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Avis Budget Group Reports First Quarter 2013 Results

Truck Rental (Consisting of the Company's U.S. truck rental operations)

  2013 2012 % change
Revenue $76 $75 1%
Adjusted EBITDA $(9) $1 NM

Truck rental revenue increased 1% due to a 4% increase in pricing, partially offset by a 3% decrease in volume.  Adjusted EBITDA declined by $10 million primarily due to our previously announced strategic initiative to reposition the business, which resulted in higher maintenance and damage costs, higher fleet costs and $4 million of restructuring costs. We continue to expect that we will incur restructuring and other costs of approximately $20 million in 2013 in conjunction with this initiative. 

Acquisition of Zipcar

The Company completed the acquisition of Zipcar on March 14, 2013. For the three months ended March 31, 2013, Zipcar's revenue increased 10% year-over-year, to $65 million. Zipcar had approximately 792,000 members as of March 31, 2013, an increase of 12% from a year earlier.

During the first quarter, the Company completed approximately $525 million in debt financing to fund its acquisition of Zipcar. The financing has a weighted-average interest rate of 5.1% and is comprised of €250 million (approximately $325 million) of 6% senior notes due 2021 and $200 million in term loan borrowings due 2019, which will initially bear interest at a rate of 3.75%.  In connection with the incremental term loan borrowings, the Company also reduced the interest rate on its approximately $700 million of pre-existing 2019 term loan borrowings by 50 basis points, to LIBOR plus 2.75%, subject to a LIBOR floor of 1%. 

The Company expects Zipcar to contribute approximately $260 million to revenue in 2013. The Company also expects Zipcar will contribute $25 to $30 million to Adjusted EBITDA this year, including synergies. Primarily because of the estimated $22 million of incremental interest expense associated with the transaction, the Company does not expect the Zipcar acquisition to significantly impact its pretax or net income in 2013, excluding certain items.

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