April 17, 2012 Dear fellow shareholders: 2011 was an outstanding year for Avis Budget Group. We made significant progress on a number of strategic initiatives, which contributed to our growth and profitability. We re- united global ownership of each of the Avis and Budget brands through our acquisition of Avis Europe plc, our long-time licensee, in a financially compelling transaction. We reported record results. And in the process, we positioned Avis Budget Group for even greater long- term success. In this letter, I’d like to cover each of these topics in a bit more detail. Strategic Progress. We entered 2011 with a focus on executing a new strategic plan designed to generate profitable organic growth for our brands, improve our customer experience and gain efficiency throughout our operations. We executed effectively against these initiatives. We invested in new and enhanced brand marketing for Avis and Budget which resonated with customers and strengthened our brands. We grew our rental volumes significantly among international and small-business travelers, two particularly profitable segments that we have targeted. We increased the profitability of our off-airport, or local-market, operations by dual-branding another 400 locations. And we achieved more than $100 million of revenue growth through our portfolio of new and existing travel and affinity partnerships, which we expect will add to our growth again in 2012. Our Performance Excellence process-improvement efforts made another strong contribution to our financial results in 2011, generating more than $70 million in incremental savings from projects that improved our efficiency and lowered our costs. And through our Company-wide Customer Led, Service Driven initiative, we enhanced the customer experience we provide, driving year-over-year improvements in Avis’ and Budget’s customer satisfaction scores. Acquisition of Avis Europe. We have long believed that competing with two truly global brands offers a number of competitive advantages, so we were gratified to be able to complete the acquisition of Avis Europe in October 2011. We can now provide customers with global dual-branded solutions that no other company can match and are a leader in fast- growing travel regions such as India and China. We see significant opportunities to realize benefits from the combination with Avis Europe. We expect to be generating more than $35 million in annual synergies by the first anniversary of the transaction. And, including those synergies, the acquisition of Avis Europe would have added more than $100 million to our 2011 pretax earnings on a pro forma basis1, which highlights just how financially attractive this transaction was for us. Just as importantly, we expect that substantial opportunities to reduce costs and accelerate growth, particularly of the Budget brand in Europe, will remain available even after the first wave of synergies. Record Results. Our financial performance was also a highlight. In 2011, we grew revenue by 14% overall, reported strong organic revenue growth in each of our operating segments (North America, International and Truck Rental), and reported double-digit growth in Adjusted EBITDA in each of those operating segments. Most importantly, because we successfully focused on profitable growth, we grew our Adjusted EBTIDA excluding certain 2 items , by 49%, to $610 million, the highest level in the Company’s history. 2012 and Beyond. We believe strongly that our strategic growth initiatives provide further opportunities for profitable growth. Accordingly, we will continue to pursue rental transactions arising from cross-border travel, dual-branding our off-airport locations, winning small-business customers, and enhancing our brand perception and value proposition. Our process-improvement efforts now are under way on a global basis. And we will continue to strengthen our brands’ presence throughout the world, in both high-growth countries as well as areas where our brands have relatively untapped growth potential. __________ Our record financial results in 2011 demonstrate both that our strategic plan is on target and what our business is capable of. We are proud of the tremendous effort put forth by our talented and hard-working employees to deliver our results. We remain confident that as we continue to generate profitable growth, coupled with ongoing vigilance in controlling costs and improvement in the global economy over time, our stock price will move to levels commensurate with our results. We are excited to be investing for growth and accelerating our strategic initiatives to capitalize on profitable opportunities. On behalf of the more than 28,000 Avis Budget Group employees around the world, we appreciate your continued support of our efforts. Yours sincerely, Ronald L. Nelson Chairman and Chief Executive Officer 1For information regarding our pro forma results, including assumptions and adjustments, please see the accompanying Annual Report on Form 10-K for 2011. 2 A reconciliation of Adjusted EBITDA, excluding certain items, to the most comparable financial measure calculated and presented in accordance with GAAP can be found in our earnings release issued on February 15, 2012 and on our website at www.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 2011 Annual Report on Form 10-K including under headings such as “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 2 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, 2011 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. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 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 and posted on its corporate Web site, if any, 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of June 30, 2011, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1,774,858,793 based on the closing price of its common stock on the NASDAQ Global Select Market. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant. As of January 31, 2012, the number of shares outstanding of the registrant’s common stock was 105,497,065. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement to be mailed to stockholders in connection with the Registrant’s annual stockholders’ meeting scheduled to be held on June 11, 2012 (the “Annual Proxy Statement”) are incorporated by reference into Part III hereof. TABLE OF CONTENTS Item Description