Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

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

	As of December 31,
	2015		2014
Interest rate caps (a)	$	10,179	$	8,333
Interest rate swaps	900		1,592
Foreign exchange contracts	811		493

__________

^(a)  Represents $8.2 billion of interest rate caps sold, partially offset by approximately $2.0 billion of interest rate caps purchased at December 31, 2015 and $6.2 billion of interest rate caps sold, partially offset by approximately $2.1 billion of interest rate caps purchased at December 31, 2014. These amounts exclude $6.2 billion and $4.2 billion of interest rate caps purchased by the Company’s Avis Budget Rental Car Funding subsidiary at December 31, 2015 and 2014, respectively.

Fair Value of Derivative Instruments

Fair values (Level 2) of derivative instruments are as follows:

		As of December 31, 2015				As of December 31, 2014
		Fair Value, Asset  Derivatives		Fair Value, Liability  Derivatives		Fair Value, Asset  Derivatives		Fair Value, Liability  Derivatives
Derivatives designated as hedging instruments
	Interest rate swaps (a)	$	1	$	5	$	1	$	3
Derivatives not designated as hedging instruments
	Interest rate caps (b)	1		5		—		10
	Foreign exchange contracts (c)	16		2		5		2
	Commodity contracts (c)	—		1		—		1
	Total	$	18	$	13	$	6	$	16

__________

Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding, as it is not consolidated by the Company; however, certain amounts related to the derivatives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss), as discussed in Note 15-Stockholders’ Equity.

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

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

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

Schedule of Effect of Derivatives Recognized

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

		Year Ended December 31,
		2015			2014			2013
Financial instruments designated as hedging instruments (a)
	Interest rate swaps	$	(1	)	$	(2	)	$	1
	Euro-denominated notes	34			46			(11		)
Financial instruments not designated as hedging instruments (b)
	Foreign exchange contracts (c)	48			8			27
	Interest rate caps (d)	(2		)	(3		)	4
	Commodity contracts (e)	—			(3		)	1
Total		$	79		$	46		$	22

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

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

^(c)  For the year ended December 31, 2015, included a $32 million gain included in interest expense and a $16 million gain included in operating expenses. For the year ended December 31, 2014, included a $10 million gain in interest expense and a $2 million loss included in operating expenses. For the year ended December 31, 2013, included a $20 million gain in interest expense and a $7 million gain included in operating expenses.

^(d)  For the years ended December 31, 2015 and 2014, amounts are included in vehicle interest, net. For the year ended December 31, 2013, $1 million of expense is included in vehicle interest, net and a $5 million gain is included in interest expense.

^(e)  Included in operating expenses.

Schedule of Carrying Amounts and Estimated Fair Values

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

		As of December 31, 2015				As of December 31, 2014
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Corporate debt
	Short-term debt and current portion of long-term debt	$	26	$	26	$	28	$	28
	Long-term debt	3,435		3,478		3,325		3,439
Debt under vehicle programs
	Vehicle-backed debt due to Avis Budget Rental Car Funding	$	6,796	$	6,836	$	6,296	$	6,407
	Vehicle-backed debt	2,060		2,071		1,750		1,771
	Interest rate swaps and interest rate caps (a)	4		4		10		10

___________

The carrying values of long-term debt, vehicle-backed debt due to Avis Budget Rental Car Funding and vehicle-backed debt as of December 31, 2014 have been retrospectively adjusted by $67 million, $44 million and $16 million, respectively, to include debt issuance costs, which are presented as a reduction of the corresponding liability.

^(a)  Derivatives in liability position.