Guarantor and Non-Guarantor Consolidating Condensed Financial Statements

The following consolidating financial information presents Consolidating Condensed Statements of Comprehensive Income for the three and six months ended June 30, 2018 and 2017, Consolidating Condensed Balance Sheets as of June 30, 2018 and December 31, 2017, and Consolidating Condensed Statements of Cash Flows for the six months ended June 30, 2018 and 2017 for: (i) Avis Budget Group, Inc. (the “Parent”); (ii) ABCR and Avis Budget Finance, Inc. (the “Subsidiary Issuers”); (iii) the guarantor subsidiaries; (iv) the non-guarantor subsidiaries; (v) elimination entries necessary to consolidate the Parent with the Subsidiary Issuers, and the guarantor and non-guarantor subsidiaries; and (vi) the Company on a consolidated basis. The Subsidiary Issuers and the guarantor and non-guarantor subsidiaries are 100% owned by the Parent, either directly or indirectly. All guarantees are full and unconditional and joint and several. This financial information is being presented in relation to the Company’s guarantee of the payment of principal, premium (if any) and interest on the notes issued by the Subsidiary Issuers. See Note 11 - Long-term Corporate Debt and Borrowing Arrangements for additional description of these guaranteed notes. The Senior Notes are guaranteed by the Parent and certain subsidiaries.

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

The following tables provide the impact of adoption of ASU 2016-18 on the Company’s Consolidating Condensed Statements of Cash Flows for the six months ended June 30, 2017.



	Six Months Ended June 30, 2017
	As Previously Reported Non-Guarantor			Effect of Change			As Adjusted Non-Guarantor			As Previously Reported Total			Effect of Change			As Adjusted Total
Decrease in program cash	$	168		$	(168	)	$	—		$	168		$	(168	)	$	—
Other, net	(1		)	1			—			(1		)	1			—
Net cash used in investing activities	(3,303		)	(167		)	(3,470		)	(3,019		)	(167		)	(3,186		)

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	27			9			36			27			9			36

Net increase in cash and cash equivalents, program and restricted cash	177			(158		)	19			286			(158		)	128
Cash and cash equivalents, program and restricted cash, beginning of period	475			230			705			490			230			720
Cash and cash equivalents, program and restricted cash, end of period	$	652		$	72		$	724		$	776		$	72		$	848

The following table provides a reconciliation of the cash and cash equivalents, program and restricted cash reported within the Consolidating Condensed Balance Sheets to the amounts shown in the Consolidating Condensed Statements of Cash Flows.



	As of June 30,
	2018				2017
	Non-Guarantor		Total		Non-Guarantor		Total
Cash and cash equivalents	$	475	$	489	$	652	$	776
Program cash	161		161		65		65
Restricted cash ^(a)	11		11		7		7
Total cash and cash equivalents, program and restricted cash	$	647	$	661	$	724	$	848

_________


^(a)	Included within other current assets.

Consolidating Condensed Statements of Comprehensive Income

Three Months Ended June 30, 2018



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Total
Revenues			$	—		$	—		$	1,395		$	1,590	$	(657	)	$	2,328

Expenses
	Operating		1			(3		)	677			500		—			1,175
	Vehicle depreciation and lease charges, net		—			—			605			582		(596		)	591
	Selling, general and administrative		10			3			176			132		—			321
	Vehicle interest, net		—			—			61			80		(61		)	80
	Non-vehicle related depreciation and amortization		—			1			36			30		—			67
	Interest expense related to corporate debt, net:
		Interest expense	—			39			1			9		—			49
		Intercompany interest expense (income)	(3		)	(31		)	5			29		—			—
	Restructuring and other related charges		—			—			1			3		—			4
	Transaction-related costs, net		—			1			1			1		—			3
Total expenses			8			10			1,563			1,366		(657		)	2,290
Income (loss) before income taxes and equity in earnings of subsidiaries			(8		)	(10		)	(168		)	224		—			38
Provision for (benefit from) income taxes			(5		)	(3		)	14			6		—			12
Equity in earnings of subsidiaries			29			36			218			—		(283		)	—
Net income			$	26		$	29		$	36		$	218	$	(283	)	$	26

Comprehensive income (loss)			$	(24	)	$	(21	)	$	(16	)	$	165	$	(128	)	$	(24	)

Six Months Ended June 30, 2018



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Total
Revenues			$	—		$	—		$	2,579		$	2,949	$	(1,232	)	$	4,296

Expenses
	Operating		2			1			1,298			966		—			2,267
	Vehicle depreciation and lease charges, net		—			—			1,141			1,086		(1,121		)	1,106
	Selling, general and administrative		28			6			331			252		—			617
	Vehicle interest, net		—			—			113			150		(111		)	152
	Non-vehicle related depreciation and amortization		—			1			72			55		—			128
	Interest expense related to corporate debt, net:
		Interest expense	—			78			2			15		—			95
		Intercompany interest expense (income)	(6		)	(9		)	11			4		—			—
		Early extinguishment of debt	—			5			—			—		—			5
	Restructuring and other related charges		—			—			4			6		—			10
	Transaction-related costs, net		—			1			1			5		—			7
Total expenses			24			83			2,973			2,539		(1,232		)	4,387
Income (loss) before income taxes and equity in earnings of subsidiaries			(24		)	(83		)	(394		)	410		—			(91		)
Provision for (benefit from) income taxes			(11		)	(22		)	(5		)	8		—			(30		)
Equity in earnings (loss) of subsidiaries			(48		)	13			402			—		(367		)	—
Net income (loss)			$	(61	)	$	(48	)	$	13		$	402	$	(367	)	$	(61	)

Comprehensive income (loss)			$	(103	)	$	(90	)	$	(37	)	$	349	$	(222	)	$	(103	)

Three Months Ended June 30, 2017



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues			$	—		$	—		$	1,371		$	1,530		$	(663	)	$	2,238

Expenses
	Operating		1			9			644			454			—			1,108
	Vehicle depreciation and lease charges, net		—			—			614			592			(609		)	597
	Selling, general and administrative		10			2			158			123			—			293
	Vehicle interest, net		—			—			52			75			(54		)	73
	Non-vehicle related depreciation and amortization		—			1			40			24			—			65
	Interest expense related to corporate debt, net:
		Interest expense	—			83			—			(35		)	—			48
		Intercompany interest expense (income)	(3		)	5			5			(7		)	—			—
		Early extinguishment of debt	—			1			—			(1		)	—			—
	Restructuring and other related charges		—			2			33			3			—			38
	Transaction-related costs, net		—			—			—			5			—			5
Total expenses			8			103			1,546			1,233			(663		)	2,227
Income (loss) before income taxes and equity in earnings of subsidiaries			(8		)	(103		)	(175		)	297			—			11
Provision for (benefit from) income taxes			(2		)	(39		)	11			38			—			8
Equity in earnings of subsidiaries			9			73			259			—			(341		)	—
Net income			$	3		$	9		$	73		$	259		$	(341	)	$	3

Comprehensive income			$	51		$	58		$	123		$	309		$	(490	)	$	51

Six Months Ended June 30, 2017



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues			$	—		$	—		$	2,524		$	2,801		$	(1,248	)	$	4,077

Expenses
	Operating		2			13			1,284			858			—			2,157
	Vehicle depreciation and lease charges, net		—			—			1,160			1,085			(1,144		)	1,101
	Selling, general and administrative		20			4			311			220			—			555
	Vehicle interest, net		—			—			97			144			(104		)	137
	Non-vehicle related depreciation and amortization		—			1			80			47			—			128
	Interest expense related to corporate debt, net:
		Interest expense	—			129			1			(33		)	—			97
		Intercompany interest expense (income)	(6		)	6			11			(11		)	—			—
		Early extinguishment of debt	—			4			—			(1		)	—			3
	Restructuring and other related charges		—			2			39			4			—			45
	Transaction-related costs, net		—			—			—			8			—			8
Total expenses			16			159			2,983			2,321			(1,248		)	4,231
Income (loss) before income taxes and equity in earnings of subsidiaries			(16		)	(159		)	(459		)	480			—			(154		)
Provision for (benefit from) income taxes			(4		)	(62		)	(28		)	44			—			(50		)
Equity in earnings (loss) of subsidiaries			(92		)	5			436			—			(349		)	—
Net income (loss)			$	(104	)	$	(92	)	$	5		$	436		$	(349	)	$	(104	)

Comprehensive income (loss)			$	(28	)	$	(16	)	$	82		$	512		$	(578	)	$	(28	)

Consolidating Condensed Balance Sheets

As of June 30, 2018



		Parent		Subsidiary Issuers		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Assets
Current assets:
	Cash and cash equivalents	$	3	$	11	$	—	$	475	$	—		$	489
	Receivables, net	—		—		248		654		—			902
	Other current assets	2		114		119		597		—			832
Total current assets		5		125		367		1,726		—			2,223

Property and equipment, net		—		183		317		215		—			715
Deferred income taxes		13		887		169		51		—			1,120
Goodwill		—		—		471		578		—			1,049
Other intangibles, net		—		26		477		340		—			843
Other non-current assets		46		39		16		142		—			243
Intercompany receivables		191		393		1,747		924		(3,255		)	—
Investment in subsidiaries		169		4,595		3,900		—		(8,664		)	—
Total assets exclusive of assets under vehicle programs		424		6,248		7,464		3,976		(11,919		)	6,193

Assets under vehicle programs:
	Program cash	—		—		—		161		—			161
	Vehicles, net	—		43		57		13,767		—			13,867
	Receivables from vehicle manufacturers and other	—		3		—		250		—			253
	Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		445		—			445
		—		46		57		14,623		—			14,726
Total assets		$	424	$	6,294	$	7,521	$	18,599	$	(11,919	)	$	20,919

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable and other current liabilities	$	13	$	251	$	664	$	904	$	—		$	1,832
	Short-term debt and current portion of long-term debt	—		17		2		5		—			24
Total current liabilities		13		268		666		909		—			1,856

Long-term debt		—		2,900		3		641		—			3,544
Other non-current liabilities		39		81		259		366		—			745
Intercompany payables		—		2,860		393		2		(3,255		)	—
Total liabilities exclusive of liabilities under vehicle programs		52		6,109		1,321		1,918		(3,255		)	6,145

Liabilities under vehicle programs:
	Debt	—		16		52		3,443		—			3,511
	Due to Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		8,265		—			8,265
Deferred income taxes		—		—		1,553		174		—			1,727
Other		—		—		—		899		—			899
		—		16		1,605		12,781		—			14,402
Total stockholders’ equity		372		169		4,595		3,900		(8,664		)	372
Total liabilities and stockholders’ equity		$	424	$	6,294	$	7,521	$	18,599	$	(11,919	)	$	20,919

As of December 31, 2017



		Parent		Subsidiary Issuers		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Assets
Current assets:
	Cash and cash equivalents	$	4	$	14	$	—	$	593	$	—		$	611
	Receivables, net	—		—		255		667		—			922
	Other current assets	4		89		101		339		—			533
Total current assets		8		103		356		1,599		—			2,066

Property and equipment, net		—		167		321		216		—			704
Deferred income taxes		14		704		154		59		—			931
Goodwill		—		—		471		602		—			1,073
Other intangibles, net		—		27		480		343		—			850
Other non-current assets		46		29		16		105		—			196
Intercompany receivables		187		382		1,506		824		(2,899		)	—
Investment in subsidiaries		381		4,681		3,938		—		(9,000		)	—
Total assets exclusive of assets under vehicle programs		636		6,093		7,242		3,748		(11,899		)	5,820

Assets under vehicle programs:
	Program cash	—		—		—		283		—			283
	Vehicles, net	—		34		61		10,531		—			10,626
	Receivables from vehicle manufacturers and other	—		1		—		546		—			547
	Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		423		—			423
		—		35		61		11,783		—			11,879
Total assets		$	636	$	6,128	$	7,303	$	15,531	$	(11,899	)	$	17,699

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable and other current liabilities	$	23	$	207	$	552	$	837	$	—		$	1,619
	Short-term debt and current portion of long-term debt	—		17		3		6		—			26
Total current liabilities		23		224		555		843		—			1,645

Long-term debt		—		2,910		3		660		—			3,573
Other non-current liabilities		40		83		216		378		—			717
Intercompany payables		—		2,515		382		2		(2,899		)	—
Total liabilities exclusive of liabilities under vehicle programs		63		5,732		1,156		1,883		(2,899		)	5,935

Liabilities under vehicle programs:
	Debt	—		15		57		2,669		—			2,741
	Due to Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		6,480		—			6,480
	Deferred income taxes	—		—		1,407		187		—			1,594
	Other	—		—		2		374		—			376
		—		15		1,466		9,710		—			11,191
Total stockholders’ equity		573		381		4,681		3,938		(9,000		)	573
Total liabilities and stockholders’ equity		$	636	$	6,128	$	7,303	$	15,531	$	(11,899	)	$	17,699

Consolidating Condensed Statements of Cash Flows

Six Months Ended June 30, 2018



	Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities	$	75		$	107		$	66		$	968		$	(95	)	$	1,121

Investing activities
Property and equipment additions	—			(33		)	(43		)	(39		)	—			(115		)
Proceeds received on asset sales	—			2			—			4			—			6
Net assets acquired (net of cash acquired)	—			(3		)	(4		)	(21		)	—			(28		)
Other, net	—			—			—			(37		)	—			(37		)
Net cash provided by (used in) investing activities exclusive of vehicle programs	—			(34		)	(47		)	(93		)	—			(174		)

Vehicle programs:
Investment in vehicles	—			(1		)	(1		)	(8,357		)	—			(8,359		)
Proceeds received on disposition of vehicles	—			17			—			4,790			—			4,807
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party	—			—			—			(22		)	—			(22		)
	—			16			(1		)	(3,589		)	—			(3,574		)
Net cash provided by (used in) investing activities	—			(18		)	(48		)	(3,682		)	—			(3,748		)

Financing activities
Proceeds from long-term borrowings	—			81			—			—			—			81
Payments on long-term borrowings	—			(92		)	(1		)	(1		)	—			(94		)
Net change in short-term borrowings	—			—			—			(2		)	—			(2		)
Repurchases of common stock	(78		)	—			—			—			—			(78		)
Debt financing fees	—			(9		)	—			—			—			(9		)
Other, net	2			(71		)	(12		)	(12		)	95			2
Net cash provided by (used in) financing activities exclusive of vehicle programs	(76		)	(91		)	(13		)	(15		)	95			(100		)

Vehicle programs:
Proceeds from borrowings	—			—			—			10,145			—			10,145
Payments on borrowings	—			(1		)	(5		)	(7,637		)	—			(7,643		)
Debt financing fees	—			—			—			(13		)	—			(13		)
	—			(1		)	(5		)	2,495			—			2,489
Net cash provided by (used in) financing activities	(76		)	(92		)	(18		)	2,480			95			2,389

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	—			—			—			(2		)	—			(2		)

Net decrease in cash and cash equivalents, program and restricted cash	(1		)	(3		)	—			(236		)	—			(240		)
Cash and cash equivalents, program and restricted cash, beginning of period	4			14			—			883			—			901
Cash and cash equivalents, program and restricted cash, end of period	$	3		$	11		$	—		$	647		$	—		$	661

Six Months Ended June 30, 2017



	Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities	$	9		$	(41	)	$	47		$	1,124		$	—		$	1,139

Investing activities
Property and equipment additions	—			(22		)	(34		)	(30		)	—			(86		)
Proceeds received on asset sales	—			1			—			3			—			4
Net assets acquired (net of cash acquired)	—			—			(4		)	(10		)	—			(14		)
Intercompany loan receipts (advances)	—			—			(1		)	(313		)	314			—
Other, net	100			—			—			—			(100		)	—
Net cash provided by (used in) investing activities exclusive of vehicle programs	100			(21		)	(39		)	(350		)	214			(96		)

Vehicle programs:
Investment in vehicles	—			1			(2		)	(8,115		)	—			(8,116		)
Proceeds received on disposition of vehicles	—			31			—			5,028			—			5,059
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party	—			—			—			(33		)	—			(33		)
	—			32			(2		)	(3,120		)	—			(3,090		)
Net cash provided by (used in) investing activities	100			11			(41		)	(3,470		)	214			(3,186		)

Financing activities
Proceeds from long-term borrowings	—			325			—			264			—			589
Payments on long-term borrowings	—			(396		)	(1		)	(194		)	—			(591		)
Net change in short-term borrowings	—			—			—			(1		)	—			(1		)
Intercompany loan borrowings (payments)	—			313			—			1			(314		)	—
Repurchases of common stock	(109		)	—			—			—			—			(109		)
Debt financing fees	—			(3		)	—			(5		)	—			(8		)
Other, net	—			(100		)	—			—			100			—
Net cash provided by (used in) financing activities exclusive of vehicle programs	(109		)	139			(1		)	65			(214		)	(120		)

Vehicle programs:
Proceeds from borrowings	—			—			—			11,255			—			11,255
Payments on borrowings	—			—			(5		)	(8,983		)	—			(8,988		)
Debt financing fees	—			—			—			(8		)	—			(8		)
	—			—			(5		)	2,264			—			2,259
Net cash provided by (used in) financing activities	(109		)	139			(6		)	2,329			(214		)	2,139

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	—			—			—			36			—			36

Net increase in cash and cash equivalents, program and restricted cash	—			109			—			19			—			128
Cash and cash equivalents, program and restricted cash, beginning of period	3			12			—			705			—			720
Cash and cash equivalents, program and restricted cash, end of period	$	3		$	121		$	—		$	724		$	—		$	848