||||||||
Net cash provided by (used in) operating activities | (99,600 | ) | 352,151 | (2,816 | ) | (31,781 | ) | 217,954 | |||||||||
Investing Activities | |||||||||||||||||
Property and equipment additions | — | (24,781 | ) | (877 | ) | — | (25,658 | ) | |||||||||
Retirements of property and equipment | — | 8,169 | 206 | — | 8,375 | ||||||||||||
Payment for purchase of rental car franchise licensees | — | (18,748 | ) | (299 | ) | — | (19,047 | ) | |||||||||
Investment in subsidiaries | (25,759 | ) | (6,022 | ) | — | 31,781 | — | ||||||||||
Net cash used in investing activities exclusive of management programs | (25,759 | ) | (41,382 | ) | (970 | ) | 31,781 | (36,330 | ) | ||||||||
Management programs: | |||||||||||||||||
Decrease in restricted cash | — | — | 5,208 | — | 5,208 | ||||||||||||
(Increase) decrease in due from vehicle manufacturers | — | (3,443 | ) | 135,256 | — | 131,813 | |||||||||||
Investment in vehicles | — | (41,397 | ) | (1,858,655 | ) | — | (1,900,052 | ) | |||||||||
Payments received on investment in vehicles | — | (182,724 | ) | 1,595,543 | — | 1,412,819 | |||||||||||
— | (227,564 | ) | (122,648 | ) | — | (350,212 | ) | ||||||||||
Net cash used in investing activities | (25,759 | ) | (268,946 | ) | (123,618 | ) | 31,781 | (386,542 | ) | ||||||||
Financing Activities | |||||||||||||||||
Net decrease in non-vehicle debt | (317,650 | ) | (156 | ) | — | — | (317,806 | ) | |||||||||
Increase (decrease) in due to Cendant Corporation and affiliates, net | 443,173 | (102,192 | ) | (24,099 | ) | — | 316,882 | ||||||||||
Payments for debt issuance costs | — | (4,231 | ) | — | — | (4,231 | ) | ||||||||||
Net cash provided by (used in) financing activities exclusive of management programs | 125,523 | (106,579 | ) | (24,099 | ) | — | (5,155 | ) | |||||||||
Management programs: | |||||||||||||||||
Net (decrease) increase in vehicle debt | — | (8,744 | ) | 138,907 | — | 130,163 | |||||||||||
Net cash provided by (used in) financing activities | 125,523 | (115,323 | ) | 114,808 | — | 125,008 | |||||||||||
Effect of changes in exchange rates on cash a cash equivalents | — | — | (117 | ) | — | (117 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 164 | (32,118 | ) | (11,743 | ) | — | (43,697 | ) | |||||||||
Cash and cash equivalents, beginning of period | 141 | 36,745 | 29,219 | — | 66,105 | ||||||||||||
Cash and cash equivalents, end of period | $ | 305 | $ | 4,627 | $ | 17,476 | $ | — | $ | 22,408 | |||||||
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 1,343,901 | $ | 153,357 | $ | — | $ | 1,497,258 | |||||||
Expenses | |||||||||||||||||
Operating, net | — | 484,554 | 65,547 | — | 550,101 | ||||||||||||
Vehicle depreciation and lease charges, net | — | 380,592 | 36,173 | — | 416,765 | ||||||||||||
Selling, general and administrative | — | 257,307 | 18,906 | — | 276,213 | ||||||||||||
Vehicle interest, net | 8,071 | 123,704 | 2,617 | — | 134,392 | ||||||||||||
Non-vehicle interest, net | 19,291 | 12,864 | — | — | 32,155 | ||||||||||||
Non-vehicle depreciation and amortization | 11,611 | 22,548 | 1,945 | — | 36,104 | ||||||||||||
Unusual charges | — | 60,062 | — | — | 60,062 | ||||||||||||
Total expenses | 38,973 | 1,341,631 | 125,188 | — | 1,505,792 | ||||||||||||
Income (loss) before equity in earnings of subsidiaries | (38,973 | ) | 2,270 | 28,169 | — | (8,534 | ) | ||||||||||
Equity in earnings of subsidiaries | 16,280 | 20,310 | — | (36,590 | ) | — | |||||||||||
Income (loss) before income taxes | (22,693 | ) | 22,580 | 28,169 | (36,590 | ) | (8,534 | ) | |||||||||
Provision (benefit) for income taxes | (16,540 | ) | 6,300 | 7,859 | — | (2,381 | ) | ||||||||||
Net income (loss) | $ | (6,153 | ) | $ | 16,280 | $ | 20,310 | $ | (36,590 | ) | $ | (6,153 | ) | ||||
1718
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Predecessor Companies)
For the Two Months Ended February 28, 2001
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | — | $ | 344,496 | $ | 41,325 | $ | — | $ | 385,821 | |||||||
Expenses | |||||||||||||||||
Operating, net | — | 154,747 | 19,340 | — | 174,087 | ||||||||||||
Vehicle depreciation and lease charges, net | — | 100,718 | 9,399 | — | 110,117 | ||||||||||||
Selling, general and administrative | — | 77,866 | 5,363 | — | 83,229 | ||||||||||||
Vehicle interest, net | 2,306 | 40,375 | 944 | — | 43,625 | ||||||||||||
Non-vehicle interest, net | 9,167 | — | — | — | 9,167 | ||||||||||||
Non-vehicle depreciation and amortization | — | 7,282 | 551 | — | 7,833 | ||||||||||||
Total expenses | 11,473 | 380,988 | 35,597 | — | 428,058 | ||||||||||||
Income (loss) before equity in earnings (losses) of subsidiaries | (11,473 | ) | (36,492 | ) | 5,728 | — | (42,237 | ) | |||||||||
Equity in earnings (losses) of subsidiaries | (25,645 | ) | 9,950 | — | 15,695 | — | |||||||||||
Income (loss) before income taxes | (37,118 | ) | (26,542 | ) | 5,728 | 15,695 | (42,237 | ) | |||||||||
Provision (benefit) for income taxes | (7,999 | ) | (9,926 | ) | 2,142 | — | (15,783 | ) | |||||||||
Income (loss) from continuing operations | (29,119 | ) | (16,616 | ) | 3,586 | 15,695 | (26,454 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | — | (6,358 | ) | 11,305 | — | 4,947 | |||||||||||
Income (loss) before cumulative effect of accounting change | (29,119 | ) | (22,974 | ) | 14,891 | 15,695 | (21,507 | ) | |||||||||
Cumulative effect of accounting change, net of tax | — | (2,671 | ) | (4,941 | ) | — | (7,612 | ) | |||||||||
Net income (loss) | $ | (29,119 | ) | $ | (25,645 | ) | $ | 9,950 | $ | 15,695 | $ | (29,119 | ) | ||||
19
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED BALANCE SHEET
September 30, 2002
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 161 | $ | 6,482 | $ | 12,522 | $ | — | $ | 19,165 | ||||||
Receivables, net | — | 147,578 | 26,824 | — | 174,402 | |||||||||||
Prepaid expenses | — | 38,447 | 8,928 | — | 47,375 | |||||||||||
Due from affiliate | (323,393 | ) | 95,005 | 228,388 | — | — | ||||||||||
Deferred income taxes | 216,944 | 337,575 | 1,621 | — | 556,140 | |||||||||||
Property and equipment, net | — | 238,885 | 13,882 | — | 252,767 | |||||||||||
Investment in consolidated subsidiaries | 747,447 | 773,006 | — | (1,520,453 | ) | — | ||||||||||
Goodwill | 804,035 | 444,667 | 3,345 | — | 1,252,047 | |||||||||||
Other assets | 15,301 | 39,980 | 104,595 | — | 159,876 | |||||||||||
Total assets exclusive of assets under management programs | 1,460,495 | 2,121,625 | 400,105 | (1,520,453 | ) | 2,461,772 | ||||||||||
Assets under management programs: | ||||||||||||||||
Restricted cash | — | 218 | 255,034 | — | 255,252 | |||||||||||
Vehicles, net | — | (97,934 | ) | 4,047,279 | — | 3,949,345 | ||||||||||
Due from vehicle manufacturers | — | 9,457 | 233,498 | — | 242,955 | |||||||||||
— | (88,259 | ) | 4,535,811 | — | 4,447,552 | |||||||||||
Total assets | $ | 1,460,495 | $ | 2,033,366 | $ | 4,935,916 | $ | (1,520,453 | ) | $ | 6,909,324 | |||||
LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Accounts payable | $ | (18,802 | ) | $ | 187,976 | $ | 57,467 | $ | — | $ | 226,641 | |||||
Accrued liabilities | 120,047 | 286,333 | 26,769 | — | 433,149 | |||||||||||
Due to Cendant Corporation and affiliates, net | 442,884 | 274,642 | (179,353 | ) | — | 538,173 | ||||||||||
Non-vehicle debt | 553,986 | 4,348 | — | — | 558,334 | |||||||||||
Public liability, property damage and other insurance liabilities | — | 145,605 | 75,252 | — | 220,857 | |||||||||||
Total liabilities exclusive of liabilities under management programs | 1,098,115 | 898,904 | (19,865 | ) | — | 1,977,154 | ||||||||||
Liabilities under management programs: | ||||||||||||||||
Vehicle debt | — | 109,305 | 4,154,263 | — | 4,263,568 | |||||||||||
Deferred income taxes | — | 277,710 | 28,512 | — | 306,222 | |||||||||||
— | 387,015 | 4,182,775 | — | 4,569,790 | ||||||||||||
Stockholder's equity | 362,380 | 747,447 | 773,006 | (1,520,453 | ) | 362,380 | ||||||||||
Total liabilities and stockholder's equity | $ | 1,460,495 | $ | 2,033,366 | $ | 4,935,916 | $ | (1,520,453 | ) | $ | 6,909,324 | |||||
20
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED BALANCE SHEET
December 31, 2001
| Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Avis Group Holdings, Inc. Consolidated | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 18 | $ | 5,210 | $ | 8,083 | $ | — | $ | 13,311 | ||||||
Receivables, net | — | 142,386 | 25,986 | — | 168,372 | |||||||||||
Prepaid expenses | — | 34,569 | 7,974 | — | 42,543 | |||||||||||
Deferred income tax | 221,741 | 326,332 | 14 | — | 548,087 | |||||||||||
Property and equipment, net | — | 230,429 | 14,847 | — | 245,276 | |||||||||||
Investment in consolidated subsidiaries | 677,401 | 628,280 | — | (1,305,681 | ) | — | ||||||||||
Goodwill, net | 825,234 | 443,000 | 2,958 | — | 1,271,192 | |||||||||||
Other assets | 16,020 | 34,791 | 95,797 | — | 146,608 | |||||||||||
Total assets exclusive of assets under management programs | 1,740,414 | 1,844,997 | 155,659 | (1,305,681 | ) | 2,435,389 | ||||||||||
Assets under management programs: | ||||||||||||||||
Restricted cash | — | 9,457 | 571,730 | — | 581,187 | |||||||||||
Vehicles, net | — | (128,932 | ) | 3,557,825 | — | 3,428,893 | ||||||||||
Due from vehicle manufacturers | — | 7,855 | 84,759 | — | 92,614 | |||||||||||
— | (111,620 | ) | 4,214,314 | — | 4,102,694 | |||||||||||
Total assets | $ | 1,740,414 | $ | 1,733,377 | $ | 4,369,973 | $ | (1,305,681 | ) | $ | 6,538,083 | |||||
LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Accounts payable | $ | — | $ | 151,379 | $ | 212,512 | $ | — | $ | 363,891 | ||||||
Accrued liabilities | 109,143 | 300,337 | 25,185 | — | 434,665 | |||||||||||
Due to Cendant Corporation and affiliates, net | 726,645 | 63,214 | (275,426 | ) | — | 514,433 | ||||||||||
Non-vehicle debt | 583,540 | 4,719 | — | — | 588,259 | |||||||||||
Public liability, property damage and other insurance liabilities | — | 166,432 | 62,071 | — | 228,503 | |||||||||||
Total liabilities exclusive of liabilities under management programs | 1,419,328 | 686,081 | 24,342 | — | 2,129,751 | |||||||||||
Liabilities under management programs: | ||||||||||||||||
Vehicle debt | — | 86,004 | 3,685,337 | — | 3,771,341 | |||||||||||
Deferred income taxes | — | 283,891 | 32,014 | — | 315,905 | |||||||||||
— | 369,895 | 3,717,351 | — | 4,087,246 | ||||||||||||
Stockholder's equity | 321,086 | 677,401 | 628,280 | (1,305,681 | ) | 321,086 | ||||||||||
Total liabilities and stockholder's equity | $ | 1,740,414 | $ | 1,733,377 | $ | 4,369,973 | $ | (1,305,681 | ) | $ | 6,538,083 | |||||
21
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2002
| Parent | Guarantor | Non- Guarantor | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | |||||||||||||||||
Net income | $ | 56,486 | $ | 69,187 | $ | 16,051 | $ | (85,238 | ) | $ | 56,486 | ||||||
Adjustments to arrive at income from continuing operations | (274 | ) | — | — | — | (274 | ) | ||||||||||
Income from continuing operations | 56,212 | 69,187 | 16,051 | (85,238 | ) | 56,212 | |||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities exclusive of management programs | (32,548 | ) | (71,742 | ) | 141,249 | — | 36,959 | ||||||||||
Net cash provided by (used in) operating activities exclusive of management programs | 23,664 | (2,555 | ) | 157,300 | (85,238 | ) | 93,171 | ||||||||||
Management programs: | |||||||||||||||||
Vehicle depreciation | — | 444,725 | 34,193 | — | 478,918 | ||||||||||||
Net cash provided by operating activities | 23,664 | 442,170 | 191,493 | (85,238 | ) | 572,089 | |||||||||||
Investing Activities | |||||||||||||||||
Property and equipment additions | — | (36,380 | ) | (1,863 | ) | — | (38,243 | ) | |||||||||
Retirements of property and equipment | — | 2,974 | 803 | — | 3,777 | ||||||||||||
Payment for purchase of rental car franchise licensees | — | (2,835 | ) | (264 | ) | — | (3,099 | ) | |||||||||
Investment in subsidiaries | (69,187 | ) | (16,051 | ) | — | 85,238 | — | ||||||||||
Net cash used in investing activities exclusive of management programs | (69,187 | ) | (52,292 | ) | (1,324 | ) | 85,238 | (37,565 | ) | ||||||||
Management programs: | |||||||||||||||||
Decrease in restricted cash | — | 9,239 | 316,696 | — | 325,935 | ||||||||||||
Increase in due from vehicle manufacturers | — | (1,602 | ) | (148,482 | ) | — | (150,084 | ) | |||||||||
Investment in vehicles | — | (131,724 | ) | (4,256,608 | ) | — | (4,388,332 | ) | |||||||||
Payments received on investment in vehicles | — | (350,194 | ) | 3,559,775 | — | 3,209,581 | |||||||||||
— | (474,281 | ) | (528,619 | ) | — | (1,002,900 | ) | ||||||||||
Net cash used in investing activities | (69,187 | ) | (526,573 | ) | (529,943 | ) | 85,238 | (1,040,465 | ) | ||||||||
Financing Activities | |||||||||||||||||
Net decrease in non-vehicle debt | (10,900 | ) | (370 | ) | — | — | (11,270 | ) | |||||||||
Increase (decrease) in due to Cendant Corporation and affiliates, net | 56,566 | 91,414 | (127,038 | ) | — | 20,942 | |||||||||||
Payments for debt issuance costs | — | (5,369 | ) | — | — | (5,369 | ) | ||||||||||
Net cash provided by (used in) financing activities exclusive of management programs | 45,666 | 85,675 | (127,038 | ) | — | 4,303 | |||||||||||
Management programs: | |||||||||||||||||
Net increase in vehicle debt | — | — | 469,728 | — | 469,728 | ||||||||||||
Net cash provided by financing activities | 45,666 | 85,675 | 342,690 | — | 474,031 | ||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | — | 199 | — | 199 | ||||||||||||
Net increase in cash and cash equivalents | 143 | 1,272 | 4,439 | — | 5,854 | ||||||||||||
Cash and cash equivalents, beginning of period | 18 | 5,210 | 8,083 | — | 13,311 | ||||||||||||
Cash and cash equivalents, end of period | $ | 161 | $ | 6,482 | $ | 12,522 | $ | — | $ | 19,165 | |||||||
22
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
For the Period March 1, 2001 (Date of Acquisition) to September 30, 2001
| Parent | Guarantor | Non- Guarantor | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | |||||||||||||||||
Net income (loss) | $ | (6,153 | ) | $ | 16,280 | $ | 20,310 | $ | (36,590 | ) | $ | (6,153 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities exclusive of management programs | (113,533 | ) | 190,955 | 122,360 | — | 199,782 | |||||||||||
Net cash provided by (used in) operating activities exclusive of management programs | (119,686 | ) | 207,235 | 142,670 | (36,590 | ) | 193,629 | ||||||||||
Management programs: | |||||||||||||||||
Vehicle depreciation | — | 361,225 | 29,495 | — | 390,720 | ||||||||||||
Net cash provided by (used in) operating activities | (119,686 | ) | 568,460 | 172,165 | (36,590 | ) | 584,349 | ||||||||||
Investing Activities | |||||||||||||||||
Property and equipment additions | — | (32,073 | ) | (1,423 | ) | — | (33,496 | ) | |||||||||
Retirements of property and equipment | — | 12,522 | 2,962 | — | 15,484 | ||||||||||||
Payment for purchase of rental car franchise licensees | — | (27,837 | ) | (424 | ) | — | (28,261 | ) | |||||||||
Investment in subsidiaries | (16,280 | ) | (20,310 | ) | — | 36,590 | — | ||||||||||
Net cash provided by (used in) investing activities exclusive of management programs | (16,280 | ) | (67,698 | ) | 1,115 | 36,590 | (46,273 | ) | |||||||||
Management programs: | |||||||||||||||||
Increase in restricted cash | — | — | (36,855 | ) | — | (36,855 | ) | ||||||||||
(Increase) decrease in due from vehicle manufacturers | — | 6,485 | (290,918 | ) | — | (284,433 | ) | ||||||||||
Investment in vehicles | — | (77,521 | ) | (3,319,358 | ) | — | (3,396,879 | ) | |||||||||
Payments received on investment in vehicles | — | (343,706 | ) | 3,388,442 | — | 3,044,736 | |||||||||||
— | (414,742 | ) | (258,689 | ) | — | (673,431 | ) | ||||||||||
Net cash used in investing activities | (16,280 | ) | (482,440 | ) | (257,574 | ) | 36,590 | (719,704 | ) | ||||||||
Financing Activities | |||||||||||||||||
Net decrease in non-vehicle debt | (317,650 | ) | (278 | ) | — | — | (317,928 | ) | |||||||||
Increase (decrease) in due to Cendant Corporation and affiliates, net | 328,675 | (79,498 | ) | (24,787 | ) | — | 224,390 | ||||||||||
Payments for debt issuance costs | — | (4,593 | ) | — | — | (4,593 | ) | ||||||||||
Capital contribution from Cendant | 125,000 | — | — | — | 125,000 | ||||||||||||
Net cash provided by (used in) financing activities exclusive of management programs | 136,025 | (84,369 | ) | (24,787 | ) | — | 26,869 | ||||||||||
Management programs: | |||||||||||||||||
Net (decrease) increase in vehicle debt | — | (8,743 | ) | 95,045 | — | 86,302 | |||||||||||
Net cash provided by (used in) financing activities | 136,025 | (93,112 | ) | 70,258 | — | 113,171 | |||||||||||
Effect of changes in exchange rates on cash a cash equivalents | — | — | (900 | ) | — | (900 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 59 | (7,092 | ) | (16,051 | ) | — | (23,084 | ) | |||||||||
Cash and cash equivalents, beginning of period | 141 | 36,745 | 29,219 | — | 66,105 | ||||||||||||
Cash and cash equivalents, end of period | $ | 200 | $ | 29,653 | $ | 13,168 | $ | — | $ | 43,021 | |||||||
23
Avis Group Holdings, Inc. and Subsidiaries
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
(Predecessor Companies)
For the Two Months Ended February 28, 2001
| Parent | Guarantor | Non- Guarantor | Eliminations | Avis Group Holdings, Inc. Consolidated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | |||||||||||||||||
Net income (loss) | $ | (29,119 | ) | $ | (25,645 | ) | $ | 9,950 | $ | 15,695 | $ | (29,119 | ) | ||||
Adjustments to arrive at income (loss) from continuing operations | — | 9,029 | (6,364 | ) | — | 2,665 | |||||||||||
Income (loss) from continuing operations | (29,119 | ) | (16,616 | ) | 3,586 | 15,695 | (26,454 | ) | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities exclusive of management programs | 425 | 77,124 | (119,563 | ) | — | (42,014 | ) | ||||||||||
Net cash provided by (used in) operating activities exclusive of management programs | (28,694 | ) | 60,508 | (115,977 | ) | 15,695 | (68,468 | ) | |||||||||
Management programs: | |||||||||||||||||
Vehicle depreciation | — | 96,394 | 7,942 | — | 104,336 | ||||||||||||
Net cash provided by (used in) operating activities | (28,694 | ) | 156,902 | (108,035 | ) | 15,695 | 35,868 | ||||||||||
Investing Activities | |||||||||||||||||
Property and equipment additions | — | (5,169 | ) | (652 | ) | — | (5,821 | ) | |||||||||
Retirements of property and equipment | — | 165 | 268 | — | 433 | ||||||||||||
Investment in subsidiaries | 25,645 | (9,950 | ) | — | (15,695 | ) | — | ||||||||||
Net cash provided by (used in) investing activities exclusive of management programs | 25,645 | (14,954 | ) | (384 | ) | (15,695 | ) | (5,388 | ) | ||||||||
Management programs: | |||||||||||||||||
Decrease in restricted cash | — | — | 10,978 | — | 10,978 | ||||||||||||
Decrease in due from vehicle manufacturers | — | — | 16,368 | — | 16,368 | ||||||||||||
Investment in vehicles | — | 378 | (940,937 | ) | — | (940,559 | ) | ||||||||||
Payments received on investment in vehicles | — | (82,703 | ) | 895,350 | — | 812,647 | |||||||||||
— | (82,325 | ) | (18,241 | ) | — | (100,566 | ) | ||||||||||
Net cash provided by (used in) investing activities | 25,645 | (97,279 | ) | (18,625 | ) | (15,695 | ) | (105,954 | ) | ||||||||
Financing Activities | |||||||||||||||||
Net decrease in non-vehicle debt | — | (77 | ) | — | — | (77 | ) | ||||||||||
Increase (decrease) in due to Cendant Corporation and affiliates, net | (89,023 | ) | 43,123 | 82 | — | (45,818 | ) | ||||||||||
Payments for debt issuance costs | — | (12 | ) | — | — | (12 | ) | ||||||||||
Issuances of common stock | 140 | — | — | — | 140 | ||||||||||||
Net cash provided by (used in) financing activities exclusive of management programs | (88,883 | ) | 43,034 | 82 | — | (45,767 | ) | ||||||||||
Management programs: | |||||||||||||||||
Net increase (decrease) in vehicle debt | 92,000 | (2 | ) | 9,209 | — | 101,207 | |||||||||||
Net cash provided by financing activities | 3,117 | 43,032 | 9,291 | — | 55,440 | ||||||||||||
Effect of changes in net assets of discontinued operations | — | (131,512 | ) | 131,906 | — | 394 | |||||||||||
Effect of changes in exchange rates on cash and cash equivalents | — | — | (11 | ) | — | (11 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 68 | (28,857 | ) | 14,526 | — | (14,263 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 73 | 65,602 | 14,693 | — | 80,368 | ||||||||||||
Cash and cash equivalents, end of period | $ | 141 | $ | 36,745 | $ | 29,219 | $ | — | $ | 66,105 | |||||||
1824
Item 2. Management's Narrative Analysis of the Results of Operations
The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes thereto included elsewhere herein. Unless otherwise noted, all dollar amounts are in thousands and presented before taxes (as appropriate).
We are the second largest general use car rental brand in the world. On March 1, 2001, all of our outstanding common stock not then-owned by Cendant Corporation ("Cendant") was acquired by a subsidiary of PHH Corporation ("PHH"), a wholly-owned subsidiary of Cendant, for approximately $994 million and we emerged as the surviving legal entity. At such time, our fleet management and fuel card businesses were sold to PHH and, therefore, are presented as a discontinued operation in the accompanying Consolidated Condensed Financial Statements. Accordingly, we are now a wholly-owned subsidiary of Cendant.
RESULTS OF OPERATIONS
The acquisition of us by Cendant resulted in significant changes to the valuation of certain of our assets, liabilities and stockholder's equity. The periods prior to the acquisition have been designated "Predecessor Companies" and the period subsequent to the acquisition has been designated "Successor Company". The results of the Predecessor Companies and the Successor Company have been combined for the sixnine months ended JuneSeptember 30, 2001 since we believe that separate discussions for the two months ended February 28, 2001 and the fourseven months ended JuneSeptember 30, 2001 are not meaningful in terms of our operating results or comparisons to the prior period.
Three Months Ended JuneSeptember 30, 2002 vs. Three Months Ended JuneSeptember 30, 2001
Our comparative results of operations, excluding our former fleet management and fuel card businesses, comprised the following:
| 2002 | 2001 | Change | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | 650,631 | $ | 628,893 | $ | 21,738 | ||||
Expenses, excluding non-vehicle interest | 600,480 | 590,664 | 9,816 | |||||||
Non-vehicle interest, net | 10,823 | 14,577 | (3,754 | ) | ||||||
Total expenses | 611,303 | 605,241 | 6,062 | |||||||
Income before income taxes | 39,328 | 23,652 | 15,676 | |||||||
Provision for income taxes | 16,518 | 13,753 | 2,765 | |||||||
Income from continuing operations | $ | 22,810 | $ | 9,899 | $ | 12,911 | ||||
| 2002 | 2001 | Change | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | 710,556 | $ | 650,368 | $ | 60,188 | ||||
Expenses, excluding non-vehicle interest and unusual charges | 638,026 | 626,593 | 11,433 | |||||||
Unusual charges | — | 60,062 | (60,062 | ) | ||||||
Non-vehicle interest, net | 10,788 | 12,492 | (1,704 | ) | ||||||
Total expenses | 648,814 | 699,147 | (50,333 | ) | ||||||
Income (loss) before income taxes | 61,742 | (48,779 | ) | 110,521 | ||||||
Provision (benefit) for income taxes | 25,931 | (24,033 | ) | 49,964 | ||||||
Income (loss) from continuing operations | $ | 35,811 | $ | (24,746 | ) | $ | 60,557 | |||
Total revenue increased 3.5%9.3% primarily due to a 4.1%6.2% increase in vehicle rental revenue per day which was due principally to strong pricingand an increase in our leisure business.rental transactions during the month of September 2002 compared with September 2001.
Total expensesExpenses, excluding non-vehicle interest and unusual charges, increased 1.0%1.8% primarily due to higher commission-related expenses associated with higher revenues, the launch of an advertising campaign during the second quarter of 2002 and severance costs related to the relocation of our information technology operations from Garden City, New York to Parsippany, New Jersey.revenues.
Non-vehicle interest, net decreased 25.8%13.6% primarily due to a decrease in interest rates and the repaymenttermination of all amounts outstanding under aour revolving credit facility duringin September 2001. Such facility was replaced with intercompany funding from Cendant at variable interest rates, which have decreased in 2002.
Our overall effective tax rate was 42.0% and 58.1%The provision for income taxes for the three months ended June 30,September 30th reflects our overall effective tax rate of 42.0% for 2002 and 2001, respectively.49.3% for 2001. The lower tax rateincrease in the provision was primarily due to our pretax income in 2002 versus a pretax loss for the three months ended JuneSeptember 30, 2002 was primarily due to2001 that included the eliminationnegative effect of the goodwill amortization expense.amortization.
As a result of the above-mentioned items, income from continuing operations increased $12.9$60.6 million or 130%, in the secondthird quarter of 2002.
1925
SixNine Months Ended JuneSeptember 30, 2002 vs. SixNine Months Ended JuneSeptember 30, 2001
Our comparative results of operations, excluding our former fleet management and fuel card businesses comprised the following:
| 2002 | 2001 | Change | 2002 | 2001 | Change | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | 1,215,234 | $ | 1,232,710 | $ | (17,476 | ) | $ | 1,925,790 | $ | 1,883,079 | $ | 42,711 | |||||||
Expenses, excluding non-vehicle interest | 1,158,441 | 1,205,871 | (47,430 | ) | ||||||||||||||||
Expenses, excluding non-vehicle interest and unusual charges | 1,796,467 | 1,832,466 | (35,999 | ) | ||||||||||||||||
Unusual charges | — | 60,062 | (60,062 | ) | ||||||||||||||||
Non-vehicle interest, net | 21,618 | 28,830 | (7,212 | ) | 32,406 | 41,322 | (8,916 | ) | ||||||||||||
Total expenses | 1,180,059 | 1,234,701 | (54,642 | ) | 1,828,873 | 1,933,850 | (104,977 | ) | ||||||||||||
Income (loss) before income taxes | 35,175 | (1,991 | ) | 37,166 | 96,917 | (50,771 | ) | 147,688 | ||||||||||||
Provision for income taxes | 14,774 | 5,869 | 8,905 | |||||||||||||||||
Provision (benefit) for income taxes | 40,705 | (18,164 | ) | 58,869 | ||||||||||||||||
Income (loss) from continuing operations | $ | 20,401 | $ | (7,860 | ) | $ | 28,261 | $ | 56,212 | $ | (32,607 | ) | $ | 88,819 | ||||||
Total revenue decreased 1.4%increased 2.3% primarily due to a reduction3.5% increase in carvehicle rental transaction volume, which resulted primarily fromrevenue per day and an increase in rental transactions during the residual effectmonth of reduced commercial air travel due to the September 11th terrorist attacks.2002 compared with September 2001.
Total expensesExpenses, excluding non-vehicle interest and unusual charges decreased 4.4%2.0% primarily due to a decrease in operating expenses derived from our ability to reduce ourcontrol operating expenses as a result of reduced car rental transaction volume during the first quarter of 2002. Vehicle depreciation and lease charges and vehicle interest expense also decreased duein response to a decline in travel offset slightly by higher commission expenses corresponding reductionto the increase in average fleet size and the related decrease in average vehicle debt supporting such fleet.revenue.
Non-vehicle interest, net decreased 25.0%21.6% primarily due to a decrease in interest rates and the repaymenttermination of all amounts outstanding under aour revolving credit facility duringin September 2001. Such facility was replaced with intercompany funding from Cendant at variable interest rates, which have decreased in 2002.
The provision for income taxes for the sixnine months ended June 30, 2002September 30th reflects our overall effective tax rate of 42.0% for 2002.2002 and 35.8% for 2001. The increase in the provision was primarily due to the Companyour reporting pretax income in 2002 versus a pretax loss of $42.2 millionin for the twonine months ended February 28, 2001 at an effective tax rate of 37.4% offset by a pre-tax income of $40.2 million for the period March 1, 2001 (Date of Acquisition) to JuneSeptember 30, 2001 at an effective tax ratethat included the negative effect of 53.8% and the elimination of goodwill amortization expense.amortization.
As a result of the above-mentioned items, income from continuing operations increased $28$88.8 million for the sixnine months ended JuneSeptember 30, 2002.
Forward-Looking Statements
Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives.
Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "project", "estimates", "plans", "may increase", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forwardlooking in nature and not historical facts. You should understand that the following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:
26
20
Other factors and assumptions not identified above were also involved in the derivation of these forward looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control.
You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
21
Item 3. Quantitative And Qualitative Disclosure About Market Risks
As previously discussed in our 2001 Annual Report on Form 10-K, we assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential loss in earnings, fair values, and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. We used JuneSeptember 30, 2002 market rates to perform a sensitivity analysis separately for each of our market risk exposures. The estimates assume instantaneous, parallel shifts in interest rate yield curves. We have determined, through such analyses, that the impact of a 10% change in interest on our earnings, fair values and cash flows would not be material.
22Item 4. Controls and Procedures
27
Item 6. Exhibits and Reports on Form 8-K
(a)
See Exhibit Index
(b)
None
2328
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AVIS GROUP HOLDINGS, INC. | ||||
By: | /s/ F. ROBERT SALERNO F. Robert Salerno President and Chief Operating Officer Date: |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature | Title | Date | ||
---|---|---|---|---|
/s/ JOHN W. CHIDSEY (John W. Chidsey) | Chief Executive Officer | |||
/s/ F. ROBERT SALERNO (F. Robert Salerno) | President, Chief Operating Officer and Director (Principal Executive Officer) | |||
/s/ KURT FREUDENBERG (Kurt Freudenberg) | Senior Vice President and Controller (Principal Financial Officer) |
2429
I, John W. Chidsey, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Avis Group Holdings, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 4, 2002
/s/ John W. Chidsey
Chief Executive Officer
30
I, Kurt Freudenberg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Avis Group Holdings, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 4, 2002
/s/ Kurt Freudenberg
Senior Vice President and Controller
31
Exhibit No. | Description | |
---|---|---|
3.1 | Certificate of Incorporation of Avis Rent A Car, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998). | |
3.2 | By-Laws of Avis Group Holdings, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998). | |
10.3 | Series 2002-2 Supplement dated as of September 12, 2002 to the Amended and Restated Based Indenture dated as of July 30, 1997 among AESOP Funding L.L.C., Avis Rent A Car System, Inc., JPMorgan Chase Bank, Certain CP Conduit Purchasers, Certain Funding Agents, Certain APA Banks and The Bank of New York, as trustee. | |
12 | Statement Re: Computation of Ratio of Earnings to Fixed Charges. |