| Free Cash Flow
The Company generated $89 million of free cash flow in the three months ended March 31, 2009.
Domestic Vehicle Financing Facility
The Company is actively investigating the possible issuance of asset-backed securities under the U.S. government's Term Asset-Backed Securities Lending Facility (TALF) program.
In February 2009, the Company completed the renewal of its $1.35 billion principal asset-backed bank conduit facility and its $1.1 billion seasonal conduit facility, which are used to finance cars for its rental fleet. The principal conduit facility has been extended through December 22, 2009, and the seasonal conduit facility will have a final maturity in November 2009 following 25% reductions in borrowing capacity in each of September and October. The initial borrowing spreads for these annually renewing facilities are unchanged from the levels established in connection with the extension of the principal conduit facility in October.
Debt Covenant Compliance
As of March 31, 2009, the Company remained in compliance with its financial covenant requirements under its senior credit facility. EBITDA for the latest twelve months for covenant purposes of approximately $159 million exceeded the requirement of $135 million.
Performance Excellence
The Company's Performance Excellence process improvement program continued to provide significant cost savings in 1Q09. The initiative is expected to deliver more than $100 million of savings in 2009.
Cost-Reduction and Efficiency Improvement Plan
During 4Q08, the Company unveiled a five-point plan to reduce costs and increase efficiency in response to the economic conditions impacting the industry. The savings from this program are expected to total $150 to $200 million in 2009 and will be incremental to savings from Performance Excellence initiative. In 1Q09, the Company:
• Reduced headcount by an additional 1,000 positions;
• Instituted price increases which took effect in January, February and March;
• Reduced advertising expenses, certain commission costs and loyalty program expenses, and increased insurance product pricing and various other fees; and
• Implemented numerous other actions to reduce costs.
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