The Company derives revenue primarily through the operation and licensing of the Avis and Budget rental
systems and by providing vehicle rentals and other services to business and leisure travelers and others.
Other revenue includes sales of loss damage waivers and insurance products, fuel and fuel service
charges, rentals of GPS navigation units and other items. Revenue is recognized when persuasive
evidence of an arrangement exists, the services have been rendered to customers, the pricing is fixed or
determinable and collection is reasonably assured.
Vehicle rental and rental-related revenue is recognized over the period the vehicle is rented. Licensing
revenue principally consists of royalties paid by the Company’s licensees and is recorded within other
revenues as the licensees’ revenue is earned (over the rental period of a vehicle). The Company renews
license agreements in the normal course of business and occasionally terminates, purchases or sells
license agreements. In connection with ongoing fees that the Company receives from its licensees pursuant
to license agreements, the Company is required to provide certain services, such as training, marketing and
the operation of reservation systems. Revenue and expenses associated with gasoline, vehicle licensing
and airport concessions are recorded on a gross basis within revenue and operating expenses.
Membership fees related to the Company’s car sharing business are generally nonrefundable, are deferred
and recognized ratably over the period of membership and are included in Accounts payable and other
current liabilities in the Consolidated Balance Sheets.