Guarantor and Non-Guarantor Consolidating Condensed Financial Statements

The following consolidating financial information presents Consolidating Condensed Statements of Comprehensive Income for the three and nine months ended September 30, 2018 and 2017, Consolidating Condensed Balance Sheets as of September 30, 2018 and December 31, 2017, and Consolidating Condensed Statements of Cash Flows for the nine months ended September 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 nine months ended September 30, 2017.



	Nine Months Ended September 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	$	53		$	(53	)	$	—		$	53		$	(53	)	$	—
Other, net	5			1			6			5			1			6
Net cash used in investing activities	(3,130		)	(52		)	(3,182		)	(2,924		)	(52		)	(2,976		)

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	32			9			41			32			9			41

Net increase in cash and cash equivalents, program and restricted cash	319			(43		)	276			324			(43		)	281
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	$	794		$	187		$	981		$	814		$	187		$	1,001

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 September 30,
	2018				2017
	Non-Guarantor		Total		Non-Guarantor		Total
Cash and cash equivalents	$	529	$	605	$	794	$	814
Program cash	151		151		180		180
Restricted cash ^(a)	12		12		7		7
Total cash and cash equivalents, program and restricted cash	$	692	$	768	$	981	$	1,001

_________


^(a)	Included within other current assets.

Consolidating Condensed Statements of Comprehensive Income

Three Months Ended September 30, 2018



			Parent			Subsidiary Issuers			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Total
Revenues			$	—		$	—		$	1,592	$	1,746		$	(560	)	$	2,778

Expenses
	Operating		—			3			737		554			—			1,294
	Vehicle depreciation and lease charges, net		—			—			540		551			(504		)	587
	Selling, general and administrative		10			3			182		141			—			336
	Vehicle interest, net		—			—			59		82			(56		)	85
	Non-vehicle related depreciation and amortization		—			—			36		26			—			62
	Interest expense related to corporate debt, net:
		Interest expense	—			37			—		7			—			44
		Intercompany interest expense (income)	(3		)	1			9		(7		)	—			—
	Transaction-related costs, net		—			—			2		9			—			11
	Restructuring and other related charges		—			—			2		2			—			4
Total expenses			7			44			1,567		1,365			(560		)	2,423
Income (loss) before income taxes and equity in earnings of subsidiaries			(7		)	(44		)	25		381			—			355
Provision for (benefit from) income taxes			(2		)	(12		)	119		37			—			142
Equity in earnings of subsidiaries			218			250			344		—			(812		)	—
Net income			$	213		$	218		$	250	$	344		$	(812	)	$	213

Comprehensive income			$	207		$	212		$	244	$	338		$	(794	)	$	207

Nine Months Ended September 30, 2018



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues			$	—		$	—		$	4,171		$	4,695		$	(1,792	)	$	7,074

Expenses
	Operating		2			4			2,035			1,520			—			3,561
	Vehicle depreciation and lease charges, net		—			—			1,681			1,637			(1,625		)	1,693
	Selling, general and administrative		38			9			513			393			—			953
	Vehicle interest, net		—			—			172			232			(167		)	237
	Non-vehicle related depreciation and amortization		—			1			108			81			—			190
	Interest expense related to corporate debt, net:
		Interest expense	—			115			2			22			—			139
		Intercompany interest expense (income)	(9		)	(8		)	20			(3		)	—			—
		Early extinguishment of debt	—			5			—			—			—			5
	Transaction-related costs, net		—			1			3			14			—			18
	Restructuring and other related charges		—			—			6			8			—			14
Total expenses			31			127			4,540			3,904			(1,792		)	6,810
Income (loss) before income taxes and equity in earnings of subsidiaries			(31		)	(127		)	(369		)	791			—			264
Provision for (benefit from) income taxes			(13		)	(34		)	114			45			—			112
Equity in earnings of subsidiaries			170			263			746			—			(1,179		)	—
Net income			$	152		$	170		$	263		$	746		$	(1,179	)	$	152

Comprehensive income			$	104		$	122		$	207		$	687		$	(1,016	)	$	104

Three Months Ended September 30, 2017



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues			$	—		$	—		$	1,569		$	1,794		$	(611	)	$	2,752

Expenses
	Operating		—			5			710			541			—			1,256
	Vehicle depreciation and lease charges, net		—			—			568			605			(557		)	616
	Selling, general and administrative		9			2			174			135			—			320
	Vehicle interest, net		—			—			53			79			(54		)	78
	Non-vehicle related depreciation and amortization		—			—			41			25			—			66
	Interest expense related to corporate debt, net:
		Interest expense	—			38			2			5			—			45
		Intercompany interest expense (income)	(3		)	25			6			(28		)	—			—
	Restructuring and other related charges		—			5			(2		)	4			—			7
Total expenses			6			75			1,552			1,366			(611		)	2,388
Income (loss) before income taxes and equity in earnings of subsidiaries			(6		)	(75		)	17			428			—			364
Provision for (benefit from) income taxes			(6		)	(30		)	87			68			—			119
Equity in earnings of subsidiaries			245			290			360			—			(895		)	—
Net income			$	245		$	245		$	290		$	360		$	(895	)	$	245

Comprehensive income			$	279		$	278		$	323		$	392		$	(993	)	$	279

Nine Months Ended September 30, 2017



			Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Revenues			$	—		$	—		$	4,093		$	4,595		$	(1,859	)	$	6,829

Expenses
	Operating		2			18			1,994			1,399			—			3,413
	Vehicle depreciation and lease charges, net		—			—			1,728			1,690			(1,701		)	1,717
	Selling, general and administrative		29			6			485			355			—			875
	Vehicle interest, net		—			—			150			223			(158		)	215
	Non-vehicle related depreciation and amortization		—			1			121			72			—			194
	Interest expense related to corporate debt, net:
		Interest expense	—			118			3			21			—			142
		Intercompany interest expense (income)	(9		)	80			17			(88		)	—			—
		Early extinguishment of debt	—			4			—			(1		)	—			3
	Restructuring and other related charges		—			7			37			8			—			52
	Transaction-related costs, net		—			—			—			8			—			8
Total expenses			22			234			4,535			3,687			(1,859		)	6,619
Income (loss) before income taxes and equity in earnings of subsidiaries			(22		)	(234		)	(442		)	908			—			210
Provision for (benefit from) income taxes			(10		)	(92		)	59			112			—			69
Equity in earnings of subsidiaries			153			295			796			—			(1,244		)	—
Net income			$	141		$	153		$	295		$	796		$	(1,244	)	$	141

Comprehensive income			$	251		$	262		$	405		$	904		$	(1,571	)	$	251

Consolidating Condensed Balance Sheets

As of September 30, 2018



		Parent		Subsidiary Issuers		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Assets
Current assets:
	Cash and cash equivalents	$	3	$	73	$	—	$	529	$	—		$	605
	Receivables, net	—		—		247		671		—			918
	Other current assets	1		100		109		447		—			657
Total current assets		4		173		356		1,647		—			2,180

Property and equipment, net		—		191		312		216		—			719
Deferred income taxes		13		842		169		41		—			1,065
Goodwill		—		—		471		593		—			1,064
Other intangibles, net		—		26		474		344		—			844
Other non-current assets		46		48		16		157		—			267
Intercompany receivables		156		399		1,880		906		(3,341		)	—
Investment in subsidiaries		355		4,841		4,043		—		(9,239		)	—
Total assets exclusive of assets under vehicle programs		574		6,520		7,721		3,904		(12,580		)	6,139

Assets under vehicle programs:
	Program cash	—		—		—		151		—			151
	Vehicles, net	—		38		58		12,067		—			12,163
	Receivables from vehicle manufacturers and other	—		2		—		770		—			772
	Investment in Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		516		—			516
		—		40		58		13,504		—			13,602
Total assets		$	574	$	6,560	$	7,779	$	17,408	$	(12,580	)	$	19,741

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable and other current liabilities	$	13	$	248	$	633	$	991	$	—		$	1,885
	Short-term debt and current portion of long-term debt	—		17		2		4		—			23
Total current liabilities		13		265		635		995		—			1,908

Long-term debt		—		2,900		2		636		—			3,538
Other non-current liabilities		40		80		261		386		—			767
Intercompany payables		—		2,941		399		1		(3,341		)	—
Total liabilities exclusive of liabilities under vehicle programs		53		6,186		1,297		2,018		(3,341		)	6,213

Liabilities under vehicle programs:
	Debt	—		19		50		3,731		—			3,800
	Due to Avis Budget Rental Car Funding (AESOP) LLC-related party	—		—		—		7,122		—			7,122
Deferred income taxes		—		—		1,591		184		—			1,775
Other		—		—		—		310		—			310
		—		19		1,641		11,347		—			13,007
Total stockholders’ equity		521		355		4,841		4,043		(9,239		)	521
Total liabilities and stockholders’ equity		$	574	$	6,560	$	7,779	$	17,408	$	(12,580	)	$	19,741

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

Nine Months Ended September 30, 2018



	Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities	$	139		$	202		$	88		$	1,785		$	(119	)	$	2,095

Investing activities
Property and equipment additions	—			(45		)	(60		)	(52		)	—			(157		)
Proceeds received on asset sales	—			2			2			5			—			9
Net assets acquired (net of cash acquired)	—			(3		)	(5		)	(56		)	—			(64		)
Other, net	—			(8		)	—			(36		)	—			(44		)
Net cash provided by (used in) investing activities exclusive of vehicle programs	—			(54		)	(63		)	(139		)	—			(256		)

Vehicle programs:
Investment in vehicles	—			—			(4		)	(10,075		)	—			(10,079		)
Proceeds received on disposition of vehicles	—			33			—			6,719			—			6,752
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party	—			—			—			(116		)	—			(116		)
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party	—			—			—			22			—			22
	—			33			(4		)	(3,450		)	—			(3,421		)
Net cash provided by (used in) investing activities	—			(21		)	(67		)	(3,589		)	—			(3,677		)

Financing activities
Proceeds from long-term borrowings	—			81			—			—			—			81
Payments on long-term borrowings	—			(97		)	(2		)	—			—			(99		)
Net change in short-term borrowings	—			—			—			(4		)	—			(4		)
Debt financing fees	—			(9		)	—			—			—			(9		)
Repurchases of common stock	(143		)	—			—			—			—			(143		)
Other, net	3			(95		)	(12		)	(12		)	119			3
Net cash provided by (used in) financing activities exclusive of vehicle programs	(140		)	(120		)	(14		)	(16		)	119			(171		)

Vehicle programs:
Proceeds from borrowings	—			—			—			13,371			—			13,371
Payments on borrowings	—			(2		)	(7		)	(11,718		)	—			(11,727		)
Debt financing fees	—			—			—			(19		)	—			(19		)
	—			(2		)	(7		)	1,634			—			1,625
Net cash provided by (used in) financing activities	(140		)	(122		)	(21		)	1,618			119			1,454

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	—			—			—			(5		)	—			(5		)

Net increase (decrease) in cash and cash equivalents, program and restricted cash	(1		)	59			—			(191		)	—			(133		)
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		$	73		$	—		$	692		$	—		$	768

Nine Months Ended September 30, 2017



	Parent			Subsidiary Issuers			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities	$	44		$	(45	)	$	70		$	2,007		$	(35	)	$	2,041

Investing activities
Property and equipment additions	—			(36		)	(56		)	(46		)	—			(138		)
Proceeds received on asset sales	—			1			—			5			—			6
Net assets acquired (net of cash acquired)	—			(1		)	(5		)	(11		)	—			(17		)
Intercompany loan receipts (advances)	—			—			—			(264		)	264			—
Other, net	100			—			—			6			(100		)	6
Net cash provided by (used in) investing activities exclusive of vehicle programs	100			(36		)	(61		)	(310		)	164			(143		)

Vehicle programs:
Investment in vehicles	—			—			—			(9,672		)	—			(9,672		)
Proceeds received on disposition of vehicles	—			39			—			6,833			—			6,872
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party	—			—			—			(33		)	—			(33		)
	—			39			—			(2,872		)	—			(2,833		)
Net cash provided by (used in) investing activities	100			3			(61		)	(3,182		)	164			(2,976		)

Financing activities
Proceeds from long-term borrowings	—			325			—			264			—			589
Payments on long-term borrowings	—			(401		)	(2		)	(193		)	—			(596		)
Net change in short-term borrowings	—			—			—			(3		)	—			(3		)
Intercompany loan borrowings (payments)	—			264			—			—			(264		)	—
Repurchases of common stock	(144		)	—			—			—			—			(144		)
Debt financing fees	—			(5		)	—			(4		)	—			(9		)
Other, net	—			(135		)	—			—			135			—
Net cash provided by (used in) financing activities exclusive of vehicle programs	(144		)	48			(2		)	64			(129		)	(163		)

Vehicle programs:
Proceeds from borrowings	—			—			—			14,276			—			14,276
Payments on borrowings	—			(1		)	(7		)	(12,922		)	—			(12,930		)
Debt financing fees	—			—			—			(8		)	—			(8		)
	—			(1		)	(7		)	1,346			—			1,338
Net cash provided by (used in) financing activities	(144		)	47			(9		)	1,410			(129		)	1,175

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	—			—			—			41			—			41

Net increase in cash and cash equivalents, program and restricted cash	—			5			—			276			—			281
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		$	17		$	—		$	981		$	—		$	1,001