Mobility Through Connectivity Annual Report 2015 Table of Contents Letter to Shareholders Form 10-K Part I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Selected Financial Data Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Part III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services Part IV Item 15. Exhibits and Financial Statement Schedules Signatures At Avis Budget Group, our purpose is to connect people with what’s important to them, no matter what the occasion. We offer a broad array of services designed to respond to consumers’ diverse demand for mobility solutions. Technology is enabling new and better mobility options that will allow us to continue to enhance the customer experience we offer. We’re testing new technology that will allow our customers to manage their entire rental, from reservation to vehicle pick-up, to car return and e-receipt, all just using a smartphone application. This connectivity should also enable us to achieve increased efficiency in managing our fleet and our costs. Increasingly using technology to enhance the vehicle rental experience and promote efficiency is a critical component of our strategy. And it’s going to be an exciting ride. We look forward to sharing our progress with you. March 29, 2016 Dear fellow shareholders: Last year, we announced that we had adopted a formal statement of purpose, which is to ensure people connect in the moments that matter, and, in 2015, we helped more than 35 million customers connect with what is important to them, a record for our Company. Our owned operations in more than 20 countries and our licensees in more than 150 countries give us a strong global presence to meet these customers’ vehicle-rental needs throughout the world. We are also deploying people and technology to serve our customers more effectively and more efficiently. As a result of these efforts, Avis Budget Group reported the highest revenue and Adjusted EBITDA1 totals in our history. Revenue for 2015 was $8.5 billion and Adjusted EBITDA was $903 million, the first time our Company has achieved Adjusted EBITDA of more than $900 million. In fact, were it not for the negative impact of currency exchange rates, revenue would have grown 5% and Adjusted EBITDA 9%. We generated more than $500 million of free cash flow, which helped fund our repurchase of nearly $400 million of our stock in 2015, representing 8% of our outstanding shares. We have now spent more than $1 billion on a combination of stock buybacks and convertible note repurchases, reducing our diluted share count by 22% from its peak in 2011. Currency exchange headwinds represent just one of the many challenges we faced in 2015, and met head-on, but which may have contributed to the decline in our stock price, despite our year-over-year earnings growth. Industry fleet levels were elevated for much of the year, commercial volume was weaker than expected, and pricing remained highly competitive. Yet we were able to grow our revenue and expand our margins. We are both proud of the way that our people around the world persevered to ensure that we stayed focused on executing our global strategic plan, while also delivering record financial results. We drove organic revenue growth by continuing to focus resources on profitable channels and on the customer experience we offer, including through new mobile technology options that provide travelers with more control over the rental experience. We also increased revenue by continuing to expand our global footprint, including the 2015 acquisitions of Maggiore, one of Italy’s leading vehicle rental companies, and of licensee operations in Brazil, Poland and Scandinavia. We are also making good progress in developing our “self-service” capabilities, which will allow our customers to complete a rental using only a mobile device or smartphone, from reservation to check-out to vehicle return and e-receipt. This initiative responds to consumer demand to be able to manage their travel arrangements 100% percent autonomously. We benefited from our ongoing expansion of Zipcar, which continues to be the world’s leading car sharing network. Our Zipcar operations enjoyed a record-setting year, expanding to more cities, more countries and more colleges and universities. We extended the testing of Zipcar’s ONE>WAY service offering, which promises to offer another source of revenue growth that further establishes our global leadership in car sharing. We also continue to make strides in driving efficiency throughout our organization. Our Transformation 2015 initiative provided tens of millions of dollars of benefits last year by standardizing and/or consolidating some of our non-field functions, and we expect this initiative to generate incremental benefits this year. Our Performance Excellence process-improvement efforts continue to generate significant savings while also aiding our efforts to enhance the customer experience. Our Demand-Fleet-Pricing yield-management initiative, using sophisticated systems to optimize our pricing in real time, is allowing us to respond to changes in the marketplace more rapidly than ever, and we are rolling this tool out to additional countries. We believe that we can continue to find additional ways to leverage technology to help our managers make smarter, faster and better decisions about customer service, revenue generation and cost management. We will look to find better ways to more effectively manage our global workforce, our acquisition and disposition of vehicles, our customer-care activities, vehicle movements, our spending with small and large suppliers, vehicle cleaning and maintenance, and much more. We are enthusiastic about the pipeline of ideas we have in this area. We are gratified that our people around the world maintained their focus during what was a busy year for Avis Budget Group. 2015 included implementation of our executive succession plan, in which we transitioned into our current roles as Executive Chairman and Chief Executive Officer, respectively, while David Wyshner was promoted to President and Chief Financial Officer. Mark Servodidio assumed Larry’s former position as President, International, while Joe Ferraro continues to serve as President, Americas. We also transitioned our marketing activities to a globally coordinated function, under the leadership of Executive Vice President and Chief Marketing Officer Scott Deaver. We are grateful to the Board for having enabled this to be such a smooth transition that developed people for greater responsibility and then effected promotions from within. We believe this approach makes for a stronger and more cohesive leadership team. In addition to focusing on our immediate priorities, our new leadership team is looking well into the future of mobility, to ensure that we are anticipating the evolving needs of both business and leisure travelers, with our purpose of helping them connect with what’s important to them. The ways in which we deliver these services will evolve, but our commitment to being a leader in this field will not waver. Yours Sincerely, Ronald L. Nelson Larry D. De Shon Executive Chairman of the Board Chief Executive Officer 1 A reconciliation of Adjusted EBITDA and Free Cash Flow to the most comparable financial measures calculated and presented in accordance with GAAP can be found in our earnings release issued on February 23, 2016 and on our website at avisbudgetgroup.com. This letter contains forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in our Annual Report on Form 10-K for the year ended December 31, 2015 including under headings such as “Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in other filings and furnishings made by the Company with the Securities and Exchange Commission from time to time. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 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) DELAWARE 06-0918165 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 6 SYLVAN WAY PARSIPPANY, NJ 07054 (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: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, Par Value $.01 The NASDAQ Global Select Market SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.