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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 Form10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September-30-2020

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)
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 and posted 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 and post 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  

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
The number of shares outstanding of the issuer’s common stock was 69,683,361 shares as of October 27, 2020.


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


Table of Contents
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”) outbreak, and the continued restrictions that have been placed on travel in many countries as a result of the outbreak and the adverse impact on the global economy from the outbreak. These factors include, but are not limited to:

the COVID-19 outbreak and resulting economic conditions, which had, and is expected to continue to have, a significant impact on our operations, including an unprecedented decline in demand, 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 due to travel restrictions, and other restrictions and orders, which is expected to continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price;

a change in our fleet costs, including as a result of a change in the cost of new vehicles, manufacturer recalls, disruption in the supply of new vehicles, 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;

our ability to realize our estimated cost savings on a timely basis, or at all, and the amount of cash expenditures made in connection with such cost saving efforts;

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;

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

the significant decline in travel demand as a result of COVID-19, including the current and any future disruptions in airline passenger traffic;

the absence of an improvement in, or further deterioration of, economic conditions, 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, civil unrest or political instability in the locations in which we operate;

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 the current and any future impacts as a result of COVID-19;

our ability to continue to successfully implement our business strategies, achieve and maintain cost savings and adapt our business to changes in mobility;

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;

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our dependence on third-party distribution channels, third-party suppliers of other services and co-marketing arrangements with third parties;

our dependence on the performance and retention of our senior management and key employees;

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, 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, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, and compliance with privacy and data protection regulation;

any impact on us from the actions of our licensees, dealers, third-party vendors and 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, potential interest rate increases, recent and potential further 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 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;

our ability to accurately estimate our future results;

the further deterioration in general economic conditions due to COVID-19 or the future outbreak of any other highly infectious or contagious disease, which could be an indicator that our goodwill or other intangible assets are impaired and could result in a future impairment charge to earnings;

risks related to actions by activist stockholders and responses from our Board of Directors and senior management; and

other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.

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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 for the accuracy and completeness of those statements. Other factors and assumptions not identified above, including those discussed herein, including but not limited to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and “Risk Factors” in Item 1A and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 20, 2020 (the “2019 Form 10-K”), may contain forward- looking statements and involve uncertainties that could cause actual results to differ materially from those projected in any forward-looking statements. Such statements are based upon assumptions and known risks and uncertainties.

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.

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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,
2020201920202019
Revenues$1,534 $2,753 $4,047 $7,010 
Expenses
Operating825 1,291 2,505 3,534 
Vehicle depreciation and lease charges, net256 551 1,089 1,579 
Selling, general and administrative166 350 549 947 
Vehicle interest, net77 90 247 261 
Non-vehicle related depreciation and amortization74 62 214 195 
Interest expense related to corporate debt, net:
Interest expense64 49 163 139 
Early extinguishment of debt2 10 9 10 
Restructuring and other related charges17 22 89 66 
Transaction-related costs, net  3 6 
Total expenses1,481 2,425 4,868 6,737 
Income (loss) before income taxes53 328 (821)273 
Provision for (benefit from) income taxes8 139 (227)113 
Net income (loss)$45 $189 $(594)$160 
Comprehensive income (loss)$74 $155 $(631)$119 
Earnings (loss) per share
Basic$0.64 $2.52 $(8.40)$2.12 
Diluted$0.63 $2.50 $(8.40)$2.10 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions, except par value)
(Unaudited)
September 30, 
2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents$1,564 $686 
Receivables, net601 911 
Other current assets470 548 
Total current assets2,635 2,145 
Property and equipment, net692 792 
Operating lease right-of-use assets2,642 2,596 
Deferred income taxes1,443 1,662 
Goodwill1,112 1,101 
Other intangibles, net780 798 
Other non-current assets249 217 
Total assets exclusive of assets under vehicle programs9,553 9,311 
Assets under vehicle programs:
Program cash94 211 
Vehicles, net8,780 12,177 
Receivables from vehicle manufacturers and other499 778 
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party670 649 
10,043 13,815 
Total assets$19,596 $23,126 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other current liabilities$2,147 $2,206 
Short-term debt and current portion of long-term debt19 19 
Total current liabilities2,166 2,225 
Long-term debt4,145 3,416 
Long-term operating lease liabilities2,166 2,140 
Other non-current liabilities764 757 
Total liabilities exclusive of liabilities under vehicle programs9,241 8,538 
Liabilities under vehicle programs:
Debt2,234 3,132 
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party6,105 7,936 
Deferred income taxes1,685 2,189 
Other407 675 
10,431 13,932 
Commitments and contingencies (Note 13)
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 capital6,672 6,741 
Accumulated deficit(1,380)(785)
Accumulated other comprehensive loss(194)(157)
Treasury stock, at cost—67 and 63 shares, respectively
(5,175)(5,144)
Total stockholders’ equity(76)656 
Total liabilities and stockholders’ equity$19,596 $23,126 

See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited) 
 Nine Months Ended 
September 30,
 20202019
Operating activities
Net income (loss)$(594)160 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Vehicle depreciation1,063 1,457 
Amortization of right-of-use assets710 752 
(Gain) loss on sale of vehicles, net(123)(69)
Non-vehicle related depreciation and amortization214 195 
Stock-based compensation6 18 
Amortization of debt financing fees24 23 
Early extinguishment of debt costs9 10 
Net change in assets and liabilities:
Receivables156 (65)
Income taxes and deferred income taxes(239)40 
Accounts payable and other current liabilities(59)41 
Operating lease liabilities(707)(746)
Other, net172 115 
Net cash provided by operating activities632 1,931 
Investing activities
Property and equipment additions(75)(178)
Proceeds received on asset sales5 7 
Net assets acquired (net of cash acquired)(63)(68)
Other, net 80 
Net cash used in investing activities exclusive of vehicle programs(133)(159)
Vehicle programs:
Investment in vehicles(4,749)(10,621)
Proceeds received on disposition of vehicles7,386 7,826 
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party
(243)(221)
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party
222 137 
2,616 (2,879)
Net cash provided by (used in) investing activities2,483 (3,038)

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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
 Nine Months Ended 
September 30,
 20202019
Financing activities
Proceeds from long-term borrowings991 402 
Payments on long-term borrowings(303)(427)
Issuance of common stock15  
Repurchases of common stock(119)(65)
Debt financing fees(24)(6)
Net cash provided by (used in) financing activities exclusive of vehicle programs
560 (96)
Vehicle programs:
Proceeds from borrowings12,349 16,042 
Payments on borrowings(15,280)(14,838)
Debt financing fees(12)(18)
(2,943)1,186 
Net cash provided by (used in) financing activities(2,383)1,090 
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash
28 (10)
Net increase (decrease) in cash and cash equivalents, program and restricted cash
760 (27)
Cash and cash equivalents, program and restricted cash, beginning of period900 735 
Cash and cash equivalents, program and restricted cash, end of period$1,660 $708 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
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Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited) 
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at June 30, 2020137.1 $1 $6,670 $(1,425)$(223)(67.4)$(5,176)$(153)
Comprehensive loss:
Net income— — — 45 — — — 
Other comprehensive income— 29 — — 
Total comprehensive income74 
Net activity related to restricted stock units— — 2 — —  1 3 
Balance at September 30, 2020137.1 $1 $6,672 $(1,380)$(194)(67.4)$(5,175)$(76)
Balance at June 30, 2019137.1 $1 $6,723 $(1,116)$(139)(61.1)$(5,093)$376 
Comprehensive income:
Net income— — — 189 — — — 
Other comprehensive loss— — — — (34)— — 
Total comprehensive income155 
Net activity related to restricted stock units— — (3)— — 0.1 10 7 
Option premiums paid— — 16 — — — — 16 
Activity related to employee stock purchase plan
— — (1)— — — 1 — 
Repurchase of common stock— — — — — (2.1)(59)(59)
Balance at September 30, 2019137.1 $1 $6,735 $(927)$(173)(63.1)$(5,141)$495 
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 2019137.1 $1 $6,741 $(785)$(157)(63.2)$(5,144)$656 
Cumulative effect of accounting change
— — — (1)— — — (1)
Comprehensive loss:
Net loss— — — (594)— — — 
Other comprehensive loss— — — — (37)— — 
Total comprehensive loss(631)
Non-controlling interest— — (2)— — — — (2)
Net activity related to restricted stock units
— — (82)— — 0.4 82  
Issuance of common stock
— — 15 — — 0.4 — 15 
Repurchase of common stock— — — — — (5.0)(113)(113)
Balance at September 30, 2020137.1 $1 $6,672 $(1,380)$(194)(67.4)$(5,175)$(76)
Balance at December 31, 2018137.1 $1 $6,771 $(1,091)$(133)(61.5)$(5,134)$414 
Cumulative effect of accounting change
— — — 4 1 — — 5 
Comprehensive income:
Net income— — — 160 — — — 
Other comprehensive loss— — — — (41)— — 
Total comprehensive income119 
Net activity related to restricted stock units
— — (30)— — 0.4 46 16 
Exercise of stock options— — (5)— — 0.1 5 — 
Activity related to employee stock purchase plan
— (1)— — — 1 — 
Repurchase of common stock— — — — — (2.1)(59)(59)
Balance at September 30, 2019137.1 $1 $6,735 $(927)$(173)(63.1)$(5,141)$495 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
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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, the “Company”), and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting.
The Company operates 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 the areas in which the Company does 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 the areas in which the Company does not operate directly.

The operating results of acquired businesses are included in the accompanying Consolidated Condensed Financial Statements from the dates of acquisition. The fair value of the assets acquired and liabilities assumed in connection with the Company’s 2019 acquisitions of various licensees has not yet been finalized; however, there have been no significant changes to the preliminary allocation of the purchase price during the nine months ended September 30, 2020.

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 the Company’s 2019 Form 10-K.

Liquidity and Management’s Plans

The continuing cases of COVID-19 and the developments surrounding the global pandemic are having a material negative impact on all aspects of the Company’s business. Significant events affecting travel and the overall economy have historically had an impact on vehicle rental volumes, with the full extent of the impact generally determined by the length of time the event influences travel decisions as well as general economic conditions. The COVID-19 outbreak and resulting economic conditions have had, and the Company believes will continue to have, a significant adverse impact on its operations and vehicle rental volumes, and on its financial results and liquidity, and such negative impact may continue well beyond the containment of the outbreak.

The Company cannot assure its assumptions used to estimate its liquidity requirements will be correct because it has never previously experienced such a decrease in demand, and as a consequence, its ability to be predictive is uncertain. In addition, the duration of the global pandemic is uncertain. Therefore, the Company has taken, and plans to take further actions to manage its liquidity, including reducing capital expenditures, operating expenses and the number of vehicles in its fleet. The Company has no meaningful corporate debt maturities until 2023. The Company plans to finance the routine Asset Backed Securities (“ABS”) maturities with program cash on hand, available revolving debt capacity and fleet sales. As a result,
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based on current operational assumptions, the Company believes it has adequate liquidity beyond the next twelve months.

In April 2020, the Company entered into an amendment (the “Amendment”) to its senior credit facilities, consisting of an approximately $1.2 billion term loan maturing in 2027 and a $1.8 billion revolving credit facility maturing in 2023, which remain in place after the Amendment. The Amendment provides for relief from the quarterly-tested leverage covenant contained in the credit agreement governing the senior credit facilities until the end of a specific relief period, including a holiday from such leverage covenant through June 30, 2021, during which time (i) certain negative covenant exceptions are not available to the Company, (ii) pricing on the senior credit facilities is increased, (iii) the Company must comply with a liquidity covenant and additional reporting requirements and (iv) the Company must meet additional conditions to borrow under the revolving credit facility.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are fully described in Note 2, “Summary of Significant Accounting Policies,” in the 2019 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,
20202019
Cash and cash equivalents$1,564 $615 
Program cash94 89 
Restricted cash (a)
2 4 
Total cash and cash equivalents, program and restricted cash$1,660 $708 
________
(a)Included within other current assets.

Vehicle Programs. The Company presents separately the financial data of its vehicle programs. These programs are distinct from the Company’s 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 the Company’s vehicle programs. The Company believes it is appropriate to segregate the financial data of its 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 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 the Company, 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. The Company records 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. During the three months ended September 30, 2020 and 2019, the Company recorded an immaterial amount, in each period, related to such items. During the nine months ended September 30, 2020 and 2019, the Company recorded a loss of $5 million and a gain of $3 million, respectively, related to such items.

Divestitures. In 2018, the Company entered into a definitive stock purchase agreement to sell its 50% equity method investment in Anji Car Rental & Leasing Company Limited (“China”), located in China, to Shanghai Automotive Industry Sales Company, Ltd., a 50% owner of China. In 2019, the Company completed the sale for $64 million, net of cross-border withholding taxes and recorded a $44 million gain within operating
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expenses. China’s operations were reported within the Company’s International segment.

Investments. As of September 30, 2020 and December 31, 2019, the Company had equity method investments with a carrying value of $59 million and $56 million, respectively, which are recorded within other non-current assets. Earnings from the Company’s equity method investments are reported within operating expenses. For the three months ended September 30, 2020 and 2019, the Company recorded income of $3 million and $5 million, respectively related to its equity method investments, and for the nine months ended September 30, 2020 and 2019, the Company recorded income of $4 million and $9 million, respectively.

Nonmarketable Equity Securities. As of September 30, 2020 and December 31, 2019, the Company had nonmarketable equity securities with a carrying value of $8 million, respectively, which are recorded within other non-current assets. During the nine months ended September 30, 2019, the Company realized a $12 million gain from the sale of a nonmarketable equity security, which is recorded within operating expenses. No adjustments were made to the carrying amounts during the three months ended September 30, 2020 and 2019, and during the nine months ended September 30, 2020.

Revenues. Revenues are recognized under “Leases (Topic 842),” with the exception of royalty fee revenue derived from the Company’s licensees and revenue related to the Company’s customer loyalty program, which were approximately $30 million and $40 million during the three months ended September 30, 2020 and 2019, respectively, and $84 million and $103 million during the nine months ended September 30, 2020 and 2019, respectively.

The following table presents the Company’s revenues disaggregated by geography.
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2020201920202019
Americas$1,114 $1,868 $2,936 $4,822 
Europe, Middle East and Africa363 742 879 1,747 
Asia and Australasia57 143 232 441 
Total revenues$1,534 $2,753 $4,047 $7,010 

The following table presents the Company’s revenues disaggregated by brand.
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2020201920202019
Avis$843 $1,580 $2,230 $4,008 
Budget539 950 1,425 2,417 
Other152 223 392 585 
Total revenues$1,534 $2,753 $4,047 $7,010 
________
Other includes Zipcar and other operating brands.

Adoption of New Accounting Pronouncements

Intangibles—Goodwill and Other—Internal-Use Software

On January 1, 2020, as the result of a new accounting pronouncement, the Company adopted Accounting Standard Update (“ASU”) 2018-15 “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement That Is a Service Contract,” which provides guidance for determining when the arrangement includes a software license. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The amendments in this Update also require the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the
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hosting arrangement, to present the expense in the same line in its statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in its statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in its balance sheet in the same line that a prepayment for the fees of the associated hosting arrangement would be presented. The adoption of this accounting pronouncement did not have a material impact on the Company's Consolidated Condensed Financial Statements.

Fair Value Measurement

On January 1, 2020, as the result of a new accounting pronouncement, the Company adopted ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” which adds, removes, and modifies disclosure requirements related to fair value measurements. The adoption of this accounting pronouncement did not have a material impact on the Company's Consolidated Condensed Financial Statements.

Measurement of Credit Losses on Financial Instruments

On January 1, 2020, as the result of a new accounting pronouncement, the Company adopted ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and related updates which sets forth a current expected credit loss impairment model for financial assets that replaces the current incurred loss model. This model requires a financial asset (or group of financial assets), including trade receivables, measured at amortized cost to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The adoption of this accounting pronouncement did not have a material impact on the Company's Consolidated Condensed Financial Statements.

Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities

During first quarter 2020, the Company early adopted the Securities Exchange Commission’s, “Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities” rules, which simplify the disclosure requirements related to the Company’s registered securities under Rule 3-10 of Regulation S-X. The final rule also allows for the simplified disclosure to be included within Management’s Discussion and Analysis of Financial Condition and Results of Operations. During third quarter 2020, the Company redeemed its remaining $100 million of publicly registered debt securities (see Note 11—Long-term corporate debt and borrowing arrangements for details). The Company’s remaining outstanding debt securities were issued in private placements exempt from the registration requirements of the federal securities laws, and therefore, such disclosure is not required.

Recently Issued Accounting Pronouncements

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions and improving the application of existing guidance. ASU 2019-12 becomes effective for the Company on January 1, 2021. Early adoption is permitted. The Company is currently evaluating the impact of this accounting pronouncement on its Consolidated Condensed Financial Statements but does not expect it to have a material impact.

Compensation—Retirement Benefits—Defined Benefit Plans

In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans,” which adds, removes, and clarifies disclosure requirements related to defined benefit pension and other postretirement plans. These changes are part of the FASB’s
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disclosure framework project, which the Board launched in 2014 to improve the effectiveness of disclosures in notes to financial statements. ASU 2018-14 becomes effective for the Company on January 1, 2021. Early adoption is permitted. The adoption of this accounting pronouncement is not expected to have a material impact on the Company's Consolidated Condensed Financial Statements.

2.    Leases

The following table presents the Company’s lease revenues disaggregated by geography.
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2020201920202019
Americas$1,099 $1,856 $2,896 $4,792 
Europe, Middle East and Africa350 717 843 1,684 
Asia and Australasia55 140 224 431 
Total lease revenues$1,504 $2,713 $3,963 $6,907 
The following table presents the Company’s lease revenues disaggregated by brand.
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
 2020201920202019
Avis$824 $1,559 $2,181 $3,953 
Budget532 935 1,401 2,379 
Other148 219 381 575 
Total lease revenues$1,504 $2,713 $3,963 $6,907 
_______
Other includes Zipcar and other operating brands.

Lessee

The Company has operating and finance leases for rental locations, corporate offices, vehicle rental fleet and equipment. Many of the Company’s operating leases for rental locations contain concession agreements with various airport authorities that allow the Company to conduct its 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. The Company’s operating leases for rental locations often also require the Company to pay or reimburse operating expenses.

The components of lease expense are as follows:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2020201920202019
Property leases (a)
Operating lease expense$130 $184 $443 $540 
Variable lease expense51 93 107 219 
Total property lease expense$181 $277 $550 $759 
__________
(a)    Primarily included in operating expense and includes $11 million and $41 million of minimum annual guaranteed rent in excess of concession fees as defined in our rental concession agreement for the three and nine months ended September 30, 2020, respectively.

Supplemental balance sheet information related to leases is as follows:
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As of 
September 30, 2020
As of 
December 31, 2019
Property leases
Operating lease ROU assets$2,642 $2,596 
Short-term operating lease liabilities (a)
$501 $479 
Long-term operating lease liabilities2,166 2,140 
Operating lease liabilities$2,667 $2,619 
Weighted average remaining lease term8.7 years8.9 years
Weighted average discount rate4.01 %4.31 %
_________
(a)    Included in Accounts payable and other current liabilities.

Supplemental cash flow information related to leases is as follows:
Nine Months Ended 
September 30,
20202019
Cash payments for lease liabilities within operating activities:
Property operating leases$554 $564 
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:
Property operating leases (a)
588 149 
_________
(a)For the nine months ended September 2019, ROU assets obtained in exchange for lease liabilities from initial recognition.

3.     Restructuring and Other Related Charges

Restructuring

During first quarter 2020, the Company initiated a global restructuring plan to reduce operating costs, such as headcount and facilities, due to declining reservations and revenue resulting from the COVID-19 outbreak (“2020 Optimization Plan”). During the nine months ended September 30, 2020, as part of this process, the Company formally communicated the termination of employment to approximately 3,600 employees, and as of September 30, 2020, the Company terminated approximately 3,500 of these employees. The Company expects further restructuring expense of approximately $7 million related to this initiative to be incurred in 2020.

During third quarter 2019, the Company initiated a restructuring plan to exit its operations in Brazil by closing rental facilities, disposing of assets and terminating personnel (“Brazil”). During the nine months ended September 30, 2020, as part of this initiative, the Company formally communicated the termination of employment to approximately 20 employees. The Company expects further restructuring expense of approximately $5 million to be incurred.

During first quarter 2019, the Company initiated a restructuring plan to drive global efficiency by improving processes and consolidating functions, and to create new objectives and strategies for its U.S. truck rental operations by reducing headcount, large vehicles and rental locations (“T19”). This initiative is substantially complete.

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The following tables summarize the changes to our restructuring-related liabilities and identifies the amounts recorded within the Company’s reporting segments for restructuring charges and corresponding payments and utilizations:
AmericasInternationalTotal
Balance as of January 1, 2020$2 $4 $6 
Restructuring expense:
2020 Optimization Plan26 33 59 
Brazil2  2 
T194  4 
Restructuring payment/utilization:
2020 Optimization Plan(24)(26)(50)
Brazil(2) (2)
T19(6)(3)(9)
Balance as of September 30, 2020$2 $8 $10 
 PersonnelFacility
Related
Other (a)
Total
Balance as of January 1, 2020$3 $1 $2 $6 
Restructuring expense:
2020 Optimization Plan56 1 2 59 
Brazil1 1  2 
T19  4 4 
Restructuring payment/utilization:
2020 Optimization Plan(49) (1)(50)
Brazil(1)(1) (2)
T19(4) (5)(9)
Balance as of September 30, 2020$6 $2 $2 $10 
__________
(a)Includes expenses primarily related to the disposition of vehicles.

Other Related Charges

Limited Voluntary Opportunity Plan (“LVOP”)

During 2020, the Company offered a voluntary termination program to certain employees in field operations, shared services, and general and administrative functions for a limited time. These employees, if qualified, elected resignation from employment in return for enhanced severance benefits to be settled in cash. During the nine months ended September 30, 2020, the Company recorded other related charges of approximately $18 million in connection with the LVOP. As of September 30, 2020, approximately 400 qualified employees elected to participate in the plan and the employment of all participants had been terminated.

Officer Separation Costs

In August 2020, the Company announced the resignation of John F. North, III as the Company’s Chief Financial Officer. Following his post-resignation transition to an advisory position, Mr. North will continue to serve as a consultant through January 1, 2021. In connection with Mr. North’s departure, the Company recorded other related charges of approximately $3 million, inclusive of accelerated stock-based compensation expense for the three months ended September 30, 2020, and expects another $2 million to be incurred during the remainder of 2020 for the remaining portion of accelerated stock-based compensation expense.

In March 2020, the Company announced the departure of Michael K. Tucker as Executive Vice President, General Counsel effective March 27, 2020. In connection with Mr. Tucker’s separation, the Company recorded other related charges of approximately $2 million for the nine months ended September 30, 2020.

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In March 2019, the Company announced the resignation of Mark J. Servodidio as the Company’s President, International effective June 14, 2019. In connection with Mr. Servodidio’s departure, the Company recorded other related charges of approximately $3 million, inclusive of accelerated stock-based compensation expense for the nine months ended September 30, 2019.

In May 2019, the Company announced the resignation of Larry D. De Shon as the Company’s President and Chief Executive Officer. Mr. De Shon continued to serve in his role until December 31, 2019. In connection with Mr. De Shon’s departure, the Company recorded other related charges of approximately $1 million for consulting fees and $12 million for severance, inclusive of accelerated stock-based compensation expense, for the nine months ended September 30, 2020 and 2019, respectively.

4.    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (“EPS”) (shares in millions): 
Three Months Ended 
September 30,
Nine Months Ended September 30,
2020201920202019
Net income (loss) for basic and diluted EPS$45 $189 $(594)$160 
Basic weighted average shares outstanding69.7 75.2 70.8 75.6 
Options and non-vested stock (a)
0.5 0.5  0.6 
Diluted weighted average shares outstanding70.2 75.7 70.8 76.2 
Earnings (Loss) per share:
Basic$0.64 $2.52 $(8.40)$2.12 
Diluted$0.63 $2.50 $(8.40)$2.10 
__________
(a)For the three months ended September 30, 2020 and 2019, 0.2 million and 0.4 million non-vested stock awards, respectively, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding. For the nine months ended September 30, 2020 and 2019, 1.4 million and 0.5 million non-vested stock awards, respectively, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.

5.     Acquisitions

    Avis and Budget Licensees

During the nine months ended September 30, 2020, the Company completed the acquisitions of various licensees in North America and Europe, for approximately $28 million, plus $21 million for acquired fleet. These investments were in-line with the Company’s strategy to re-acquire licensees when advantageous to expand its footprint of Company-operated locations. The acquired fleet was financed under the Company’s existing financing arrangements. In connection with these acquisitions, approximately $26 million was recorded in other intangibles related to license agreements. The license agreements are being amortized over a weighted average useful life of approximately two years. The fair value of the assets acquired and liabilities assumed has not yet been finalized and is therefore subject to change.

6.    Other Current Assets

Other current assets consisted of:
As of 
September 30, 
2020
As of December 31, 2019
Prepaid expenses$177 $234 
Sales and use taxes147 173 
Other146 141 
Other current assets$470 $548 
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7.    Intangible Assets

Intangible assets consisted of:
 As of September 30, 2020As of December 31, 2019
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortized Intangible Assets
License agreements$271 $136 $135 $241 $108 $133 
Customer relationships261 186 75 255 165 90 
Other52 30 22 50 25 25 
Total$584 $352 $232 $546 $298 $248