Related Party Transactions

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

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 now record 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 do not 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, which is reported within other (income) expense, net during the three and nine months ended September 30, 2022.

We provide vehicles and related fleet services to AMV, as well as certain administrative services to support their operations. During the three and nine months ended September 30, 2022, we recognized $2 million of income related to these services within other (income) expense, net. At September 30, 2022, we had receivables from AMV of $5 million and a net investment in vehicle finance leases of $36 million. The carrying amount of our equity investment was approximately $57 million at September 30, 2022 and is recorded within other non-current assets in our Consolidated Condensed Balance Sheet. For the three and nine months ended September 30, 2022, we recorded losses of $3 million within other (income) expense, net related to our equity investment.