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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2023
OR

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

For the transition period from _____ to _____
Commission File No. 001-10308

Avis Budget Group, Inc.
(Exact name of registrant as specified in its charter)

| 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) |

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, Par Value $0.01 | CAR | The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | Non-accelerated Filer | ☐
Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the issuer’s common stock was 38,738,944 shares as of July 31, 2023.

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|  | Page
PART I | Financial Information |
Item 1. | Financial Statements |
| Consolidated Condensed Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited) | 4
| Consolidated Condensed Balance Sheets as of June 3 0, 2023 and December 31, 2022 (Unaudited) | 5
| Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 3 0, 2023 and 2022 (Unaudited) | 6
| Consolidated Condensed Statements of Stockholders’ Equity for the Three and Six Months Ended June 3 0, 2023 and 2022 (Unaudited) | 8
| Notes to Consolidated Condensed Financial Statements (Unaudited) | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 37
Item 4. | Controls and Procedures | 38
PART II | Other Information |
Item 1. | Legal Proceedings | 39
Item 1A. | Risk Factors | 39
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 39
Item 5. | Other Information | 39
Item 6. | Exhibits | 39
| Signatures | 40

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FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q may be considered “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by any such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such as “believes,” “expects,” “anticipates,” “will,” “should,” “could,” “may,” “would,” “intends,” “projects,” “estimates,” “plans,” “forecasts,” “guidance,” and similar words, expressions or phrases. The following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements. These factors include, but are not limited to:
•the high level of competition in the mobility industry, including from new companies or technology, and the impact such competition may have on pricing and rental volume;
•a change in our fleet costs, including as a result of a change in the cost of new vehicles, resulting from inflation or otherwise, manufacturer recalls, disruption in the supply of new vehicles, shortages in semiconductors used in new vehicle production, and/or a change in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;
•the results of operations or financial condition of the manufacturers of our vehicles, which could impact their ability to perform their payment obligations under our agreements with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make vehicles available to us or the mobility industry as a whole on commercially reasonable terms or at all;
•levels of and volatility in travel demand, including future volatility in airline passenger traffic;
•a deterioration in economic conditions, resulting in a recession or otherwise, particularly during our peak season or in key market segments;
•an occurrence or threat of terrorism, the current and any future pandemic diseases, natural disasters, military conflict, including the ongoing military conflict between Russia and Ukraine, or civil unrest in the locations in which we operate, and the potential effects of sanctions on the world economy and markets and/or international trade;
•any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business, including as a result of COVID-19, inflation, the ongoing military conflict between Russia and Ukraine, and any embargos on oil sales imposed on or by the Russian government;
•our ability to continue to successfully implement or achieve our business plans and strategies, achieve and maintain cost savings and adapt our business to changes in mobility;
•political, economic or commercial instability in the countries in which we operate, and our ability to conform to multiple and conflicting laws or regulations in tho se countries;
•our ability to dispose of vehicles in the used-vehicle market on attractive terms;
•our dependence on third-party distribution channels, third-party suppliers of other services an d co-marketing arrangements with third parties;
•risks related to completed or future acquisitions or investments that we may pursue, including the incurrence of incremental indebtedness to help fund such transactions and our ability to promptly and effectively integrate any acquired businesses or capitalize on joint ventures, partnerships and other investments;
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•our ability to utilize derivative instruments, and the impact of derivative instruments we utilize, which can be affected by fluctuations in interest rates, gasoline prices and exchange rates, changes in government regulations and other factors;
•our exposure to uninsured or unpaid claims in excess of historical levels and our ability to obtain insurance at desired levels and the cost of that insurance;
•risks associated with litigation or governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and consumer privacy, labor and employment, and tax;
•risks related to protecting the integrity of, and preventing unauthorized access to, our information technology systems or those of our third-party vendors, licensees, dealers, independent operators and independent contractors, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, compliance with privacy and data protection regulation, and the effects of any potential increase in cyberattacks on the world economy and markets and/or international trade;
•any impact on us from the actions of our third-party vendors, licensees, dealers, independent operators and independent contractors and/or disputes that may arise out of our agreements with such parties;
•any major disruptions in our communication networks or information systems;
•risks related to tax obligations and the effect of future changes in tax laws and accounting standards;
•risks related to our indebtedness, including our substantial outstanding debt obligations, recent and future interest rate increases, which increase our financing costs, downgrades by rating agencies and our ability to incur substantially more debt;
•our ability to obtain financing for our global operations, including the funding of our vehicle fleet through the issuance of asset-backed securities and use of the global lending markets;
•our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, or to obtain a waiver or amendment of such covenants should we be unable to meet such covenants;
•significant changes in the assumptions and estimates that are used in our impairment testing for goodwill or intangible assets, which could result in a significant impairment of our goodwill or intangible assets; and
•other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.
We operate in a continuously changing business environment and new risk factors emerge from time to time. New risk factors, factors beyond our control, or changes in the impact of identified risk factors may cause actual results to differ materially from those set forth in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Moreover, we do not assume responsibility if future results are materially different from those forecasted or anticipated. Other factors and assumptions not identified above, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and “Risk Factors” in Item 1A in this quarterly report and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2023 (the “2022 Form 10-K”), may cause actual results to differ materially from those projected in any forward-looking statements.
Although we believe that our assumptions are reasonable, any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual results could differ materially from past results and/or those anticipated, estimated or projected. We undertake no obligation to release any revisions
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to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
3

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

|  |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  |  | 2023 |  | 2022 |  | 2023 |  | 2022
Revenues | $ | 3,123 |  |  | $ | 3,244 |  |  | $ | 5,680 |  |  | $ | 5,676 |
Expenses |  |  |  |  |  |  |
| Operating | 1,475 |  |  | 1,349 |  |  | 2,782 |  |  | 2,496 |
| Vehicle depreciation and lease charges, net | 375 |  |  | 234 |  |  | 640 |  |  | 345 |
| Selling, general and administrative | 378 |  |  | 359 |  |  | 702 |  |  | 642 |
| Vehicle interest, net | 172 |  |  | 97 |  |  | 305 |  |  | 174 |
| Non-vehicle related depreciation and amortization | 52 |  |  | 51 |  |  | 108 |  |  | 109 |
| Interest expense related to corporate debt, net: |  |  |  |  |  |  |
| Interest expense | 68 |  |  | 64 |  |  | 141 |  |  | 117 |
| Restructuring and other related charges | 1 |  |  | 6 |  |  | 5 |  |  | 14 |
| Transaction-related costs, net | — |  |  | 1 |  |  | — |  |  | 1 |
| Other (income) expense, net | 4 |  |  | — |  |  | 2 |  |  | — |
Total expenses | 2,525 |  |  | 2,161 |  |  | 4,685 |  |  | 3,898 |
Income before income taxes | 598 |  |  | 1,083 |  |  | 995 |  |  | 1,778 |
Provision for income taxes | 162 |  |  | 309 |  |  | 247 |  |  | 477 |
Net income | 436 |  |  | 774 |  |  | 748 |  |  | 1,301 |
| Less: net income (loss) attributable to non-controlling interests | 1 |  |  | (4) |  |  | 1 |  |  | (6) |
Net income attributable to Avis Budget Group, Inc. | $ | 435 |  |  | $ | 778 |  |  | $ | 747 |  |  | $ | 1,307 |
Comprehensive income attributable to Avis Budget Group, Inc. | $ | 456 |  |  | $ | 742 |  |  | $ | 758 |  |  | $ | 1,310 |
Earnings per share |  |  |  |  |  |  |
| Basic | $ | 11.13 |  |  | $ | 16.05 |  |  | $ | 19.16 |  |  | $ | 25.74 |
| Diluted | $ | 11.01 |  |  | $ | 15.71 |  |  | $ | 18.93 |  |  | $ | 25.14 |

See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions, except par value)
(Unaudited)

|  | June 30, 2023 |  | December 31, 2022
Assets |  |  |
Current assets: |  |  |
| Cash and cash equivalents | $ | 571 |  |  | $ | 570 |
| Receivables, net | 897 |  |  | 810 |
| Other current assets | 765 |  |  | 506 |
Total current assets | 2,233 |  |  | 1,886 |
Property and equipment, net | 624 |  |  | 594 |
Operating lease right-of-use assets | 2,547 |  |  | 2,405 |
Deferred income taxes | 1,457 |  |  | 1,379 |
Goodwill | 1,082 |  |  | 1,070 |
Other intangibles, net | 669 |  |  | 666 |
Other non-current assets | 480 |  |  | 499 |
Total assets exclusive of assets under vehicle programs | 9,092 |  |  | 8,499 |
Assets under vehicle programs: |  |  |
| Program cash | 109 |  |  | 70 |
| Vehicles, net | 20,625 |  |  | 15,961 |
| Receivables from vehicle manufacturers and other | 421 |  |  | 421 |
| Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party | 1,148 |  |  | 976 |
|  | 22,303 |  |  | 17,428 |
Total Assets | $ | 31,395 |  |  | $ | 25,927 |
Liabilities and Stockholders’ Equity |  |  |
Current liabilities: |  |  |
| Accounts payable and other current liabilities | $ | 2,810 |  |  | $ | 2,547 |
| Short-term debt and current portion of long-term debt | 34 |  |  | 27 |
Total current liabilities | 2,844 |  |  | 2,574 |
Long-term debt | 4,668 |  |  | 4,644 |
Long-term operating lease liabilities | 2,079 |  |  | 1,884 |
Other non-current liabilities | 529 |  |  | 554 |
Total liabilities exclusive of liabilities under vehicle programs | 10,120 |  |  | 9,656 |
Liabilities under vehicle programs: |  |  |
| Debt | 3,399 |  |  | 2,534 |
| Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party | 14,375 |  |  | 11,275 |
| Deferred income taxes | 2,997 |  |  | 2,754 |
| Other | 629 |  |  | 408 |
|  | 21,400 |  |  | 16,971 |
Commitments and contingencies (Note 13) |  |  |
Stockholders’ equity: |  |  |
| Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, respectively | — |  |  | — |
| Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively | 1 |  |  | 1 |
| Additional paid-in capital | 6,625 |  |  | 6,666 |
| Retained earnings | 3,326 |  |  | 2,579 |
| Accumulated other comprehensive loss | (90) |  |  | (101) |
| Treasury stock, at cost— 97 and 98 shares, respectively | (9,991) |  |  | (9,848) |
Stockholders’ equity attributable to Avis Budget Group, Inc. | (129) |  |  | (703) |
| Non-controlling interests | 4 |  |  | 3 |
Total stockholders’ equity | (125) |  |  | (700) |
Total Liabilities and Stockholders’ Equity | $ | 31,395 |  |  | $ | 25,927 |

See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

|  |  | Six Months Ended June 30,
|  |  | 2023 |  | 2022
Operating activities |  |  |
Net income | $ | 748 |  |  | $ | 1,301 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Vehicle depreciation | 1,017 |  |  | 777 |
| Amortization of right-of-use assets | 503 |  |  | 414 |
| (Gain) loss on sale of vehicles, net | (455) |  |  | (497) |
| Non-vehicle related depreciation and amortization | 108 |  |  | 109 |
| Stock-based compensation | 16 |  |  | 12 |
| Amortization of debt financing fees | 19 |  |  | 16 |
| Net change in assets and liabilities: |  |  |
|  | Receivables | (52) |  |  | (139) |
|  | Income taxes and deferred income taxes | 150 |  |  | 373 |
|  | Accounts payable and other current liabilities | 108 |  |  | 434 |
| Operating lease liabilities | (500) |  |  | (415) |
| Other, net | 120 |  |  | (14) |
Net cash provided by operating activities | 1,782 |  |  | 2,371 |
Investing activities |  |  |
Property and equipment additions | (105) |  |  | (76) |
Proceeds received on asset sales | — |  |  | 2 |
Net assets acquired (net of cash acquired) | (33) |  |  | (1) |
Other, net | — |  |  | 23 |
Net cash used in investing activities exclusive of vehicle programs | (138) |  |  | (52) |
Vehicle programs: |  |  |
| Investment in vehicles | (8,881) |  |  | (6,269) |
| Proceeds received on disposition of vehicles | 3,977 |  |  | 2,594 |
| Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party | (329) |  |  | (210) |
| Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party | 157 |  |  | 67 |
|  | (5,076) |  |  | (3,818) |
Net cash used in investing activities | (5,214) |  |  | (3,870) |

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

|  | Six Months Ended June 30,
|  | 2023 |  | 2022
Financing activities |  |  |
Proceeds from long-term borrowings | $ | — |  |  | $ | 729 |
Payments on long-term borrowings | (15) |  |  | (11) |
Net change in short-term borrowings | 3 |  |  | — |
Repurchases of common stock | (200) |  |  | (1,748) |
Debt financing fees | (2) |  |  | (6) |
Net cash used in financing activities exclusive of vehicle programs | (214) |  |  | (1,036) |
Vehicle programs: |  |  |
| Proceeds from borrowings | 11,866 |  |  | 8,921 |
| Payments on borrowings | (8,158) |  |  | (6,289) |
| Debt financing fees | (28) |  |  | (14) |
|  | 3,680 |  |  | 2,618 |
Net cash provided by financing activities | 3,466 |  |  | 1,582 |
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash | 6 |  |  | (25) |
Net increase in cash and cash equivalents, program and restricted cash | 40 |  |  | 58 |
Cash and cash equivalents, program and restricted cash, beginning of period | 642 |  |  | 626 |
Cash and cash equivalents, program and restricted cash, end of period | $ | 682 |  |  | $ | 684 |

See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)

| Common Stock |  | Additional Paid-in Capital |  | Retained Earnings (Accumulated Deficit) |  | Accumulated Other Comprehensive Income (Loss) |  | Treasury Stock |  | Stockholders’ Equity Attributable to Avis Budget Group, Inc. |  | Non-controlling Interests |  | Total Stockholders’ Equity
| Shares |  | Amount |  |  |  |  | Shares |  | Amount |  |  |
Balance at March 31, 2023 | 137.1 |  |  | $ | 1 |  |  | $ | 6,620 |  |  | $ | 2,891 |  |  | $ | (111) |  |  | (97.3) |  |  | $ | (9,845) |  |  | $ | (444) |  |  | $ | 3 |  |  | $ | (441) |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income | — |  |  | — |  |  | — |  |  | 435 |  |  | — |  |  | — |  |  | — |  |  | 435 |  |  | 1 |  |  | 436 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 21 |  |  | — |  |  | — |  |  | 21 |  |  | — |  |  | 21 |
Total comprehensive income |  |  |  |  |  |  | 435 |  |  | 21 |  |  |  |  |  |  | 456 |  |  | 1 |  |  | 457 |
Net activity related to restricted stock units | — |  |  | — |  |  | 5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | — |  |  | 5 |
Repurchases of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.7) |  |  | (146) |  |  | (146) |  |  | — |  |  | (146) |
Balance at June 30, 2023 | 137.1 |  |  | $ | 1 |  |  | $ | 6,625 |  |  | $ | 3,326 |  |  | $ | (90) |  |  | $ | (98.0) |  |  | $ | (9,991) |  |  | $ | (129) |  |  | $ | 4 |  |  | $ | (125) |
Balance at March 31, 2022 | 137.1 |  |  | $ | 1 |  |  | $ | 6,646 |  |  | $ | 344 |  |  | $ | (94) |  |  | (87.4) |  |  | $ | (7,889) |  |  | $ | (992) |  |  | $ | 9 |  |  | $ | (983) |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) | — |  |  | — |  |  | — |  |  | 778 |  |  | — |  |  | — |  |  | — |  |  | 778 |  |  | (4) |  |  | 774 |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | (36) |  |  | — |  |  | — |  |  | (36) |  |  | — |  |  | (36) |
Total comprehensive income (loss) |  |  |  |  |  |  | 778 |  |  | (36) |  |  |  |  |  |  | 742 |  |  | (4) |  |  | 738 |
Net activity related to restricted stock units | — |  |  | — |  |  | (3) |  |  | — |  |  | — |  |  | 0.1 |  |  | — |  |  | (3) |  |  | — |  |  | (3) |
Repurchases of common stock | — |  | — |  | — |  | — |  | — |  | (1.5) |  |  | (401) |  |  | (401) |  |  | — |  | (401) |
Balance at June 30, 2022 | 137.1 |  |  | $ | 1 |  |  | $ | 6,643 |  |  | $ | 1,122 |  |  | $ | (130) |  |  | (88.8) |  |  | $ | (8,290) |  |  | $ | (654) |  |  | $ | 5 |  |  | $ | (649) |

| Common Stock |  | Additional Paid-in Capital |  | Retained Earnings (Accumulated Deficit) |  | Accumulated Other Comprehensive Income (Loss) |  | Treasury Stock |  | Stockholders’ Equity Attributable to Avis Budget Group, Inc. |  | Non-controlling Interests |  | Total Stockholders’ Equity
| Shares |  | Amount |  |  |  |  | Shares |  | Amount |  |  |
Balance at December 31, 2022 | 137.1 |  |  | $ | 1 |  |  | $ | 6,666 |  |  | $ | 2,579 |  |  | $ | (101) |  |  | (97.6) |  |  | $ | (9,848) |  |  | $ | (703) |  |  | $ | 3 |  |  | $ | (700) |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income | — |  |  | — |  |  | — |  |  | 747 |  |  | — |  |  | — |  |  | — |  |  | 747 |  |  | 1 |  |  | 748 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 11 |  |  | — |  |  | — |  |  | 11 |  |  | — |  |  | 11 |
Total comprehensive income |  |  |  |  |  |  | 747 |  |  | 11 |  |  |  |  |  |  | 758 |  |  | 1 |  |  | 759 |
Net activity related to restricted stock units | — |  |  | — |  |  | (41) |  |  | — |  |  | — |  |  | 0.3 |  |  | 3 |  |  | (38) |  |  | — |  |  | (38) |
Repurchases of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.7) |  |  | (146) |  |  | (146) |  |  | — |  |  | (146) |
Balance at June 30, 2023 | 137.1 |  |  | $ | 1 |  |  | $ | 6,625 |  |  | $ | 3,326 |  |  | $ | (90) |  |  | $ | (98.0) |  |  | $ | (9,991) |  |  | $ | (129) |  |  | $ | 4 |  |  | $ | (125) |
Balance at December 31, 2021 | 137.1 |  |  | $ | 1 |  |  | $ | 6,676 |  |  | $ | (185) |  |  | $ | (133) |  |  | (81.2) |  |  | $ | (6,579) |  |  | $ | (220) |  |  | $ | 11 |  |  | $ | (209) |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) | — |  |  | — |  |  | — |  |  | 1,307 |  |  | — |  |  | — |  |  | — |  |  | 1,307 |  |  | (6) |  |  | 1,301 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | 3 |
Total comprehensive income (loss) |  |  |  |  |  |  | 1,307 |  |  | 3 |  |  |  |  |  |  | 1,310 |  |  | (6) |  |  | 1,304 |
Net activity related to restricted stock units | — |  |  | — |  |  | (33) |  |  | — |  |  | — |  |  | 0.3 |  |  | (3) |  |  | (36) |  |  | — |  |  | (36) |
Repurchases of common stock | — |  | — |  | — |  | — |  | — |  | (7.9) |  |  | (1,708) |  |  | (1,708) |  |  | — |  | (1,708) |
Balance at June 30, 2022 | 137.1 |  |  | $ | 1 |  |  | $ | 6,643 |  |  | $ | 1,122 |  |  | $ | (130) |  |  | (88.8) |  |  | $ | (8,290) |  |  | $ | (654) |  |  | $ | 5 |  |  | $ | (649) |

See Notes to Consolidated Condensed Financial Statements (Unaudited).
8

Avis Budget Group, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Unless otherwise noted, all dollar amounts in tables are in millions, except per share amounts)
1. Basis of Presentation
Avis Budget Group, Inc. provides mobility solutions to businesses and consumers worldwide. The accompanying unaudited Consolidated Condensed Financial Statements include the accounts and transactions of Avis Budget Group, Inc. and its subsidiaries, as well as entities in which Avis Budget Group, Inc. directly or indirectly has a controlling financial interest (collectively, “we”, “our”, “us”, or the “Company”), and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting.
We operate the following reportable business segments:
•Americas - consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.
•International - consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.
The operating results of acquired businesses are included in the accompanying Consolidated Condensed Financial Statements from the dates of acquisition. Differences between the preliminary allocation of purchase price and the final allocation for our 2022 acquisitions of various licensees were not material. We consolidate joint venture activities when we have a controlling interest and record non-controlling interests within stockholders’ equity and the statement of comprehensive income equal to the percentage of ownership interest retained in such entities by the respective non-controlling party.
In presenting the Consolidated Condensed Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Consolidated Condensed Financial Statements contain all adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These financial statements should be read in conjunction with our 2022 Annual Report on Form 10-K (the “2022 Form 10-K”).
Summary of Significant Accounting Policies
Our significant accounting policies are fully described in Note 2 – Summary of Significant Accounting Policies in our 2022 Form 10-K.
Cash and cash equivalents, Program cash and Restricted cash. The following table provides a detail of cash and cash equivalents, program and restricted cash reported within the Consolidated Condensed Balance Sheets to the amounts shown in the Consolidated Condensed Statements of Cash Flows.

| As of June 30,
| 2023 |  | 2022
Cash and cash equivalents | $ | 571 |  |  | $ | 579 |
Program cash | 109 |  |  | 103 |
Restricted cash (a) | 2 |  |  | 2 |
Total cash and cash equivalents, program and restricted cash | $ | 682 |  |  | $ | 684 |

________
(a)Included within other current assets.
9

Vehicle Programs. We present separately the financial data of our vehicle programs. These programs are distinct from our other activities since the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.
Transaction-related costs, net. Transaction-related costs, net are classified separately in the Consolidated Condensed Statements of Comprehensive Income. These costs are comprised of expenses primarily related to acquisition-related activities such as due diligence and other advisory costs, expenses related to the integration of the acquiree’s operations with those of our operations, including the implementation of best practices and process improvements, non-cash gains and losses related to re-acquired rights, expenses related to pre-acquisition contingencies and contingent consideration related to acquisitions.
Currency Transactions. We record the gain or loss on foreign currency transactions on certain intercompany loans and the gain or loss on intercompany loan hedges within interest expense related to corporate debt, net.
Divestitures. In February 2022, we completed the sale of our operations in the United States Virgin Islands for $13 million, for the right to operate the Avis brand. During the six months ended June 30, 2022, we recorded a gain of $2 million within restructuring and other related charges.
In March 2022, we completed the sale of our operations in the Netherlands for $15 million, subject to working capital adjustments, for the right to operate the Avis and Budget brands. During the six months ended June 30, 2022, we recorded a loss of $7 million, net of impact of foreign currency adjustments, within restructuring and other related charges. The Netherlands operations were reported within our International reporting segment.
Variable Interest Entity (“VIE”). We review our investments to determine if they are VIEs. A VIE is an entity in which either (i) the equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. Entities that are determined to be VIEs are consolidated if we are the primary beneficiary of the entity. The primary beneficiary possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. We will reconsider our original assessment of a VIE upon the occurrence of certain events such as contributions and redemptions, either by us, or third parties, or amendments to an entity’s governing documents. On an ongoing basis, we reconsider whether we are deemed to be a VIE’s primary beneficiary. See Note 15 – Related Party Transactions for our VIE investment in our former subsidiary.
Investments. As of June 30, 2023 and December 31, 2022, we had equity method investments with a carrying value o f $85 million and $77 million, respectively, which are included in other non-current assets. Earnings from our equity method investments are included within operating expenses. For the three months ended June 30, 2023 and 2022, we recorded $3 million and $2 million related to our equity method investments, respectively. For the six months ended June 30, 2023 and 2022, we recorded $4 million and $3 million related to our equity method investments, respectively. See Note 15 – Related Party Transactions for our equity method investment in our former subsidiary.
Revenues. Revenues are recognized under “Leases (Topic 842),” with the exception of royalty fee revenue derived from our licensees and revenue related to our customer loyalty program, which were approximately $42 million during the three months ended June 30, 2023 and 2022, in each period, and $86 million and $76 million during the six months ended June 30, 2023 and 2022, respectively.
10

The following table presents our revenues disaggregated by geography:

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Americas | $ | 2,428 |  |  | $ | 2,567 |  |  | $ | 4,444 |  |  | $ | 4,567 |
Europe, Middle East and Africa | 543 |  |  | 525 |  |  | 910 |  |  | 849 |
Asia and Australasia | 152 |  |  | 152 |  |  | 326 |  |  | 260 |
Total revenues | $ | 3,123 |  |  | $ | 3,244 |  |  | $ | 5,680 |  |  | $ | 5,676 |

The following table presents our revenues disaggregated by brand:

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Avis | $ | 1,748 |  |  | $ | 1,753 |  |  | $ | 3,163 |  |  | $ | 3,034 |
Budget | 1,180 |  |  | 1,284 |  |  | 2,157 |  |  | 2,266 |
Other | 195 |  |  | 207 |  |  | 360 |  |  | 376 |
Total revenues | $ | 3,123 |  |  | $ | 3,244 |  |  | $ | 5,680 |  |  | $ | 5,676 |

________
Other includes Zipcar and other operating brands.
Recently Issued Accounting Pronouncements
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which amends Topic 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2021-08 became effective for us on January 1, 2023. The adoption of this accounting pronouncement did not have a material impact on our Consolidated Condensed Financial Statements.
2. Leases
Lessor
The following table presents our lease revenues disaggregated by geography:

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Americas | $ | 2,410 |  |  | $ | 2,549 |  |  | $ | 4,405 |  |  | $ | 4,534 |
Europe, Middle East and Africa | 523 |  |  | 505 |  |  | 872 |  |  | 814 |
Asia and Australasia | 148 |  |  | 148 |  |  | 317 |  |  | 252 |
Total lease revenues | $ | 3,081 |  |  | $ | 3,202 |  |  | $ | 5,594 |  |  | $ | 5,600 |

11

The following table presents our lease revenues disaggregated by brand:

| Three Months Ended June 30, |  | Six Months Ended June 30, |
| 2023 |  | 2022 |  | 2023 |  | 2022 |
Avis | $ | 1,721 |  |  | $ | 1,728 |  |  | $ | 3,109 |  |  | $ | 2,989 |  |
Budget | 1,168 |  |  | 1,270 |  |  | 2,132 |  |  | 2,242 |  |
Other | 192 |  |  | 204 |  |  | 353 |  |  | 369 |  |
Total lease revenues | $ | 3,081 |  |  | $ | 3,202 |  |  | $ | 5,594 |  |  | $ | 5,600 |  |

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

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Property leases (a) |  |  |  |  |  |  |
Operating lease expense | $ | 214 |  |  | $ | 168 |  |  | $ | 419 |  |  | $ | 329 |
Variable lease expense | 108 |  |  | 152 |  |  | 191 |  |  | 254 |
Total property lease expense | $ | 322 |  |  | $ | 320 |  |  | $ | 610 |  |  | $ | 583 |

__________
(a) Primarily within operating expenses.
Supplemental balance sheet information related to leases is as follows:

| As of June 30, 2023 |  | As of December 31, 2022
Property leases |  |  |
Operating lease ROU assets | $ | 2,547 |  | $ | 2,405
Short-term operating lease liabilities (a) | $ | 506 |  | $ | 555
Long-term operating lease liabilities | 2,079 |  | 1,884
Operating lease liabilities | $ | 2,585 |  | $ | 2,439
Weighted average remaining lease term | 8.6 years |  | 8.2 years
Weighted average discount rate | 4.54 | % |  | 4.30 | %

_________
(a) Included in accounts payable and other current liabilities.
12

Supplemental cash flow information related to leases is as follows:

| Six Months Ended June 30,
| 2023 |  | 2022
Cash payments for lease liabilities within operating activities: |  |  |
Property operating leases | $ | 431 |  |  | $ | 354 |
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities: |  |  |
Property operating leases | $ | 572 |  |  | $ | 311 |

3. Restructuring and Other Related Charges
During second quarter 2022, we initiated a restructuring plan to focus on consolidating our global operations by designing new processes and implementing new systems (“Cost Optimization”). As of June 30, 2023, we formally communicated the termination of employment to approximately 270 employees as part of this process, and terminated approximately 255 of these employees. We expect further restructuring expense of approximately $2 million related to this initiative to be incurred this year.
The following table presents our restructuring liabilities and related activities by reportable segment as it relates to our Cost Optimization plan, which are all personnel related in nature:

|  |  | Americas |  | International |  | Total
Balance as of January 1, 2023 |  | $ | 1 |  |  | $ | 3 |  |  | $ | 4 |
| Restructuring expense |  | 3 |  |  | 2 |  |  | 5 |
| Restructuring payments and utilization |  | (3) |  |  | (3) |  |  | (6) |
Balance as of June 30, 2023 |  | $ | 1 |  |  | $ | 2 |  |  | $ | 3 |

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

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Net income attributable to Avis Budget Group, Inc. for basic and diluted EPS | $ | 435 |  |  | $ | 778 |  |  | $ | 747 |  |  | $ | 1,307 |
Basic weighted average shares outstanding | 39.1 |  |  | 48.5 |  |  | 39.0 |  |  | 50.8 |
Non-vested stock (a) | 0.4 |  |  | 1.0 |  |  | 0.5 |  |  | 1.2 |
Diluted weighted average shares outstanding | 39.5 |  |  | 49.5 |  |  | 39.5 |  |  | 52.0 |
Earnings per share: |  |  |  |  |  |  |
| Basic | $ | 11.13 |  |  | $ | 16.05 |  |  | $ | 19.16 |  |  | $ | 25.74 |
| Diluted | $ | 11.01 |  |  | $ | 15.71 |  |  | $ | 18.93 |  |  | $ | 25.14 |

________
(a) For the three and six months ended June 30, 2023, 0.1 million non-vested stock awards, in each period, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding. For the six months ended June 30, 2022, 0.1 million non-vested stock awards have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.
13

5. Other Current Assets
Other current assets consisted of:

| As of June 30, 2023 |  | As of December 31, 2022
Prepaid expenses | $ | 294 |  |  | $ | 252 |
Sales and use taxes | 312 |  |  | 142 |
Other | 159 |  |  | 112 |
Other current assets | $ | 765 |  |  | $ | 506 |

6. Acquisitions
During the six months ended June 30, 2023, we completed the acquisition of a licensee in North America for approximately $14 million, plus approximately $20 million for acquired fleet. This investment is in-line with our strategy to re-acquire licensees when advantageous to expand our footprint of Company-operated locations. The acquired fleet was financed under our existing financing arrangements. In connection with this acquisition, approximately $14 million was recorded to other intangibles related to franchise agreements. The license agreements are being amortized over a weighted average useful life of approximately five years. The fair value of the assets acquired and liabilities assumed has not yet been finalized and is therefore subject to change.
7. Intangible Assets
Intangible assets consisted of:

| As of June 30, 2023 |  | As of December 31, 2022
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Amortized Intangible Assets |  |  |  |  |  |  |  |  |  |  |
License agreements | $ | 305 |  |  | $ | 225 |  |  | $ | 80 |  |  | $ | 290 |  |  | $ | 217 |  |  | $ | 73 |
Customer relationships | 250 |  |  | 214 |  |  | 36 |  |  | 247 |  |  | 207 |  |  | 40 |
Other | 51 |  |  | 43 |  |  | 8 |  |  | 48 |  |  | 39 |  |  | 9 |
Total | $ | 606 |  |  | $ | 482 |  |  | $ | 124 |  |  | $ | 585 |  |  | $ | 463 |  |  | $ | 122 |
Unamortized Intangible Assets |  |  |  |  |  |  |  |  |  |  |
Goodwill | $ | 1,082 |  |  |  |  |  |  | $ | 1,070 |  |  |  |  |
Trademarks | $ | 545 |  |  |  |  |  |  | $ | 544 |  |  |  |  |

For the three months ended June 30, 2023 and 2022, amortization expense related to amortizable intangible assets was approximat el y $6 million and $10 million, respectively. For the six months ended June 30, 2023 and 2022, amortization expense related to amortizable intangible assets was approximat el y $14 million and $26 million, respectively. Based on our amortizable intangible assets at June 30, 2023, we expect amortization expense of approximately $14 million for the remainder of 2023, $25 million for 2024, $19 million for 2025, $18 million for 2026, $14 million for 2027 and $10 million for 2028, excluding effects of currency exchange rates.
14

8. Vehicle Rental Activities
The components of vehicles, net within assets under vehicle programs are as follows:

| As of |  | As of
| June 30, |  | December 31,
| 2023 |  | 2022
Rental vehicles | $ | 22,725 |  |  | $ | 17,819 |
Less: Accumulated depreciation | (2,407) |  |  | (2,211) |
| 20,318 |  |  | 15,608 |
Vehicles held for sale | 276 |  |  | 317 |
Vehicles, net investment in lease (a) | 31 |  |  | 36 |
Vehicles, net | $ | 20,625 |  |  | $ | 15,961 |

________
(a) See Note 15 – Related Party Transactions.
The components of vehicle depreciation and lease charges, net are summarized below:

| Three Months Ended June 30, |  | Six Months Ended June 30, |
| 2023 |  | 2022 |  | 2023 |  | 2022 |
Depreciation expense | $ | 540 |  |  | $ | 396 |  |  | $ | 1,017 |  |  | $ | 777 |  |
Lease charges | 40 |  |  | 32 |  |  | 78 |  |  | 65 |  |
(Gain) loss on sale of vehicles, net | (205) |  |  | (194) |  |  | (455) |  |  | (497) |  |
Vehicle depreciation and lease charges, net | $ | 375 |  |  | $ | 234 |  |  | $ | 640 |  |  | $ | 345 |  |

At June 30, 2023 and 2022, we had payables related to vehicle purchases included in liabilities under vehicle programs - other of $443 million and $249 million, respectively, and receivables related to vehicle sales included in assets under vehicle programs - receivables from vehicle manufacturers and other of $140 million and $74 million, respectively.
9. Income Taxes
Our effective tax rate for the six months ended June 30, 2023 was a provision of 24.8%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes.
Our effective tax rate for the six months ended June 30, 2022 was a provision of 26.8%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes.
15

10. Accounts Payable and Other Current Liabilities
Accounts payable and other current liabilities consisted of:

| As of |  | As of
| June 30, |  | December 31,
| 2023 |  | 2022
Accounts payable | $ | 573 |  |  | $ | 466 |
Short-term operating lease liabilities | 506 |  |  | 555 |
Deferred lease revenues - current | 362 |  |  | 188 |
Accrued advertising and marketing | 298 |  |  | 268 |
Accrued sales and use taxes | 271 |  |  | 246 |
Accrued payroll and related | 171 |  |  | 205 |
Public liability and property damage insurance liabilities – current | 178 |  |  | 174 |
Other | 451 |  |  | 445 |
Accounts payable and other current liabilities | $ | 2,810 |  |  | $ | 2,547 |

11. Long-term Corporate Debt and Borrowing Arrangements
Long-term corporate debt and borrowing arrangements consisted of:

|  |  | As of |  | As of
| Maturity Date |  | June 30, |  | December 31,
|  | 2023 |  | 2022
4.125% euro-denominated Senior Notes | November 2024 |  | $ | 327 |  |  | $ | 321 |
4.500% euro-denominated Senior Notes | May 2025 |  | 273 |  |  | 268 |
4.750% euro-denominated Senior Notes | January 2026 |  | 382 |  |  | 375 |
5.750% Senior Notes | July 2027 |  | 734 |  |  | 732 |
4.750% Senior Notes | April 2028 |  | 500 |  |  | 500 |
5.375% Senior Notes | March 2029 |  | 600 |  |  | 600 |
Floating Rate Term Loan (a) | August 2027 |  | 1,170 |  |  | 1,176 |
Floating Rate Term Loan (b) | March 2029 |  | 723 |  |  | 725 |
Other (c) |  |  | 33 |  |  | 18 |
Deferred financing fees |  |  | (40) |  |  | (44) |
Total |  |  | 4,702 |  |  | 4,671 |
Less: Short-term debt and current portion of long-term debt |  |  | 34 |  |  | 27 |
Long-term debt |  |  | $ | 4,668 |  |  | $ | 4,644 |

__________
(a)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of June 30, 2023, the floating rate term loan due 2027 bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 175 basis points, for an aggregate rate of 6.97%. We have entered into a swap to hedge $700 million of interest rate exposure related to the floating rate term loan at an aggregate rate of 4.72%.
(b)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of June 30, 2023, the floating rate term loan due 2029 bears interest at one-month SOFR plus 350 basis points for an aggregate rate of 8.70%.
(c)Primarily includes finance leases, which are secured by liens on the related assets.
16

Committed Credit Facilities and Available Funding Arrangements
As of June 30, 2023, the committed corporate credit facilities available to us and/or our subsidiaries were as follows:

| Total Capacity |  | Outstanding Borrowings |  | Letters of Credit Issued |  | Available Capacity
Senior revolving credit facility maturing 2026 (a) | $ | 2,000 |  |  | $ | — |  |  | $ | 1,493 |  |  | $ | 507 |

__________
(a)The senior revolving credit facility bears interest at one-month SOFR plus 175 basis points and is part of our senior credit facilities, which include the floating rate term loan and the senior revolving credit facility, and which are secured by pledges of capital stock of certain of our subsidiaries, liens on substantially all of our intellectual property and certain other real and personal property.
Debt Covenants
The agreements governing our indebtedness contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries, the incurrence of additional indebtedness and/or liens by us and certain of our subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback transactions. Our senior credit facility also contains a maximum leverage ratio requirement. As of June 30, 2023, we were in compliance with the financial covenants governing our indebtedness.
12. Debt Under Vehicle Programs and Borrowing Arrangements
Debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”), consisted of:

| As of |  | As of
| June 30, |  | December 31,
| 2023 |  | 2022
Americas - Debt due to Avis Budget Rental Car Funding | $ | 14,440 |  |  | $ | 11,322 |
Americas - Debt borrowings | 885 |  |  | 598 |
International - Debt borrowings | 2,231 |  |  | 1,700 |
International - Finance leases | 202 |  |  | 176 |
Other | 85 |  |  | 65 |
Deferred financing fees (a) | (69) |  |  | (52) |
Total | $ | 17,774 |  |  | $ | 13,809 |

__________
(a)Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of June 30, 2023 and December 31, 2022 were $65 million and $47 million, respectively.
In January 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $500 million and $350 million of asset-backed notes to investors with an expected final payment date of April 2028 and October 2026, respectively, and a weighted average interest rate of 5.36% and 5.31%, respectively.
In April 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $450 million and $550 million of asset-backed notes to investors with an expected final payment date of February 2027 and June 2028, respectively, and a weighted average interest rate of 5.67% and 5.76%, respectively.
In June 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $476 million and $526 million of asset-backed notes to investors with an expected final payment date of April 2027 and December 2028, respectively, and a weighted average interest rate of 5.91% and 5.98%, respectively.
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Debt Maturities
The following table provides the contractual maturities of our debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding, at June 30, 2023:

| Debt under Vehicle Programs (a)
Within 1 year (b) | $ | 2,995 |
Between 1 and 2 years (c) | 6,723 |
Between 2 and 3 years (d) | 2,811 |
Between 3 and 4 years | 2,816 |
Between 4 and 5 years | 1,783 |
Thereafter | 715 |
Total | $ | 17,843 |

__________
(a) Vehicle-backed debt primarily represents asset-backed securities.
(b) Includes $1.5 billion of bank and bank-sponsored facilities.
(c) Includes $4.9 billion of bank and bank-sponsored facilities.
(d) Includes $0.1 billion of bank and bank-sponsored facilities.
Committed Credit Facilities and Available Funding Arrangements
As of June 30, 2023, available funding under our debt arrangements related to our vehicle programs, including related party debt due to Avis Budget Rental Car Funding, consisted of:

| Total Capacity (a) |  | Outstanding Borrowings (b) |  | Available Capacity
Americas - Debt due to Avis Budget Rental Car Funding | $ | 14,969 |  |  | $ | 14,440 |  |  | $ | 529 |
Americas - Debt borrowings | 1,006 |  |  | 885 |  |  | 121 |
International - Debt borrowings | 2,677 |  |  | 2,231 |  |  | 446 |
International - Finance leases | 228 |  |  | 202 |  |  | 26 |
Other | 85 |  |  | 85 |  |  | — |
Total | $ | 18,965 |  |  | $ | 17,843 |  |  | $ | 1,122 |

__________
(a) Capacity is subject to maintaining sufficient assets to collateralize debt. The total capacity for Americas - Debt due to Avis Budget Rental Car Funding includes increases from an amendment and renewal of our asset-backed variable-funding financing facilities during March 2023 and subsequently amended during April 2023.
(b) The outstanding debt is collateralized by vehicles and related assets of $16.8 billion for Americas - Debt due to Avis Budget Rental Car Funding; $1.3 billion for Americas - Debt borrowings; $3.1 billion for International - Debt borrowings; and $0.2 billion for International - Finance leases.
Debt Covenants
The agreements under our vehicle-backed funding programs contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries and restrictions on indebtedness, mergers, liens, liquidations, and sale and leaseback transactions and in some cases also require compliance with certain financial requirements. As of June 30, 2023, we are not aware of any instances of non-compliance with any of the financial or restrictive covenants contained in the debt agreements under our vehicle-backed funding programs.
13. Commitments and Contingencies
Contingencies
In 2006, we completed the spin-offs of our Realogy and Wyndham subsidiaries (now known as Anywhere Real Estate, Inc., and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co., respectively). We do not believe that the impact of any resolution of pre-existing contingent liabilities in connection with the spin-offs should result in a material liability to us in relation to our consolidated financial position or liquidity, as Anywhere Real Estate, Inc., Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have agreed to
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assume responsibility for these liabilities.
In March 2023, the California Office of Tax Appeals (“OTA”) issued an opinion in a case involving notices of proposed assessment of California corporation franchise tax for tax year 1999 issued to us. The case involves whether (i) the notices of proposed assessment were barred by the statute of limitations; and (ii) a transaction undertaken by us in tax year 1999 constituted a tax-free reorganization under the Internal Revenue Code (“IRC”). The OTA concluded that the notices of proposed assessment were not barred by the statute of limitations and that the 1999 transaction was not a tax-free reorganization under the IRC. Anywhere Real Estate, Inc. has assumed 62.5%, and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have assumed 37.5% of the potential tax liability in this matter, respectively. We have filed a petition for rehearing and intend to vigorously pursue this matter.
We are also named in litigation that is primarily related to the businesses of our former subsidiaries, including Realogy and Wyndham. We are entitled to indemnification from such entities for any liability resulting from such litigation.
We have been named as a defendant in purported consumer class action lawsuits, including three purported class action suits filed against us in New Jersey, one related to fines and fees charged to car renters by us for violations incurred during the course of their rental, one seeking damages in connection with a claim relating to an alleged breach of contract and another related to ancillary charges at our Payless subsidiary.
We are currently involved, and in the future may be involved, in claims and/or legal proceedings, including class actions, and governmental inquiries that are incidental to our vehicle rental and car sharing operations, including, among others, contract and licensee disputes, competition matters, employment and wage-and-hour claims, insurance and liability claims, intellectual property claims, business practice disputes and other regulatory, environmental, commercial and tax matters. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable resolutions could occur. We estimate that the potential exposure resulting from adverse outcomes of current legal proceedings in which it is reasonably possible that a loss may be incurred could, in the aggregate, be up to approximately $35 million in excess of amounts accrued as of June 30, 2023. We do not believe that the impact should result in a material liability to us in relation to our consolidated financial condition or results of operations.
Commitments to Purchase Vehicles
We maintain agreements with vehicle manufacturers under which we have agreed to purchase approximate ly $5.6 billion of vehicles from manufacturers over the next 12 months, a $1.1 billion decrease compared to December 31, 2022, financed primarily through the issuance of vehicle-backed debt and cash received upon the disposition of vehicles. Certain of these commitments are subject to the vehicle manufacturers satisfying their obligations under their respective repurchase and guaranteed depreciation agreements.
Concentrations
Concentrations of credit risk as of June 30, 2023 include (i) risks related to our repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers and primarily with respect to receivables for program cars that have been disposed but for which we have not yet received payment from the manufacturers and (ii) risks related to Realogy and Wyndham, including receivables of $36 million and $22 million, re sp ectively, related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with their disposition.
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14. Stockholders' Equity
Share Repurchases
Our Board of Directors has authorized the repurchase of up t o $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in February 2023 (the “Stock Repurchase Program”). During the six months ended June 30, 2023, we repurchased approximately 723 thousand shares of common stock at a cost of approximately $146.1 million under the program. As of June 30, 2023, approximately $1.5 billion of authorization remains available to repurchase common stock under the program.
Total Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income.
The components of other comprehensive income (loss) were as follows:

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Net income | $ | 436 |  |  | $ | 774 |  |  | $ | 748 |  |  | $ | 1,301 |
| Less: net income (loss) attributable to non-controlling interests | 1 |  |  | (4) |  |  | 1 |  |  | (6) |
Net income attributable to Avis Budget Group, Inc. | 435 |  |  | 778 |  |  | 747 |  |  | 1,307 |
Other comprehensive income (loss): |  |  |  |  |  |  |
| Currency translation adjustments (net of tax of $2, $(14), $5 and $(17), respectively) | 6 |  |  | (50) |  |  | 2 |  |  | (43) |
| Net unrealized gain (loss) on cash flow hedges (net of tax of $(4), $(4), $(2) and $(15), respectively) | 14 |  |  | 13 |  |  | 7 |  |  | 43 |
| Minimum pension liability adjustment (net of tax of $0, in each period) | 1 |  |  | 1 |  |  | 2 |  |  | 3 |
|  | 21 |  |  | (36) |  |  | 11 |  |  | 3 |
Comprehensive income attributable to Avis Budget Group, Inc. | $ | 456 |  |  | $ | 742 |  |  | $ | 758 |  |  | $ | 1,310 |

__________
Currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries.
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Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) were as follows:

|  | Currency Translation Adjustments |  | Net Unrealized Gains (Losses) on Cash Flow Hedges(a) |  | Minimum Pension Liability Adjustment(b) |  | Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2023 | $ | (30) |  |  | $ | 45 |  |  | $ | (116) |  |  | $ | (101) |
| Other comprehensive income (loss) before reclassifications | 2 |  |  | 13 |  |  | — |  |  | 15 |
| Amounts reclassified from accumulated other comprehensive income | — |  |  | (6) |  |  | 2 |  |  | (4) |
Net current-period other comprehensive income (loss) | 2 |  |  | 7 |  |  | 2 |  |  | 11 |
Balance, June 30, 2023 | $ | (28) |  |  | $ | 52 |  |  | $ | (114) |  |  | $ | (90) |
Balance, January 1, 2022 | $ | 16 |  |  | $ | (19) |  |  | $ | (130) |  |  | $ | (133) |
| Other comprehensive income (loss) before reclassifications | (43) |  |  | 36 |  |  | 1 |  |  | (6) |
| Amounts reclassified from accumulated other comprehensive income | — |  |  | 7 |  |  | 2 |  |  | 9 |
Net current-period other comprehensive income (loss) | (43) |  |  | 43 |  |  | 3 |  |  | 3 |
Balance, June 30, 2022 | $ | (27) |  |  | $ | 24 |  |  | $ | (127) |  |  | $ | (130) |

__________
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 $100 million gain, net of tax, as of June 30, 2023 related to our hedge of our investment in euro-denominated foreign operations (see Note 17 – Financial Instruments).
(a)For the three months ended June 30, 2023 and 2022, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were $5 million ($4 million, net of tax) and $4 million ($3 million, net of tax), respectively. For the six months ended June 30, 2023 and 2022, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were $8 million ($6 million, net of tax) and $9 million ($7 million, net of tax), respectively.
(b)For the three months ended June 30, 2023, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were $2 million ($1 million, net of tax.) For the six months ended June 30, 2023 and 2022, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were $3 million ($2 million, net of tax) and $3 million ($2 million, net of tax), respectively.
15. Related Party Transactions
SRS Mobility Ventures, LLC
In 2021, SRS Mobility Ventures, LLC acquired a 33 1/3% Class A Membership Interest in one of our subsidiaries at fair value of $37.5 million. SRS Mobility Ventures, LLC is an affiliate of our largest shareholder, SRS Investment Management, LLC.
On September 1, 2022, through the issuance of Class B Preferred Voting Membership Interests, SRS Mobility Ventures, LLC increased their ownership in this subsidiary to 51% at a fair value of $62 million. As a result, we deconsolidated our former subsidiary, Avis Mobility Ventures LLC (“AMV”), from our financial statements and began reporting our proportional share of the former subsidiary’s income or loss within other (income) expense, net in our Consolidated Condensed Statements of Comprehensive Income as we no longer have the ability to direct the significant activities of the former subsidiary and are therefore no longer primary beneficiary of the VIE.
In accordance with ASC Topic 810-10-40, we must deconsolidate a subsidiary as of the date we cease to have a controlling interest in that subsidiary and recognize the gain or loss in net income at that time. The fair value of our retained investment was determined utilizing a discounted cash flow methodology based on various assumptions, including projections of future cash flows, which include forecast of future revenue and EBITDA. Upon deconsolidation, our former subsidiary had a net asset carrying amount of $49 million resulting in a gain of $10 million.
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We continue to provide vehicles, related fleet services and certain administrative services to AMV to support their operations. For the three and six months ended June 30, 2023, we recorded $6 million and $14 million, respectively, of related income within other (income) expense, net. As of June 30, 2023 and December 31, 2022, receivables from AMV related to these services were $6 million, in each period, and our net investment in vehicle finance lease with AMV, which is included in vehicles, net, was $31 million and $36 million, respectively. The carrying value of our equity investment in AMV as of June 30, 2023 and December 31, 2022 was approximately $32 million and $49 million, respectively, which is included in other non-current assets. For the three and six months ended June 30, 2023, we recorded losses of $10 million and $16 million, respectively, within other (income) expense, net, related to our equity investment.
16. Stock-Based Compensation
We recorded stock-based compensation expense of $8 million and $6 million ($5 million in each period, net of tax) during the three months ended June 30, 2023 and 2022, respectively, and $16 million and $12 million ($11 million and $9 million, net of tax) during the six months ended June 30, 2023 and 2022, respectively.
In 2020, we granted market-based restricted stock units (“RSUs”) that vest based on absolute stock price attainment. The grant date fair value of this award is estimated using a Monte Carlo simulation model.
The weighted average assumptions used in the model are as follows:

Expected volatility of stock price |  | 91% |
Risk-free interest rate |  | 0.18% |
Valuation period |  | 3 years |
Dividend yield |  | —% |

The activity related to RSUs consisted of (in thousands of shares):

|  |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value (in millions)
Time-based RSUs |  |  |  |  |  |  |
| Outstanding at January 1, 2023 | 451 |  |  | $ | 92.06 |  |  |  |  |
|  | Granted (a) | 72 |  |  | 208.55 |  |  |  |  |
|  | Vested (b) | (218) |  |  | 54.55 |  |  |  |  |
|  | Forfeited | (5) |  |  | 158.70 |  |  |  |  |
| Outstanding and expected to vest at June 30, 2023 (c) | 300 |  |  | $ | 146.24 |  |  | 1.5 |  | $ | 68 |
Performance-based and market-based RSUs |  |  |  |  |  |  |
| Outstanding at January 1, 2023 | 691 |  |  | $ | 57.56 |  |  |  |  |
|  | Granted (a) | 89 |  |  | 208.49 |  |  |  |  |
|  | Vested (b) | (344) |  |  | 21.09 |  |  |  |  |
|  | Forfeited | (6) |  |  | 129.91 |  |  |  |  |
| Outstanding at June 30, 2023 | 430 |  |  | $ | 116.90 |  |  | 1.2 |  | $ | 98 |
| Outstanding and expected to vest at June 30, 2023 (c) | 384 |  |  | $ | 106.80 |  |  | 1.2 |  | $ | 88 |

__________
(a)Reflects the maximum number of stock units assuming achievement of all performance-, market- and time-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs and performance-based RSUs granted during the six months ended June 30, 2022 w as $194.74.
(b)The total fair value of RSUs vested during the six months ended June 30, 2023 and 2022 was $19 million, in each period.
(c)Aggregate unrecognized compensation expense related to time-based RSUs and performance-based and market-based RSUs amoun ted to $58 million and will be recognized over a weighted average vesting period of 1.3 years.
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17. Financial Instruments
Derivative Instruments and Hedging Activities
Currency Risk. We use currency exchange contracts to manage our exposure to changes in currency exchange rates associated with certain of our non-U.S.-dollar denominated receivables and forecasted royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S.-dollar denominated acquisitions. We primarily hedge a portion of our 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. We have designated our euro-denominated notes as a hedge of our investment in euro-denominated foreign operations.
The estimated net amount of existing gains or losses we expect to reclassify from accumulated other comprehensive income (loss) to earnings for cash flow and net investment hedges over the next 12 months is not material.
Interest Rate Risk. We use various hedging strategies including interest rate swaps and interest rate caps to create what we deem an appropriate mix of fixed and floating rate assets and liabilities. We use interest rate swaps and interest rate caps to manage the risk related to our floating rate corporate debt and our floating rate vehicle-backed debt. We record the changes in the fair value of our cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassify these amounts into earnings in the period during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. We record the gains or losses related to freestanding derivatives, which are not designated as a hedge for accounting purposes, currently in earnings and are presented in the same line of the income statement expected for the hedged item. We estimate that approximately $25 million of gain curr ently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months.
Commodity Risk. We periodically enter into derivative commodity contracts to manage our exposure to chan ges in the price of gasoline. These instruments were designated as freestanding derivatives and the changes in fair value are recorded in earnings and are presented in the same line of the income statement expected for the hedged item.
We held derivative instruments with absolute notional values as follows:

| As of June 30, 2023
Foreign exchange contracts | $ | 1,298 |
Interest rate caps (a) | 15,042 |
Interest rate swaps | 1,450 |

__________
(a)Repres ents $10.2 billion of interest rate caps sold, partially offset by approximately $4.8 billion of interest rate caps purchased. These amounts exclude $5.9 billion of interest rate caps purchased by our Avis Budget Rental Car Funding subsidiary as it is not consolidated by us.
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Estimated fair values (Level 2) of derivative instruments are as follows:

|  | As of June 30, 2023 |  | As of December 31, 2022
|  | Fair Value, Asset Derivatives |  | Fair Value, Derivative Liabilities |  | Fair Value, Derivative Assets |  | Fair Value, Derivative Liabilities
Derivatives designated as hedging instruments |  |  |  |  |  |  |
| Interest rate swaps (a) | $ | 69 |  |  | $ | — |  |  | $ | 61 |  |  | $ | — |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |
| Foreign exchange contracts (b) | 2 |  |  | 3 |  |  | 4 |  |  | 6 |
| Interest rate caps (c) | 57 |  |  | 142 |  |  | 46 |  |  | 111 |
| Total | $ | 128 |  |  | $ | 145 |  |  | $ | 111 |  |  | $ | 117 |

__________
Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding, as it is not consolidated by us; however, certain amounts related to the deriv atives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss), as discussed in Note 14 – Stockholders' Equity.
(a)Included in other non-current assets or other non-current liabilities.
(b)Included in other current assets or other current liabilities.
(c)Included in assets under vehicle programs or liabilities under vehicle programs.
The effects of derivatives recognized in our Consolidated Condensed Financial Statements are as follows:

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Derivatives designated as hedging instruments (a) |  |  |  |  |  |  |
| Interest rate swaps (b) | $ | 14 |  |  | $ | 13 |  |  | $ | 7 |  |  | $ | 43 |
| Euro-denominated notes (c) | (5) |  |  | 38 |  |  | (14) |  |  | 58 |
Derivatives not designated as hedging instruments (d) |  |  |  |  |  |  |
| Foreign exchange contracts (e) | (8) |  |  | 31 |  |  | (15) |  |  | 43 |
| Interest rate caps (f) | (1) |  |  | (3) |  |  | (1) |  |  | (1) |
| Total | $ | — |  |  | $ | 79 |  |  | $ | (23) |  |  | $ | 143 |

__________
(a)Recognized, net of tax, as a component of accumulated other comprehensive income (loss) within stockholders’ equity.
(b)Classified as a net unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss). Refer to Note 14 – Stockholders' Equity for amounts reclassified from accumulated other comprehensive income into earnings.
(c)Classified as a net investment hedge within currency translation adjustment in accumulated other comprehensive income (loss).
(d)Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged.
(e)Included in interest expense.
(f)Primarily included in vehicle interest, net.
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Debt Instruments
The carrying amounts and estimated fair values (Level 2) of debt instruments are as follows:

|  | As of June 30, 2023 |  | As of December 31, 2022
|  | Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
Corporate debt |  |  |  |  |  |  |
| Short-term debt and current portion of long-term debt | $ | 34 |  |  | $ | 33 |  |  | $ | 27 |  |  | $ | 26 |
| Long-term debt | 4,668 |  |  | 4,613 |  |  | 4,644 |  |  | 4,411 |
Debt under vehicle programs |  |  |  |  |  |  |
| Vehicle-backed debt due to Avis Budget Rental Car Funding | $ | 14,375 |  |  | $ | 13,910 |  |  | $ | 11,275 |  |  | $ | 10,848 |
| Vehicle-backed debt | 3,257 |  |  | 3,257 |  |  | 2,423 |  |  | 2,422 |
| Interest rate swaps and interest rate caps (a) | 142 |  |  | 142 |  |  | 111 |  |  | 111 |

__________
(a) Derivatives in a liability position.
18. Segment Information
Our chief operating decision-maker assesses performance and allocates 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 the segments operate and other relevant factors. We aggregate certain of our operating segments into our reportable segments.
Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; any impairment charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; charges for legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which include third party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; and income taxes.
We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally. Our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
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|  |  |  | Three Months Ended June 30,
|  |  |  | 2023 |  | 2022
|  |  |  | Revenues |  | Adjusted EBITDA |  | Revenues |  | Adjusted EBITDA
Americas | $ | 2,428 |  |  | $ | 631 |  |  | $ | 2,567 |  |  | $ | 1,041 |
International | 695 |  |  | 126 |  |  | 677 |  |  | 183 |
Corporate and Other (a) | — |  |  | (20) |  |  | — |  |  | (19) |
| Total Company | $ | 3,123 |  |  | $ | 737 |  |  | $ | 3,244 |  |  | $ | 1,205 |
Reconciliation of Adjusted EBITDA to income before income taxes:
|  |  | 2023 |  |  |  | 2022
Adjusted EBITDA |  |  | $ | 737 |  |  |  |  | $ | 1,205 |
Less: | Non-vehicle related depreciation and amortization |  | 52 |  |  |  |  | 51 |
|  | Interest expense related to corporate debt, net |  | 68 |  |  |  |  | 64 |
|  | Restructuring and other related charges |  | 1 |  |  |  |  | 6 |
|  | Transaction-related costs, net |  | — |  |  |  |  | 1 |
|  | Other (income) expense, net (b) |  | 4 |  |  |  |  | — |
|  | Reported within operating expenses: |  |  |  |  |  |
|  | Cloud computing costs |  | 9 |  |  |  |  | 2 |
|  | COVID-19 charges |  | — |  |  |  |  | (2) |
|  | Legal matters, net |  | 5 |  |  |  |  | — |
Income before income taxes |  |  | $ | 598 |  |  |  |  | $ | 1,083 |

__________
(a)Includes unallocated corporate overhead which is not attributable to a particular segment.
(b)Primarily consists of losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

|  |  |  | Six Months Ended June 30,
|  |  |  | 2023 |  | 2022
|  |  |  | Revenues |  | Adjusted EBITDA |  | Revenues |  | Adjusted EBITDA
Americas | $ | 4,444 |  |  | $ | 1,147 |  |  | $ | 4,567 |  |  | $ | 1,851 |
International | 1,236 |  |  | 176 |  |  | 1,109 |  |  | 206 |
Corporate and Other (a) | — |  |  | (51) |  |  | — |  |  | (42) |
| Total Company | $ | 5,680 |  |  | $ | 1,272 |  |  | $ | 5,676 |  |  | $ | 2,015 |
Reconciliation of Adjusted EBITDA to income before income taxes:
|  |  | 2023 |  |  |  | 2022
Adjusted EBITDA |  |  | $ | 1,272 |  |  |  |  | $ | 2,015 |
Less: | Non-vehicle related depreciation and amortization |  | 108 |  |  |  |  | 109 |
|  | Interest expense related to corporate debt, net |  | 141 |  |  |  |  | 117 |
|  | Restructuring and other related charges |  | 5 |  |  |  |  | 14 |
|  | Transaction-related costs, net |  | — |  |  |  |  | 1 |
|  | Other (income) expense, net (b) |  | 2 |  |  |  |  | — |
|  | Reported within operating expenses: |  |  |  |  |  |
|  | Cloud computing costs |  | 16 |  |  |  |  | 4 |
|  | COVID-19 charges |  | — |  |  |  |  | (9) |
|  | Legal matters, net |  | 5 |  |  |  |  | 1 |
Income before income taxes |  |  | $ | 995 |  |  |  |  | $ | 1,778 |

__________
(a)Includes unallocated corporate overhead which is not attributable to a particular segment.
(b)Primarily consists of losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.
26

Since December 31, 2022, there have been no significant changes in segment assets exclusive of assets under vehicle programs. As of June 30, 2023 and December 31, 2022, Americas’ segment assets under vehicle programs were approxim ately $18.3 billion an d $14.3 billion, respectively. This increase in assets under vehicle programs is directly correlated to the increase in the size and cost of our vehicle rental fleet to meet demand.
19. Subsequent Event
In July 2023, the Company issued €400 million of 7.25% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually. The proceeds will primarily be used to redeem €300 million principal amount of 4.125% Senior Notes due November 2024.
In July 2023, we repurchased approximately 335 thousand shares of common stock at a cost of approximately $74 million under the Stock Repurchase Program.
* * * *
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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 included in this Quarterly Report on Form 10-Q, and with our 2022 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 those discussed in “Forward-Looking Statements”. See “Forward-Looking Statements” and “Risk Factors” for additional information. Unless otherwise noted, all dollar amounts in tables are in millions.

OVERVIEW

Our Company
We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 690,000 vehicles in second quarter 2023. 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, car sharing operations in certain of these markets, and licensees in certain areas in which we do not operate directly; and International, consisting primarily of our vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, car sharing operations in certain of these markets, and licensees in certain areas in which we do not operate directly.
Business and Trends
Our strategy continues to primarily focus on costs and customer experience to strengthen our company, enable resilience, and deliver stakeholder value. During the three months ended June 30, 2023, we generated revenues of $3.1 billion, net income of $436 million and Adjusted EBITDA of $737 million. These results were driven by increased volume, offset by increased fleet costs and sustained inflationary pressures on costs.
We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, used car values, and an economic downturn that may impact travel demand. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.
RESULTS OF OPERATIONS
We measure performance principally using the following key metrics: (i) rental days, which represent the total number of days (or portion thereof) a vehicle was rented, (ii) revenue per day, which represents revenues divided by rental days, (iii) vehicle utilization, which represents rental days divided by available rental days, with available rental days being defined as average rental fleet times the number of days in the period, and (iv) per-unit fleet costs, which represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet. Our rental days, revenue per day and vehicle utilization metrics are all calculated based on the actual rental of the vehicle during a 24-hour period. We believe that this methodology provides management with the most relevant metrics in order to effectively manage the performance of the business. Our calculation may not be comparable to the calculation of similarly titled metrics by other companies. We present currency exchange rate effects to provide a method of assessing how our business performed excluding the effects of foreign currency rate fluctuations. Currency exchange rate effects are calculated by translating the current period results at the prior period average exchange rate plus any related gains and losses on currency hedges.
We assess performance and allocate resources based upon the separate financial information of our operating
28

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 revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; any impairment charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; charges for legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which include third party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net, and income taxes.
We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition 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.
During the six months ended June 30, 2023:
•Our revenues totaled $5.7 billion, consistent with the similar period in 2022.
•Our net income was $747 million, representing a decrease of $560 million year-over-year, primarily due to increased fleet costs and sustained inflationary pressures on costs.
•Our Adjusted EBITDA was $1.3 billion, representing a decrease of $743 million year-over-year.
Three Months Ended June 30, 2023 vs. Three Months Ended June 30, 2022
Our consolidated condensed results of operations comprised of the following:

|  |  |  | Three Months Ended June 30,
|  |  |  | 2023 |  | 2022 |  | $ Change |  | % Change
Revenues | $ | 3,123 |  |  | $ | 3,244 |  |  | $ | (121) |  |  | (4 | %)
Expenses |  |  |  |  |  |  |
| Operating | 1,475 |  |  | 1,349 |  |  | 126 |  |  | 9 | %
| Vehicle depreciation and lease charges, net | 375 |  |  | 234 |  |  | 141 |  |  | 60 | %
| Selling, general and administrative | 378 |  |  | 359 |  |  | 19 |  |  | 5 | %
| Vehicle interest, net | 172 |  |  | 97 |  |  | 75 |  |  | 77 | %
| Non-vehicle related depreciation and amortization | 52 |  |  | 51 |  |  | 1 |  |  | 2 | %
| Interest expense related to corporate debt, net: |  |  |  |  |  |  |
| Interest expense | 68 |  |  | 64 |  |  | 4 |  |  | 6 | %
| Restructuring and other related charges | 1 |  |  | 6 |  |  | (5) |  |  | (83 | %)
| Transaction-related costs, net | — |  |  | 1 |  |  | (1) |  |  | n/m
| Other (income) expense, net | 4 |  |  | — |  |  | 4 |  |  | n/m
Total expenses | 2,525 |  |  | 2,161 |  |  | 364 |  |  | 17 | %
Income before income taxes | 598 |  |  | 1,083 |  |  | (485) |  |  | (45 | %)
Provision for income taxes | 162 |  |  | 309 |  |  | (147) |  |  | (48 | %)
Net income | 436 |  |  | 774 |  |  | (338) |  |  | (44 | %)
Less: net income (loss) attributable to non-controlling interests | 1 |  |  | (4) |  |  | 5 |  |  | n/m
Net income attributable to Avis Budget Group, Inc. | $ | 435 |  |  | $ | 778 |  |  | $ | (343) |  |  | (44 | %)

___________
n/m - Not Meaningful
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Revenues decreased $121 million, or 4%, during the three months ended June 30, 2023 compared to the similar period in 2022, primarily due to a 7% decrease in revenue per day, excluding exchange rate effects, partially offset by a 4% increase in volume. Total expenses increased 17% during the three months ended June 30, 2023 compared to the similar period in 2022, primarily due to increased fleet costs, interest costs, and the impact of inflation. Our effective tax rates were a provision of 27.1% and 28.5% for the three months ended June 30, 2023 and 2022, respectively. As a result of these items, our net income decreased by $343 million compared to the similar period in 2022. For the three months ended June 30, 2023 and 2022, we reported earnings per diluted share of $11.01 and $15.71, respectively.
Operating expenses increased to 47.2% of revenue during the three months ended June 30, 2023 compared to 41.6% during the similar period in 2022, primarily due to a decrease in revenue per day and cost inflation. Vehicle depreciation and lease charges increased to 12.0% of revenue during the three months ended June 30, 2023 compared to 7.2% during the similar period in 2022, primarily due to increased per unit fleet costs, excluding exchange rate effects, driven by increased fleet levels and depreciation rates. Selling, general and administrative costs increased to 12.1% of revenue during the three months ended June 30, 2023 compared to 11.1% during the similar period in 2022, primarily due to increased marketing costs and inflation. Vehicle interest costs increased to 5.5% of revenue during the three months ended June 30, 2023, compared to 3.0% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:

|  |  |  | Three Months Ended June 30,
|  |  |  | 2023 |  | 2022
|  |  |  | Revenues |  | Adjusted EBITDA |  | Revenues |  | Adjusted EBITDA
Americas | $ | 2,428 |  |  | $ | 631 |  |  | $ | 2,567 |  |  | $ | 1,041 |
International | 695 |  |  | 126 |  |  | 677 |  |  | 183 |
Corporate and Other (a) | — |  |  | (20) |  |  | — |  |  | (19) |
| Total Company | $ | 3,123 |  |  | $ | 737 |  |  | $ | 3,244 |  |  | $ | 1,205 |
|  |  |  | Reconciliation to Adjusted EBITDA
|  |  |  |  |  |  |  | 2023 |  | 2022
Net income |  | $ | 436 |  |  | $ | 774 |
Provision for income taxes |  | 162 |  |  | 309 |
Income before income taxes |  | 598 |  |  | 1,083 |
Add: | Non-vehicle related depreciation and amortization |  | 52 |  |  | 51 |
|  | Interest expense related to corporate debt, net |  | 68 |  |  | 64 |
|  | Restructuring and other related charges |  | 1 |  |  | 6 |
|  | Transaction-related costs, net |  | — |  |  | 1 |
|  | Other (income) expense, net (b) |  | 4 |  |  | — |
|  | Reported within operating expenses: |  |  |  |
|  | Cloud computing costs |  | 9 |  |  | 2 |
|  | COVID-19 charges, net |  | — |  |  | (2) |
|  | Legal matters, net |  | 5 |  |  | — |
Adjusted EBITDA |  | $ | 737 |  |  | $ | 1,205 |

__________
(a)Includes unallocated corporate overhead which is not attributable to a particular segment.
(b)Primarily consists of losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.
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Americas

|  | Three Months Ended June 30,
|  | 2023 |  | 2022 |  | % Change
Revenues |  | $ | 2,428 |  |  | $ | 2,567 |  |  | (5 | %)
Adjusted EBITDA |  | 631 |  |  | 1,041 |  |  | (39 | %)

Revenues decreased 5% during the three months ended June 30, 2023 compared to the similar period in 2022, primarily due to an 8% decrease in revenue per day, partially offset by a 3% increase in volume.
Operating expenses increased to 47.6% of revenue during the three months ended June 30, 2023 compared to 41.6% during the similar period in 2022, primarily due to a decrease in revenue per day and cost inflation. Vehicle depreciation and lease charges increased to 10.5% of revenue during the three months ended June 30, 2023 compared to 5.0% during the similar period in 2022, primarily due to increased per-unit fleet costs, driven by increased fleet levels and depreciation rates. Selling, general and administrative costs were 10.1% of revenue, consistent with the similar period in 2022, primarily due to increased marketing costs, offset by a decrease in other selling, general and administrative costs. Vehicle interest costs increased to 6.0% of revenue during the three months ended June 30, 2023 compared to 3.3% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
Adjusted EBITDA decreased 39% during the three months ended June 30, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs and inflationary pressures.
International

|  | Three Months Ended June 30,
|  | 2023 |  | 2022 |  | % Change
Revenues |  | $ | 695 |  |  | $ | 677 |  |  | 3 | %
Adjusted EBITDA |  | 126 |  |  | 183 |  |  | (31) | %

Revenues increased 3% during the three months ended June 30, 2023, compared to the similar period in 2022, primarily due to a 7% increase in volume, partially offset by a 3% decrease in revenue per day, excluding exchange rate effects, and a $3 million negative impact from currency exchange rate movements.
Operating expenses increased to 45.3% of revenue during the three months ended June 30, 2023 compared to 41.4% during the similar period in 2022, primarily due to a decrease in revenue per day and cost inflation. Vehicle depreciation and lease charges increased to 17.3% of revenue during the three months ended June 30, 2023 compared to 15.8% during the similar period in 2022, primarily due to increased per-unit fleet costs, excluding exchange rate effects, driven by increased fleet levels. Selling, general and administrative costs increased to 15.6% of revenue during the three months ended June 30, 2023 compared to 14.2% during the similar period in 2022, primarily due to increased marketing costs and inflation. Vehicle interest costs increased to 3.8% of revenue during the three months ended June 30, 2023 compared to 1.7% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
Adjusted EBITDA decreased 31% during the three months ended June 30, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs, inflationary pressures, and a $2 million negative impact from currency exchange rate movements.
31

Six Months Ended June 30, 2023 vs. Six Months Ended June 30, 2022
Our consolidated condensed results of operations comprised the following:

|  |  |  | Six Months Ended June 30,
|  |  |  | 2023 |  | 2022 |  | $ Change |  | % Change
Revenues | $ | 5,680 |  |  | $ | 5,676 |  |  | $ | 4 |  |  | n/m
Expenses |  |  |  |  |  |  |
| Operating | 2,782 |  |  | 2,496 |  |  | 286 |  |  | 11 | %
| Vehicle depreciation and lease charges, net | 640 |  |  | 345 |  |  | 295 |  |  | 86 | %
| Selling, general and administrative | 702 |  |  | 642 |  |  | 60 |  |  | 9 | %
| Vehicle interest, net | 305 |  |  | 174 |  |  | 131 |  |  | 75 | %
| Non-vehicle related depreciation and amortization | 108 |  |  | 109 |  |  | (1) |  |  | (1 | %)
| Interest expense related to corporate debt, net: |  |  |  |  |  |  |
| Interest expense | 141 |  |  | 117 |  |  | 24 |  |  | 21 | %
| Restructuring and other related charges | 5 |  |  | 14 |  |  | (9) |  |  | (64 | %)
| Transaction-related costs, net | — |  |  | 1 |  |  | (1) |  |  | n/m
| Other (income) expense, net | 2 |  |  | — |  |  | 2 |  |  | n/m
Total expenses | 4,685 |  |  | 3,898 |  |  | 787 |  |  | 20 | %
Income before income taxes | 995 |  |  | 1,778 |  |  | (783) |  |  | (44 | %)
Provision for income taxes | 247 |  |  | 477 |  |  | (230) |  |  | (48 | %)
Net income | 748 |  |  | 1,301 |  |  | (553) |  |  | (43 | %)
Less: net income (loss) attributable to non-controlling interests | 1 |  |  | (6) |  |  | 7 |  |  | n/m
Net income attributable to Avis Budget Group, Inc. | $ | 747 |  |  | $ | 1,307 |  |  | $ | (560) |  |  | (43 | %)

___________
n/m - Not Meaningful
Revenues during the six months ended June 30, 2023 were consistent with the similar period in 2022. Total expenses increased 20.2% during the six months ended June 30, 2023, compared to the similar period in 2022, primarily due to increased fleet costs, interest costs, and the impact of inflation. Our effective tax rates were a provision of 24.8% and 26.8% for the six months ended June 30, 2023 and 2022, respectively. As a result of these items, our net income decreased by $560 million compared to the similar period in 2022. For the six months ended June 30, 2023 and 2022, we reported earnings per diluted share of $18.93 and $25.14, respectively.
Operating expenses increased to 49.0% of revenue during the six months ended June 30, 2023 compared to 44.0% during the similar period in 2022, primarily due to a decrease in revenue per day and cost inflation. Vehicle depreciation and lease charges increased to 11.3% of revenue during the six months ended June 30, 2023 compared to 6.1% during the similar period in 2022, primarily due to increased per unit fleet costs, excluding exchange rate effects, driven by increased fleet levels and depreciation rates. Selling, general and administrative costs increased to 12.4% of revenue during the six months ended June 30, 2023 compared to 11.3% during the similar period in 2022, primarily due to increased marketing costs and inflation. Vehicle interest costs increased to 5.4% of revenue during the six months ended June 30, 2023 compared to 3.1% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
32

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:

|  |  |  | Six Months Ended June 30,
|  |  |  | 2023 |  | 2022
|  |  |  | Revenues |  | Adjusted EBITDA |  | Revenues |  | Adjusted EBITDA
Americas | $ | 4,444 |  |  | $ | 1,147 |  |  | $ | 4,567 |  |  | $ | 1,851 |
International | 1,236 |  |  | 176 |  |  | 1,109 |  |  | 206 |
Corporate and Other (a) | — |  |  | (51) |  |  | — |  |  | (42) |
| Total Company | $ | 5,680 |  |  | $ | 1,272 |  |  | $ | 5,676 |  |  | $ | 2,015 |
|  |  |  | Reconciliation to Adjusted EBITDA
|  |  |  |  |  |  |  | 2023 |  | 2022
Net income |  | $ | 748 |  |  | $ | 1,301 |
Provision for income taxes |  | 247 |  |  | 477 |
Income before income taxes |  | 995 |  |  | 1,778 |
Add: | Non-vehicle related depreciation and amortization |  | 108 |  |  | 109 |
|  | Interest expense related to corporate debt, net |  | 141 |  |  | 117 |
|  | Restructuring and other related charges |  | 5 |  |  | 14 |
|  | Transaction-related costs, net |  | — |  |  | 1 |
|  | Other (expense) income, net (b) |  | 2 |  |  | — |
|  | Reported within operating expenses: |  |  |  |
|  | Cloud computing costs |  | 16 |  |  | 4 |
|  | COVID-19 charges |  | — |  |  | (9) |
|  | Legal matters, net |  | 5 |  |  | 1 |
Adjusted EBITDA |  | $ | 1,272 |  |  | $ | 2,015 |

__________
(a)Includes unallocated corporate overhead which is not attributable to a particular segment.
(b)Primarily consists of losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.
Americas

|  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | % Change
Revenues |  | $ | 4,444 |  |  | $ | 4,567 |  |  | (3 | %)
Adjusted EBITDA |  | 1,147 |  |  | 1,851 |  |  | (38 | %)

Revenues decreased 3% during the six months ended June 30, 2023 compared to the similar period in 2022, primarily due to a 5% decrease in revenue per day, partially offset by a 3% increase in volume.
Operating expenses increased to 48.9% of revenue during the six months ended June 30, 2023 compared to 43.0% during the similar period in 2022, primarily due to a decrease in revenue per day and cost inflation. Vehicle depreciation and lease charges increased to 9.7% of revenue during the six months ended June 30, 2023 compared to 3.4% during the similar period in 2022, primarily due to increased per-unit fleet costs, driven by increased fleet levels and depreciation rates. Selling, general and administrative costs were 10.0% of revenue, consistent with the similar period in 2022, primarily due to increased marketing costs, offset by a decrease in other selling, general and administrative costs. Vehicle interest costs were 5.8% of revenue during the six months ended June 30, 2023 compared to 3.3% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
Adjusted EBITDA decreased 38% during the six months ended June 30, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs and inflationary pressures.
33

International

|  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | % Change
Revenues |  | $ | 1,236 |  |  | $ | 1,109 |  |  | 11 | %
Adjusted EBITDA |  | 176 |  |  | 206 |  |  | (15 | %)

Revenues increased 11% during the six months ended June 30, 2023 compared to the similar period in 2022, primarily due to a 3% increase in revenue per day, excluding exchange rate effects, and an 11% increase in volume, partially offset by a $35 million negative impact from currency exchange rate movements.
Operating expenses increased to 48.5% of revenue during the six months ended June 30, 2023 compared to 47.1% during the similar period in 2022, primarily due to inflationary pressures. Vehicle depreciation and lease charges were 17.0% of revenue, consistent with the similar period in 2022. Selling, general and administrative costs increased to 16.6% of revenue during the six months ended June 30, 2023 compared to 15.2% during the similar period in 2022, primarily due to increased marketing costs and inflation. Vehicle interest costs increased to 3.8% of revenue during the six months ended June 30, 2023 compared to 2.0% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
Adjusted EBITDA decreased 15% during the six months ended June 30, 2023 compared to the similar period in 2022, primarily due to inflationary pressures on costs and a $9 million negative impact from currency exchange rate movements.
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.
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FINANCIAL CONDITION

|  | June 30, 2023 |  | December 31, 2022 |  | Change
Total assets exclusive of assets under vehicle programs |  | $ | 9,092 |  |  | $ | 8,499 |  |  | $ | 593 |
Total liabilities exclusive of liabilities under vehicle programs |  | 10,120 |  |  | 9,656 |  |  | 464 |
Assets under vehicle programs |  | 22,303 |  |  | 17,428 |  |  | 4,875 |
Liabilities under vehicle programs |  | 21,400 |  |  | 16,971 |  |  | 4,429 |
Total stockholders’ equity |  | (125) |  |  | (700) |  |  | 575 |

The increases in assets and liabilities under vehicle programs are principally related to the increase in the size and cost of our vehicle rental fleet.
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.
In January 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $500 million and $350 million of asset-backed notes to investors with an expected final payment date of April 2028 and October 2026, respectively, with a weighted average interest rate of 5.36% and 5.31%, respectively. The proceeds from these borrowings were used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States.
In April 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $450 million and $550 million of asset-backed notes to investors with an expected final payment date of February 2027 and June 2028, respectively, and a weighted average interest rate of 5.67% and 5.76% respectively. The proceeds from these borrowings were used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States.
In June 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $476 million and $526 million of asset-backed notes to investors with an expected final payment date of April 2027 and December 2028, respectively, and a weighted average interest rate of 5.91% and 5.98% respectively. The proceeds from these borrowings were used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States.
In July 2023, the Company issued €400 million of 7.25% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually. The proceeds will primarily be used to redeem €300 million principal amount of 4.125% Senior Notes due November 2024.
Our Board of Directors has authorized the repurchase of up to $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023. Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments 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. D uring the six months ended June 30, 2023, we repurchased approximately 723 thousand shares of common stock at a cost of approximately $146.1 million under the program. As of June 30, 2023, approximately $1.5 billion of authorization remained available to repurchase common stock under the program.
35

CASH FLOWS
The following table summarizes our cash flows:

|  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | Change
Cash provided by (used in): |  |  |  |  |
| Operating activities | $ | 1,782 |  |  | $ | 2,371 |  |  | $ | (589) |
| Investing activities | (5,214) |  |  | (3,870) |  |  | (1,344) |
| Financing activities | 3,466 |  |  | 1,582 |  |  | 1,884 |
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash | 6 |  |  | (25) |  |  | 31 |
Net increase in cash and cash equivalents, program and restricted cash | 40 |  |  | 58 |  |  | (18) |
Cash and cash equivalents, program and restricted cash, beginning of period | 642 |  |  | 626 |  |  | 16 |
Cash and cash equivalents, program and restricted cash, end of period | $ | 682 |  |  | $ | 684 |  |  | $ | (2) |

The decrease in cash provided by operating activities during the six months ended June 30, 2023 compared with the similar period in 2022 is primarily due to the decrease in our net income.
The increase in cash used in investing activities during the six months ended June 30, 2023 compared with the similar period in 2022 is primarily due to the increase in our net investment in vehicles.
The increase in cash provided by financing activities during the six months ended June 30, 2023 compared with the similar period in 2022 is primarily due to the increase in our net borrowings under vehicle programs and decrease in our repurchases of common stock, offset by the decrease in our corporate borrowings.
DEBT AND FINANCING ARRANGEMENTS
At June 30, 2023, we had approximately $22.5 billion of indebtedness, including corporate indebtedness of approximately $4.7 billion and debt under vehicle programs of approximately $17.8 billion. For information regarding our debt and borrowing arrangements, see Notes 1, 11 and 12 to our Consolidated Condensed Financial Statements.
LIQUIDITY RISK
Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses. The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations. 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.
Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions or the absence of a recovery or worsening of the U.S. and worldwide economies, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally. We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further 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 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.
As of June 30, 2023, we had $571 million of available cash and cash equivalents and access to available borrowings under our revolving credit facility of approximately $507 million, providing us with access to an approximate $1.1 billion of total liquidity.
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Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings. As of June 30, 2023, we were in compliance with the financial covenants governing our indebtedness. For additional information regarding our liquidity risks, see Part I, Item 1A, “Risk Factors” of our 2022 Form 10-K.
CONTRACTUAL OBLIGATIONS
Our future contractual obligations have not changed significantly from the amounts reported within our 2022 Form 10-K with the exception of our commitment to purchase vehicles, which decreased by approximately $1.1 billion from December 31, 2022, to approximately $5.6 billion as of June 30, 2023 due to seasonality. 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 11 and 12 to our Consolidated Condensed Financial Statements.
CRITICAL ACCOUNTING ESTIMATES
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 (GAAP), we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they relate to future events and/or events that are outside of our control. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented within the section titled “Critical Accounting Estimates” of our 2022 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 complex judgments that could potentially affect 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 June 30, 2023 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 June 30, 2023. For additional information regarding our long-term borrowings and financial instruments, see Notes 11, 12 and 17 to our Consolidated Condensed Financial Statements.
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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 June 30, 2023.
(b)Changes in Internal Control Over Financial Reporting. During the second quarter of 2023, there was no change in our 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, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding our legal proceedings, see Note 13 – Commitments and Contingencies t o our Consolidated Condensed Financial Statements and refer to our 2022 Form 10-K.
SEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. In accordance with these regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required pursuant to this item.
Item 1A. Risk Factors
During the six months ended June 30, 2023, we had no material developments to report with respect to our risk factors. For additional information regarding our risk factors, please refer to our 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

| Total Number of Shares Purchased (in millions) (a) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) |  | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions)
April 2023 | 0.00 |  | $ | — |  |  | 0.00 |  | $ | 1,691 |
May 2023 | 0.02 |  | 169.92 |  |  | 0.02 |  | $ | 1,688 |
June 2023 | 0.70 |  | 202.90 |  |  | 0.70 |  | $ | 1,545 |
| 0.72 |  | $ | 201.99 |  |  | 0.72 |  | $ | 1,545 |

___________
(a) Excludes 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 t o $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023. Under our stock repurchase program, the Company may repurchase shares from time to time in open market transactions, and may also repurchase shares in accelerated share repurchases, tender offers, privately negotiated transactions or by other means. Repurchases may also be made under a plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, the Company’s share price, legal requirements, restricted payment capacity under its debt instruments and other factors. The stock repurchase program may be suspended, modified or discontinued without prior notice.
Item 5. Other Information
During the three months ended June 30, 2023, no director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits
See Exhibit Index.
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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: | August 1, 2023 |  |  | /s/ Cathleen DeGenova
|  |  |  | Cathleen DeGenova
|  |  |  | Vice President and
|  |  |  | Chief Accounting Officer

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Exhibit Index

Exhibit No. | Description
3.1 | Amended and Restated Certificate of Incorporation of Avis Budget Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 5, 2006).
3.2 | Amended and Restated Bylaws of Avis Budget Group, Inc., dated as of August 10, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated August 13, 2020).
4.1 | Indenture, dated as of July 13, 2023, by and among Avis Budget Finance plc, as issuer, the guarantors party thereto, Deutsche Bank Trust Company Americas, as trustee and registrar, and Deutsche Bank AG, London Branch, as paying agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated July 14, 2023).
4.2 | Form of 7.25% Senior Notes due 2030 (included as Exhibit A to Exhibit 4.1).
10.1 | Fifth Amendment, dated as of April 21, 2023, to the Sixth Amended and Restated Credit Agreement, dated as of July 9, 2021, among Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC, as borrower, Avis Budget Group, Inc., the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto.
10.2 | Series 2023-3 Supplement, dated as of April 6, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-3 Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 11, 2023).
10.3 | Series 2023-4 Supplement, dated as of April 6, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-4 Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 11, 2023).
10.4 | Series 2023-5 Supplement, dated as of June 1, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-5 Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 6, 2023).
10.5 | Series 2023-6 Supplement, dated as of June 1, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-6 Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 6, 2023).
10.6 | Second Amendment to the Fifth Amended and Restated Series 2010-6 Supplement, dated as of April 24, 2023, by and among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, Avis Budget Car Rental, LLC, as Administrator, JPMorgan Chase Bank, N.A., as Administrative Agent, the Non-Conduit Purchasers, the CP Conduit Purchasers, the Committed Note Purchasers, the APA Banks and the Funding Agents named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee and as Series 2010-6 Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 28, 2023).
10.7 | Second Amendment to the Third Amended and Restated Series 2015-3 Supplement, dated as of April 24, 2023, by and among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, Avis Budget Car Rental, LLC, as Administrator, JPMorgan Chase Bank, N.A., as Administrative Agent, the Non-Conduit Purchasers, the CP Conduit Purchasers, the Committed Note Purchasers, the APA Banks and the Funding Agents named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee and as Series 2015-3 Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 28, 2023).
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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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.
104 | Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)
† | Denotes management contract or compensatory plan.

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