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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 September 30, 2022

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) 
Delaware06-0918165
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
6 Sylvan Way
Parsippany,NJ07054
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01CARThe 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 FilerAccelerated FilerNon-accelerated Filer
Smaller Reporting CompanyEmerging 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 41,466,412 shares as of October 28, 2022.


Table of Contents
 Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.



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,” 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. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the Coronavirus (“COVID-19”) pandemic, the continued restrictions that have been placed on travel in many countries and the resulting adverse impact on the global economy, the potential effects on the global economy and markets as a result of the ongoing military conflict between Russia and Ukraine, and the risk of a recession in the United States or in any of the other regions in which we operate. These factors include, but are not limited to:

COVID-19 and its resulting impact on the global economy, which has had, and is expected to continue to have, a significant impact on our operations, including unprecedented volatility in demand levels, as well as its current, and uncertain future, impact including, but not limited to, its effect on the ability or desire of people to travel, including due to travel restrictions, and other restrictions and orders, which may continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price;

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 particularly as COVID-19 related restrictions are lifted and travel demand increases;

the significant volatility in travel demand as a result of COVID-19, including the current and any future disruptions 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 our business strategies, achieve and maintain cost savings and adapt our business to changes in mobility;
1


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 those countries;

our dependence on third-party distribution channels, third-party suppliers of other services and 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;

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, interest rate increases, 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
2

results are materially different from those forecast 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 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 17, 2022 (the “2021 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 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

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 
September 30,
Nine Months Ended 
September 30,
2022202120222021
Revenues$3,547 $3,001 $9,223 $6,744 
Expenses
Operating1,464 1,225 3,960 3,089 
Vehicle depreciation and lease charges, net134 277 479 869 
Selling, general and administrative384 361 1,026 837 
Vehicle interest, net107 80 281 232 
Non-vehicle related depreciation and amortization59 69 168 199 
Interest expense related to corporate debt, net:
Interest expense64 47 181 167 
Early extinguishment of debt 7  136 
Restructuring and other related charges2 5 16 47 
Transaction-related costs, net 1 1 3 
Other (income) expense, net(9) (9) 
Total expenses2,205 2,072 6,103 5,579 
Income before income taxes1,342 929 3,120 1,165 
Provision for income taxes311 255 788 263 
Net income1,031 674 2,332 902 
Less: net loss attributable to non-controlling interests(3)(1)(9)(1)
Net income attributable to Avis Budget Group, Inc.
$1,034 $675 $2,341 $903 
Comprehensive income attributable to Avis Budget Group, Inc.
$979 $660 $2,289 $914 
Earnings per share
Basic$22.08 $10.58 $47.34 $13.31 
Diluted$21.67 $10.45 $46.32 $13.16 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
4

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions, except par value)
(Unaudited)
September 30, 
2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents$581 $534 
Receivables, net869 775 
Other current assets526 538 
Total current assets1,976 1,847 
Property and equipment, net506 537 
Operating lease right-of-use assets2,275 2,368 
Deferred income taxes1,316 1,615 
Goodwill1,031 1,108 
Other intangibles, net662 724 
Other non-current assets496 382 
Total assets exclusive of assets under vehicle programs8,262 8,581 
Assets under vehicle programs:
Program cash139 89 
Vehicles, net15,391 12,866 
Receivables from vehicle manufacturers and other478 222 
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party927 842 
16,935 14,019 
Total Assets$25,197 $22,600 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other current liabilities$2,719 $2,389 
Short-term debt and current portion of long-term debt27 19 
Total current liabilities2,746 2,408 
Long-term debt4,563 3,990 
Long-term operating lease liabilities1,822 1,910 
Other non-current liabilities553 625 
Total liabilities exclusive of liabilities under vehicle programs9,684 8,933 
Liabilities under vehicle programs:
Debt2,682 2,542 
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party10,422 8,848 
Deferred income taxes2,636 2,242 
Other280 244 
16,020 13,876 
Commitments and contingencies (Note 12)
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 capital6,676 6,676 
Retained earnings (accumulated deficit)2,156 (185)
Accumulated other comprehensive loss(185)(133)
Treasury stock, at cost— 94 and 81 shares, respectively
(9,157)(6,579)
Stockholders’ equity attributable to Avis Budget Group, Inc.
(509)(220)
Non-controlling interests2 11 
Total stockholders’ equity(507)(209)
Total Liabilities and Stockholders’ Equity$25,197 $22,600 

See Notes to Consolidated Condensed Financial Statements (Unaudited).
5

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

 Nine Months Ended 
September 30,
 20222021
Operating activities
Net income$2,332 $902 
Adjustments to reconcile net income to net cash provided by operating activities:
Vehicle depreciation1,232 981 
Amortization of right-of-use assets637 562 
(Gain) loss on sale of vehicles, net(856)(241)
Non-vehicle related depreciation and amortization168 199 
Stock-based compensation19 25 
Amortization of debt financing fees25 25 
Early extinguishment of debt costs 136 
Net change in assets and liabilities:
Receivables(194)(175)
Income taxes and deferred income taxes640 200 
Accounts payable and other current liabilities415 435 
Operating lease liabilities(639)(558)
Other, net83 57 
Net cash provided by operating activities3,862 2,548 
Investing activities
Property and equipment additions(120)(57)
Proceeds received on asset sales2 3 
Net assets acquired (net of cash acquired)(1)(17)
Cash disposed upon deconsolidation of subsidiary(55) 
Other, net22 (3)
Net cash used in investing activities exclusive of vehicle programs(152)(74)
Vehicle programs:
Investment in vehicles(7,946)(8,041)
Proceeds received on disposition of vehicles4,608 3,310 
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party(351)(260)
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party265 134 
(3,424)(4,857)
Net cash used in investing activities(3,576)(4,931)

6

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

 Nine Months Ended 
September 30,
 20222021
Financing activities
Proceeds from long-term borrowings729 1,100 
Payments on long-term borrowings(17)(1,350)
Net change in short-term borrowings(1) 
Repurchases of common stock(2,574)(997)
Debt financing fees(7)(21)
Contributions from non-controlling interests40 38 
Net cash used in financing activities exclusive of vehicle programs(1,830)(1,230)
Vehicle programs:
Proceeds from borrowings13,075 11,612 
Payments on borrowings(11,360)(7,790)
Debt financing fees(23)(14)
1,692 3,808 
Net cash (used in) provided by financing activities(138)2,578 
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash(53)(15)
Net increase in cash and cash equivalents, program and restricted cash95 180 
Cash and cash equivalents, program and restricted cash, beginning of period626 765 
Cash and cash equivalents, program and restricted cash, end of period$721 $945 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
7

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Treasury Stock
Stockholders’ Equity Attributable to Avis Budget Group, Inc.
Non-controlling InterestsTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at June 30, 2022137.1 $1 $6,643 $1,122 $(130)(88.8)$(8,290)$(654)$5 $(649)
Comprehensive income:
Net income— — — 1,034 — — — 1,034 (3)1,031 
Other comprehensive loss— — — — (55)— — (55)— (55)
Total comprehensive income (loss)1,034 (55)979 (3)976 
Contributions from non-controlling interests— — 40 — — — — 40 — 40 
Net activity related to restricted stock units— — (7)— — — 1 (6)— (6)
Repurchases of common stock— — — — — (5.3)(868)(868)— (868)
Balance at September 30, 2022137.1 $1 $6,676 $2,156 $(185)(94.1)$(9,157)$(509)$2 $(507)
Balance at June 30, 2021137.1 $1 $6,646 $(1,242)$(161)(67.1)$(5,152)$92 $ $92 
Comprehensive income:
Net income— — — 675 — — — 675 (1)674 
Other comprehensive loss— — — — (15)— — (15)— (15)
Total comprehensive income (loss)675 (15)660 (1)659 
Contributions from non-controlling interests— — 24 — — — — 24 14 38 
Net activity related to restricted stock units— — 3 — —  4 7 — 7 
Repurchases of common stock(11.6)(994)(994)(994)
Balance at September 30, 2021137.1 $1 $6,673 $(567)$(176)(78.7)$(6,142)$(211)$13 $(198)


Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Treasury Stock
Stockholders’ Equity Attributable to Avis Budget Group, Inc.
Non-controlling InterestsTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 2021137.1 $1 $6,676 $(185)$(133)(81.2)$(6,579)$(220)$11 $(209)
Comprehensive income:
Net income— — — 2,341 — — — 2,341 (9)2,332 
Other comprehensive loss— — — — (52)— — (52)— (52)
Total comprehensive income (loss)2,341 (52)2,289 (9)2,280 
Contributions from non-controlling interests— — 40 — — — — 40  40 
Net activity related to restricted stock units— — (40)— — 0.3 (2)(42)— (42)
Repurchases of common stock— — — — — (13.2)(2,576)(2,576)— (2,576)
Balance at September 30, 2022137.1 $1 $6,676 $2,156 $(185)(94.1)$(9,157)$(509)$2 $(507)
Balance at December 31, 2020137.1 $1 $6,668 $(1,470)$(187)(67.3)$(5,167)$(155)$ $(155)
Comprehensive income:
Net income— — — 903 — — — 903 (1)902 
Other comprehensive income— — — — 11 — — 11 — 11 
Total comprehensive income903 11 914 (1)913 
Contributions from non-controlling interests— — 24 — — — — 24 14 38 
Net activity related to restricted stock units— — (19)— — 0.3 29 10 — 10 
Repurchases of common stock(11.7)(1,004)(1,004)(1,004)
Balance at September 30, 2021137.1 $1 $6,673 $(567)$(176)(78.7)$(6,142)$(211)$13 $(198)
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 certain 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 certain 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 2021 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 2021 Annual Report on Form 10-K (the “2021 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 2021 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 September 30,
20222021
Cash and cash equivalents$581 $886 
Program cash139 55 
Restricted cash (a)
1 4 
Total cash and cash equivalents, program and restricted cash$721 $945 
________
(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 nine months ended September 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 nine months ended September 30, 2022, we recorded a loss of $7 million, net of impact of foreign currency adjustments, within restructuring and other related charges.

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 14 – Related Party Transactions for our VIE investment in our former subsidiary.

Investments. As of September 30, 2022 and December 31, 2021, we had equity method investments with a carrying value of $69 million and $72 million, respectively, which are recorded within other non-current assets. Earnings from our equity method investments are reported within operating expenses. For the three months ended September 30, 2022 and 2021, we recorded $7 million and $6 million related to our equity method investments, respectively. For the nine months ended September 30, 2022 and 2021, we recorded $10 million and $8 million related to our equity method investments, respectively. See Note 14 – 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 $51 million and $34 million during the three months ended September 30, 2022 and 2021, respectively, and $127 million and $93 million during the nine months ended September 30, 2022 and 2021, respectively.

The following table presents our revenues disaggregated by geography:
10


 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2022202120222021
Americas$2,703 $2,403 $7,270 $5,457 
Europe, Middle East and Africa678 527 1,527 1,011 
Asia and Australasia166 71 426 276 
Total revenues$3,547 $3,001 $9,223 $6,744 

The following table presents our revenues disaggregated by brand:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2022202120222021
Avis$1,958 $1,588 $4,992 $3,509 
Budget1,371 1,198 3,637 2,707 
Other218 215 594 528 
Total revenues$3,547 $3,001 $9,223 $6,744 
________
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 becomes effective for us on January 1, 2023. Early adoption is permitted on a retrospective or prospective basis. The adoption of this accounting pronouncement is not expected to have a material impact on our Consolidated Condensed Financial Statements.

Reference Rate Reform

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which amends ASU 2020-04 and clarifies the scope and guidance of Topic 848 to allow derivatives impacted by the reference rate reform to qualify for certain optional expedients and exceptions for contract modifications and hedge accounting. The guidance is optional and is effective for a limited period of time through December 31, 2022. As of September 30, 2022, this guidance had no impact on our Consolidated Condensed Financial Statements and we will continue to evaluate this guidance.

 2.    Leases
Lessor

The following table presents our lease revenues disaggregated by geography:
Three Months Ended
 September 30,
Nine Months Ended 
September 30,
2022202120222021
Americas$2,682 $2,391 $7,216 $5,417 
Europe, Middle East and Africa654 508 1,468 968 
Asia and Australasia160 68 412 266 
Total lease revenues$3,496 $2,967 $9,096 $6,651 

11


The following table presents our lease revenues disaggregated by brand:
Three Months Ended
September 30,
Nine Months Ended 
September 30,
2022202120222021
Avis$1,926 $1,573 $4,915 $3,464 
Budget1,356 1,185 3,598 2,676 
Other214 209 583 511 
Total lease revenues$3,496 $2,967 $9,096 $6,651 
_______
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
September 30,
Nine Months Ended 
September 30,
2022202120222021
Property leases (a)
Operating lease expense$184 $146 $513 $419 
Variable lease expense169 152 423 318 
Total property lease expense$353 $298 $936 $737 
__________
(a)    Primarily within operating expense and includes $(4) million for the three months ended September 30, 2021, and $(9) million and $12 million for the nine months ended September 30, 2022 and 2021, respectively, of minimum annual guaranteed rent in excess of concession fees, net, as defined in our rental concession agreements.

Supplemental balance sheet information related to leases is as follows:
As of 
September 30, 2022
As of 
December 31, 2021
Property leases
Operating lease ROU assets$2,275$2,368
Short-term operating lease liabilities (a)
$488$496
Long-term operating lease liabilities1,8221,910
Operating lease liabilities$2,310$2,406
Weighted average remaining lease term8.5 years8.8 years
Weighted average discount rate4.04 %3.84 %
_________
(a)    Included in Accounts payable and other current liabilities.

12


Supplemental cash flow information related to leases is as follows:
Nine Months Ended 
September 30,
20222021
Cash payments for lease liabilities within operating activities:
Property operating leases$537 $445 
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:
Property operating leases$508 $226 

 3.    Restructuring and Other Related Charges

Restructuring

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”). During the nine months ended September 30, 2022, we formally communicated the termination of employment to approximately 130 employees, as part of this process, and terminated approximately 120 of these employees. We expect further restructuring expenses of approximately $5 million related to this initiative.

During first quarter 2021, we initiated a global restructuring plan to focus on cost discipline by reviewing headcounts, facilities and contractor agreements. We are transforming our business as we prepare to exit the COVID-19 crisis by controlling fixed costs and matching variable costs to demand (“T21”). As of September 30, 2022, we terminated the employment of approximately 65 employees. We expect no further restructuring expenses to be incurred related to this initiative.

During first quarter 2020, we initiated a global restructuring plan to reduce operating costs, such as headcount and facilities, due to declining reservations and revenue resulting from COVID-19 outbreak (“2020 Optimization”). We expect no further restructuring expenses related to this initiative.

During third quarter 2019, we initiated a restructuring plan to exit our operations in Brazil by closing rental facilities, disposing of assets and terminating personnel (“Brazil”). We expect no further restructuring expenses related to this initiative.

13


The following tables summarize the changes to our restructuring-related liabilities and identifies the amounts recorded within our reporting segments for restructuring charges and corresponding payments and utilizations:
AmericasInternationalTotal
Balance as of January 1, 2022$2 $8 $10 
Restructuring expense:
Cost Optimization2 4 6 
T211 2 3 
Brazil1  1 
Restructuring payment/utilization:
Cost Optimization(