AVIS BUDGET GROUP, INC. - Quarter Report: 2017 March (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 001-10308

Avis Budget Group, Inc.

(Exact name of registrant as specified in its charter)



Delaware		06-0918165
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
6 Sylvan Way Parsippany, NJ		07054
(Address of principal executive offices)		(Zip Code)
	(973) 496-4700 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o	Non-accelerated filer	o
Smaller reporting company	o	Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares outstanding of the issuer’s common stock was 84,234,701 shares as of April 30, 2017.

Table of Contents



		Page
PART I	Financial Information
Item 1.	Financial Statements
	Consolidated Condensed Statements of Comprehensive Income for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	3
	Consolidated Condensed Balance Sheets as of March 31, 2017 and December 31, 2016 (Unaudited)	4
	Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	5
	Notes to Consolidated Condensed Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	37
PART II	Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6.	Exhibits	38
	Signatures	39

Table of Contents

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q may be considered “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by any such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such as “believes,” “expects,” “anticipates,” “will,” “should,” “could,” “may,” “would,” “intends,” “projects,” “estimates,” “plans,” and similar words, expressions or phrases. The following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:


•	the high level of competition in the vehicle rental industry and the impact such competition may have on pricing and rental volume;


•	a change in travel demand, including changes in airline passenger traffic;


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


•	the results of operations or financial condition of the manufacturers of our cars, which could impact their ability to perform their payment obligations under our agreements with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make cars available to us or the rental car industry as a whole on commercially reasonable terms or at all;


•	any change in economic conditions generally, particularly during our peak season or in key market segments;


•	our ability to continue to achieve and maintain cost savings and successfully implement our business strategies;


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


•	an occurrence or threat of terrorism, pandemic disease, natural disasters, military conflict or civil unrest in the locations in which we operate;


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


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


•	our ability to accurately estimate our future results;


•	any major disruptions in our communication networks or information systems;


•	our exposure to uninsured or unpaid claims in excess of historical levels;


•	risks associated with litigation, governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and taxes;


•	any impact on us from the actions of our licensees, dealers and independent contractors;

Table of Contents


•	any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business;


•	risks related to our indebtedness, including our substantial outstanding debt obligations and our ability to incur substantially more debt;


•	our ability to meet the financial and other covenants contained in the agreements governing our indebtedness;


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


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


•	risks related to protecting the integrity of our information technology systems and the confidential information of our employees and customers against security breaches, including cyber-security breaches; and


•	other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services, including uncertainty and instability related to the potential withdrawal of countries from the European Union.

We operate in a continuously changing business environment and new risk factors emerge from time to time. New risk factors, factors beyond our control, or changes in the impact of identified risk factors may cause actual results to differ materially from those set forth in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Moreover, we do not assume responsibility for the accuracy and completeness of those statements. Other factors and assumptions not identified above, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and other portions of our 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2017 (the “2016 Form 10-K”), could cause actual results to differ materially from those projected in any forward-looking statements.

Although we believe that our assumptions are reasonable, any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual results could differ materially from past results and/or those anticipated, estimated or projected. Except to the extent of our obligations under the federal securities laws, we undertake no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Table of Contents

PART I — FINANCIAL INFORMATION


Item 1.	Financial Statements

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data)

(Unaudited)



		Three Months Ended March 31,
		2017			2016
Revenues
	Vehicle rental	$	1,286		$	1,328
	Other	553			553
Net revenues		1,839			1,881

Expenses
	Operating	1,049			1,040
	Vehicle depreciation and lease charges, net	504			463
	Selling, general and administrative	262			269
	Vehicle interest, net	64			65
	Non-vehicle related depreciation and amortization	63			61
	Interest expense related to corporate debt, net:
	Interest expense	49			50
	Early extinguishment of debt	3			—
	Restructuring expense	7			15
	Transaction-related costs, net	3			4
Total expenses		2,004			1,967

Loss before income taxes		(165		)	(86		)
Benefit from income taxes		(58		)	(35		)

Net loss		$	(107	)	$	(51	)

Comprehensive income (loss)		$	(79	)	$	19

Loss per share
	Basic	$	(1.25	)	$	(0.53	)
	Diluted	$	(1.25	)	$	(0.53	)

See Notes to Consolidated Condensed Financial Statements (Unaudited).

Table of Contents

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions, except par value)

(Unaudited)



		March 31, 2017			December 31, 2016
Assets
Current assets:
	Cash and cash equivalents	$	923		$	490
	Receivables, net	718			808
	Other current assets	651			519
Total current assets		2,292			1,817

Property and equipment, net		684			685
Deferred income taxes		1,631			1,493
Goodwill		1,013			1,007
Other intangibles, net		859			870
Other non-current assets		195			193
Total assets exclusive of assets under vehicle programs		6,674			6,065

Assets under vehicle programs:
	Program cash	142			225
	Vehicles, net	11,486			10,464
	Receivables from vehicle manufacturers and other	281			527
	Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party	395			362
		12,304			11,578
Total assets		$	18,978		$	17,643

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable and other current liabilities	$	1,589		$	1,488
	Short-term debt and current portion of long-term debt	474			279
Total current liabilities		2,063			1,767

Long-term debt		3,506			3,244
Other non-current liabilities		747			764
Total liabilities exclusive of liabilities under vehicle programs		6,316			5,775

Liabilities under vehicle programs:
	Debt	2,395			2,183
	Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party	7,106			6,695
	Deferred income taxes	2,453			2,429
	Other	567			340
		12,521			11,647
Commitments and contingencies (Note 10)

Stockholders’ equity:
	Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, at each date	—			—
	Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, at each date	1			1
	Additional paid-in capital	6,866			6,918
	Accumulated deficit	(1,690		)	(1,639		)
	Accumulated other comprehensive loss	(126		)	(154		)
	Treasury stock, at cost—52 and 51 shares, respectively	(4,910		)	(4,905		)
Total stockholders’ equity		141			221
Total liabilities and stockholders’ equity		$	18,978		$	17,643

See Notes to Consolidated Condensed Financial Statements (Unaudited).

Table of Contents

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



			Three Months Ended March 31,
			2017			2016
Operating activities
Net loss			$	(107	)	$	(51	)
Adjustments to reconcile net loss to net cash provided by operating activities:
	Vehicle depreciation		437			432
	(Gain) loss on sale of vehicles, net		24			(3		)
	Non-vehicle related depreciation and amortization		63			61
	Stock-based compensation		1			7
	Amortization of debt financing fees		9			10
	Early extinguishment of debt costs		3			—
	Net change in assets and liabilities:
		Receivables	30			(11		)
		Income taxes and deferred income taxes	(70		)	(45		)
		Accounts payable and other current liabilities	63			14
	Other, net		(6		)	58
Net cash provided by operating activities			447			472

Investing activities
Property and equipment additions			(42		)	(40		)
Proceeds received on asset sales			2			3
Net assets acquired (net of cash acquired)			—			(1		)
Net cash used in investing activities exclusive of vehicle programs			(40		)	(38		)

Vehicle programs:
	Decrease in program cash		87			198
	Investment in vehicles		(3,944		)	(4,140		)
	Proceeds received on disposition of vehicles		2,958			2,776
	Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		(33		)	—
			(932		)	(1,166		)
Net cash used in investing activities			(972		)	(1,204		)

Table of Contents

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

		Three Months Ended March 31,
		2017			2016
Financing activities
Proceeds from long-term borrowings		590			350
Payments on long-term borrowings		(143		)	(5		)
Net change in short-term borrowings		—			1
Repurchases of common stock		(61		)	(95		)
Debt financing fees		(7		)	(5		)
Net cash provided by financing activities exclusive of vehicle programs		379			246

Vehicle programs:
	Proceeds from borrowings	5,812			4,694
	Payments on borrowings	(5,236		)	(3,796		)
	Debt financing fees	(5		)	(6		)
		571			892
Net cash provided by financing activities		950			1,138

Effect of changes in exchange rates on cash and cash equivalents		8			18

Net increase in cash and cash equivalents		433			424
Cash and cash equivalents, beginning of period		490			452
Cash and cash equivalents, end of period		$	923		$	876

See Notes to Consolidated Condensed Financial Statements (Unaudited).

Table of Contents

Avis Budget Group, Inc.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)

(Unless otherwise noted, all dollar amounts in tables are in millions, except per share amounts)


1.	Basis of Presentation

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

The Company operates the following reportable business segments:


•	Americas—provides and licenses the Company’s brands to third parties for vehicle rentals and ancillary products and services in North America, South America, Central America and the Caribbean, and operates the Company’s car sharing business in certain of these markets.


•	International—provides and licenses the Company’s brands to third parties for vehicle rentals and ancillary products and services in Europe, the Middle East, Africa, Asia, Australia and New Zealand, and operates the Company’s car sharing business in certain of these markets.

The operating results of acquired businesses are included in the accompanying Consolidated Condensed Financial Statements from the dates of acquisition. The fair value of the assets acquired and liabilities assumed in connection with the Company’s fourth quarter 2016 acquisition of France Cars has not yet been finalized; however, there have been no significant changes to the preliminary allocation of the purchase price during the three months ended March 31, 2017.

In presenting the Consolidated Condensed Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Consolidated Condensed Financial Statements contain all adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These financial statements should be read in conjunction with the Company’s 2016 Form 10-K.

Reclassifications. Certain reclassifications have been made to prior years’ Consolidated Condensed Financial Statements to conform to the current year presentation. These reclassifications have no impact on reported net income (see “Adoption of New Accounting Pronouncements” below).

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

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

Table of Contents

Currency Transactions. The Company records the gain or loss on foreign-currency transactions on certain intercompany loans and the gain or loss on intercompany loan hedges within interest expense related to corporate debt, net. During the three months ended March 31, 2017 and 2016, the Company recorded losses of an immaterial amount and $3 million, respectively.

Adoption of New Accounting Pronouncements

On January 1, 2017, as a result of a new accounting pronouncement, the Company adopted Accounting Standards Update (”ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, minimum statutory withholding requirements and classification in the statement of cash flows. Accordingly, in the Company’s Consolidated Condensed Balance Sheet at January 1, 2017, deferred income tax assets, net of the valuation allowance were increased by $56 million related to previously unrecognized excess tax benefits associated with equity awards, with a corresponding decrease to accumulated deficit, using the modified retrospective method. In addition, in the Company’s Consolidated Condensed Statement of Cash Flows for the period ended March 31, 2016, cash taxes paid related to shares directly withheld from employees for tax purposes of $9 million were reclassified from accounts payable and other current liabilities within net cash provided by operating activities to repurchases of common stock within net cash provided by financing activities exclusive of vehicle programs. The Company elected to account for forfeitures on an actual basis, which did not have a material impact on its Consolidated Condensed Financial Statements.

Recently Issued Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Costs and Net Periodic Postretirement Benefit Cost,” which requires an entity to disaggregate the components of net benefit cost recognized in the consolidated statements of operations. ASU 2017-07 becomes effective for the Company on January 1, 2018. The adoption of this accounting pronouncement is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other, Simplifying the Test for Goodwill Impairment,” which requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 becomes effective for the Company on January 1, 2020. The adoption of this accounting pronouncement is not expected to have an impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations, Clarifying the Definition of a Business,” which assists entities in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. ASU 2017-01 becomes effective for the Company on January 1, 2018. The adoption of this accounting pronouncement is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows, Restricted Cash,” which clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. ASU 2016-18 becomes effective for the Company on January 1, 2018. The adoption of this accounting pronouncement will impact the presentation of restricted cash in the Company’s Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which clarifies guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 becomes effective for the Company on January 1, 2018. The adoption of this accounting pronouncement is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires a lessee to recognize all long-term leases on its balance sheet as a liability for its lease obligation, measured at the present value of lease

Table of Contents

payments not yet paid, and a corresponding asset representing its right to use the underlying asset over the lease term and expands disclosure of key information about leasing arrangements. The ASU does not significantly change a lessee’s recognition, measurement and presentation of expenses and cash flows. Additionally, ASU 2016-02 aligns key aspects of lessor accounting with the new revenue recognition guidance in ASU 2014-09, “Revenue from Contracts with Customers” (see below). ASU 2016-02 becomes effective for the Company on January 1, 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach which includes a number of optional practical expedients that entities may elect to apply. The Company is currently evaluating and planning for the implementation of this ASU, including assessing its overall impact, and expects most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will materially increase total assets and total liabilities relative to such amounts prior to adoption.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which makes limited amendments to the classification and measurement of financial instruments. The new standard amends certain disclosure requirements associated with the fair value of financial instruments. ASU 2016-01 becomes effective for the Company on January 1, 2018. The adoption of this accounting pronouncement is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which outlines a single model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The new guidance applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. Also, additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 becomes effective for the Company on January 1, 2018 and may be adopted on either a full or modified retrospective basis. The Company is currently evaluating and planning for the implementation of this ASU, including assessing its overall impact, and expects the guidance will affect its accounting for certain contracts.


2.	Restructuring

During first quarter 2017, the Company initiated a strategic restructuring initiative to drive operational efficiency throughout the organization by reducing headcount, improving processes and consolidating functions (the “T17 restructuring”). During the three months ended March 31, 2017, as part of this process, the Company formally communicated the termination of employment to approximately 335 employees, and as of March 31, 2017, the Company had terminated approximately 240 of these employees. The costs associated with this initiative primarily represent severance, outplacement services and other costs associated with employee terminations, the majority of which have been or are expected to be settled in cash. The Company expects further restructuring expense of approximately $40 million related to this initiative to be incurred in 2017.

In conjunction with previous acquisitions, the Company identified opportunities to integrate and streamline its operations, primarily in Europe. This initiative is substantially complete, and the Company does not anticipate any further restructuring expense related to this initiative.

In 2014, the Company committed to various strategic initiatives to identify best practices and drive efficiency throughout its organization, by reducing headcount, improving processes and consolidating functions (the “T15 restructuring”). The Company does not anticipate any further restructuring expense related to this initiative.

Table of Contents

The following tables summarize the changes to our restructuring-related liabilities and identify the amounts recorded within the Company’s reporting segments for restructuring charges and corresponding payments:



		Americas			International			Total
Balance as of January 1, 2017		$	1		$	5		$	6
	T17 restructuring expense	7			—			7
	T17 restructuring payment	(2		)	—			(2		)
	T15 restructuring payment	—			(1		)	(1		)
Balance as of March 31, 2017		$	6		$	4		$	10

		Personnel Related			Facility Related			Total
Balance as of January 1, 2017		$	5		$	1		$	6
	T17 restructuring expense	7			—			7
	T17 restructuring payment	(2		)	—			(2		)
	T15 restructuring payment	(1		)	—			(1		)
Balance as of March 31, 2017		$	9		$	1		$	10


3.	Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (“EPS”) (shares in millions):



		Three Months Ended March 31,
		2017			2016
Net loss for basic and diluted EPS		$	(107	)	$	(51	)

Basic and diluted weighted average shares outstanding ^(a)		85.7			96.3

Loss per share:
	Basic and diluted	$	(1.25	)	$	(0.53	)

__________


^(a)	As the Company incurred a net loss for the three months ended March 31, 2017 and 2016, 0.8 million outstanding options in each period, and 2.6 million and 2.4 million non-vested stock awards, respectively, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.


4.	Other Current Assets

Other current assets consisted of:



	As of March 31, 2017		As of December 31, 2016
Sales and use taxes	$	257	$	153
Prepaid expenses	230		212
Other	164		154
Other current assets	$	651	$	519

Table of Contents


5.	Intangible Assets

Intangible assets consisted of:



	As of March 31, 2017						As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets
License agreements	$	260	$	115	$	145	$	261	$	109	$	152
Customer relationships	226		96		130		224		90		134
Other	45		12		33		46		12		34
Total	$	531	$	223	$	308	$	531	$	211	$	320

Unamortized Intangible Assets
Goodwill	$	1,013					$	1,007
Trademarks	$	551					$	550

For the three months ended March 31, 2017 and 2016, amortization expense related to amortizable intangible assets was approximately $15 million and $17 million, respectively. Based on the Company’s amortizable intangible assets at March 31, 2017, the Company expects amortization expense of approximately $40 million for the remainder of 2017, $41 million for 2018, $37 million for 2019, $37 million for 2020, $27 million for 2021 and $22 million for 2022, excluding effects of currency exchange rates.


6.	Vehicle Rental Activities

The components of vehicles, net within assets under vehicle programs were as follows:



	As of			As of
	March 31,			December 31,
	2017			2016
Rental vehicles	$	12,387		$	10,937
Less: Accumulated depreciation	(1,360		)	(1,454		)
	11,027			9,483
Vehicles held for sale	459			981
Vehicles, net	$	11,486		$	10,464

The components of vehicle depreciation and lease charges, net are summarized below:



	Three Months Ended March 31,
	2017		2016
Depreciation expense	$	437	$	432
Lease charges	43		34
(Gain) loss on sale of vehicles, net	24		(3		)
Vehicle depreciation and lease charges, net	$	504	$	463

At March 31, 2017 and 2016, the Company had payables related to vehicle purchases included in liabilities under vehicle programs - other of $546 million and $467 million, respectively, and receivables related to vehicle sales included in assets under vehicle programs - receivables from vehicle manufacturers and other of $277 million and $331 million, respectively.

Table of Contents


7.	Accounts Payable and Other Current Liabilities

Accounts payable and other current liabilities consisted of:



	As of		As of
	March 31,		December 31,
	2017		2016
Accounts payable	$	355	$	343
Accrued sales and use taxes	229		206
Deferred revenue – current	164		114
Accrued payroll and related	147		173
Public liability and property damage insurance liabilities – current	143		141
Other	551		511
Accounts payable and other current liabilities	$	1,589	$	1,488


8.	Long-term Debt and Borrowing Arrangements

Long-term and other borrowing arrangements consisted of:



		As of			As of
	Maturity Dates	March 31,			December 31,
	Maturity Dates	2017			2016
Floating Rate Senior Notes ^(a)	December 2017	$	249		$	249
Floating Rate Term Loan	March 2019	—			144
6% Euro-denominated Senior Notes ^(b)	March 2021	196			194
Floating Rate Term Loan ^(c)	March 2022	1,144			816
5⅛% Senior Notes	June 2022	400			400
5½% Senior Notes	April 2023	675			675
6⅜% Senior Notes	April 2024	350			350
4⅛% Euro-denominated Senior Notes	November 2024	320			316
5¼% Senior Notes	March 2025	375			375
4½% Euro-denominated Senior Notes	May 2025	266			—
Other ^(d)		59			57
Deferred financing fees		(54		)	(53		)
Total		3,980			3,523
Less: Short-term debt and current portion of long-term debt		474			279
Long-term debt		$	3,506		$	3,244

__________


^(a)	The interest rate on these notes is equal to three-month LIBOR plus 275 basis points, for an aggregate rate of 3.80% at March 31, 2017; the Company has entered into an interest rate swap to hedge its interest rate exposure related to these notes at an aggregate rate of 3.58%. These notes have been called for redemption.


^(b)	These notes have been called for redemption.

^(c)

The floating rate term loan is part of the Company’s senior credit facility, which is secured by pledges of capital stock of certain subsidiaries of the Company, and liens on substantially all of the Company’s intellectual property and certain other real and personal property. As of March 31, 2017, the floating rate term loan due 2022 bears interest at three-month LIBOR plus 200 basis points, for an aggregate rate of 2.82%. The Company has entered into a swap to hedge $700 million of its interest rate exposure related to the floating rate term loan at an aggregate rate of 3.75%.


^(d)	Primarily includes capital leases which are secured by liens on the related assets.

In March 2017, the Company issued €250 million of 4½% euro-denominated Senior Notes due 2025, the proceeds of which will be used to redeem all of its outstanding 6% euro-denominated Senior Notes due 2021 and a portion of its Floating Rate Senior Notes due 2017.

In March 2017, the Company increased its Floating Rate Term Loan due 2022 to $1.1 billion and reduced the loan interest rate to three-month LIBOR plus 2.00%. The Company used the incremental term loan proceeds to repay all of its outstanding Floating Rate Term Loan due 2019. The remaining proceeds will be used to redeem the remainder of the Company’s Floating Rate Senior Notes due 2017.

Table of Contents

Committed Credit Facilities and Available Funding Arrangements

At March 31, 2017, the committed corporate credit facilities available to the Company and/or its subsidiaries were as follows:



	Total Capacity		Outstanding Borrowings		Letters of Credit Issued		Available Capacity
Senior revolving credit facility maturing 2021 ^(a)	$	1,800	$	—	$	904	$	896
Other facilities^(b)	4		4		—		—

__________


^(a)	The senior revolving credit facility bears interest at one-month LIBOR plus 200 basis points and is part of the Company’s senior credit facility, which is secured by pledges of capital stock of certain subsidiaries of the Company, and liens on substantially all of the Company’s intellectual property and certain other real and personal property.


^(b)	These facilities encompass bank overdraft lines of credit, bearing interest of 1.50% to 3.10% as of March 31, 2017.

At March 31, 2017, the Company had various uncommitted credit facilities available, under which it had drawn approximately $7 million, which bear interest at rates between 0.71% and 4.50%.

Debt Covenants

The agreements governing the Company’s indebtedness contain restrictive covenants, including restrictions on dividends paid to the Company by certain of its subsidiaries, the incurrence of additional indebtedness by the Company and certain of its subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback transactions. The Company’s senior credit facility also contains a maximum leverage ratio requirement. As of March 31, 2017, the Company was in compliance with the financial covenants governing its indebtedness.


9.	Debt Under Vehicle Programs and Borrowing Arrangements

Debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”), consisted of:



	As of			As of
	March 31,			December 31,
	2017			2016
Americas - Debt due to Avis Budget Rental Car Funding ^(a)	$	7,146		$	6,733
Americas - Debt borrowings ^(a)	689			577
International - Debt borrowings ^(a)	1,560			1,449
International - Capital leases	154			162
Other	3			7
Deferred financing fees ^(b)	(51		)	(50		)
Total	$	9,501		$	8,878

__________


^(a)	The increase reflects additional borrowings principally to fund increases in the Company’s car rental fleet.


^(b)	Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of March 31, 2017 and December 31, 2016 were $40 million and $38 million, respectively.

In March 2017, the Company’s Avis Budget Rental Car Funding subsidiary issued approximately $600 million in asset-backed notes with an expected final payment date of September 2022. The weighted average interest rate was 3%. The Company used the proceeds from these borrowings to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States.

Table of Contents

Debt Maturities

The following table provides the contractual maturities of the Company’s debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding, at March 31, 2017.



	Debt under Vehicle Programs
Within 1 year ^(a)	$	1,027
Between 1 and 2 years	3,079
Between 2 and 3 years	2,453
Between 3 and 4 years	1,441
Between 4 and 5 years	725
Thereafter	827
Total	$	9,552

__________


^(a)	Vehicle-backed debt maturing within one year primarily represents term asset-backed securities.

Committed Credit Facilities and Available Funding Arrangements

As of March 31, 2017, available funding under the Company’s vehicle programs, including related party debt due to Avis Budget Rental Car Funding, consisted of:



	Total Capacity ^(a)		Outstanding Borrowings		Available Capacity
Americas - Debt due to Avis Budget Rental Car Funding ^(b)	$	9,312	$	7,146	$	2,166
Americas - Debt borrowings ^(c)	897		689		208
International - Debt borrowings ^(d)	2,351		1,560		791
International - Capital leases ^(e)	172		154		18
Other	3		3		—
Total	$	12,735	$	9,552	$	3,183

__________


^(a)	Capacity is subject to maintaining sufficient assets to collateralize debt.


^(b)	The outstanding debt is collateralized by approximately $8.7 billion of underlying vehicles and related assets.


^(c)	The outstanding debt is collateralized by approximately $0.9 billion of underlying vehicles and related assets.


^(d)	The outstanding debt is collateralized by approximately $1.8 billion of underlying vehicles and related assets.


^(e)	The outstanding debt is collateralized by approximately $0.2 billion of underlying vehicles and related assets.

Debt Covenants

The agreements under the Company’s vehicle-backed funding programs contain restrictive covenants, including restrictions on dividends paid to the Company by certain of its subsidiaries and restrictions on indebtedness, mergers, liens, liquidations and sale and leaseback transactions and in some cases also require compliance with certain financial requirements. As of March 31, 2017, the Company is not aware of any instances of non-compliance with any of the financial covenants contained in the debt agreements under its vehicle-backed funding programs.


10.	Commitments and Contingencies

Contingencies

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

Table of Contents

In February 2015, the French Competition Authority issued a statement of objections alleging that several car rental companies, including the Company and two of its European subsidiaries, engaged with (i) twelve French airports, the majority of which are controlled by public administrative bodies or the French state, and violated competition law through the distribution by airports of company-specific statistics to car rental companies operating at those airports and (ii) two other international car rental companies in a concerted practice relating to train station surcharges. In February 2017, the Company was notified that the French Competition Authority dismissed the charges and cleared the Company and its subsidiaries of any wrongdoing.

In February 2017, following a state court trial in Georgia, a jury found the Company liable for damages in a case brought by a plaintiff who was injured in a vehicle accident allegedly caused by an employee of an independent contractor of the Company who was acting outside of the scope of employment. In March 2017, the Company was also found liable for damages in a companion case arising from the same incident. The Company considers the attribution of liability to the Company, and the amount of damages awarded, to be unsupported by the facts of these cases and intends to appeal the verdicts. The Company has recognized a liability for the expected loss related to these cases of $39 million.

The Company is involved in claims, legal proceedings and governmental inquiries related, among other things, to its vehicle rental operations, including contract and licensee disputes, competition matters, employment matters, insurance and liability claims, intellectual property claims, business practice disputes and other regulatory, environmental, commercial and tax matters. Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable resolutions could occur. The Company estimates that the potential exposure resulting from adverse outcomes of legal proceedings in which it is reasonably possible that a loss may be incurred could, in the aggregate, be up to approximately $50 million in excess of amounts accrued as of March 31, 2017; however, the Company does not believe that the impact should result in a material liability to the Company in relation to its consolidated financial condition or results of operations.

Commitments to Purchase Vehicles

The Company maintains agreements with vehicle manufacturers under which the Company has agreed to purchase approximately $5.2 billion of vehicles from manufacturers over the next 12 months. Certain of these commitments are subject to the vehicle manufacturers’ satisfying their obligations under their respective repurchase and guaranteed depreciation agreements. The purchase of such vehicles is financed primarily through the issuance of vehicle-backed debt and cash received upon the disposition of vehicles.

Concentrations

Concentrations of credit risk at March 31, 2017 include (i) risks related to the Company’s repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers, including Ford, General Motors, Chrysler, Peugeot, Kia, Volkswagen, Fiat, Mercedes, Toyota and Volvo, and primarily with respect to receivables for program cars that have been disposed but for which the Company has not yet received payment from the manufacturers and (ii) risks related to Realogy and Wyndham, including receivables of $41 million and $25 million, respectively, related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with their disposition.


11.	Stockholders’ Equity

Stockholder Rights Plan

In January 2017, the Company’s Board of Directors authorized the adoption of a short-term stockholder rights plan, which expires in January 2018. Pursuant to the rights plan, the Company declared a dividend of one preferred share purchase right for each outstanding share of common stock, payable to holders of record as of the close of business on February 2, 2017. Each right, which is exercisable only in the event any person or group acquires a voting or economic position of 10% or more of the Company’s outstanding common stock (with certain limited exceptions), would entitle any holder other than the person or group whose ownership position has exceeded the ownership limit to purchase common stock having a value

Table of Contents

equal to twice the $90 exercise price of the right, or, at the election of the Board of Directors, to exchange each right for one share of common stock (subject to adjustment) (see Note 16 - Subsequent Events).

Share Repurchases

The Company’s Board of Directors has authorized the repurchase of up to approximately $1.5 billion of its common stock under a plan originally approved in 2013 and subsequently expanded, most recently in 2016. During the three months ended March 31, 2017, the Company repurchased approximately 1.5 million shares of common stock at a cost of approximately $50 million under the program. During the three months ended March 31, 2016, the Company repurchased approximately 3.0 million shares of common stock at a cost of approximately $80 million under the program. As of March 31, 2017, approximately $250 million of authorization remains available to repurchase common stock under this plan.

Total Comprehensive Income (Loss)

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

The components of other comprehensive income (loss) were as follows:



		Three Months Ended March 31,
		2017			2016
Net loss		$	(107	)	$	(51	)
Other comprehensive income:
	Currency translation adjustments (net of tax of $3 and $9, respectively)	25			72
	Net unrealized gain (loss) on cash flow hedges (net of tax of $0 and $2, respectively)	1			(3		)
	Minimum pension liability adjustment (net of tax of ($1) and $0, respectively)	2			1
		28			70
Comprehensive income (loss)		$	(79	)	$	19

__________

Currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) were as follows:



		Currency Translation Adjustments			Net Unrealized Gains (Losses) on Cash Flow Hedges^(a)			Net Unrealized Gains (Losses) on Available-for Sale Securities		Minimum Pension Liability Adjustment^(b)			Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2017		$	(39	)	$	2		$	1	$	(118	)	$	(154	)
	Other comprehensive income (loss) before reclassifications	25			—			—		1			26
	Amounts reclassified from accumulated other comprehensive income (loss)	—			1			—		1			2
Net current-period other comprehensive income (loss)		25			1			—		2			28
Balance, March 31, 2017		$	(14	)	$	3		$	1	$	(116	)	$	(126	)

Balance, January 1, 2016		$	(80	)	$	(2	)	$	—	$	(65	)	$	(147	)
	Other comprehensive income (loss) before reclassifications	72			(4		)	—		—			68
	Amounts reclassified from accumulated other comprehensive income (loss)	—			1			—		1			2
Net current-period other comprehensive income (loss)		72			(3		)	—		1			70
Balance, March 31, 2016		$	(8	)	$	(5	)	$	—	$	(64	)	$	(77	)

Table of Contents

__________

All components of accumulated other comprehensive income (loss) are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries and include a $78 million gain, net of tax, as of March 31, 2017 related to the Company’s hedge of its net investment in euro-denominated foreign operations (see Note 13 - Financial Instruments).


^(a)	For the three months ended March 31, 2017 and 2016, amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were $1 million ($1 million, net of tax) and $2 million ($1 million, net of tax), respectively.


^(b)	For the three months ended March 31, 2017 and 2016, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were $2 million ($1 million, net of tax) and $1 million ($1 million, net of tax), respectively.


12.	Stock-Based Compensation

The Company recorded stock-based compensation expense of $1 million and $8 million ($0 million and $5 million, net of tax) during the three months ended March 31, 2017 and 2016, respectively.

The Company uses a Monte Carlo simulation model to calculate the fair value of stock unit awards containing a market condition. For the three months ended March 31, 2017, the Company did not issue any stock unit awards containing a market condition. For the three months ended March 31, 2016, the Company’s weighted average assumptions for expected stock price volatility, risk-free interest rate, valuation period and dividend yield were 46%, 0.99%, 3 years, and 0.0%, respectively.

The activity related to the Company’s restricted stock units (“RSUs”) consisted of (in thousands of shares):



		Time-Based RSUs				Performance-Based and Market-Based RSUs
		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017 ^(a)		878		$	34.83	923		$	34.11
	Granted	528		34.41		572		34.41
	Vested ^(b)	(367	)	36.00		(146	)	36.52
	Forfeited/expired	(18	)	32.00		(193	)	41.86
Outstanding at March 31, 2017 ^(c)		1,021		$	34.24	1,156		$	32.67

__________


^(a)	Reflects the maximum number of stock units assuming achievement of all time-, performance- and market-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs, and performance-based and market-based RSUs granted during the three months ended March 31, 2016 was $25.88 and $23.29, respectively.


^(b)	The total grant date fair value of RSUs vested during the three months ended March 31, 2017 and 2016 was $19 million and $25 million, respectively.


^(c)	The Company’s outstanding time-based RSUs, and performance-based and market-based RSUs had aggregate intrinsic values of $30 million and $34 million, respectively. Aggregate unrecognized compensation expense related to time-based RSUs, and performance-based and market-based RSUs amounted to $53 million and will be recognized over a weighted average vesting period of 1.9 years.

The stock option activity consisted of (in thousands of shares):



		Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Term (years)
Outstanding at January 1, 2017		810		$	2.91	$	27	2.3
	Granted	—		—
	Exercised	(3	)	0.79		—
	Forfeited/expired	—		—
Outstanding and exercisable at March 31, 2017		807		$	2.92	$	22	2.0

Table of Contents


13.	Financial Instruments

Derivative Instruments and Hedging Activities

Currency Risk. The Company uses currency exchange contracts to manage its exposure to changes in currency exchange rates associated with its non-U.S.-dollar denominated receivables and forecasted royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S.-dollar denominated acquisitions. The Company primarily hedges a portion of its current-year currency exposure to the Australian, Canadian and New Zealand dollars, the euro and the British pound sterling. The majority of forward contracts do not qualify for hedge accounting treatment. The fluctuations in the value of these forward contracts do, however, largely offset the impact of changes in the value of the underlying risk they economically hedge. Forward contracts used to hedge forecasted third-party receipts and disbursements up to 12 months are designated and do qualify as cash flow hedges. The Company has designated its euro-denominated notes as a hedge of its investment in euro-denominated foreign operations.

The amount of gains or losses reclassified from other comprehensive income (loss) to earnings resulting from ineffectiveness or from excluding a component of the hedges’ gain or loss from the effectiveness calculation for cash flow and net investment hedges during the three months ended March 31, 2017 and 2016 was not material, nor is the amount of gains or losses the Company expects to reclassify from accumulated other comprehensive income (loss) to earnings over the next 12 months.

Interest Rate Risk. The Company uses various hedging strategies including interest rate swaps and interest rate caps to create an appropriate mix of fixed and floating rate assets and liabilities. The Company uses interest rate swaps and interest rate caps to manage the risk related to its floating rate corporate debt and its floating rate vehicle-backed debt. The Company records the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized. The Company records the gains or losses related to freestanding derivatives, which are not designated as a hedge for accounting purposes, in its consolidated results of operations. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings. The amount of gains or losses reclassified from other comprehensive income (loss) to earnings resulting from ineffectiveness related to the Company’s cash flow hedges was not material during the three months ended March 31, 2017 and 2016. The Company estimates that $3 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months.

The Company enters into derivative commodity contracts to manage its exposure to changes in the price of unleaded gasoline. Changes in the fair value of these derivatives are recorded within operating expenses.

The Company held derivative instruments with absolute notional values as follows:



	As of March 31, 2017
Interest rate caps ^(a)	$	9,836
Interest rate swaps	2,050
Foreign exchange contracts	1,133

Commodity contracts (millions of gallons of unleaded gasoline)	8

__________


^(a)	Represents $7.4 billion of interest rate caps sold, partially offset by approximately $2.4 billion of interest rate caps purchased. These amounts exclude $5.0 billion of interest rate caps purchased by the Company’s Avis Budget Rental Car Funding subsidiary as it is not consolidated by the Company.

Table of Contents

Estimated fair values (Level 2) of derivative instruments were as follows:



		As of March 31, 2017				As of December 31, 2016
		Fair Value, Asset Derivatives		Fair Value, Liability Derivatives		Fair Value, Asset Derivatives		Fair Value, Liability Derivatives
Derivatives designated as hedging instruments
	Interest rate swaps ^(a)	$	7	$	3	$	7	$	4

Derivatives not designated as hedging instruments
	Interest rate caps ^(b)	1		3		1		7
	Foreign exchange contracts ^(c)	2		12		7		2
	Commodity contracts ^(c)	—		1		—		—
	Total	$	10	$	19	$	15	$	13

__________

Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding; however, certain amounts related to the derivatives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss).


^(a)	Included in other non-current assets or other non-current liabilities.


^(b)	Included in assets under vehicle programs or liabilities under vehicle programs.


^(c)	Included in other current assets or other current liabilities.

The effects of derivatives recognized in the Company’s Consolidated Condensed Financial Statements were as follows:



		Three Months Ended March 31,
		2017			2016
Derivatives designated as hedging instruments ^(a)
	Interest rate swaps	$	1		$	(3	)
	Euro-denominated notes	(5		)	(14		)
Derivatives not designated as hedging instruments ^(b)
	Foreign exchange contracts^(c)	(12		)	(10		)
	Commodity contracts ^(d)	(1		)	(2		)
	Total	$	(17	)	$	(29	)

__________


^(a)	Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.


^(b)	Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged.


^(c)	For the three months ended March 31, 2017, included a $7 million loss in interest expense and a $5 million loss in operating expense. For the three months ended March 31, 2016, included a $9 million gain in interest expense and a $19 million loss in operating expense.


^(d)	Included in operating expense.

Table of Contents

Debt Instruments

The carrying amounts and estimated fair values (Level 2) of debt instruments were as follows:



		As of March 31, 2017				As of December 31, 2016
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Corporate debt
	Short-term debt and current portion of long-term debt	$	474	$	475	$	279	$	280
	Long-term debt	3,506		3,497		3,244		3,265

Debt under vehicle programs
	Vehicle-backed debt due to Avis Budget Rental Car Funding	$	7,106	$	7,147	$	6,695	$	6,722
	Vehicle-backed debt	2,392		2,407		2,176		2,187
	Interest rate swaps and interest rate caps ^(a)	3		3		7		7

__________


^(a)	Derivatives in a liability position.


14.	Segment Information

The Company’s chief operating decision maker assesses performance and allocates resources based upon the separate financial information from the Company’s operating segments. In identifying its reportable segments, the Company considered the nature of services provided, the geographical areas in which the segments operated and other relevant factors. The Company aggregates certain of its operating segments into its reportable segments.

Management evaluates the operating results of each of its reportable segments based upon revenue and “Adjusted EBITDA,” which the Company defines as income from continuing operations before non-vehicle related depreciation and amortization, any impairment charge, restructuring expense, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, charges for unprecedented personal-injury legal matters and income taxes. The Company’s presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.



			Three Months Ended March 31,
			2017					2016
			Revenues		Adjusted EBITDA			Revenues		Adjusted EBITDA
Americas			$	1,314	$	(20	)	$	1,364	$	63
International			525		7			517		1
Corporate and Other ^(a)			—		(14		)	—		(20		)
	Total Company		$	1,839	(27		)	$	1,881	44

Less:		Non-vehicle related depreciation and amortization			63					61
		Interest expense related to corporate debt, net			49					50
		Early extinguishment of debt			3					—
		Restructuring expense			7					15
		Transaction-related costs, net			3					4
		Charges for legal matter ^(b)			13					—
Loss before income taxes					$	(165	)			$	(86	)

__________


^(a)	Includes unallocated corporate overhead which is not attributable to a particular segment.


^(b)	Reported within operating expenses in our Consolidated Condensed Statements of Comprehensive Income.

Since December 31, 2016, there have been no significant changes in segment assets and segment assets under vehicle programs.

Table of Contents


15.	Guarantor and Non-Guarantor Consolidating Condensed Financial Statements

The following consolidating financial information presents Consolidating Condensed Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016, Consolidating Condensed Balance Sheets as of March 31, 2017 and December 31, 2016, and Consolidating Condensed Statements of Cash Flows for the three months ended March 31, 2017 and 2016 for: (i) Avis Budget Group, Inc. (the “Parent”); (ii) ABCR and Avis Budget Finance, Inc. (the “Subsidiary Issuers”); (iii) the guarantor subsidiaries; (iv) the non-guarantor subsidiaries; (v) elimination entries necessary to consolidate the Parent with the Subsidiary Issuers, and the guarantor and non-guarantor subsidiaries; and (vi) the Company on a consolidated basis. The Subsidiary Issuers and the guarantor and non-guarantor subsidiaries are 100% owned by the Parent, either directly or indirectly. All guarantees are full and unconditional and joint and several. This financial information is being presented in relation to the Company’s guarantee of the payment of principal, premium (if any) and interest on the notes issued by the Subsidiary Issuers. See Note 8 - Long-term Debt and Borrowing Arrangements for additional description of these guaranteed notes. The Senior Notes are guaranteed by the Parent and certain subsidiaries.

Investments in subsidiaries are accounted for using the equity method of accounting for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. For purposes of the accompanying Consolidating Condensed Statements of Comprehensive Income, certain expenses incurred by the Subsidiary Issuers are allocated to the guarantor and non-guarantor subsidiaries.

Table of Contents

Consolidating Condensed Statements of Comprehensive Income

Three Months Ended March 31, 2017



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues
	Vehicle rental		$	—		$	—		$	886		$	400		$	—		$	1,286
	Other		—			—			267			871			(585		)	553
Net revenues			—			—			1,153			1,271			(585		)	1,839

Expenses
	Operating		1			4			640			404			—			1,049
	Vehicle depreciation and lease charges, net		—			—			546			493			(535		)	504
	Selling, general and administrative		10			2			153			97			—			262
	Vehicle interest, net		—			—			45			69			(50		)	64
	Non-vehicle related depreciation and amortization		—			—			40			23			—			63
	Interest expense related to corporate debt, net:
		Interest expense	—			46			1			2			—			49
		Intercompany interest expense (income)	(3		)	1			6			(4		)	—			—
		Early extinguishment of debt	—			3			—			—			—			3
	Restructuring expense		—			—			6			1			—			7
	Transaction-related costs, net		—			—			—			3			—			3
Total expenses			8			56			1,437			1,088			(585		)	2,004
Income (loss) before income taxes and equity in earnings of subsidiaries			(8		)	(56		)	(284		)	183			—			(165		)
Provision for (benefit from) income taxes			(2		)	(23		)	(39		)	6			—			(58		)
Equity in earnings (loss) of subsidiaries			(101		)	(68		)	177			—			(8		)	—
Net income (loss)			$	(107	)	$	(101	)	$	(68	)	$	177		$	(8	)	$	(107	)

Comprehensive income (loss)			$	(79	)	$	(74	)	$	(41	)	$	203		$	(88	)	$	(79	)

Table of Contents

Three Months Ended March 31, 2016



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues
	Vehicle rental		$	—		$	—		$	929		$	399		$	—		$	1,328
	Other		—			—			271			794			(512		)	553
Net revenues			—			—			1,200			1,193			(512		)	1,881

Expenses
	Operating		1			10			628			401			—			1,040
	Vehicle depreciation and lease charges, net		—			—			461			467			(465		)	463
	Selling, general and administrative		10			5			149			105			—			269
	Vehicle interest, net		—			—			45			67			(47		)	65
	Non-vehicle related depreciation and amortization		—			1			37			23			—			61
	Interest expense related to corporate debt, net:
		Interest expense	—			39			1			10			—			50
		Intercompany interest expense (income)	(3		)	(3		)	6			—			—			—
	Restructuring expense		—			—			6			9			—			15
	Transaction-related costs, net		—			1			—			3			—			4
Total expenses			8			53			1,333			1,085			(512		)	1,967
Income (loss) before income taxes and equity in earnings of subsidiaries			(8		)	(53		)	(133		)	108			—			(86		)
Provision for (benefit from) income taxes			(3		)	(21		)	(5		)	(6		)	—			(35		)
Equity in earnings (loss) of subsidiaries			(46		)	(14		)	114			—			(54		)	—
Net income (loss)			$	(51	)	$	(46	)	$	(14	)	$	114		$	(54	)	$	(51	)

Comprehensive income			$	19		$	24		$	58		$	185		$	(267	)	$	19

Table of Contents

Consolidating Condensed Balance Sheets

As of March 31, 2017



		Parent			Subsidiary Issuers			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Assets
Current assets:
	Cash and cash equivalents	$	2		$	280		$	—	$	641	$	—		$	923
	Receivables, net	—			—			216		502		—			718
	Other current assets	2			103			110		436		—			651
Total current assets		4			383			326		1,579		—			2,292

Property and equipment, net		—			155			332		197		—			684
Deferred income taxes		19			1,348			272		—		(8		)	1,631
Goodwill		—			—			489		524		—			1,013
Other intangibles, net		—			28			496		335		—			859
Other non-current assets		75			26			16		78		—			195
Intercompany receivables		175			365			1,478		945		(2,963		)	—
Investment in subsidiaries		(49		)	3,679			3,723		—		(7,353		)	—
Total assets exclusive of assets under vehicle programs		224			5,984			7,132		3,658		(10,324		)	6,674

Assets under vehicle programs:
	Program cash	—			—			—		142		—			142
	Vehicles, net	—			37			69		11,380		—			11,486
	Receivables from vehicle manufacturers and other	—			2			1		278		—			281
	Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party	—			—			—		395		—			395
		—			39			70		12,195		—			12,304
Total assets		$	224		$	6,023		$	7,202	$	15,853	$	(10,324	)	$	18,978

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable and other current liabilities	$	13		$	195		$	568	$	813	$	—		$	1,589
	Short-term debt and current portion of long-term debt	—			266			3		205		—			474
Total current liabilities		13			461			571		1,018		—			2,063

Long-term debt		—			2,918			3		585		—			3,506
Other non-current liabilities		70			86			237		362		(8		)	747
Intercompany payables		—			2,597			365		1		(2,963		)	—
Total liabilities exclusive of liabilities under vehicle programs		83			6,062			1,176		1,966		(2,971		)	6,316

Liabilities under vehicle programs:
	Debt	—			10			64		2,321		—			2,395
	Due to Avis Budget Rental Car Funding (AESOP) LLC-related party	—			—			—		7,106		—			7,106
Deferred income taxes		—			—			2,283		170		—			2,453
Other		—			—			—		567		—			567
		—			10			2,347		10,164		—			12,521
Total stockholders’ equity		141			(49		)	3,679		3,723		(7,353		)	141
Total liabilities and stockholders’ equity		$	224		$	6,023		$	7,202	$	15,853	$	(10,324	)	$	18,978

Table of Contents

As of December 31, 2016



		Parent		Subsidiary Issuers		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Assets
Current assets:
	Cash and cash equivalents	$	3	$	12	$	—	$	475	$	—		$	490
	Receivables, net	—		—		231		577		—			808
	Other current assets	2		101		90		326		—			519
Total current assets		5		113		321		1,378		—			1,817

Property and equipment, net		—		148		341		196		—			685
Deferred income taxes		20		1,219		268		—		(14		)	1,493
Goodwill		—		—		489		518		—			1,007
Other intangibles, net		—		28		502		340		—			870
Other non-current assets		75		24		16		78		—			193
Intercompany receivables		171		359		1,466		670		(2,666		)	—
Investment in subsidiaries		42		3,717		3,698		—		(7,457		)	—
Total assets exclusive of assets under vehicle programs		313		5,608		7,101		3,180		(10,137		)	6,065

Assets under vehicle programs:
	Program cash	—		—		—		225		—			225
	Vehicles, net	—		24		70		10,370		—			10,464
	Receivables from vehicle manufacturers and other	—		1		—		526		—			527
	Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		362		—			362
		—		25		70		11,483		—			11,578
Total assets		$	313	$	5,633	$	7,171	$	14,663	$	(10,137	)	$	17,643

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable and other current liabilities	$	23	$	189	$	512	$	764	$	—		$	1,488
	Short-term debt and current portion of long-term debt	—		264		3		12		—			279
Total current liabilities		23		453		515		776		—			1,767

Long-term debt		—		2,730		3		511		—			3,244
Other non-current liabilities		69		88		253		368		(14		)	764
Intercompany payables		—		2,306		359		1		(2,666		)	—
Total liabilities exclusive of liabilities under vehicle programs		92		5,577		1,130		1,656		(2,680		)	5,775

Liabilities under vehicle programs:
	Debt	—		14		66		2,103		—			2,183
	Due to Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		6,695		—			6,695
	Deferred income taxes	—		—		2,258		171		—			2,429
	Other	—		—		—		340		—			340
		—		14		2,324		9,309		—			11,647
Total stockholders’ equity		221		42		3,717		3,698		(7,457		)	221
Total liabilities and stockholders’ equity		$	313	$	5,633	$	7,171	$	14,663	$	(10,137	)	$	17,643

Table of Contents

Consolidating Condensed Statements of Cash Flows

Three Months Ended March 31, 2017



	Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities	$	7		$	(130	)	$	24		$	546		$	—		$	447

Investing activities
Property and equipment additions	—			(8		)	(19		)	(15		)	—			(42		)
Proceeds received on asset sales	—			1			—			1			—			2
Intercompany loan receipts (advances)	—			—			—			(270		)	270			—
Other, net	53			—			—			—			(53		)	—
Net cash provided by (used in) investing activities exclusive of vehicle programs	53			(7		)	(19		)	(284		)	217			(40		)

Vehicle programs:
Decrease in program cash	—			—			—			87			—			87
Investment in vehicles	—			—			(1		)	(3,943		)	—			(3,944		)
Proceeds received on disposition of vehicles	—			8			—			2,950			—			2,958
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party	—			—			—			(33		)	—			(33		)
	—			8			(1		)	(939		)	—			(932		)
Net cash provided by (used in) investing activities	53			1			(20		)	(1,223		)	217			(972		)

Financing activities
Proceeds from long-term borrowings	—			325			—			265			—			590
Payments on long-term borrowings	—			(142		)	(1		)	—			—			(143		)
Intercompany loan borrowings (payments)	—			270			—			—			(270		)	—
Repurchases of common stock	(61		)	—			—			—			—			(61		)
Debt financing fees	—			(3		)	—			(4		)	—			(7		)
Other, net	—			(53		)	—			—			53			—
Net cash provided by (used in) financing activities exclusive of vehicle programs	(61		)	397			(1		)	261			(217		)	379

Vehicle programs:
Proceeds from borrowings	—			—			—			5,812			—			5,812
Payments on borrowings	—			—			(3		)	(5,233		)	—			(5,236		)
Debt financing fees	—			—			—			(5		)	—			(5		)
	—			—			(3		)	574			—			571
Net cash provided by (used in) financing activities	(61		)	397			(4		)	835			(217		)	950

Effect of changes in exchange rates on cash and cash equivalents	—			—			—			8			—			8

Net increase (decrease) in cash and cash equivalents	(1		)	268			—			166			—			433
Cash and cash equivalents, beginning of period	3			12			—			475			—			490
Cash and cash equivalents, end of period	$	2		$	280		$	—		$	641		$	—		$	923

Table of Contents

Three Months Ended March 31, 2016



	Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities	$	9		$	17		$	(2	)	$	448		$	—		$	472

Investing activities
Property and equipment additions	—			(4		)	(21		)	(15		)	—			(40		)
Proceeds received on asset sales	—			2			—			1			—			3
Net assets acquired (net of cash acquired)	—			—			—			(1		)	—			(1		)
Intercompany loan receipts (advances)	—			—			27			—			(27		)	—
Other, net	86			—			—			—			(86		)	—
Net cash provided by (used in) investing activities exclusive of vehicle programs	86			(2		)	6			(15		)	(113		)	(38		)

Vehicle programs:
Decrease in program cash	—			—			—			198			—			198
Investment in vehicles	—			—			(1		)	(4,139		)	—			(4,140		)
Proceeds received on disposition of vehicles	—			11			—			2,765			—			2,776
	—			11			(1		)	(1,176		)	—			(1,166		)
Net cash provided by (used in) investing activities	86			9			5			(1,191		)	(113		)	(1,204		)

Financing activities
Proceeds from long-term borrowings	—			350			—			—			—			350
Payments on long-term borrowings	—			(4		)	(1		)	—			—			(5		)
Net change in short-term borrowings	—			—			—			1			—			1
Intercompany loan borrowings (payments)	—			—			—			(27		)	27			—
Repurchases of common stock	(95		)	—			—			—			—			(95		)
Debt financing fees	—			(5		)	—			—			—			(5		)
Other, net	—			(86		)	—			—			86			—
Net cash provided by (used in) financing activities exclusive of vehicle programs	(95		)	255			(1		)	(26		)	113			246

Vehicle programs:
Proceeds from borrowings	—			—			—			4,694			—			4,694
Payments on borrowings	—			—			(2		)	(3,794		)	—			(3,796		)
Debt financing fees	—			—			—			(6		)	—			(6		)
	—			—			(2		)	894			—			892
Net cash provided by (used in) financing activities	(95		)	255			(3		)	868			113			1,138

Effect of changes in exchange rates on cash and cash equivalents	—			—			—			18			—			18

Net increase in cash and cash equivalents	—			281			—			143			—			424
Cash and cash equivalents, beginning of period	4			70			—			378			—			452
Cash and cash equivalents, end of period	$	4		$	351		$	—		$	521		$	—		$	876

Table of Contents


16.	Subsequent Events

In April 2017, the Company redeemed its outstanding €175 million principal amount of 6% euro-denominated Senior Notes due 2021 for €180 million plus accrued interest.

In May 2017, the Company accelerated the expiration of its short-term stockholder rights plan from January 22, 2018 to May 3, 2017 and entered into a new shareholder agreement with SRS Investment Management LLC and certain of its affiliates.

* * * *

Table of Contents


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes thereto included elsewhere herein, and with our 2016 Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including but not limited to those included elsewhere in this Quarterly Report on Form 10-Q and those included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and other portions of our 2016 Form 10-K. Unless otherwise noted, all dollar amounts in tables are in millions and those relating to our results of operations are presented before taxes.

OVERVIEW

Our Company

We operate three of the most recognized brands in the global vehicle rental and car sharing industry, Avis, Budget and Zipcar. We are a leading vehicle rental operator in North America, Europe, Australia, New Zealand and certain other regions we serve, with an average rental fleet of more than 600,000 vehicles. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

Our Segments

We categorize our operations into two reportable business segments: Americas, consisting primarily of our vehicle rental operations in North America, South America, Central America and the Caribbean, and our car sharing operations in certain of these markets; and International, consisting primarily of our vehicle rental operations in Europe, the Middle East, Africa, Asia, Australia and New Zealand, and our car sharing operations in certain of these markets.

Business and Trends

Our revenues are derived principally from vehicle rentals in our Company-owned operations and include:


•	time and mileage (“T&M”) fees charged to our customers for vehicle rentals;


•	payments from our customers with respect to certain operating expenses we incur, including gasoline and vehicle licensing fees, as well as concession fees, which we pay in exchange for the right to operate at airports and other locations;


•	sales of loss damage waivers and insurance and rentals of navigation units and other items in conjunction with vehicle rentals; and


•	royalty revenue from our licensees in conjunction with their vehicle rental transactions.

Our operating results are subject to variability due to seasonality, macroeconomic conditions and other factors. Car rental volumes tend to be associated with the travel industry, particularly airline passenger volumes, or enplanements, which in turn tend to reflect general economic conditions. Our vehicle rental operations are also seasonal, with the third quarter of the year historically having been our strongest due to the increased level of leisure travel during such quarter. We have a partially variable cost structure and routinely adjust the size, and therefore the cost, of our rental fleet in response to fluctuations in demand.

We believe that the following factors, among others, may affect our financial condition and results of operations:


•	general travel demand, including worldwide enplanements;


•	fleet, pricing, marketing and strategic decisions made by us and by our competitors;


•	changes in fleet costs and in conditions in the used vehicle marketplace, as well as manufacturer recalls;


•	changes in borrowing costs and in market willingness to purchase corporate and vehicle-related debt;

Table of Contents


•	demand for truck rentals and car sharing services;


•	changes in the price of gasoline; and


•	changes in currency exchange rates.

Thus far in 2017, we have operated in an uncertain and uneven economic environment marked by heightened geopolitical risks and soft used-vehicle residual values. Nonetheless, we continue to anticipate that worldwide demand for vehicle rental and car sharing services will increase in 2017, most likely against a backdrop of modest and uneven global economic growth and a stabilization of vehicle residual values. Our access to new fleet vehicles has been adequate to meet our needs for both replacement of existing vehicles in the normal course and for growth to meet incremental demand, and we expect that to continue to be the case. We will look to pursue opportunities for pricing increases in 2017 in order to enhance our returns on invested capital and profitability.

Our objective is to focus on strategically accelerating our growth, strengthening our global position as a leading provider of vehicle rental services, continuing to enhance our customers’ rental experience, and controlling costs and driving efficiency throughout the organization. We operate in a highly competitive industry and we expect to continue to face challenges and risks. We seek to mitigate our exposure to risks in numerous ways, including delivering upon our core strategic initiatives, continued optimization of fleet levels to match changes in demand for vehicle rentals, maintenance of liquidity to fund our fleet and our operations, appropriate investments in technology and adjustments in the size, nature and terms of our relationships with vehicle manufacturers.

During 2017:


•	Our net revenues totaled $1.8 billion in the three months ended March 31, 2017 and decreased 2% compared to the three months ended March 31, 2016.

•

In the three months ended March 31, 2017, our net loss was $107 million, representing a $56 million year-over-year decline in earnings, and our Adjusted EBITDA was a loss of $27 million, representing a $71 million year-over-year decline, due to lower pricing and higher per-unit fleet costs, partially offset by increased rental volumes and an $18 million favorable impact from currency exchange rate movements.


•	In the three months ended March 31, 2017, we repurchased approximately $50 million of our common stock, reducing our shares outstanding by approximately 1.5 million shares, or 2%.


•	In March 2017, we issued €250 million of 4½% euro-denominated Senior Notes due 2025 and $188 million of incremental term loan borrowings, the proceeds of which will be used to redeem all of our outstanding 6% euro-denominated Senior Notes due 2021 and our Floating Rate Senior Notes due 2017. As a result of these transactions, we will have no significant corporate debt maturities until 2022.

RESULTS OF OPERATIONS

We measure performance principally using the following key operating statistics: (i) rental days, which represents the total number of days (or portion thereof) a vehicle was rented, and (ii) T&M revenue per rental day, which represents the average daily revenue we earned from rental and mileage fees charged to our customers, both of which exclude our U.S. truck rental and Zipcar car sharing operations. We also measure our ancillary revenues (rental-transaction revenue other than T&M revenue), such as from the sale of collision and loss damage waivers, insurance products, fuel service options and portable GPS navigation unit rentals. Our vehicle rental operating statistics (rental days and T&M revenue per rental day) are all calculated based on the actual rental of the vehicle during a 24-hour period. We believe that this methodology provides our management with the most relevant statistics in order to manage the business. Our calculation may not be comparable to other companies’ calculation of similarly-titled statistics. In addition, per-unit fleet costs exclude our U.S. truck rental operations. We present currency exchange rate impacts to provide a method of assessing how our business performed excluding the effects of foreign currency rate fluctuations. Currency exchange rate impacts are calculated by translating the current-year results at the prior-period average exchange rate plus any related gains and losses on currency hedges.

Table of Contents

We assess performance and allocate resources based upon the separate financial information of our operating segments. In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which our segments operate and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenue and “Adjusted EBITDA,” which we define as income from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring expense, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, charges for unprecedented personal-injury legal matters and income taxes. Charges for unprecedented personal-injury legal matters are recorded within operating expenses in our consolidated condensed statement of comprehensive income. We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the aggregate performance of our operating businesses and in comparing our results from period to period. We believe that Adjusted EBITDA is useful to investors because it allows investors to assess our financial condition and results of operations on the same basis that management uses internally. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

Three Months Ended March 31, 2017 vs. Three Months Ended March 31, 2016

Our consolidated results of operations comprised the following:



		Three Months Ended March 31,
		2017			2016			Change			% Change
Revenues
	Vehicle rental	$	1,286		$	1,328		$	(42	)	(3	%)
	Other	553			553			—			0	%
Net revenues		1,839			1,881			(42		)	(2	%)

Expenses
	Operating	1,049			1,040			9			1	%
	Vehicle depreciation and lease charges, net	504			463			41			9	%
	Selling, general and administrative	262			269			(7		)	(3	%)
	Vehicle interest, net	64			65			(1		)	(2	%)
	Non-vehicle related depreciation and amortization	63			61			2			3	%
	Interest expense related to corporate debt, net:
	Interest expense	49			50			(1		)	(2	%)
	Early extinguishment of debt	3			—			3			*
	Restructuring expense	7			15			(8		)	(53	%)
	Transaction-related costs, net	3			4			(1		)	(25	%)
Total expenses		2,004			1,967			37			2	%

Loss before income taxes		(165		)	(86		)	(79		)	*
Benefit from income taxes		(58		)	(35		)	(23		)	*

Net loss		$	(107	)	$	(51	)	$	(56	)	*

__________


*	Not meaningful

The first quarter is typically a seasonally slower and lower-margin period for our business. First quarter results are not indicative of the full year. The shift in Easter from first quarter 2016 to second quarter 2017 also negatively impacted our first quarter 2017 results.

During first quarter 2017, our net revenues decreased as a result of a 5% decline in pricing, partially offset by 3% increase in rental volumes. Currency exchange rate movements negatively impacted revenues by $5 million.

Total expenses increased as a result of a 4% increase in per-unit fleet costs, partially offset by a $27 million (1%) favorable impact on expenses from currency exchange rate movements. Our effective tax rates were benefits of 35% and 41% for the three months ended March 31, 2017 and 2016, respectively. As a result of the decrease in our net revenues and these items, our net loss increased by $56 million.

Table of Contents

For the three months ended March 31, 2017, the Company reported a loss of $1.25 per diluted share, which includes after-tax charges for legal matters of ($0.09) per share, after-tax restructuring expense of ($0.05) per share, after-tax transaction-related costs of ($0.03) per share and after-tax debt extinguishment costs of ($0.02) per share. For the three months ended March 31, 2016, the Company reported a loss of $0.53 per diluted share, which includes after-tax restructuring expense of ($0.12) per share and after-tax transaction-related costs of ($0.03) per share.

In the three months ended March 31, 2017:


•	Operating expenses increased to 57.1% of revenue from 55.3% in first quarter 2016, primarily due to lower pricing.


•	Vehicle depreciation and lease charges increased to 27.4% of revenue from 24.6% in first quarter 2016, due to higher per-unit fleet costs and lower pricing.


•	Selling, general and administrative costs were 14.2% of revenue compared to 14.3% in first quarter 2016.


•	Vehicle interest costs were 3.5% of revenue compared to 3.4% in the prior-year period.

Following is a more detailed discussion of the results of each of our reportable segments:



			Revenues						Adjusted EBITDA
			2017		2016		% Change		2017			2016			% Change
Americas			$	1,314	$	1,364	(4	%)	$	(20	)	$	63		*
International			525		517		2	%	7			1			*
Corporate and Other ^(a)			—		—		*		(14		)	(20		)	*
	Total Company		$	1,839	$	1,881	(2	%)	(27		)	44			*

Less:		Non-vehicle related depreciation and amortization							63			61
		Interest expense related to corporate debt, net:
		Interest expense							49			50
		Early extinguishment of debt							3			—
		Restructuring expense							7			15
		Transaction-related costs, net ^(b)							3			4
		Charges for legal matter ^(c)							13			—
Loss before income taxes									$	(165	)	$	(86	)

__________


*	Not meaningful.


^(a)	Includes unallocated corporate overhead which is not attributable to a particular segment.


^(b)	Primarily comprised of acquisition- and integration-related expenses.


^(c)	Reported within operating expenses in our consolidated results of operations.

Americas



	2017			2016		% Change
Revenue	$	1,314		$	1,364	(4	%)
Adjusted EBITDA	(20		)	63		*

__________


*	Not meaningful.

Revenues decreased 4% in first quarter 2017 compared with first quarter 2016, primarily due to a 4% decrease in pricing, partially offset by a 1% increase in rental volumes despite the leap-year impact of an extra day in first quarter 2016. Currency movements favorably impacted revenues by $3 million.

Adjusted EBITDA decreased $83 million in first quarter 2017 compared with first quarter 2016, due to lower pricing and a 7% increase in per-unit fleet costs, partially offset by an increase in rental volumes and a $2 million favorable impact from currency movements.

Table of Contents

In the three months ended March 31, 2017:


•	Operating expenses increased to 55.6% of revenue from 52.9% in first quarter 2016, due to lower pricing.


•	Vehicle depreciation and lease charges increased to 30.2% of revenue from 26.6% in the prior-year period, due to higher per-unit fleet costs and lower pricing.


•	Selling, general and administrative costs increased to 12.8% of revenue from 12.0% in first quarter 2016, due to lower pricing.


•	Vehicle interest costs increased to 4.0% of revenue compared to 3.8% in first quarter 2016.

International



	2017		2016		% Change
Revenue	$	525	$	517	2	%
Adjusted EBITDA	7		1		*

__________


*	Not meaningful.

Revenues increased 2% in first quarter 2017 compared to first quarter 2016, due to a 7% increase in rental volumes, largely driven by the acquisition of France Cars, partially offset by a 6% decrease in pricing (including a 2% negative impact from currency movements). Currency movements negatively impacted revenues by $8 million (2%).

Adjusted EBITDA increased $6 million in first quarter 2017 compared to first quarter 2016, due to increased rental volumes and a $16 million favorable impact from currency movements, partially offset by lower pricing.

In the three months ended March 31, 2017:


•	Operating expenses decreased to 60.4% of revenue from 60.6% in the prior-year period.


•	Vehicle depreciation and lease charges increased to 20.4% of revenue from 19.4% in first quarter 2016, primarily due to lower pricing.


•	Selling, general and administrative costs decreased to 15.6% of revenue from 17.3% in the prior-year period, primarily due to reduced marketing costs and commissions.


•	Vehicle interest costs decreased to 2.2% of revenue compared to 2.6% in first quarter 2016, principally due to lower borrowing rates.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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

Table of Contents

FINANCIAL CONDITION



	March 31, 2017		December 31, 2016		Change
Total assets exclusive of assets under vehicle programs	$	6,674	$	6,065	$	609
Total liabilities exclusive of liabilities under vehicle programs	6,316		5,775		541
Assets under vehicle programs	12,304		11,578		726
Liabilities under vehicle programs	12,521		11,647		874
Stockholders’ equity	141		221		(80		)

Total assets exclusive of assets under vehicle programs increased primarily due to a temporary increase in cash from the issuance of 4½% euro-denominated Senior Notes due May 2025 and $188 million of incremental term loan borrowings and a seasonal increase in value-added tax receivables which are recoverable from government agencies. Total liabilities exclusive of liabilities under vehicle programs increased primarily due to a temporary increase in corporate debt (See “Liquidity and Capital Resources” regarding the changes in our corporate financings).

The increases in assets under vehicle programs and liabilities under vehicle programs are principally related to the seasonal increase in the size of our vehicle rental fleet. The decrease in stockholders’ equity is primarily due to our net loss.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below.

During the three months ended March 31, 2017, we issued €250 million of 4½% euro-denominated Senior Notes due 2025 at par. The proceeds from this borrowing will be used to redeem all of our outstanding 6% euro-denominated Senior Notes due 2021 and a portion of our Floating Rate Senior Notes due 2017 during second quarter 2017. We also increased our Floating Rate Term Loan borrowing by $188 million, which will be used to repay the remainder of our outstanding Floating Rate Senior Notes due 2017. In addition, we repurchased approximately 1.5 million shares of our outstanding common stock for approximately $50 million during the three months ended March 31, 2017.

CASH FLOWS

The following table summarizes our cash flows:



		Three Months Ended March 31,
		2017			2016			Change
Cash provided by (used in):
	Operating activities	$	447		$	472		$	(25	)
	Investing activities	(972		)	(1,204		)	232
	Financing activities	950			1,138			(188		)
Effect of exchange rate changes		8			18			(10		)
Net increase in cash and cash equivalents		433			424			9
Cash and cash equivalents, beginning of period		490			452			38
Cash and cash equivalents, end of period		$	923		$	876		$	47

During the three months ended March 31, 2017, we generated $25 million less cash from operating activities compared with the same period in 2016, principally due to our net loss.

The decrease in cash used in investing activities during the three months ended March 31, 2017 compared with the same period in 2016 is primarily due to a net decrease in investment in vehicles.

Table of Contents

The decrease in cash provided by financing activities during the three months ended March 31, 2017 compared with the same period in 2016 is primarily due to a decrease in net borrowings under vehicle programs, partially offset by a temporary increase in net corporate borrowings.

DEBT AND FINANCING ARRANGEMENTS

At March 31, 2017, we had approximately $14 billion of indebtedness, including corporate indebtedness of approximately $4 billion and debt under vehicle programs of approximately $10 billion.

Corporate indebtedness consisted of:



		As of			As of
	Maturity Dates	March 31,			December 31,
	Maturity Dates	2017			2016
Floating Rate Senior Notes ^(a)	December 2017	249			249
Floating Rate Term Loan	March 2019	—			144
6% Euro-denominated Senior Notes ^(b)	March 2021	196			194
Floating Rate Term Loan ^(c)	March 2022	1,144			816
5⅛% Senior Notes	June 2022	400			400
5½% Senior Notes	April 2023	675			675
6⅜% Senior Notes	April 2024	350			350
4⅛% Euro-denominated Senior Notes	November 2024	320			316
5¼% Senior Notes	March 2025	375			375
4½% Euro-denominated Senior Notes	May 2025	266			—
Other ^(d)		59			57
Deferred financing fees		(54		)	(53		)
Total		$	3,980		$	3,523

__________


^(a)	The interest rate on these notes is equal to three-month LIBOR plus 275 basis points, for an aggregate rate of 3.80% at March 31, 2017; the Company has entered into an interest rate swap to hedge its interest rate exposure related to these notes at an aggregate rate of 3.58%. These notes have been called for redemption.


^(b)	These notes have been called for redemption.

^(c)


^(d)	Primarily includes capital leases which are secured by liens on the related assets.

The following table summarizes the components of our debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”):



	As of			As of
	March 31,			December 31,
	2017			2016
Americas - Debt due to Avis Budget Rental Car Funding ^(a)	$	7,146		$	6,733
Americas - Debt borrowings ^(a)	689			577
International - Debt borrowings ^(a)	1,560			1,449
International - Capital leases	154			162
Other	3			7
Deferred financing fees ^(b)	(51		)	(50		)
Total	$	9,501		$	8,878

__________


^(a)	The increase reflects additional borrowings principally to fund increases in the Company’s car rental fleet.


^(b)	Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of March 31, 2017 and December 31, 2016 were $40 million and $38 million, respectively.

Table of Contents

As of March 31, 2017, the committed corporate credit facilities available to us and/or our subsidiaries included:



	Total Capacity		Outstanding Borrowings		Letters of Credit Issued		Available Capacity
Senior revolving credit facility maturing 2021 ^(a)	$	1,800	$	—	$	904	$	896
Other facilities ^(b)	4		4		—		—

__________


^(a)	The senior revolving credit facility bears interest at one-month LIBOR plus 200 basis points and is part of the Company’s senior credit facility, which is secured by pledges of capital stock of certain subsidiaries of the Company, and liens on substantially all of the Company’s intellectual property and certain other real and personal property.


^(b)	These facilities encompass bank overdraft lines of credit, bearing interest of 1.50% to 3.10% as of March 31, 2017.

At March 31, 2017, we had various uncommitted credit facilities available, under which we had drawn approximately $7 million, which bear interest at rates between 0.71% and 4.50%.

The following table presents available funding under our debt arrangements related to our vehicle programs at March 31, 2017:



	Total Capacity ^(a)		Outstanding Borrowings		Available Capacity
Americas - Debt due to Avis Budget Rental Car Funding ^(b)	$	9,312	$	7,146	$	2,166
Americas - Debt borrowings ^(c)	897		689		208
International - Debt borrowings ^(d)	2,351		1,560		791
International - Capital leases ^(e)	172		154		18
Other	3		3		—
Total	$	12,735	$	9,552	$	3,183

__________


^(a)	Capacity is subject to maintaining sufficient assets to collateralize debt.


^(b)	The outstanding debt is collateralized by approximately $8.7 billion of underlying vehicles and related assets.


^(c)	The outstanding debt is collateralized by approximately $0.9 billion of underlying vehicles and related assets.


^(d)	The outstanding debt is collateralized by approximately $1.8 billion of underlying vehicles and related assets.


^(e)	The outstanding debt is collateralized by approximately $0.2 billion of underlying vehicles and related assets.

LIQUIDITY RISK

Our primary liquidity needs include the payment of operating expenses, servicing of corporate and vehicle related debt and procurement of rental vehicles to be used in our operations. The present intention of management is to reinvest the undistributed earnings of the Company’s foreign subsidiaries indefinitely into its foreign operations. We do not anticipate the need to repatriate foreign earnings to the United States to service corporate debt or for other U.S. needs. Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.

As discussed above, as of March 31, 2017, we have cash and cash equivalents of approximately $0.9 billion, available borrowing capacity under our committed credit facilities of approximately $0.9 billion and available capacity under our vehicle programs of approximately $3.2 billion.

Our liquidity position could be negatively affected by financial market disruptions or a downturn in the U.S. and worldwide economies, which may result in unfavorable conditions in the vehicle rental industry, in the asset-backed financing market, and in the credit markets generally. We believe these factors have in the past affected and could in the future affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a downturn in the worldwide economy or a disruption in the credit markets could impact our liquidity due to (i) decreased demand and pricing for vehicles in the used-vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs under, our financings, (iii) the adverse impact of vehicle manufacturers, including Ford, General Motors, Chrysler, Peugeot, Kia, Volkswagen, Fiat, Mercedes, Toyota and Volvo, being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market.

Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the financial and other covenants associated with our senior credit facility and other borrowings, including a maximum leverage ratio. As of March 31, 2017, we were in compliance with the financial covenants governing our

Table of Contents

indebtedness. For additional information regarding our liquidity risks, see Part I, Item 1A, “Risk Factors” of our 2016 Form 10-K.

CONTRACTUAL OBLIGATIONS

Our future contractual obligations have not changed significantly from the amounts reported within our 2016 Form 10-K with the exception of our commitment to purchase vehicles, which decreased by approximately $2.5 billion from December 31, 2016, to approximately $5.2 billion at March 31, 2017. Changes to our obligations related to corporate indebtedness and debt under vehicle programs are presented above within the section titled “Liquidity and Capital Resources—Debt and Financing Arrangements” and also within Notes 8 and 9 to our Consolidated Condensed Financial Statements.

ACCOUNTING POLICIES

The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions that we are required to make pertain to matters that are inherently uncertain as they relate to future events. Presented within the section titled “Critical Accounting Policies” of our 2016 Form 10-K are the accounting policies (related to goodwill and other indefinite-lived intangible assets, vehicles, income taxes and public liability, property damage and other insurance liabilities) that we believe require subjective and/or complex judgments that could potentially affect 2017 reported results. There have been no significant changes to those accounting policies or our assessment of which accounting policies we would consider to be critical accounting policies.

New Accounting Standards

For detailed information regarding new accounting standards and their impact on our business, see Note 1 to our Consolidated Condensed Financial Statements.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and gasoline prices. We assess our market risks based on changes in interest and currency exchange rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates. We used March 31, 2017 market rates to perform a sensitivity analysis separately for each of these market risk exposures. We have determined, through such analyses, that the impact of a 10% change in interest or currency exchange rates on our results of operations, balance sheet and cash flows would not be material. Additionally, we have commodity price exposure related to fluctuations in the price of unleaded gasoline. We anticipate that such commodity risk will remain a market risk exposure for the foreseeable future. We determined that a 10% change in the price of unleaded gasoline would not have a material impact on our earnings for the period ended March 31, 2017. For additional information regarding our long-term borrowings and financial instruments, see Notes 8, 9 and 13 to our Consolidated Condensed Financial Statements.


Item 4.	Controls and Procedures

(a)

Disclosure Controls and Procedures. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2017.

(b)

Changes in Internal Control Over Financial Reporting. During the fiscal quarter to which this report relates, there has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II – OTHER INFORMATION


Item 1.	Legal Proceedings

In February 2017, the Company was notified that the French Competition Authority dismissed all charges and cleared the Company and its subsidiaries of any wrongdoing.

For additional information regarding the Company’s legal proceedings, see Note 10 to our Consolidated Condensed Financial Statements and refer to the Company’s 2016 Form 10-K.


Item 1A.	Risk Factors

During quarter ended March 31, 2017, the Company had no material developments to report with respect to its risk factors. For additional information regarding the Company’s risk factors, please refer to the Company’s 2016 Form 10-K.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

The following is a summary of the Company’s common stock repurchases by month for the quarter ended March 31, 2017:



	Total Number of Shares Purchased^(a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
January 2017	270,788	$	36.93	270,788	290,476,208
February 2017	250,728	35.89		250,728	281,476,420
March 2017	1,000,944	30.97		1,000,944	250,475,857
Total	1,522,460	$	32.84	1,522,460	250,475,857

__________


^(a)	Excludes, for the three months ended March 31, 2017, 214,659 shares which were withheld by the Company to satisfy employees’ income tax liabilities attributable to the vesting of restricted stock unit awards.

The Company’s Board of Directors has authorized the repurchase of up to approximately $1.5 billion of its common stock under a plan originally approved in 2013 and subsequently expanded, most recently in 2016. The Company’s stock repurchases may occur through open market purchases or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. The repurchase program may be suspended, modified or discontinued at any time without prior notice. The repurchase program has no set expiration or termination date.


Item 6.	Exhibits

See Exhibit Index.

Table of Contents

SIGNATURES

Pursuant to the requirements 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 BUDGET GROUP, INC.

Date:	May 4, 2017
		/s/ David B. Wyshner
		David B. Wyshner
		President and
		Chief Financial Officer

Date:	May 4, 2017
		/s/ David T. Calabria
		David T. Calabria
		Senior Vice President and
		Chief Accounting Officer

Table of Contents

Exhibit Index



Exhibit No.	Description
3.3	Certificate of Designations of Series R Preferred Stock of Avis Budget Group, Inc., as filed with the Secretary of State of the State of Delaware on January 23, 2017 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 23, 2017).
4.1	Rights Agreement, dated as of January 23, 2017, between Avis Budget Group, Inc. and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 23, 2017).
4.2	Indenture dated as of March 8, 2017 among Avis Budget Finance, plc, as Issuer, the Guarantors from time to time parties thereto, Deutsche Bank Trust Company Americas, as Trustee, Deutsche Bank AG, London Branch, as Paying Agent and Deutsche Bank Luxembourg S.A., as Registrar.
4.3	Form of 4.50% Senior Notes Due 2025.
10.1	First Amendment, dated as of March 3, 2017, to the Fourth Amended and Restated Credit Agreement dated as of October 7, 2016, among Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC, Avis Budget Group, Inc., the subsidiary borrowers from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the several lenders from time to time parties thereto (Incorporated by reference Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 9, 2017).
10.2	Series 2017-1 Supplement, dated as of March 15, 2017, between Avis Budget Rental Car Funding (AESOP) and The Bank of New York Mellon Trust Company, N.A., as Trustee and Series 2017-1 Agent (Incorporated by reference Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 21, 2017).
12	Statement re: Computation of Ratio of Earnings to Fixed Charges.
31.1	Certification of Chief Executive Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.