---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

---

FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2002
COMMISSION FILE NUMBER: 1-13315

---

AVIS GROUP HOLDINGS, INC.(Exact Name Of Registrant As Specified In Its Charter)

|DELAWARE(State or other jurisdiction of
incorporation or organization) |  | 11-3347585(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------
|6 SYLVAN WAY
PARSIPPANY, NJ(Address of Principal Executive Offices)    |  | 07054(Zip Code)                               

(973) 496-3500(Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:None SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:None

---

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 o    No ý

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. ý

Indicate
by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act). Yes o    No ý

The
aggregate market value of the common stock issued and outstanding and held by nonaffiliates of the Registrant on December 31, 2002: All of our Common Stock is owned by Cendant
Corporation, accordingly there is no public trading market for our Common Stock.

The
number of shares outstanding of the Registrant's classes of common stock was 5,537 as of December 31, 2002.

Avis
Group Holdings, Inc. meets the conditions set forth in General Instructions I (1) (a) and (b) to Form 10-K and is therefore filing this form
with the reduced disclosure format.

---

---

---



TABLE OF CONTENTS

|Item |   | Description                                                                          |  | Page
|---- | - | ------------------------------------------------------------------------------------ |  | ----
|     |   | PART I                                                                               |  |     
|1    |   | Business                                                                             |  | 2   
|2    |   | Properties                                                                           |  | 6   
|3    |   | Legal Proceedings                                                                    |  | 6   
|4    |   | Submission of Matters to a Vote of Security Holders                                  |  | 6   
|     |   | PART II                                                                              |  |     
|5    |   | Market for the Registrant's Common Equity and Related Stockholder Matters            |  | 7   
|6    |   | Selected Financial Data                                                              |  | 7   
|7    |   | Management's Narrative Analysis of the Results of Operations                         |  | 7   
|7    | a | Quantitative and Qualitative Disclosure about Market Risk                            |  | 10  
|8    |   | Financial Statements and Supplementary Data                                          |  | 11  
|9    |   | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |  | 11  
|     |   | PART III                                                                             |  |     
|10   |   | Directors and Executive Officers of the Registrant                                   |  | 11  
|11   |   | Executive Compensation                                                               |  | 11  
|12   |   | Security Ownership of Certain Beneficial Owners and Management                       |  | 11  
|13   |   | Certain Relationships and Related Transactions                                       |  | 11  
|14   |   | Controls and Procedures                                                              |  | 11  
|     |   | PART IV                                                                              |  |     
|15   |   | Exhibits, Financial Statement Schedules and Reports on Form 8-K                      |  | 12  
|     |   | Signatures                                                                           |  |     
|     |   | Certifications                                                                       |  |     

ii

---



FORWARD-LOOKING STATEMENTS

Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from
those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives.

Statements
preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "project", "estimates", "plans", "may increase", "may fluctuate"
and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. You should understand that
the following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:



Other
factors and assumptions not identified above were also involved in the derivation of these forward looking statements, and the failure of such other assumptions to be realized as
well as other factors may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control.

1

---

You
should consider the areas of risk described above in connection with any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing
obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to
report the occurrence of unanticipated events unless required by law. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

PART I

ITEM 1. BUSINESS

Except as expressly indicated or unless the context otherwise requires, the "Company", "we", "our" or "us" means Avis Group
Holdings, Inc., a Delaware corporation, and its subsidiaries.

This
10-K Report includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business,
competitive, market and regulatory factors. Please refer to "Forward-Looking Statements" for additional factors and assumptions that could cause actual results to differ from the forward-looking
statements contained in this 10-K Report.

On
March 1, 2001, all of our common stock not then owned by Cendant Corporation ("Cendant") was acquired by PHH Corporation, a wholly-owned subsidiary of Cendant for approximately
$994 million. Simultaneous with the acquisition, our stock was distributed to a Cendant subsidiary not within the PHH ownership structure and the Company's former fleet and fuel card businesses
were retained by PHH. Accordingly, we are now a wholly-owned subsidiary of Cendant.

We
operate portions of the Avis car rental system (the "Avis System"), which represents the second largest general use car rental brand in the world, based on total revenue and number of
locations. We are the largest franchisee of the portion of the Avis System owned by Cendant. The Avis System is comprised of approximately 4,800 rental locations (of which 1,778 are operated and/or
franchised by Cendant), including locations at some of the largest airports and cities in the United States and foreign countries. We own and operate 964 Avis car rental locations in both airport and
non-airport (downtown and suburban) locations in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Argentina, Australia and New Zealand. For the year ended
December 31, 2002, we operated an average fleet of approximately 219,000 vehicles and generated total vehicle rental revenue of approximately $2.51 billion, of which approximately 90%
was derived from U.S. operations.

The
Avis System provides our car rental locations access to the benefits of a variety of services, including: (i) the "Avis Cares®" driver and travel safety program,
(ii) a standardized system identity for rental location presentation and uniforms; (iii) a training program, business policies, quality of service standards and data designed to monitor
service commitment levels; (iv) marketing/advertising/public
relations support for national consumer promotions including the avis.com Internet site; and (v) brand awareness of the Avis System through the familiar "We Try Harder®"
advertising.

We
also have access to Cendant's Wizard® System, an on-line computer system, which provides (i) global reservations processing, (ii) rental
agreement generation and administration and (iii) fleet accounting and control. We pay Cendant a fee for each use of the Wizard System. We also offer our corporate customers Avis
InterActive®, which provides these customers real-time access to aggregated information on car rental expenses to better manage their car rental expenditures.

Growth.The existing rental patterns of our business cause us to have excess capacity from Friday through Sunday. We intend
to increase business during this period through a combination of advertising, targeted marketing programs to associations and customers of other Cendant brands and increased presence in the

2

---

online arena. Our own Internet site, avis.com, as well as other Internet travel sites, including the cheaptickets.com Web site, present good opportunities to grow our business and improve our
profitability through enhanced utilization of our fleet. We also intend to continue to grow our share of the corporate market through normal contract negotiations and by seeking clients that may be
affected by fleet constraints of certain of our competitors.

Fleet Management.We participate in a variety of vehicle purchase programs with major domestic and foreign manufacturers,
principally General Motors Corporation ("GM"). Under the terms of our agreement with GM, which expires in 2006, we are required to purchase a certain number of vehicles. Our current operating strategy
is to maintain an average fleet age of approximately 6.5 months. For model year 2002, over 99% of our domestic fleet vehicles were subject to repurchase programs. Under these programs, subject
to certain conditions, such as mileage and vehicle condition, a manufacturer is required to repurchase those vehicles at a pre-negotiated price thereby eliminating our risk on the resale
of the vehicles. In 2002, approximately 3% of repurchase program vehicles did not meet the conditions for repurchase.

We
acquire our fleet through, and lease it from, our wholly-owned and consolidated subsidiary, AESOP Leasing L.P. ("AESOP"). Beginning in November 2002, we began to sublease a
portion of our fleet to Budget Rent A Car System, Inc., ("Budget"), a wholly-owned subsidiary of Cendant not within our ownership structure, under a sublease agreement. Under the terms of the
sublease agreement, we charge Budget a monthly fee equal to the leased vehicles' monthly depreciation expense, vehicle debt interest expense and certain related administrative expenses in exchange for
use of the rental vehicle for an agreed upon length of time. Upon expiration of the sublease term the vehicles are turned back to the vehicle manufacturers under existing vehicle repurchase programs.
The cash generated from such turnbacks, along with the cash generated from the monthly sublease charge, is used to pay down the vehicle debt and interest related to such vehicles.

Marketing.In 2002, approximately 75% of vehicle rental transactions were generated from our owned and operated car rental
locations in the United States by travelers who used the Avis System under
contracts between us and their employers or organizations of which they were members. Unaffiliated business and leisure travelers, a segment which contributed to market share growth in 2002, were
solicited by direct mail, telesales and advertising campaigns.

Travel
agents can make Avis System reservations by telephone, via our Internet site, or through all major global distribution systems and online travel portals, and can obtain access
through these systems to our rental locations, vehicle availability and applicable rate structures. An automated link between these systems and the Wizard System gives them the ability to reserve and
confirm rentals directly through these systems. We also maintain strong links to the travel industry. We have arrangements with frequent traveler programs of airlines, such as Delta, American,
Continental and United, and of hotels, including the Hilton Corporation, Hyatt Corporation, Best Western, and Starwood Hotels and Resorts. These arrangements provide various incentives to all program
participants and cooperative marketing opportunities for us and our partners. We also have an arrangement with Cendant's lodging brands whereby lodging customers who are making reservations by
telephone may be transferred to us if they desire to rent a vehicle.

Internationally,
we utilize a multi-faceted approach to sales and marketing throughout our global network by employing teams of trained and qualified account executives to negotiate
contracts with major corporate accounts and leisure and travel industry partners. In addition, we utilize centralized telemarketing and direct mail initiatives to continuously broaden our customer
base. Sales efforts are designed to secure customer commitment and support customer requirements for both domestic and international car rental needs. Our international operations maintain close
relationships with the travel industry including participation in several airline frequent flyer programs, such as those operated by Air Canada and Qantas, as well as participation in Avis Europe's
programs with British Airways, Lufthansa and other carriers.

3

---

Avis.com.We have a strong brand presence on the Internet through our Avis Internet site, www.avis.com. A steadily increasing number of
Avis vehicle rental customers obtain rate, location and fleet information and then reserve their Avis
rentals directly through the avis.com Internet site. In addition, customers electing to use other Internet services, such as Expedia, Travelocity, and America Online, for their travel plans, also have
access to Avis reservations. During 2002, reservations through Internet sources increased to 13.8% of total reservations from 9.5% in the prior year.

Competition.The vehicle rental industry is characterized by intense price and service competition. In any given location, we
may encounter competition from national, regional and local companies, many of which, particularly those owned by the major automobile manufacturers, have greater resources than the Avis System.
Nationally, our principal competitor is The Hertz Corporation; however, we also compete with National Car Rental System, Inc., Alamo Rent-A-Car, LLC, Dollar Rent A Car
Systems, Inc. and Thrifty Rent-A-Car System, Inc. and Enterprise Rent-A-Car Company. In addition, we compete with a large number of
regional and local smaller vehicle rental companies throughout the country.

Competition
in the U.S. vehicle rental operations business is based primarily upon price, reliability, ease of rental and return and other elements of customer service. In addition,
competition is influenced strongly by advertising and marketing. In part, because of the Wizard System and Avis Interactive, we have been particularly successful in competing for commercial accounts.

Trademarks and Intellectual Property.The service mark "Avis," related marks incorporating the word "Avis", and related logos
are material to us. We actively use this mark, which is registered (or has applications pending for registration) with the United States Patent and Trademark Office as well as major countries
worldwide where we operate. Cendant owns the mark we use. We pay Cendant a royalty fee of 4.4% of revenue for the use of the Avis trade name. The royalty of 4.4% consists of a base royalty of 3.0% of
gross revenue and a supplemental royalty of 1.4% of the gross revenue payable quarterly in arrears, which will increase periodically to a maximum of 1.5% in 2003 and will continue at this percentage
through 2047.

Seasonality.The third quarter of the year, which covers the summer vacation period, represents the peak season for vehicle
rentals. Any occurrence that disrupts travel patterns during the summer period could have a material adverse effect on our annual performance. The fourth quarter is generally our weakest financial
quarter. In 2002, our average monthly rental fleet, excluding sub-franchisees, ranged from a low of approximately 194,000 vehicles in January to a high of approximately 248,000 vehicles in
July. Rental utilization, which is based on the number of hours vehicles are rented compared to the total number of hours vehicles are available for rental, ranged from a low of 66.1% in December to a
high 82.1% in August and averaged 73.9% for all of 2002.

Insurance.We generally assume the risk of liability to third parties arising from vehicle rental services in the United
States, Canada, Puerto Rico and the U.S. Virgin Islands, for up to $1.0 million per occurrence, through a combination of certificates of self-insurance, insurance coverage provided
by our domestic subsidiary and insurance coverage secured from an unaffiliated domestic insurance carrier. We maintain additional insurance in excess of such level up to $9 million per
occurrence through an unaffiliated fronting carrier, and up to an additional $300 million per occurrence through a combination of unaffiliated excess carriers.

Prior
to July 27, 2001, we assumed the risk of liability to third parties for up to $1.0 million per occurrence and maintained excess coverage public liability insurance
with unaffiliated carriers up to $203 million per occurrence.

We
insure the risk of liability to third parties in Argentina, Australia and New Zealand through a combination of unaffiliated carriers and our wholly-owned subsidiary. These carriers
provide coverage supplemental to minimum local requirements.

4

---

A
traditional revenue source for the vehicle rental industry has been the sale of loss damage waivers, by which rental companies agree to relieve a customer from financial responsibility
arising from vehicle damage incurred during the rental period. Approximately 3.2% of our vehicle operations revenue during 2002 and 2001 was generated by the sale of loss damage waivers. Approximately
40 states have considered legislation affecting the sale of loss damage waivers. To date, 24 states have enacted legislation which requires disclosure to each customer at the time of rental that
damage to the rented vehicle may be covered by the customer's personal automobile insurance and that loss damage waivers may not be necessary. Currently, New York does not permit us to offer loss
damage waivers for sale and limits potential customer liability to $100. Pursuant to new legislation effective February 24, 2003, New York will permit the sale of loss damage waivers at a
capped rate of $9 per day for vehicles with Manufacturers Suggested Retail Price ("MSRP") of less than $30,000 and $12 per day for vehicles with a MSRP a of over $30,000. Moreover, Nevada has capped
rates for loss damage waivers at $15. California has capped these rates at either $9 per day for cars with an MSRP of $19,000 or less, or $15 per day for cars with an MSRP of $19,000 to $34,999, but
there is no cap for cars with an MSRP of $35,000 or more.

Regulation.We are subject to federal, state and local laws and regulations including those relating to taxing and licensing
of vehicles, franchising, consumer credit, environmental protection and labor matters. The principal environmental regulatory requirements applicable to our vehicle rental operations relate to the
ownership or use of tanks for the storage of petroleum products, such as gasoline, diesel fuel and motor oil; the treatment or discharge of waste waters; and the generation, storage, transportation
and off-site treatment or disposal of solid or liquid wastes. We operate 274 locations at which petroleum products are stored in underground or aboveground tanks. We have instituted an
environmental compliance program designed to ensure that these tanks are in compliance with applicable technical and operational requirements, including the replacement and upgrade of underground
tanks to comply with the December 1998 EPA upgrade mandate, release detection and release detection record keeping. We believe that the locations where we currently operate are in compliance,
in all material respects, with such regulatory requirements.

We
may also be subject to requirements related to reporting, investigation and remediation of, or the liability for reporting, investigation and remediation of, substances that have been
released to the environment at properties owned or operated by us or at properties to which we send substances for treatment or disposal. Such requirements may be imposed without regard to fault and
liability for environmental remediation and may be substantial.

We
may be eligible for reimbursement or payment of investigation and remediation costs associated with future releases from our regulated underground storage tanks and have established
funds to assist in the payment of investigation and remediation costs for releases from certain registered underground tanks. Subject to certain deductibles, the availability of funds, compliance
status of the tanks and the nature of the release, these tank funds may be available to us for use in remediating future releases from our tank systems.

We
are also subject to regulation under the insurance statutes, including insurance holding company statutes, of the jurisdictions in which our insurance company subsidiaries are
domiciled. These regulations
vary from state to state, but generally require insurance holding companies and insurers that are subsidiaries of insurance holding companies to register and file certain reports including information
concerning their capital structure, ownership, financial condition and general business operations with the state regulatory authority, and require prior regulatory agency approval of changes in
control of an insurer and intercorporate transfers of assets within the holding company structure. Such insurance statutes also require that we obtain limited licenses to sell optional insurance
coverage to our customers at the time of rental.

5

---

The
payment of dividends to us by our insurance company subsidiaries is restricted by government regulations in Colorado, Bermuda and Barbados affecting insurance companies domiciled in
those jurisdictions.

Employees.As of December 31, 2002, we employed approximately 19,500 people. Management considers our employee
relations to be satisfactory.

ITEM 2. PROPERTIES

Our principal executive offices are located in a facility owned by Cendant at 6 Sylvan Way, Parsippany, New Jersey 07054.

We
lease a portion of a 158,000 square foot facility in Virginia Beach, Virginia, owned by Cendant which serves as a satellite administrative office for our rental car operations. We
also sublease space from Cendant in Tulsa, Oklahoma for certain marketing activities. In addition, there are approximately 19 leased office locations in the United States.

We
lease or have vehicle rental concessions relating to space at 729 locations in the United States and 235 locations outside the United States utilized in connection with our vehicle
rental operation. Of those locations, 231 in the United States and 73 outside the United States are airports. Typically, an airport receives a percentage of vehicle rental revenues, with a guaranteed
minimum. Because there is a limit to the number of vehicle rental locations in an airport, vehicle rental companies frequently bid for the available locations, usually on the basis of the size of the
guaranteed minimums. We and other vehicle rental companies firms also lease parking space at or near airports and at other vehicle rental locations.

ITEM 3. LEGAL PROCEEDINGS

After the April 15, 1998 announcement of the discovery of accounting irregularities in the former CUC business units, and prior to the date of this Annual
Report on Form 10-K, approximately 70 lawsuits claiming to be class actions and other proceedings were commenced against Cendant and other defendants. Cendant has settled the
principal securities class action pending against it and such settlement was fully funded by Cendant on May 24, 2002.

Cendant
is involved in litigation asserting claims associated with the accounting irregularities discovered in former CUC business units outside of the principal common stockholder class
action litigation. Cendant cannot give any assurance as to the final outcome or resolution of these proceedings. However, Cendant does not believe that the impact of such proceedings should result in
a material liability to us in relation to our consolidated financial position or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instruction I (2) of Form 10-K.

6

---

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Not Applicable

ITEM 6. SELECTED FINANCIAL DATA

Omitted pursuant to General Instruction I (2) of Form 10-K.

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Consolidated Financial Statements and accompanying Notes thereto included
elsewhere herein. Unless otherwise noted, all dollar amounts are in thousands and presented before taxes (as appropriate).

We
are the second largest general use car rental brand in the world and a wholly-owned subsidiary of Cendant Corporation.

CRITICAL ACCOUNTING POLICIES

In presenting our financial statements in conformity with accounting principles generally accepted in the United States of America, we are required to make
estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to
future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant
unfavorable change to current conditions, it will likely result in a material adverse impact to our consolidated results of operations, financial position and in liquidity. We believe that the
estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and
complex judgments that could potentially affect reported results.

Financial Instruments.We estimate fair values of each of our financial instruments, including derivative instruments. These
financial instruments are not publicly traded on an organized exchange. In the absence of quoted market prices, we must develop an estimate of fair value using present value cash flow models, which
may involve significant judgments and assumptions, including estimates of future interest rate levels based on interest rate yield curves and estimation of the timing of future cash flows. The use of
different assumptions may have a material effect on the estimated fair value amounts recorded in the financial statements, which are disclosed in Note 13Financial Instruments to
our Consolidated Financial Statements. In addition, hedge accounting requires that at the beginning of each hedge period, we justify an expectation that the relationship between the changes in fair
value of derivatives designated as hedges compared to changes in the fair value of the underlying hedged items be highly effective. This effectiveness assessment involves an estimation of changes in
fair value resulting from changes in interest rates, as well as the probability of the occurrence of transactions for cash flow hedges. The use of different assumptions and changing market conditions
may impact the results of the effectiveness assessment and ultimately the timing of when changes in derivative fair values and the underlying hedged items are recorded in earnings. See Item 7a.
"Quantitative and Qualitative Disclosures above Market Risk" for a discussion of the effect of hypothetical changes to these assumptions.

Goodwill and Other Intangible Assets.We have reviewed the carrying values of our goodwill and other intangible assets as
required by SFAS No. 142, "Goodwill and Other Intangible Assets," by comparing the carrying values of our reporting units to their fair values and determined that the carrying amounts of our
reporting units did not exceed their respective fair values. When determining fair value, we utilized various assumptions, including projections of future cash flows. A change in these underlying
assumptions will

7

---

cause a change in the results of the tests and, as such, could cause fair value to be less than the respective carrying amounts. In such event, we would then be required to record a charge, which
would impact earnings. We will continue to review the carrying values of goodwill and other intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have
occurred.

The
aggregate carrying value of our goodwill and other intangible assets was approximately $1,271.6 million at December 31, 2002, of which $1,254.4 million
represented goodwill and $17.2 million represented intangible assets with finite lives (refer to Note 8Intangible Assets to our Consolidated Financial Statements for more
information on goodwill and other intangible assets).

RESULTS OF OPERATIONS2002 vs. 2001

The periods prior to March 1, 2001 (the date we were acquired by Cendant) have been designated "Predecessor Companies" and the periods subsequent to
March 1, 2001 have been designated "Successor Company". The results of the Predecessor Companies and the Successor Company have been combined for the year ended December 31, 2001 since
we believe that separate discussions for the two months ended February 28, 2001 and the ten months ended December 31, 2001 are not meaningful in terms of describing trends in our
operating results or comparisons to the prior year.

Our
comparative results of continuing operations, for the years ended December 31, 2002 and 2001 comprised the following:

|                                                             |  | 2002 |           | 2001 |   | Change    |  
|------------------------------------------------------------ |  | ---- | --------- | ---- | - | --------- | -
|Revenues                                                     |  | $    | 2,512,198 |      | $ | 2,387,780 |  
|                                                             |  |      |           |      |   |           |  
|Expenses, excluding unusual charges and non-vehicle interest |  |      | 2,386,782 |      |   | 2,398,796 |  
|Unusual charges                                              |  |      |          |      |   | 48,559    |  
|Non-vehicle interest, net                                    |  |      | 42,797    |      |   | 52,512    |  
|                                                             |  |      |           |      |   |           |  
|Total expenses                                               |  |      | 2,429,579 |      |   | 2,499,867 |  
|                                                             |  |      |           |      |   |           |  
|Income (loss) before income taxes                            |  |      | 82,619    |      |   | (112,087  | )
|Provision (benefit) for income taxes                         |  |      | 30,982    |      |   | (29,868   | )
|                                                             |  |      |           |      |   |           |  
|Income (loss) from continuing operations                     |  | $    | 51,637    |      | $ | (82,219   | )
|                                                             |  |      |           |      |   |           |  

Our
2002 revenue increased 5.2% over 2001 primarily due to a 4.0% increase in vehicle rental revenue per day, which primarily resulted from an increase in pricing.

Total
expenses decreased 2.8% during 2002 primarily due to the elimination of unusual charges and also due to a decrease of 18.5% in net non-vehicle interest expense
principally due to the termination of our revolving credit facility in 2001, which was replaced by intercompany funding from Cendant at lower variable interest rates. See
Note 3Unusual Charges to our Consolidated Financial Statements for a discussion of the 2001 unusual charges.

Our
effective tax rate for 2002 was 37.5%, compared with 26.6% for 2001. The increase in the effective tax rate is primarily due to the impact of the goodwill amortization that reduced
our effective tax rate in 2001.

As
a result of the above-mentioned items, income from continuing operations increased $133.9 million during 2002.

CHANGE IN ACCOUNTING POLICIES

Goodwill and Other Intangible Assets.On January 1, 2002, we adopted Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets," in its entirety. In connection with the adoption of this standard, we have not amortized any goodwill or indefinite-lived intangible
assets during 2002. Prior to the adoption, all intangible assets were amortized on a straight-line basis over their

8

---

estimated periods to be benefited. Therefore, the results of operations for 2001 and 2000 reflect the amortization of goodwill and indefinite-lived intangible assets, while the results of operations
for 2002 do not reflect such amortization (see Note 8Intangible Assets to our Consolidated Financial Statements for a pro forma disclosure depicting our results of operations
during 2001 and 2000 after applying the non-amortization provisions of SFAS No. 142).

In
connection with the implementation of SFAS No. 142, we were required to assess goodwill and indefinite-lived intangible assets for impairment. We reviewed the carrying value of
our reporting units by comparing such amounts to their fair value and determined that the carrying value of our reporting units did not exceed their respective fair values. Accordingly, the initial
implementation of this standard and the annual testing did not result in a charge and, as such, did not impact our results of operations during 2002.

Impairment or Disposal of Long-Lived Assets.On January 1, 2002, we adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." This standard supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," and replaces the accounting and reporting provisions of APB Opinion No. 30, "Reporting Results of OperationsReporting the Effects
of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," as it relates to the disposal of a segment of a business. SFAS No. 144
requires the use of a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations, by requiring those long-lived assets to be
measured at the lower of carrying amount or fair value less cost to sell. The impairment recognition and measurement provisions of SFAS No. 121 were retained for all long-lived
assets to be held and used with the exception of goodwill.

Accounting for Derivative Instruments and Hedging Activities.On January 1, 2001, we adopted the provisions of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard, as amended and interpreted, establishes accounting and reporting standards for derivative instruments and
hedging activities. As required by SFAS No. 133, we have recorded all such derivatives at fair value in the Consolidated Balance Sheets. The adoption of this standard resulted in the
recognition of a non-cash charge of $10.9 million ($7.6 million, after tax) in the Consolidated Statement of Operations on January 1, 2001 to account for the
cumulative effect of the accounting change relating to derivatives designated in fair value type hedges prior to adopting this standard, to derivatives not designated as hedges. We also recognized a
cumulative-effect-type adjustment in the amount of $2.4 million ($1.5 million after tax) in accumulated other comprehensive loss in the Consolidated Balance Sheets
attributable to derivatives designated as cash-flow-like hedges prior to the adoption of SFAS No. 133.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Early Extinguishment of Debt.In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." Such standard requires any gain or loss on
extinguishments of debt to be presented as a component of continuing operations (unless specific criteria are met) whereas SFAS No. 4 required that such gains and losses be classified as an
extraordinary item in determining net income. Upon adoption of this standard, we expect to reclassify any extraordinary gains and losses on the extinguishments of debt recorded in prior periods to
continuing operations. We will adopt these provisions on January 1, 2003, as required. The other provisions of SFAS No. 145 were not relevant to us.

Costs Associated with Exit or Disposal Activities.In June 2002, the FASB issued SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities." Such standard requires costs associated with exit or disposal activities (including restructurings) to be recognized when the costs are incurred,
rather than at a date of commitment to an exit or disposal plan. SFAS No. 146 nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a liability related to an exit or disposal activity is not recognized until such
liability has actually been incurred whereas under

9

---

EITF Issue No. 94-3 a liability was recognized at the time of a commitment to an exit or disposal plan. The provisions of this standard are effective for exit or disposal
activities initiated after December 31, 2002. We will adopt this standard on January 1, 2003, as required.

Guarantees.In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others."
Such Interpretation elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees issued. It also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this Interpretation apply to
guarantees issued or modified after December 31, 2002. We will adopt these provisions on January 1, 2003. The disclosure provisions of this Interpretation are effective for financial
statements with annual periods ending after December 15, 2002. We have applied the disclosure provisions of this Interpretation as of December 31, 2002, as required by this
Interpretation (see Note 17Commitments and Contingencies to our Consolidated Financial Statements).

Stock-Based Compensation.On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
CompensationTransition and Disclosure." This standard amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee compensation. This standard also requires prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the method used on reported results. We have applied the disclosure provisions of SFAS No. 148 as of
December 31, 2002.

As
permitted by SFAS No. 123, during 2002, the Company measured its stock-based compensation using the intrinsic value approach under Accounting Principles Board Opinion
No. 25. Accordingly, we did not recognize compensation expense upon the issuance of Cendant stock options issued to our employees because the option terms were fixed and the exercise price
equaled the market price of the underlying Cendant common stock on the grant date. We complied with the provisions of SFAS No. 123 by providing pro forma disclosures of net income giving
consideration to the fair value method provisions of SFAS No. 123. See Note 1Summary of Significant Accounting Policies to our Consolidated Financial Statements for a table
illustrates the effect on net income if the fair value based method had been applied during each period presented.

On
January 1, 2003, we adopted the fair value method of accounting for stock-based compensation provisions of SFAS No. 123, which is considered by the FASB to be the
preferable accounting method for stock-based employee compensation, and have elected to use the prospective transition method permitted by SFAS No. 148. Therefore, the transition provisions of
SFAS No. 148 will be adopted concurrently with the fair value based recognition provisions of SFAS No. 123 on January 1, 2003. Subsequently, we will expense all future employee
stock awards by Cendant to our employees over the vesting period based on the fair value of the award on the date of grant in accordance with the prospective transition method.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We use various financial instruments, particularly interest rate swaps and also interest rate caps to manage and reduce the interest rate risk related
specifically to our asset-backed securities.

We
are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market-making, or other speculative activities in the
derivatives markets. Our principal market exposures are to interest rate movements both in one country, as well as relative interest rate movements between countries. Our primary interest rate
exposures are to interest rate fluctuations in the United States, specifically LIBOR and commercial paper interest rates due to their impact on variable rate borrowings. We anticipate that such
interest rates will remain a primary market exposure for the foreseeable future.

10

---

We
assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash
flows based on a hypothetical 10% change (increase and decrease) in interest rates.

We
use a duration-based model in determining the impact of interest rate shifts on our debt portfolio and interest rate derivatives portfolios. The primary assumption used in this model
is that a 10% increase or decrease in the benchmark interest rate produces a parallel shift in the yield curve across all maturities.

Our
total market risk is influenced by a wide variety of factors including the volatility present within the markets and the liquidity of the markets. There are certain limitations
inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these "shock tests" are constrained by several factors, including the necessity to conduct the analysis
based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

We
used December 31, 2002, 2001 and 2000 market rates on our instruments to perform the sensitivity analyses separately for our market risk exposures. The estimates are based on
the market risk sensitive portfolios and assume instantaneous, parallel shifts in interest rate yield curves.

We
have determined that the impact of a 10% change in interest rates and prices on our earnings, fair values and cash flows would not be material.

While
these results may be used as benchmarks, they should not be viewed as forecasts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial Statements and Financial Statement Index commencing on page F-1 hereof.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Omitted pursuant to General Instruction I (2) of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Omitted pursuant to General Instruction I (2) of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Omitted pursuant to General Instruction I (2) of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted pursuant to General Instruction I (2) of Form 10-K.

ITEM 14. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our President and Chief Operating Officer and Senior Vice
President and Controller have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"). Based on such evaluation,
such officers have concluded that, as of the Evaluation

11

---

Date, our disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to our company (including our consolidated subsidiaries) required to be
included in our reports filed or submitted under the Exchange Act.

(b)Changes in Internal Controls. Since the Evaluation Date, there have not been any significant changes in our internal controls or in
other factors that could significantly affect such controls.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

ITEM 15(A)(1) FINANCIAL STATEMENTS

See Financial Statements and Financial Statement Index commencing on page F-1 herein.

ITEM 15(A)(3) EXHIBITS

See Exhibit Index commencing on page G-1 hereof.

ITEM 15(B) REPORTS ON FORM 8-K

None

12

---



SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

| |  | AVIS GROUP HOLDINGS, INC.
| |  | -------------------------
| |  | By:                      

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|Signature                               |  | Title                                                                         |  | Date         
|--------------------------------------- |  | ----------------------------------------------------------------------------- |  | -------------
|/s/F. ROBERT SALERNO(F. Robert Salerno) |  | President, Chief Operating Officer and Director (Principal Executive Officer) |  | March 6, 2003
|/s/KURT FREUDENBERG(Kurt Freudenberg)   |  | Senior Vice President and Controller
(Principal Financial Officer)            |  | March 6, 2003
|/s/KEVIN M. SHEEHAN(Kevin M. Sheehan)   |  | Director                                                                      |  | March 6, 2003

13

---



CERTIFICATIONS

I,
F. Robert Salerno, certify that:



Date:
March 6, 2003

/s/F. ROBERT SALERNOPresident and Chief Operating Officer


14

---

I, Kurt Freudenberg, certify that:



Date:
March 6, 2003

/s/KURT FREUDENBERGSenior Vice President and Controller


15

---



INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                                                                                                                       |  | Page
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Independent Auditors' Report                                                                                                                                                                                                           |  | F-2 
|Consolidated Statements of Operations for the year ended December 31, 2002, the period March 1, 2001 (Date of Acquisition) to December 31, 2001, the two months ended February 28, 2001 and the year ended December 31, 2000           |  | F-3 
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                                                                                                                                                           |  | F-4 
|Consolidated Statements of Cash Flows for the year ended December 31, 2002, the period March 1, 2001 (Date of Acquisition) to December 31, 2001, the two months ended February 28, 2001 and the year ended December 31, 2000           |  | F-5 
|Consolidated Statements of Stockholder's Equity for the year ended December 31, 2002, the period March 1, 2001 (Date of Acquisition) to December 31, 2001, the two months ended February 28, 2001 and the year ended December 31, 2000 |  | F-7 
|Notes to the Consolidated Financial Statements                                                                                                                                                                                         |  | F-8 

F-1

---



INDEPENDENT AUDITORS' REPORT

Independent Auditors Report
To the Board of Directors and Stockholder of
Avis Group Holdings, Inc.
Parsippany, New Jersey

We
have audited the accompanying consolidated balance sheets of Avis Group Holdings, Inc. and subsidiaries (successor to Avis Rent A Car System, Inc. and subsidiaries, Avis
Fleet Leasing and Management Corp., and subsidiaries and Reserve Claims Management Co., collectively the "Predecessor Companies") (collectively referred to as the "Company") as of December 31,
2002 and 2001, and the related consolidated statements of operations, common stockholders' equity, and cash flows for the year ended December 31, 2002 and for the period March 1, 2001
(Date of Acquisition) to December 31, 2001 and as to the Predecessor Companies, the consolidated statements of operations, common stockholders' equity and cash flows for the period
January 1, 2001 to February 28, 2001 and for the year ended December 31, 2000. Our audits also included the financial statement schedule listed in the Index at Item 14. These
consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial
statements and financial statement schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2002 and 2001, and the
results of its operations and its cash flows for the year ended December 31, 2002 and for the period March 1, 2001 (Date of Acquisition) to December 31, 2001, and with respect to
the Predecessor Companies, the results of its operations and its cash flows for the period January 1, 2001 to February 28, 2001 and for the year ended
December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As
discussed in Note 1 to the consolidated financial statements, on January 1, 2002, the Company adopted the non-amortization provisions for goodwill and other
indefinite lived intangible assets. Also, as discussed in Note 1, on January 1, 2001, the Company modified the accounting for derivative instruments and hedging activities.

/s/
Deloitte & Touche LLP
New York, New York
January 29, 2003

F-2

---



Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands)

|                                                                                    |                                             |   |           |           |   | Predecessor Companies
|----------------------------------------------------------------------------------- | ------------------------------------------- | - | --------- | --------- | - | ---------------------
|
|
|Revenues                                                                            |                                             | $ | 2,512,198 |           | $ | 2,001,959            
|Expenses                                                                            |                                             |   |           |           |   |                      
|                                                                                    | Operating, net                              |   |           | 1,019,697 |   |                      
|                                                                                    | Vehicle depreciation and lease charges, net |   |           | 663,793   |   |                      
|                                                                                    | Selling, general and administrative         |   |           | 460,474   |   |                      
|                                                                                    | Vehicle interest, net                       |   |           | 205,521   |   |                      
|                                                                                    | Non-vehicle interest                        |   |           | 42,797    |   |                      
|                                                                                    | Non-vehicle depreciation and amortization   |   |           | 37,297    |   |                      
|                                                                                    | Unusual charges                             |   |           |          |   |                      
|                                                                                    |                                             |   |           |           |   |                      
|Total expenses                                                                      |                                             |   | 2,429,579 |           |   | 2,071,809            
|                                                                                    |                                             |   |           |           |   |                      
|Income (loss) before income taxes                                                   |                                             |   | 82,619    |           |   | (69,850              
|Provision (benefit) for income taxes                                                |                                             |   | 30,982    |           |   | (14,085              
|                                                                                    |                                             |   |           |           |   |                      
|Income (loss) from continuing operations                                            |                                             |   | 51,637    |           |   | (55,765              
|Income from discontinued operations, net of tax                                     |                                             |   |          |           |   |                     
|                                                                                    |                                             |   |           |           |   |                      
|Income (loss) before extraordinary gains and cumulative effect of accounting change |                                             |   | 51,637    |           |   | (55,765              
|Extraordinary gains on early extinguishment of debt, net of tax                     |                                             |   | 809       |           |   |                     
|                                                                                    |                                             |   |           |           |   |                      
|Income (loss) before cumulative effect of accounting change                         |                                             |   | 52,446    |           |   | (55,765              
|Cumulative effect of accounting change, net of tax                                  |                                             |   |          |           |   |                     
|                                                                                    |                                             |   |           |           |   |                      
|Net income (loss)                                                                   |                                             | $ | 52,446    |           | $ | (55,765              
|                                                                                    |                                             |   |           |           |   |                      

See
Notes to Consolidated Financial Statements.

F-3

---



Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATED BALANCE SHEETS  (In thousands, except share data)

|                                                                     |                                                                            | December 31,
2002 |           | December 31,
2001 |  
|-------------------------------------------------------------------- | -------------------------------------------------------------------------- | ----------------- | --------- | ----------------- | -
|ASSETS                                                               |                                                                            |                   |           |                   |  
|                                                                     | Cash and cash equivalents                                                  |                   | $         | 25,252            |  
|                                                                     | Restricted cash                                                            |                   |           | 59,012            |  
|                                                                     | Receivables (net of allowance for doubtful accounts of $3,625 and $5,177)  |                   |           | 158,730           |  
|                                                                     | Prepaid expenses                                                           |                   |           | 49,798            |  
|                                                                     | Deferred income taxes                                                      |                   |           | 481,335           |  
|                                                                     | Property and equipment, net                                                |                   |           | 278,830           |  
|                                                                     | Goodwill, net                                                              |                   |           | 1,254,401         |  
|                                                                     | Other assets                                                               |                   |           | 55,517            |  
|                                                                     |                                                                            |                   |           |                   |  
|Total assets exclusive of assets under management programs           |                                                                            |                   | 2,362,875 |                   |  
|                                                                     |                                                                            |                   |           |                   |  
|Assets under management programs:                                    |                                                                            |                   |           |                   |  
|                                                                     | Restricted cash                                                            |                   |           | 2,462             |  
|                                                                     | Vehicles, net                                                              |                   |           | 4,173,847         |  
|                                                                     | Due from vehicle manufacturers, net                                        |                   |           | 258,459           |  
|                                                                     |                                                                            |                   |           |                   |  
|                                                                     |                                                                            |                   | 4,434,768 |                   |  
|                                                                     |                                                                            |                   |           |                   |  
|Total assets                                                         |                                                                            | $                 | 6,797,643 |                   | $
|                                                                     |                                                                            |                   |           |                   |  
|LIABILITIES AND STOCKHOLDER'S EQUITY                                 |                                                                            |                   |           |                   |  
|Liabilities:                                                         |                                                                            |                   |           |                   |  
|                                                                     | Accounts payable                                                           |                   | $         | 205,727           |  
|                                                                     | Accrued liabilities                                                        |                   |           | 415,009           |  
|                                                                     | Due to Cendant Corporation and affiliates, net                             |                   |           | 551,809           |  
|                                                                     | Non-vehicle debt                                                           |                   |           | 534,231           |  
|                                                                     | Public liability, property damage and other insurance liabilities          |                   |           | 211,786           |  
|                                                                     |                                                                            |                   |           |                   |  
|Total liabilities exclusive of liabilities under management programs |                                                                            |                   | 1,918,562 |                   |  
|                                                                     |                                                                            |                   |           |                   |  
|Liabilities under management programs:                               |                                                                            |                   |           |                   |  
|                                                                     | Vehicle debt                                                               |                   |           | 4,245,703         |  
|                                                                     | Deferred income taxes                                                      |                   |           | 288,005           |  
|                                                                     |                                                                            |                   |           |                   |  
|                                                                     |                                                                            |                   | 4,533,708 |                   |  
|                                                                     |                                                                            |                   |           |                   |  
|Commitments and contingencies (Note 17)                              |                                                                            |                   |           |                   |  
|Stockholder's equity:                                                |                                                                            |                   |           |                   |  
|                                                                     | Common stock, $.01 par valueauthorized 10,000 shares; issued 5,537 shares |                   |           |                  |  
|                                                                     | Additional paid-in-capital                                                 |                   |           | 168,832           |  
|                                                                     | Retained earnings                                                          |                   |           | 241,752           |  
|                                                                     | Accumulated other comprehensive loss                                       |                   |           | (65,211           | )
|                                                                     |                                                                            |                   |           |                   |  
|Total stockholder's equity                                           |                                                                            |                   | 345,373   |                   |  
|                                                                     |                                                                            |                   |           |                   |  
|Total liabilities and stockholder's equity                           |                                                                            | $                 | 6,797,643 |                   | $
|                                                                     |                                                                            |                   |           |                   |  

See
Notes to Consolidated Financial Statements.

F-4

---



Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

|                                                                                                                                                           |                                                                                                        |                     |         |         |         | Predecessor Companies |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------------------- | ------- | ------- | ------- | --------------------- | -------
|
|
|Operating Activities                                                                                                                                       |                                                                                                        |                     |         |         |         |                       |        
|Net income (loss)                                                                                                                                          |                                                                                                        | $                   | 52,446  |         | $       | (55,765               | )      
|Adjustments to arrive at income (loss) from continuing operations                                                                                          |                                                                                                        |                     | (809    | )       |         |                      |        
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        
|Income (loss) from continuing operations                                                                                                                   |                                                                                                        |                     | 51,637  |         |         | (55,765               | )      
|Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities exclusive of management programs: |                                                                                                        |                     |         |         |         |                       |        
|                                                                                                                                                           | Non-vehicle depreciation and amortization                                                              |                     |         | 37,297  |         |                       | 53,453 
|                                                                                                                                                           | Net change in operating assets and liabilities, excluding the impact of acquisitions and dispositions: |                     |         |         |         |                       |        
|                                                                                                                                                           |                                                                                                        | Receivables         |         |         | 8,927   |                       |        
|                                                                                                                                                           |                                                                                                        | Accounts payable    |         |         | 35,870  |                       |        
|                                                                                                                                                           |                                                                                                        | Accrued liabilities |         |         | (36,808 | )                     |        
|                                                                                                                                                           |                                                                                                        | Other, net          |         |         | (9,401  | )                     |        
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        
|Net cash provided by (used in) operating activities exclusive of management programs                                                                       |                                                                                                        |                     | 87,522  |         |         | (126,200              | )      
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        
|Management programs:                                                                                                                                       |                                                                                                        |                     |         |         |         |                       |        
|                                                                                                                                                           | Vehicle depreciation                                                                                   |                     |         | 633,223 |         |                       | 524,142
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        
|Net cash provided by operating activities                                                                                                                  |                                                                                                        |                     | 720,745 |         |         | 397,942               |        
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        
|Investing Activities                                                                                                                                       |                                                                                                        |                     |         |         |         |                       |        
|Property and equipment additions                                                                                                                           |                                                                                                        |                     | (77,137 | )       |         | (50,146               | )      
|Retirements of property and equipment                                                                                                                      |                                                                                                        |                     | 7,484   |         |         | 18,853                |        
|Payment for purchase of rental car franchise licensees                                                                                                     |                                                                                                        |                     | (16,629 | )       |         | (28,614               | )      
|Proceeds from sale of PHH Europe                                                                                                                           |                                                                                                        |                     |        |         |         |                      |        
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        
|Net cash provided by (used in) investing activities, exclusive of management programs                                                                      |                                                                                                        |                     | (86,282 | )       |         | (59,907               | )      
|                                                                                                                                                           |                                                                                                        |                     |         |         |         |                       |        

See
Notes to Consolidated Financial Statements.

F-5

---

|                                                                                     |                                                       |   |            |            |   | Predecessor Companies |           
|------------------------------------------------------------------------------------ | ----------------------------------------------------- | - | ---------- | ---------- | - | --------------------- | ----------
|
|
|Management programs:                                                                 |                                                       |   |            |            |   |                       |           
|                                                                                     | Decrease (increase) in restricted cash                |   | $          | 578,725    |   | $                     | (466,996  
|                                                                                     | Decrease (increase) in due from vehicle manufacturers |   |            | (165,439   | ) |                       | 213,503   
|                                                                                     | Investment in vehicles                                |   |            | (6,064,007 | ) |                       | (4,254,447
|                                                                                     | Payments received on investment in vehicles           |   |            | 4,565,489  |   |                       | 4,101,706 
|                                                                                     |                                                       |   |            |            |   |                       |           
|                                                                                     |                                                       |   | (1,085,232 | )          |   | (406,234              | )         
|                                                                                     |                                                       |   |            |            |   |                       |           
|Net cash used in investing activities                                                |                                                       |   | (1,171,514 | )          |   | (466,141              | )         
|                                                                                     |                                                       |   |            |            |   |                       |           
|Financing Activities                                                                 |                                                       |   |            |            |   |                       |           
|Proceeds from borrowings                                                             |                                                       |   |           |            |   | 140,000               |           
|Principal payments on borrowings                                                     |                                                       |   | (28,774    | )          |   | (458,186              | )         
|Increase (decrease) in due to Cendant Corporation and affiliates, net                |                                                       |   | 35,103     |            |   | 503,086               |           
|Issuance of common stock                                                             |                                                       |   |           |            |   |                      |           
|                                                                                     |                                                       |   |            |            |   |                       |           
|Net cash provided by (used in) financing activities exclusive of management programs |                                                       |   | 6,329      |            |   | 184,900               |           
|                                                                                     |                                                       |   |            |            |   |                       |           
|Management programs:                                                                 |                                                       |   |            |            |   |                       |           
|                                                                                     | Proceeds from borrowings                              |   |            | 2,258,737  |   |                       | 1,020,000 
|                                                                                     | Principal payments on borrowings                      |   |            | (1,796,243 | ) |                       | (1,183,608
|                                                                                     | Payments for debt issuance costs                      |   |            | (6,566     | ) |                       | (5,043    
|                                                                                     |                                                       |   |            |            |   |                       |           
|                                                                                     |                                                       |   | 455,928    |            |   | (168,651              | )         
|                                                                                     |                                                       |   |            |            |   |                       |           
|Net cash provided by (used in) financing activities                                  |                                                       |   | 462,257    |            |   | 16,249                |           
|                                                                                     |                                                       |   |            |            |   |                       |           
|Effect of changes in net assets of discontinued operations                           |                                                       |   |           |            |   |                      |           
|Effect of changes in exchange rates on cash and cash equivalents                     |                                                       |   | 453        |            |   | (844                  | )         
|                                                                                     |                                                       |   |            |            |   |                       |           
|Net increase (decrease) in cash and cash equivalents                                 |                                                       |   | 11,941     |            |   | (52,794               | )         
|Cash and cash equivalents, beginning of period                                       |                                                       |   | 13,311     |            |   | 66,105                |           
|                                                                                     |                                                       |   |            |            |   |                       |           
|Cash and cash equivalents, end of period                                             |                                                       | $ | 25,252     |            | $ | 13,311                |           
|                                                                                     |                                                       |   |            |            |   |                       |           
|Supplemental disclosure of Cash Flow Information:                                    |                                                       |   |            |            |   |                       |           
|Interest payments                                                                    |                                                       | $ | 262,103    |            | $ | 248,125               |           
|Income tax payments, net                                                             |                                                       | $ | 10,256     |            | $ | 13,482                |           

See
Notes to Consolidated Financial Statements.

F-6

---



Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

|                                                                                                  |  | Common
Stock |      | Additional
Paid-in
Capital |   | Retained
Earnings |   | Accumulated
Other
Comprehensive
Loss |         | Treasury
Stock |   | Total   |  
|------------------------------------------------------------------------------------------------- |  | ------------ | ---- | -------------------------- | - | ----------------- | - | ------------------------------------ | ------- | -------------- | - | ------- | -
|PREDECESSOR COMPANIES                                                                             |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Balance, January 1, 2000                                                                          |  | $            | 359  |                            | $ | 593,106           |   | $                                    | 175,690 |                | $ | (3,639  | )
|Comprehensive income:                                                                             |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Net income                                                                                        |  |              |     |                            |   |                  |   |                                      | 120,676 |                |   |        |  
|Currency translation adjustment, net of tax of $(10,135)                                          |  |              |     |                            |   |                  |   |                                      |        |                |   | (15,852 | )
|Additional minimum pension liability, net of tax of $(323)                                        |  |              |     |                            |   |                  |   |                                      |        |                |   | (505    | )
|Total comprehensive income                                                                        |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Preferred stock dividends                                                                         |  |              |     |                            |   |                  |   |                                      | (18,906 | )              |   |        |  
|Exercise of stock options                                                                         |  |              |     |                            |   | 723               |   |                                      |        |                |   |        |  
|Other                                                                                             |  |              |     |                            |   |                  |   |                                      |        |                |   |        |  
|                                                                                                  |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Balance, December 31, 2000                                                                        |  |              | 359  |                            |   | 593,829           |   |                                      | 277,460 |                |   | (19,996 | )
|Comprehensive loss:                                                                               |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Net loss for the two months ended February 28, 2001                                               |  |              |     |                            |   |                  |   |                                      | (29,119 | )              |   |        |  
|Currency translation adjustment, net of tax of $(1,124)                                           |  |              |     |                            |   |                  |   |                                      |        |                |   | (1,758  | )
|Cumulative effect from change in accounting policy for derivative instruments, net of tax of $936 |  |              |     |                            |   |                  |   |                                      |        |                |   | 1,464   |  
|Unrealized gains on cash flow hedges, net of tax of $252                                          |  |              |     |                            |   |                  |   |                                      |        |                |   | 561     |  
|Total comprehensive loss                                                                          |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Preferred stock dividends                                                                         |  |              |     |                            |   |                  |   |                                      | (3,270  | )              |   |        |  
|Exercise of stock options                                                                         |  |              |     |                            |   | 30                |   |                                      |        |                |   |        |  
|                                                                                                  |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Balance, February 28, 2001                                                                        |  |              | 359  |                            |   | 593,859           |   |                                      | 245,071 |                |   | (19,729 | )
|SUCCESSOR COMPANY                                                                                 |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Recapitalization of equity due to acquisition of Company by Cendant Corporation                   |  |              | (359 | )                          |   | (550,027          | ) |                                      |        |                |   | 19,729  |  
|Forgiveness of intercompany debt by Cendant Corporation                                           |  |              |     |                            |   | 125,000           |   |                                      |        |                |   |        |  
|Comprehensive loss:                                                                               |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Net loss for the period March 1, 2001 (Date of Acquisition) to December 31, 2001                  |  |              |     |                            |   |                  |   |                                      | (55,765 | )              |   |        |  
|Currency translation adjustment, net of tax of $(1,587)                                           |  |              |     |                            |   |                  |   |                                      |        |                |   | (2,469  | )
|Unrealized losses on cash flow hedges, net of tax of $(22,110)                                    |  |              |     |                            |   |                  |   |                                      |        |                |   | (34,583 | )
|Total comprehensive loss                                                                          |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|                                                                                                  |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Balance, December 31, 2001                                                                        |  |              |     |                            |   | 168,832           |   |                                      | 189,306 |                |   | (37,052 | )
|Comprehensive income:                                                                             |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Net income                                                                                        |  |              |     |                            |   |                  |   |                                      | 52,446  |                |   |        |  
|Currency translation adjustment, net of tax of $2,561                                             |  |              |     |                            |   |                  |   |                                      |        |                |   | 4,006   |  
|Unrealized losses on cash flow hedges, net of tax of $(9,062)                                     |  |              |     |                            |   |                  |   |                                      |        |                |   | (14,380 | )
|Additional minimum pension liability, net of tax of $(11,367)                                     |  |              |     |                            |   |                  |   |                                      |        |                |   | (17,785 | )
|Total comprehensive income                                                                        |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|                                                                                                  |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  
|Balance, December 31, 2002                                                                        |  | $            |     |                            | $ | 168,832           |   | $                                    | 241,752 |                | $ | (65,211 | )
|                                                                                                  |  |              |      |                            |   |                   |   |                                      |         |                |   |         |  

See Notes to Consolidated Financial Statements.

F-7

---



Avis Group Holdings, Inc. and Subsidiaries  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unless otherwise noted, all dollar amounts are in thousands)

1.    Summary of Significant Accounting Policies



F-8

---



F-9

---



F-10

---



F-11

---



March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesYear Ended
December 31,
2002

Two Months Ended
February 28,
2001

Year Ended
December 31,
2000Reported net income (loss)

$
52,446

$
(55,765
)
$
(29,119
)
$
120,676Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax


(18,018
)

(5,400
)

(1,719
)

(10,782
)Pro forma net income

$
34,428

$
(61,165
)
$
(30,838
)
$
109,894




2.    Discontinued Operations



Two Months
Ended
February 28,
2001

Year Ended
December 31,
2000Revenues

$
255,548

$
1,630,208Income before provision for income taxes


9,992


116,774Provision for income taxes


5,045


52,462Net income

$
4,947

$
64,312




F-12

---



Two Months
Ended
February 28,
2001

Year Ended
December 31,
2000Interest on intercompany loans

$
342

$
6,230Employee benefits cost


963


5,824$
1,305

$
12,054


3.    Unusual Charges



4.    Acquisitions and Disposition



F-13

---

5.    Income Taxes



March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesYear Ended
December 31,
2002

Two Months Ended
February 28,
2001

Year Ended
December 31,
2000CurrentFederal

$
(3,289
)
$


$


$
State


5,007





200


450Foreign


11,435


12,380


1,564


75913,153


12,380


1,764


1,209DeferredFederal


20,514


(23,247
)

(14,602
)

26,281State


(2,685
)

(1,243
)

(2,828
)

3,383Foreign





(1,975
)

(117
)

11,86717,829


(26,465
)

(17,547
)

41,531Provision (benefit) for income taxes

$
30,982

$
(14,085
)
$
(15,783
)
$
42,740




March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesYear Ended
December 31,
2002

Two Months Ended
February 28,
2001

Year Ended
December 31,
2000Domestic

$
46,930

$
(94,664
)
$
(45,983
)
$
70,247Foreign


35,689


24,814


3,746


28,857Pre-tax income (loss)

$
82,619

$
(69,850
)
$
(42,237
)
$
99,104


F-14

---



December 31,
2002

December 31,
2001Deferred income tax assetsAccrued liabilities and accounts payable

$
241,678

$
344,066Public liability, property damage and other insurance liabilities


59,015


88,888Net operating loss carryforwards


199,852


148,150Alternative minimum income tax credit carryforwards


7,781


5,846Investment tax credit carryforward


2,265


2,265Valuation allowance(a)


(18,265
)

(18,265
)492,326


570,950Deferred income tax liabilityPrepaid expense and other


10,991


22,863Net deferred income tax assets

$
481,335

$
548,087Management program deferred income tax liabilityVehicle depreciation and other

$
288,005

$
315,905


---



F-15

---



March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesYear Ended
December 31,
2002

Two Months Ended
February 28,
2001

Year Ended
December 31,
2000Federal statutory rate

35.0
%
35.0
%
35.0
%
35.0
%Taxes on foreign operations at rates different than U.S. federal statutory rates

(1.3
)
(1.8
)
(0.3
)
1.9Amortization of non-deductible goodwill



(12.9
)
(1.3
)
3.3State income taxes, net of federal tax

3.3

1.2

4.0

2.5Other

0.5

(1.3
)


0.437.5
%
20.2
%
37.4
%
43.1
%


6.    Property and Equipment, Net



December 31,
2002

December 31,
2001Land

$
23,755

$
24,388Buildings and leasehold improvements


147,292


121,133Buses and support vehicles


79,648


76,581Furniture, fixtures and equipment


84,095


45,713Construction-in-progress


21,120


28,756355,910


296,571Less: accumulated depreciation and amortization


(77,080
)

(51,295
)$
278,830

$
245,276


7.    Vehicles, Net



December 31,
2002

December 31,
2001Rental vehicles

$
4,415,761

$
3,740,333Vehicles held for sale


144,283


56,6014,560,044


3,796,934Less: accumulated depreciation


(386,197
)

(368,041
)$
4,173,847

$
3,428,893


F-16

---





March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesYear Ended
December 31,
2002

Two Months Ended
February 28,
2001

Year Ended
December 31,
2000Depreciation expense

$
633,223

$
524,142

$
104,336

$
644,789Lease charges


25,525


27,292


3,821


26,072Losses on sales of vehicles, net


5,045


27,216


1,960


2,196$
663,793

$
578,650

$
110,117

$
673,057




8.    Intangible Assets



December 31, 2002

December 31, 2001Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
AmortizationAmortized Intangible AssetsCustomer lists

$
18,952

$
1,760

$
18,952

$
800Unamortized Intangible AssetsGoodwill

$
1,254,401




$
1,297,774

$
26,582




Balance as of January 1, 2002

$
1,271,192Goodwill acquired during 2002


7,200Adjustments to goodwill acquired in 2001


(23,991
)Balance as of December 31, 2002

$
1,254,401




F-17

---



March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesTwo Months Ended
February 28,
2001

Year Ended
December 31,
2000Reported net income (loss)

$
(55,765
)
$
(29,119
)
$
120,676Add back: Goodwill amortization, net of tax


22,987


1,307


8,893Pro forma net income (loss)

$
(32,778
)
$
(27,812
)
$
129,569


9.    Accrued Liabilities



December 31,
2002

December 31,
2001Payroll and related costs

$
120,260

$
94,300Taxes, other than income taxes


34,709


30,391Facility related


36,295


47,446Interest


15,748


16,958Sales and marketing


32,178


51,217Other


175,819


194,353$
415,009

$
434,665




Costs

Cash
Payments

Other
Reductions

Balance at
December 31,
2001

Cash
Payments

Other
Additions

Balance at
December 31,
2002Personnel related

$
35,925

$
(19,444
)
$


$
16,481

$
(20,284
)
$
8,325

$
4,522Asset fair value adjustments


19,480





(18,674
)

806


(886
)

80


Facility related


7,692


(136
)




7,556


(2,349
)




5,207Total

$
63,097

$
(19,580
)
$
(18,674
)
$
24,843

$
(23,519
)
$
8,405

$
9,729




F-18

---



10.    Due to Cendant Corporation and Affiliates, Net



December 31,
2002

December 31,
2001Due to Cendant-working capital and trading, net(a)

$
253,032

$
281,544Due from Cendant-demand-long-term(b)


(155,246
)

(155,295
)Due to Cendant-long-term(c)


408,108


380,000Due to other Cendant affiliates, net(d)


45,915


8,184Total due to Cendant Corporation and affiliates, net

$
551,809

$
514,433


---



March 1, 2001
(Date of Acquisition)
to
December 31,
2001

Predecessor CompaniesYear Ended
December 31,
2002

Two Months Ended
February 28,
2001

Year Ended
December 31,
2000Royalties(a)

$
109,072

$
85,002

$
16,205

$
104,538Reservations(a)


56,230


45,763


8,496


55,976Data processing(b)


36,044


50,723


11,395


53,106Rent, corporate overhead allocations and other(b)


57,317


34,662


1,456


5,265Interest on amounts due to Cendant Corporation and affiliates, net(c)


13,171


15,103





Total

$
271,834

$
231,253

$
37,552

$
218,885


---

F-19

---



11.    Non-Vehicle Debt



December 31,
2002

December 31,
200111% senior subordinated notes

$
530,146

$
583,541Other


4,085


4,718$
534,231

$
588,259




F-20

---



12.    Vehicle Debt



December 31,
2002

December 31,
2001Commercial paper notes

$


$
119,998Series 2002-2 variable funding rental car asset-backed notes


404,000


Series 2002-4 variable funding rental car asset-backed notes


90,000


Series 2001-2 auction rate rental car asset-backed notes


185,000


40,000Series 1997-1B 6.40% rental car asset-backed medium-term notes





850,000Series 1998-1 6.14% rental car asset-backed medium-term notes


600,000


600,000Series 2000-1 floating rate rental car asset-backed notes


250,000


250,000Series 2000-2 floating rate rental car asset-backed notes


300,000


300,000Series 2000-3 floating rate rental car asset-backed notes


200,000


200,000Series 2000-4 floating rate rental car asset-backed notes


500,000


500,000Series 2001-1 floating rate rental car asset-backed notes


750,000


750,000Series 2002-1 3.85% rental car asset-backed medium-term notes


499,795


Series 2002-1 floating rate rental car asset-backed notes


250,000


Other


216,908


161,343$
4,245,703

$
3,771,341




F-21

---



Amount2003

$
947,7872004


734,7552005


1,997,7962006


2,1282007


557,368Thereafter


5,869$
4,245,703




13.    Financial Instruments



F-22

---



December 31,
2002

December 31,
2001Carrying
Amount

Estimated
Fair
Value

Carrying
Amount

Estimated
Fair
ValueAssetsCash and cash equivalents

$
25,252

$
25,252

$
13,311

$
13,311Restricted cash


59,012


59,012


65,595


65,595Non-vehicle debt


534,231


524,770


588,259


544,632Derivatives assetsInterest rate caps


17,473


17,473


29,310


29,310Assets under management programsRestricted cash


2,462


2,462


581,187


581,187Liabilities under management programsVehicle debt, excluding interest rates swaps and caps


4,148,159


4,203,094


3,685,337


3,723,448Interest rate swaps and caps


97,544


97,544


86,004


86,004


F-23

---

14.    Stockholder's Equity



|                           |  | Currency
Translation
Adjustments |         | Unrealized
Gains (Losses)
on Cash Flow
Hedges |   | Minimum
Pension
Liability
Adjustments |   | Accumulated
Other
Comprehensive
Loss |        
|-------------------------- |  | -------------------------------- | ------- | --------------------------------------------- | - | ------------------------------------- | - | ------------------------------------ | -------
|Balance, January 1, 2000   |  | $                                | (2,719  | )                                             | $ |                                      |   | $                                    | (920   
|Current period change      |  |                                  | (15,852 | )                                             |   |                                      |   |                                      | (505   
|                           |  |                                  |         |                                               |   |                                       |   |                                      |        
|Balance, December 31, 2000 |  |                                  | (18,571 | )                                             |   |                                      |   |                                      | (1,425 
|Current period change      |  |                                  | (1,758  | )                                             |   | 2,025                                 |   |                                      |       
|                           |  |                                  |         |                                               |   |                                       |   |                                      |        
|Balance February 28, 2001  |  |                                  | (20,329 | )                                             |   | 2,025                                 |   |                                      | (1,425 
|Recapitalization of equity |  |                                  | 20,329  |                                               |   | (2,025                                | ) |                                      | 1,425  
|Current period change      |  |                                  | (2,469  | )                                             |   | (34,583                               | ) |                                      |       
|                           |  |                                  |         |                                               |   |                                       |   |                                      |        
|Balance, December 31, 2001 |  |                                  | (2,469  | )                                             |   | (34,583                               | ) |                                      |       
|Current period change      |  |                                  | 4,006   |                                               |   | (14,380                               | ) |                                      | (17,785
|                           |  |                                  |         |                                               |   |                                       |   |                                      |        
|Balance, December 31, 2002 |  | $                                | 1,537   |                                               | $ | (48,963                               | ) | $                                    | (17,785
|                           |  |                                  |         |                                               |   |                                       |   |                                      |        

15.    Stock Option Plans



Options

Weighted Average
Exercise PriceBalance at January 1, 2000

6,933,613

$
21.41Granted at fair market value

1,411,502


24.22Exercised

(336,757
)

18.36Forfeited

(460,482
)

27.01Balance at December 31, 2000

7,547,876


21.73Exercised

(6,480
)

32.76Forfeited

(6,830
)

32.76Exchanged for cash in connection with the acquisition of the Company by Cendant

(6,741,559
)

21.63Converted at March 1, 2001

793,007

$
21.63




F-24

---





December 31,
2000Dividend yield

Expected volatility

17.3
%Risk-free interest rate

6.3
%Expected holding period (years)

0.3




F-25

---



Options

Weighted Average
Exercise PriceBalance at March 1, 2001

2,530,813

$
28.44Converted at March 1, 2001

1,958,729


8.76Granted at fair market value

3,134,050


13.90Exercised

(134,388
)

10.30Forfeited

(67,766
)

15.06Balance at December 31, 2001

7,421,438


17.55Granted at fair market value

1,970,552


19.03Exercised

(167,184
)

11.68Forfeited

(1,124,284
)

15.99Balance at December 31, 2002

8,100,522


18.36




Range of
Exercise
Prices

Number of
Options

Outstanding Options
Weighted Average
Remaining
Contractual Life

Weighted Average
Exercise Price

Exercisable Options
Number of
Options

Weighted Average
Exercise
Price$0.01 to $10.00

668,285

7.3

$
9.02

380,170

$
8.71$10.01 to $20.00

5,617,928

8.3


16.02

4,203,586


16.81$20.01 to $30.00

568,496

6.0


22.65

568,496


22.65$30.01 to $40.00

1,245,813

3.8


31.94

1,245,813


31.948,100,522

7.4

$
18.36

6,398,065

$
19.80




Year Ended
December 31, 2002

Period March 1, 2001
(Date of Acquisition) to
December 31, 2001Dividend yield



Expected volatility

50.0
%
50.0
%Risk-free interest rate

4.2
%
4.4
%Expected holding period (years)

4.5

4.5




16.    Employee Benefit Plans



F-26

---



17.  Commitments and Contingencies



Year

Amount2003


157,2432004


122,0202005


86,3392006


65,0372007


40,817Thereafter


259,248$
730,704




F-27

---



F-28

---

18.    Segment Information



United
States

Australia/
New
Zealand

Canada

All Other
Countries

TotalYear Ended December 31, 2002Revenues

$
2,252,508

$
119,701

$
111,282

$
28,707

$
2,512,198Total assets


6,254,413


103,419


241,343


198,468


6,797,643Net property and equipment


264,092


6,712


6,727


1,299


278,830Period March 1, 2001 (Date of Acquisition) to December 31, 2001Revenues

$
1,796,627

$
86,471

$
93,503

$
25,358

$
2,001,959Total assets


6,216,238


72,891


195,550


53,404


6,538,083Net property and equipment


230,435


6,140


7,032


1,669


245,276PREDECESSOR COMPANIESTwo Months Ended February 28, 2001Revenues

$
344,496

$
21,547

$
13,241

$
6,537

$
385,821Year Ended December 31, 2000Revenues

$
2,356,318

$
118,215

$
106,167

$
32,776

$
2,613,476Total assets


6,074,610


125,965


244,923


74,508


6,520,006Net property and equipment


187,583


5,937


7,999


1,767


203,286


19.    Guarantor and Non-Guarantor Condensed Consolidating Financial Statements



F-29

---



Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS  For the Year Ended December 31, 2002

|                                                        |                                             | Parent |         | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |         | Eliminations |         | Avis Group
Holdings, Inc.
Consolidated
|------------------------------------------------------- | ------------------------------------------- | ------ | ------- | ---------------------- | - | --------------------------- | ------- | ------------ | ------- | --------------------------------------
|Revenues                                                |                                             | $      |        |                        | $ | 2,252,507                   |         | $            | 259,691 |                                       
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       
|Expenses                                                |                                             |        |         |                        |   |                             |         |              |         |                                       
|                                                        | Operating, net                              |        |         |                       |   |                             | 904,998 |              |         | 114,699                               
|                                                        | Vehicle depreciation and lease charges, net |        |         |                       |   |                             | 602,369 |              |         | 61,424                                
|                                                        | Selling, general and administrative         |        |         |                       |   |                             | 427,177 |              |         | 33,297                                
|                                                        | Vehicle interest, net                       |        |         | 13,836                 |   |                             | 189,774 |              |         | 1,911                                 
|                                                        | Non-vehicle interest, net                   |        |         | 30,173                 |   |                             | 12,624  |              |         |                                      
|                                                        | Non-vehicle depreciation and amortization   |        |         | 960                    |   |                             | 33,405  |              |         | 2,932                                 
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       
|Total expenses                                          |                                             |        | 44,969  |                        |   | 2,170,347                   |         |              | 214,263 |                                       
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       
|Income (loss) before equity in earnings of subsidiaries |                                             |        | (44,969 | )                      |   | 82,160                      |         |              | 45,428  |                                       
|Equity in earnings of subsidiaries                      |                                             |        | 69,095  |                        |   | 28,392                      |         |              |        |                                       
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       
|Income before income taxes                              |                                             |        | 24,126  |                        |   | 110,552                     |         |              | 45,428  |                                       
|Provision (benefit) for income taxes                    |                                             |        | (27,511 | )                      |   | 41,457                      |         |              | 17,036  |                                       
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       
|Income before extraordinary gains                       |                                             |        | 51,637  |                        |   | 69,095                      |         |              | 28,392  |                                       
|Extraordinary gains, net of tax                         |                                             |        | 809     |                        |   |                            |         |              |        |                                       
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       
|Net income                                              |                                             | $      | 52,446  |                        | $ | 69,095                      |         | $            | 28,392  |                                       
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                       

F-30

---

Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS  For the period March 1, 2001 (Date of Acquisition) to December 31, 2001

|                                                        |                                             | Parent |         | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |         | Eliminations |         | Avis Group
Holdings, Inc.
Consolidated |  
|------------------------------------------------------- | ------------------------------------------- | ------ | ------- | ---------------------- | - | --------------------------- | ------- | ------------ | ------- | -------------------------------------- | -
|Revenues                                                |                                             | $      |        |                        | $ | 1,796,626                   |         | $            | 205,333 |                                        | $
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                        |  
|Expenses                                                |                                             |        |         |                        |   |                             |         |              |         |                                        |  
|                                                        | Operating, net                              |        |         |                       |   |                             | 677,471 |              |         | 92,298                                 |  
|                                                        | Vehicle depreciation and lease charges, net |        |         |                       |   |                             | 528,309 |              |         | 50,341                                 |  
|                                                        | Selling, general and administrative         |        |         |                       |   |                             | 364,810 |              |         | 24,893                                 |  
|                                                        | Vehicle interest, net                       |        |         | 11,530                 |   |                             | 173,859 |              |         | 2,941                                  |  
|                                                        | Non-vehicle interest, net                   |        |         | 26,949                 |   |                             | 16,396  |              |         |                                       |  
|                                                        | Non-vehicle depreciation and amortization   |        |         | 17,329                 |   |                             | 33,345  |              |         | 2,779                                  |  
|                                                        | Unusual charges                             |        |         | 2,132                  |   |                             | 45,182  |              |         | 1,245                                  |  
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                        |  
|Total expenses                                          |                                             |        | 57,940  |                        |   | 1,839,372                   |         |              | 174,497 |                                        |  
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                        |  
|Income (loss) before equity in earnings of subsidiaries |                                             |        | (57,940 | )                      |   | (42,746                     | )       |              | 30,836  |                                        |  
|Equity in earnings (losses) of subsidiaries             |                                             |        | (14,475 | )                      |   | 24,607                      |         |              |        |                                        |  
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                        |  
|Income (loss) before income taxes                       |                                             |        | (72,415 | )                      |   | (18,139                     | )       |              | 30,836  |                                        |  
|Provision (benefit) for income taxes                    |                                             |        | (16,650 | )                      |   | (3,664                      | )       |              | 6,229   |                                        |  
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                        |  
|Net income (loss)                                       |                                             | $      | (55,765 | )                      | $ | (14,475                     | )       | $            | 24,607  |                                        | $
|                                                        |                                             |        |         |                        |   |                             |         |              |         |                                        |  

F-31

---

Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS  (Predecessor Companies)  For the Two Months Ended February 28, 2001

|                                                            |                                             | Parent |         | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |         | Eliminations |        | Avis Group
Holdings, Inc.
Consolidated |  
|----------------------------------------------------------- | ------------------------------------------- | ------ | ------- | ---------------------- | - | --------------------------- | ------- | ------------ | ------ | -------------------------------------- | -
|Revenues                                                    |                                             | $      |        |                        | $ | 344,496                     |         | $            | 41,325 |                                        | $
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Expenses                                                    |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|                                                            | Operating, net                              |        |         |                       |   |                             | 154,747 |              |        | 19,340                                 |  
|                                                            | Vehicle depreciation and lease charges, net |        |         |                       |   |                             | 100,718 |              |        | 9,399                                  |  
|                                                            | Selling, general and administrative         |        |         |                       |   |                             | 77,866  |              |        | 5,363                                  |  
|                                                            | Vehicle interest, net                       |        |         | 2,306                  |   |                             | 40,375  |              |        | 944                                    |  
|                                                            | Non-vehicle interest,net                    |        |         | 9,167                  |   |                             |        |              |        |                                       |  
|                                                            | Non-vehicle depreciation and amortization   |        |         |                       |   |                             | 7,282   |              |        | 551                                    |  
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Total expenses                                              |                                             |        | 11,473  |                        |   | 380,988                     |         |              | 35,597 |                                        |  
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Income (loss) before equity in earnings of subsidiaries     |                                             |        | (11,473 | )                      |   | (36,492                     | )       |              | 5,728  |                                        |  
|Equity in earnings (losses) of subsidiaries                 |                                             |        | (25,645 | )                      |   | 9,950                       |         |              |       |                                        |  
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Income (loss) before income taxes                           |                                             |        | (37,118 | )                      |   | (26,542                     | )       |              | 5,728  |                                        |  
|Provision (benefit) for income taxes                        |                                             |        | (7,999  | )                      |   | (9,926                      | )       |              | 2,142  |                                        |  
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Income (loss) from continuing operations                    |                                             |        | (29,119 | )                      |   | (16,616                     | )       |              | 3,586  |                                        |  
|Income (loss) from discontinued operations, net of tax      |                                             |        |        |                        |   | (6,358                      | )       |              | 11,305 |                                        |  
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Income (loss) before cumulative effect of accounting change |                                             |        | (29,119 | )                      |   | (22,974                     | )       |              | 14,891 |                                        |  
|Cumulative effect of accounting change, net of tax          |                                             |        |        |                        |   | (2,671                      | )       |              | (4,941 | )                                      |  
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  
|Net income (loss)                                           |                                             | $      | (29,119 | )                      | $ | (25,645                     | )       | $            | 9,950  |                                        | $
|                                                            |                                             |        |         |                        |   |                             |         |              |        |                                        |  

F-32

---

Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS  (Predecessor Companies)  For the Year Ended December 31, 2000

|                                                        |                                             | Parent |          | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |         | Eliminations |         | Avis Group
Holdings, Inc.
Consolidated
|------------------------------------------------------- | ------------------------------------------- | ------ | -------- | ---------------------- | - | --------------------------- | ------- | ------------ | ------- | --------------------------------------
|Revenues                                                |                                             | $      |         |                        | $ | 2,356,319                   |         | $            | 257,157 |                                       
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       
|Expenses                                                |                                             |        |          |                        |   |                             |         |              |         |                                       
|                                                        | Operating, net                              |        |          |                       |   |                             | 842,266 |              |         | 123,560                               
|                                                        | Vehicle depreciation and lease charges, net |        |          |                       |   |                             | 610,607 |              |         | 62,450                                
|                                                        | Selling, general and administrative         |        |          |                       |   |                             | 432,101 |              |         | 33,048                                
|                                                        | Vehicle interest, net                       |        |          | 13,836                 |   |                             | 232,713 |              |         | 4,005                                 
|                                                        | Non-vehicle interest, net                   |        |          | 108,872                |   |                             |        |              |         |                                      
|                                                        | Non-vehicle depreciation and amortization   |        |          |                       |   |                             | 47,389  |              |         | 3,525                                 
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       
|Total expenses                                          |                                             |        | 122,708  |                        |   | 2,165,076                   |         |              | 226,588 |                                       
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       
|Income (loss) before equity in earnings of subsidiaries |                                             |        | (122,708 | )                      |   | 191,243                     |         |              | 30,569  |                                       
|Equity in earnings of subsidiaries                      |                                             |        | 140,455  |                        |   | 116,164                     |         |              |        |                                       
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       
|Income before income taxes                              |                                             |        | 17,747   |                        |   | 307,407                     |         |              | 30,569  |                                       
|Provision (benefit) for income taxes                    |                                             |        | (102,929 | )                      |   | 132,493                     |         |              | 13,176  |                                       
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       
|Income from continuing operations                       |                                             |        | 120,676  |                        |   | 174,914                     |         |              | 17,393  |                                       
|Income (loss) from discontinued operations, net of tax  |                                             |        |         |                        |   | (34,459                     | )       |              | 98,771  |                                       
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       
|Net income                                              |                                             | $      | 120,676  |                        | $ | 140,455                     |         | $            | 116,164 |                                       
|                                                        |                                             |        |          |                        |   |                             |         |              |         |                                       

F-33

---



Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATING CONDENSED BALANCE SHEET  December 31, 2002

|                                           |                                                                      | Parent                         |           | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |           | Eliminations |           | Avis Group
Holdings, Inc.
Consolidated
|------------------------------------------ | -------------------------------------------------------------------- | ------------------------------ | --------- | ---------------------- | - | --------------------------- | --------- | ------------ | --------- | --------------------------------------
|ASSETS                                     |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Cash and cash equivalents                                            |                                | $         | 69                     |   | $                           | 10,886    |              | $         | 14,297                                
|                                           | Restricted cash                                                      |                                |           |                       |   |                             |          |              |           | 59,012                                
|                                           | Receivables                                                          |                                |           |                       |   |                             | 122,436   |              |           | 36,294                                
|                                           | Prepaid expenses                                                     |                                |           |                       |   |                             | 40,113    |              |           | 9,685                                 
|                                           | Deferred income tax                                                  |                                |           | 157,713                |   |                             | 315,856   |              |           | 7,766                                 
|                                           | Property and equipment, net                                          |                                |           |                       |   |                             | 264,091   |              |           | 14,739                                
|                                           | Investment in consolidated subsidiaries                              |                                |           | 746,729                |   |                             | 664,644   |              |           |                                      
|                                           | Goodwill                                                             |                                |           | 801,243                |   |                             | 449,760   |              |           | 3,398                                 
|                                           | Other assets                                                         |                                |           | 15,059                 |   |                             | 15,903    |              |           | 24,555                                
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Total assets exclusive of assets under management programs           |                                |           | 1,720,813              |   |                             | 1,883,689 |              |           | 169,746                               
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Assets under management programs:                                    |                                |           |                        |   |                             |           |              |           |                                       
|                                           |                                                                      | Restricted cash                |           |                        |  |                             |           | 83           |           |                                       
|                                           |                                                                      | Vehicles, net                  |           |                        |  |                             |           | (102,326     | )         |                                       
|                                           |                                                                      | Due from vehicle manufacturers |           |                        |  |                             |           | 20,758       |           |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           |                                                                      |                                |          |                        |   | (81,485                     | )         |              | 4,516,253 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Total assets                               |                                                                      | $                              | 1,720,813 |                        | $ | 1,802,204                   |           | $            | 4,685,999 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|LIABILITIES AND STOCKHOLDER'S EQUITY       |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Liabilities:                               |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Accounts payable                                                     |                                | $         | (78,584                | ) | $                           | 418,917   |              | $         | (134,606                              
|                                           | Accrued liabilities                                                  |                                |           | 8,683                  |   |                             | 379,090   |              |           | 27,236                                
|                                           | Due to (from) Cendant Corporation and affiliates, net                |                                |           | 908,508                |   |                             | 11,997    |              |           | (368,696                              
|                                           | Non-vehicle debt                                                     |                                |           | 530,146                |   |                             | 4,085     |              |           |                                      
|                                           | Public liability, property damage and other insurance liabilities    |                                |           |                       |   |                             | 142,423   |              |           | 69,363                                
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Total liabilities exclusive of liabilities under management programs |                                |           | 1,368,753              |   |                             | 956,512   |              |           | (406,703                              
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Liabilities under management programs:     |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Vehicle debt                                                         |                                |           |                       |   |                             | 97,544    |              |           | 4,148,159                             
|                                           | Deferred income taxes                                                |                                |           | 6,687                  |   |                             | 1,419     |              |           | 279,899                               
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           |                                                                      |                                | 6,687     |                        |   | 98,963                      |           |              | 4,428,058 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Stockholder's equity                       |                                                                      |                                | 345,373   |                        |   | 746,729                     |           |              | 664,644   |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Total liabilities and stockholder's equity |                                                                      | $                              | 1,720,813 |                        | $ | 1,802,204                   |           | $            | 4,685,999 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       

F-34

---

Avis Group Holdings, Inc. and Subsidiaries  CONSOLIDATING CONDENSED BALANCE SHEET  December 31, 2001

|                                           |                                                                      | Parent                         |           | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |           | Eliminations |           | Avis Group
Holdings, Inc.
Consolidated
|------------------------------------------ | -------------------------------------------------------------------- | ------------------------------ | --------- | ---------------------- | - | --------------------------- | --------- | ------------ | --------- | --------------------------------------
|ASSETS                                     |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Cash and cash equivalents                                            |                                | $         | 18                     |   | $                           | 5,210     |              | $         | 8,083                                 
|                                           | Restricted cash                                                      |                                |           |                       |   |                             |          |              |           | 65,595                                
|                                           | Receivables, net                                                     |                                |           |                        |   |                             | 142,386   |              |           | 25,986                                
|                                           | Prepaid expenses                                                     |                                |           |                        |   |                             | 34,569    |              |           | 7,974                                 
|                                           | Deferred income tax                                                  |                                |           | 221,741                |   |                             | 326,332   |              |           | 14                                    
|                                           | Property and equipment, net                                          |                                |           |                        |   |                             | 230,429   |              |           | 14,847                                
|                                           | Investment in consolidated subsidiaries                              |                                |           | 677,401                |   |                             | 628,280   |              |           |                                      
|                                           | Goodwill, net                                                        |                                |           | 825,234                |   |                             | 443,000   |              |           | 2,958                                 
|                                           | Other assets                                                         |                                |           | 16,020                 |   |                             | 34,791    |              |           | 30,202                                
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Total assets exclusive of assets under management programs           |                                |           | 1,740,414              |   |                             | 1,844,997 |              |           | 155,659                               
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Assets under management programs:                                    |                                |           |                        |   |                             |           |              |           |                                       
|                                           |                                                                      | Restricted cash                |           |                        |  |                             |           | 9,457        |           |                                       
|                                           |                                                                      | Vehicles, net                  |           |                        |  |                             |           | (128,932     | )         |                                       
|                                           |                                                                      | Due from vehicle manufacturers |           |                        |  |                             |           | 7,855        |           |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           |                                                                      |                                |           |                        |  |                             |           | (111,620     | )         |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Total assets                               |                                                                      | $                              | 1,740,414 |                        | $ | 1,733,377                   |           | $            | 4,369,973 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|LIABILITIES AND STOCKHOLDER'S EQUITY       |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Liabilities:                               |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Accounts payable                                                     |                                | $         |                       |   | $                           | 151,379   |              | $         | 212,512                               
|                                           | Accrued liabilities                                                  |                                |           | 109,143                |   |                             | 300,337   |              |           | 25,185                                
|                                           | Due to (from) Cendant Corporation and affiliates, net                |                                |           | 726,645                |   |                             | 63,214    |              |           | (275,426                              
|                                           | Non-vehicle debt                                                     |                                |           | 583,540                |   |                             | 4,719     |              |           |                                      
|                                           | Public liability, property damage and other insurance liabilities    |                                |           |                       |   |                             | 166,432   |              |           | 62,071                                
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Total liabilities exclusive of liabilities under management programs |                                |           | 1,419,328              |   |                             | 686,081   |              |           | 24,342                                
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Liabilities under management programs:     |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           | Vehicle debt                                                         |                                |           |                       |   |                             | 86,004    |              |           | 3,685,337                             
|                                           | Deferred income taxes                                                |                                |           |                       |   |                             | 283,891   |              |           | 32,014                                
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|                                           |                                                                      |                                |          |                        |   | 369,895                     |           |              | 3,717,351 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Stockholder's equity                       |                                                                      |                                | 321,086   |                        |   | 677,401                     |           |              | 628,280   |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       
|Total liabilities and stockholder's equity |                                                                      | $                              | 1,740,414 |                        | $ | 1,733,377                   |           | $            | 4,369,973 |                                       
|                                           |                                                                      |                                |           |                        |   |                             |           |              |           |                                       

F-35

---



Avis Group Holdings, Inc. and Subsidiaries            CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS            For the Year Ended December 31, 2002

|                                                                                                                                                   |                                                  | Parent |          | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |          | Eliminations |          | Avis Group
Holdings, Inc.
Consolidated |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------ | -------- | ---------------------- | - | --------------------------- | -------- | ------------ | -------- | -------------------------------------- | -
|Operating Activities                                                                                                                               |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net income                                                                                                                                         |                                                  | $      | 52,446   |                        | $ | 69,095                      |          | $            | 28,392   |                                        | $
|Adjustments to arrive at income from continuing operations                                                                                         |                                                  |        | (809     | )                      |   |                            |          |              |         |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Income from continuing operations                                                                                                                  |                                                  |        | 51,637   |                        |   | 69,095                      |          |              | 28,392   |                                        |  
|Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities exclusive of management programs |                                                  |        | (154,051 | )                      |   | (86,950                     | )        |              | 276,886  |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) operating activities exclusive of management programs                                                               |                                                  |        | (102,414 | )                      |   | (17,855                     | )        |              | 305,278  |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                                               |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                                   | Vehicle depreciation                             |        |          |                       |   |                             | 587,616  |              |          | 45,607                                 |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) operating activities                                                                                                |                                                  |        | (102,414 | )                      |   | 569,761                     |          |              | 350,885  |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Investing Activities                                                                                                                               |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Property and equipment additions                                                                                                                   |                                                  |        |         |                        |   | (73,457                     | )        |              | (3,680   | )                                      |  
|Retirements of property and equipment                                                                                                              |                                                  |        |         |                        |   | 6,121                       |          |              | 1,363    |                                        |  
|Payments for purchase of rental car franchise licensees                                                                                            |                                                  |        |         |                        |   | (16,281                     | )        |              | (348     | )                                      |  
|Investment in subsidiaries                                                                                                                         |                                                  |        | (69,095  | )                      |   | (28,392                     | )        |              |         |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash used in investing activities exclusive of management programs                                                                             |                                                  |        | (69,095  | )                      |   | (112,009                    | )        |              | (2,665   | )                                      |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                                               |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                                   | Decrease in restricted cash                      |        |          |                       |   |                             | 9,374    |              |          | 569,351                                |  
|                                                                                                                                                   | Increase in due from vehicle manufacturers       |        |          |                       |   |                             | (12,903  | )            |          | (152,536                               | )
|                                                                                                                                                   | Investment in vehicles                           |        |          |                       |   |                             | (127,958 | )            |          | (5,936,049                             | )
|                                                                                                                                                   | Payments received on investment in vehicles sold |        |          |                       |   |                             | (470,429 | )            |          | 5,035,918                              |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                                   |                                                  |        |         |                        |   | (601,916                    | )        |              | (483,316 | )                                      |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash used in investing activities                                                                                                              |                                                  |        | (69,095  | )                      |   | (713,925                    | )        |              | (485,981 | )                                      |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Financing Activities                                                                                                                               |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net decrease in non-vehicle debt                                                                                                                   |                                                  |        | (28,141  | )                      |   | (633                        | )        |              |         |                                        |  
|Increase (decrease) in due to Cendant Corporation and affiliates, net                                                                              |                                                  |        | 199,701  |                        |   | 157,039                     |          |              | (321,637 | )                                      |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) financing activities exclusive of management programs                                                               |                                                  |        | 171,560  |                        |   | 156,406                     |          |              | (321,637 | )                                      |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                                               |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                                   | Net increase in vehicle debt                     |        |          |                       |   |                             |         |              |          | 462,494                                |  
|                                                                                                                                                   | Payments for debt issuance costs                 |        |          |                       |   |                             | (6,566   | )            |          |                                       |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                                   |                                                  |        |         |                        |   | (6,566                      | )        |              | 462,494  |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by financing activities                                                                                                          |                                                  |        | 171,560  |                        |   | 149,840                     |          |              | 140,857  |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Effect of changes in exchange rates on cash a cash equivalents                                                                                     |                                                  |        |         |                        |   |                            |          |              | 453      |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net increase in cash and cash equivalents                                                                                                          |                                                  |        | 51       |                        |   | 5,676                       |          |              | 6,214    |                                        |  
|Cash and cash equivalents, beginning of year                                                                                                       |                                                  |        | 18       |                        |   | 5,210                       |          |              | 8,083    |                                        |  
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Cash and cash equivalents, end of year                                                                                                             |                                                  | $      | 69       |                        | $ | 10,886                      |          | $            | 14,297   |                                        | $
|                                                                                                                                                   |                                                  |        |          |                        |   |                             |          |              |          |                                        |  

F-36

---

Avis Group Holdings, Inc. and Subsidiaries            CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS            Period March 1, 2001 (Date of Acquisition) to December 31, 2001

|                                                                                                                                   |                                                            | Parent |          | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |          | Eliminations |          | Avis Group
Holdings, Inc.
Consolidated |  
|---------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------ | -------- | ---------------------- | - | --------------------------- | -------- | ------------ | -------- | -------------------------------------- | -
|Operating Activities                                                                                                               |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net income (loss)                                                                                                                  |                                                            | $      | (55,765  | )                      | $ | (14,475                     | )        | $            | 24,607   |                                        | $
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities exclusive of management programs |                                                            |        | (152,228 | )                      |   | 120,251                     |          |              | (38,458  | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) operating activities exclusive of management programs                                               |                                                            |        | (207,993 | )                      |   | 105,776                     |          |              | (13,851  | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                               |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                   | Vehicle depreciation                                       |        |          |                       |   |                             | 486,722  |              |          | 37,420                                 |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) operating activities                                                                                |                                                            |        | (207,993 | )                      |   | 592,498                     |          |              | 23,569   |                                        |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Investing Activities                                                                                                               |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Property and equipment additions                                                                                                   |                                                            |        |         |                        |   | (47,550                     | )        |              | (2,596   | )                                      |  
|Retirements of property and equipment                                                                                              |                                                            |        |         |                        |   | 15,285                      |          |              | 3,568    |                                        |  
|Payment for purchase of rental car franchise licensees                                                                             |                                                            |        |         |                        |   | (27,936                     | )        |              | (678     | )                                      |  
|Investment in subsidiaries                                                                                                         |                                                            |        | 14,475   |                        |   | (24,607                     | )        |              |         |                                        |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) investing activities exclusive of management programs                                               |                                                            |        | 14,475   |                        |   | (84,808                     | )        |              | 294      |                                        |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                               |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                   | Increase in restricted cash                                |        |          |                       |   |                             | (9,457   | )            |          | (457,539                               | )
|                                                                                                                                   | (Increase) decrease in due from (to) vehicle manufacturers |        |          |                       |   |                             | (2,064   | )            |          | 215,567                                |  
|                                                                                                                                   | Investment in vehicles                                     |        |          |                       |   |                             | (52,308  | )            |          | (4,202,139                             | )
|                                                                                                                                   | Payments received on investment in vehicles sold           |        |          |                       |   |                             | (458,878 | )            |          | 4,560,584                              |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                   |                                                            |        |         |                        |   | (522,707                    | )        |              | 116,473  |                                        |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) investing activities                                                                                |                                                            |        | 14,475   |                        |   | (607,515                    | )        |              | 116,767  |                                        |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Financing Activities                                                                                                               |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net decrease in non-vehicle debt                                                                                                   |                                                            |        | (318,186 | )                      |   |                            |          |              |         |                                        |  
|Increase (decrease) in due to Cendant Corporation and affiliates, net                                                              |                                                            |        | 511,045  |                        |   | (2,196                      | )        |              | (5,763   | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) financing activities exclusive of management programs                                               |                                                            |        | 192,859  |                        |   | (2,196                      | )        |              | (5,763   | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                               |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                   | Net increase (decrease) in vehicle debt                    |        |          | 536                    |   |                             | (9,279   | )            |          | (154,865                               | )
|                                                                                                                                   | Payments for debt issuance costs                           |        |          |                       |   |                             | (5,043   | )            |          |                                       |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                   |                                                            |        | 536      |                        |   | (14,322                     | )        |              | (154,865 | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) financing activities                                                                                |                                                            |        | 193,395  |                        |   | (16,518                     | )        |              | (160,628 | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Effect of changes in exchange rates on cash and cash equivalents                                                                   |                                                            |        |         |                        |   |                            |          |              | (844     | )                                      |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Net decrease in cash and cash equivalents                                                                                          |                                                            |        | (123     | )                      |   | (31,535                     | )        |              | (21,136  | )                                      |  
|Cash and cash equivalents, beginning of period                                                                                     |                                                            |        | 141      |                        |   | 36,745                      |          |              | 29,219   |                                        |  
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  
|Cash and cash equivalents, end of period                                                                                           |                                                            | $      | 18       |                        | $ | 5,210                       |          | $            | 8,083    |                                        | $
|                                                                                                                                   |                                                            |        |          |                        |   |                             |          |              |          |                                        |  

F-37

---

Avis Group Holdings, Inc. and Subsidiaries            CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS            (Predecessor Companies)            For the Two Months Ended
February 28, 2001

|                                                                                                                                                          |                                            | Parent |         | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |        | Eliminations |          | Avis Group
Holdings, Inc.
Consolidated |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------- | ---------------------- | - | --------------------------- | ------ | ------------ | -------- | -------------------------------------- | -
|Operating Activities                                                                                                                                      |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net income (loss)                                                                                                                                         |                                            | $      | (29,119 | )                      | $ | (25,645                     | )      | $            | 9,950    |                                        | $
|Adjustments to arrive at income (loss) from continuing operations                                                                                         |                                            |        |        |                        |   | 9,029                       |        |              | (6,364   | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Income (loss) from continuing operations                                                                                                                  |                                            |        | (29,119 | )                      |   | (16,616                     | )      |              | 3,586    |                                        |  
|Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities exclusive of management programs |                                            |        | 425     |                        |   | 77,124                      |        |              | (119,563 | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net cash provided by (used in) operating activities exclusive of management programs                                                                      |                                            |        | (28,694 | )                      |   | 60,508                      |        |              | (115,977 | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Management programs:                                                                                                                                      |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|                                                                                                                                                          | Vehicle depreciation                       |        |         |                       |   |                             | 96,394 |              |          | 7,942                                  |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net cash provided by (used in) operating activities                                                                                                       |                                            |        | (28,694 | )                      |   | 156,902                     |        |              | (108,035 | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Investing Activities                                                                                                                                      |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Property and equipment additions                                                                                                                          |                                            |        |        |                        |   | (5,169                      | )      |              | (652     | )                                      |  
|Retirements of property and equipment                                                                                                                     |                                            |        |        |                        |   | 165                         |        |              | 268      |                                        |  
|Investment in subsidiaries                                                                                                                                |                                            |        | 25,645  |                        |   | (9,950                      | )      |              |         |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net cash provided by (used in) investing activities exclusive of management programs                                                                      |                                            |        | 25,645  |                        |   | (14,954                     | )      |              | (384     | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Management programs:                                                                                                                                      |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|                                                                                                                                                          | Decrease in restricted cash                |        |         |                       |   |                             |       |              |          | 10,978                                 |  
|                                                                                                                                                          | Decrease in due from vehicle manufacturers |        |         |                       |   |                             |       |              |          | 16,368                                 |  
|                                                                                                                                                          | Investment in vehicles                     |        |         |                       |   |                             | 378    |              |          | (940,937                               | )
|Payments received on investment in vehicles sold                                                                                                          |                                            |        |        |                        |   | (82,703                     | )      |              | 895,350  |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|                                                                                                                                                          |                                            |        |        |                        |   | (82,325                     | )      |              | (18,241  | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net cash provided by (used in) investing activities                                                                                                       |                                            |        | 25,645  |                        |   | (97,279                     | )      |              | (18,625  | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Financing Activities                                                                                                                                      |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net decrease in non-vehicle debt                                                                                                                          |                                            |        |        |                        |   | (77                         | )      |              |         |                                        |  
|Increase (decrease) in due to Cendant Corporation and affiliates, net                                                                                     |                                            |        | (89,023 | )                      |   | 43,123                      |        |              | 82       |                                        |  
|Repurchase of common stock                                                                                                                                |                                            |        | 140     |                        |   |                            |        |              |         |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net cash provided by (used in) financing activities exclusive of management programs                                                                      |                                            |        | (88,883 | )                      |   | 43,046                      |        |              | 82       |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Management programs:                                                                                                                                      |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|                                                                                                                                                          | Net (decrease) increase in vehicle debt    |        |         | 92,000                 |   |                             | (2     | )            |          | 9,209                                  |  
|                                                                                                                                                          | Payments for debt issuance costs           |        |         |                       |   |                             | (12    | )            |          |                                       |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|                                                                                                                                                          |                                            |        | 92,000  |                        |   | (14                         | )      |              | 9,209    |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net cash provided by financing activities                                                                                                                 |                                            |        | 3,117   |                        |   | 43,032                      |        |              | 9,291    |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Effect of changes in net assets of discontinued operations                                                                                                |                                            |        |        |                        |   | (131,512                    | )      |              | 131,906  |                                        |  
|Effect of changes in exchange rates on cash a cash equivalents                                                                                            |                                            |        |        |                        |   |                            |        |              | (11      | )                                      |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Net increase (decrease) in cash and cash equivalents                                                                                                      |                                            |        | 68      |                        |   | (28,857                     | )      |              | 14,526   |                                        |  
|Cash and cash equivalents, beginning of period                                                                                                            |                                            |        | 73      |                        |   | 65,602                      |        |              | 14,693   |                                        |  
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  
|Cash and cash equivalents, end of period                                                                                                                  |                                            | $      | 141     |                        | $ | 36,745                      |        | $            | 29,219   |                                        | $
|                                                                                                                                                          |                                            |        |         |                        |   |                             |        |              |          |                                        |  

F-38

---

Avis Group Holdings, Inc. and Subsidiaries            CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS            (Predecessor Companies)            For the Year Ended
December 31, 2000

|                                                                                                                                         |                                                  | Parent |          | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |          | Eliminations |          | Avis Group
Holdings, Inc.
Consolidated |  
|---------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------ | -------- | ---------------------- | - | --------------------------- | -------- | ------------ | -------- | -------------------------------------- | -
|Operating Activities                                                                                                                     |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net income                                                                                                                               |                                                  | $      | 120,676  |                        | $ | 140,455                     |          | $            | 116,164  |                                        | $
|Adjustments to arrive at income from continuing operations                                                                               |                                                  |        |         |                        |   | 34,459                      |          |              | (98,771  | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Income from continuing operations                                                                                                        |                                                  |        | 120,676  |                        |   | 174,914                     |          |              | 17,393   |                                        |  
|Adjustments to reconcile income from continuing operations to net cash provided by operating activities exclusive of management programs |                                                  |        | (58,264  | )                      |   | 15,657                      |          |              | 124,236  |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by operating activities exclusive of management programs                                                               |                                                  |        | 62,412   |                        |   | 190,571                     |          |              | 141,629  |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                                     |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                         | Vehicle depreciation                             |        |          |                       |   |                             | 601,405  |              |          | 43,384                                 |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by operating activities                                                                                                |                                                  |        | 62,412   |                        |   | 791,976                     |          |              | 185,013  |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Investing Activities                                                                                                                     |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Property and equipment additions                                                                                                         |                                                  |        |         |                        |   | (52,436                     | )        |              | (7,807   | )                                      |  
|Retirements of property and equipment                                                                                                    |                                                  |        |         |                        |   | 20,660                      |          |              | 7,234    |                                        |  
|Payments for rental car franchise licensees                                                                                              |                                                  |        |         |                        |   | (30                         | )        |              |         |                                        |  
|Proceeds from the sale of PHH Europe                                                                                                     |                                                  |        | 953,929  |                        |   |                            |          |              |         |                                        |  
|Investment in subsidiaries                                                                                                               |                                                  |        | (140,455 | )                      |   | (116,164                    | )        |              |         |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) investing activities exclusive of management programs                                                     |                                                  |        | 813,474  |                        |   | (147,970                    | )        |              | (573     | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                                     |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                         | Increase in restricted cash                      |        |          |                       |   |                             |         |              |          | (29,954                                | )
|                                                                                                                                         | Increase in due from vehicle manufacturers       |        |          |                       |   |                             | (11,419  | )            |          | (95,729                                | )
|                                                                                                                                         | Investment in vehicles                           |        |          |                       |   |                             | (35,946  | )            |          | (5,268,032                             | )
|                                                                                                                                         | Payments received on investment in vehicles sold |        |          |                       |   |                             | (606,102 | )            |          | 4,780,585                              |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                         |                                                  |        |         |                        |   | (653,467                    | )        |              | (613,130 | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) investing activities                                                                                      |                                                  |        | 813,474  |                        |   | (801,437                    | )        |              | (613,703 | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Financing Activities                                                                                                                     |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net decrease in non-vehicle debt                                                                                                         |                                                  |        | (837,000 | )                      |   | (569                        | )        |              |         |                                        |  
|Repurchase of common stock                                                                                                               |                                                  |        | 5,963    |                        |   |                            |          |              |         |                                        |  
|Increase (decrease) in due to Cendant Corporation and affiliates, net                                                                    |                                                  |        | (44,830  | )                      |   | 383,860                     |          |              | (166,314 | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) financing activities exclusive of management programs                                                     |                                                  |        | (875,867 | )                      |   | 383,291                     |          |              | (166,314 | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Management programs:                                                                                                                     |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                         | Net increase in vehicle debt                     |        |          |                       |   |                             |         |              |          | 432,558                                |  
|                                                                                                                                         | Payments for debt issuance costs                 |        |          |                       |   |                             | (9,742   | )            |          |                                       |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|                                                                                                                                         |                                                  |        |         |                        |   | (9,742                      | )        |              | 432,558  |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net cash provided by (used in) financing activities                                                                                      |                                                  |        | (875,867 | )                      |   | 373,549                     |          |              | 266,244  |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Effect of changes in net assets of discontinued operations                                                                               |                                                  |        |         |                        |   | (322,951                    | )        |              | 170,197  |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Effect of changes in exchange rates on cash a cash equivalents                                                                           |                                                  |        |         |                        |   |                            |          |              | (441     | )                                      |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Net increase in cash and cash equivalents                                                                                                |                                                  |        | 19       |                        |   | 41,137                      |          |              | 7,310    |                                        |  
|Cash and cash equivalents, beginning of period                                                                                           |                                                  |        | 54       |                        |   | 24,798                      |          |              | 7,050    |                                        |  
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  
|Cash and cash equivalents, end of period                                                                                                 |                                                  | $      | 73       |                        | $ | 65,935                      |          | $            | 14,360   |                                        | $
|                                                                                                                                         |                                                  |        |          |                        |   |                             |          |              |          |                                        |  

F-39

---



EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Certificate of Incorporation of Avis Rent A Car, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998).                                                                                                                                                                                                                                
|3.2         |  | By-Laws of Avis Group Holdings, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-46737, dated February 23, 1998).                                                                                                                                                                                                                                                 
|4.1         |  | Series 1997-2 Supplement, dated as of July 30, 1997 between AESOP Funding II L.L.C. and The Bank of New York, as Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding II and
The Bank of New York (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-28609, dated June 6, 1997).                                        
|4.2         |  | Amendment No. 1, dated as of November 19, 1999, to the Series 1997-2 Supplement, between AESOP Funding II L.L.C. and The Bank of New York, as Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997,
between AESOP Funding II and the Bank of New York as trustee (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).            
|4.3         |  | Amendment No. 2, dated as of June 21, 2001, to the Series 1997-2 Supplement, between AESOP Funding II L.L.C. and the Bank of New York, as Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997,
between AESOP Funding II and the Bank of New York, as trustee (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).               
|4.4         |  | Loan Agreement, dated as of July 30, 1997, between AESOP Leasing L.P., as borrower, and AESOP Funding II L.L.C., as lender (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No.
333-28609, dated June 6, 1997).                                                                                                                                                                
|4.5         |  | Loan Agreement, dated as of July 30, 1997, between AESOP Leasing Corp II, as borrower, AESOP Leasing Corp., as permitted nominee of the borrower, and AESOP Funding II L.L.C., as lender (Incorporated by reference to the
Company's Registration Statement on Form S-1, Registration No. 333-28609, dated June 6, 1997).                                                                                                  
|4.6         |  | Master Motor Vehicle Finance Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing L.P., as lessor, Avis Rent A Car System, Inc., as lessee, individually and as the administrator and Avis Rent A Car, Inc.,
 as guarantor (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-28609, dated June 6, 1997).                                              
|4.7         |  | Master Motor Vehicle Operating Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing Corp. II, as lessor, Avis Rent A Car System, Inc., individually and as the administrator, certain Eligible Rental Car
Companies, as lessees, and Avis Rent A Car, Inc., as guarantor (Incorporated by reference to the Company's Registration Statement on Form S-1, Registration No. 333-28609, dated June 6, 1997).
|4.8         |  | Supplemental Indenture No. 1, dated as of July 31, 1998, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer, and The Bank of New York, as trustee
(Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                                      
|4.9         |  | Amendment No. 1, dated as of July 31, 1998, to Loan Agreement, dated as of July 30, 1997, between AESOP Leasing L.P., as borrower, and AESOP Funding II L.L.C., as lender. (Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                                                                            

G-1

---

|4.10 |  | Amendment No. 1, dated as of July 31, 1998, to Master Motor Vehicle Finance Lease Agreement, dated as of July 30, 1997, among AESOP Leasing L.P., as lessor, Avis Rent A Car Systems, Inc., as lessee individually and as
administrator, and Avis Rent A Car, Inc., as guarantor (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                                          
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.11 |  | Master Exchange Agreement, dated as of September 15, 1998, between AESOP Leasing L.P. and Bank One Texas, National Association (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001).                                                                                                                                                                                                                                            
|4.12 |  | Intercreditor Agreement, dated as of September 15, 1998, by and among AESOP Funding II L.L.C., AESOP Leasing L.P., and Avis Rent A Car System, Inc., as administrator, The Bank of New York, as Trustee, Bank One, Texas,
National Association, as intermediary and Credit Lyonnais New York Branch, as lender agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).                                                      
|4.13 |  | Amended and Restated Administration Agreement, dated as of September 15, 1998, among AESOP Funding II L.L.C., AESOP Leasing L.P., AESOP Leasing Corp. II, Avis Rent A Car System, Inc., as administrator and The Bank of New
York, as Trustee (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).                                                                                                                             
|4.14 |  | Receivables Financing Agreement, dated as of September 15, 1998, among Bank One, Texas, National Association, as intermediary, Atlantic Asset Securitization Corp., Lyon Short Term Funding Corp., Credit Lyonnais New York
Branch, as lender, as agent for the lenders, Atlantic and Lyon and the lenders' party to the Receivables Financing Agreement from time to time (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2001).
|4.15 |  | Amended and Restated Loan Agreement, dated as of September 15, 1998, among AESOP Leasing L.P., as borrower, PV Holding Corp., as a permitted nominee of the borrower, Quartz Fleet Management, Inc., as a permitted nominee
of the borrower, and AESOP Funding II L.L.C., as issuer (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                                       
|4.16 |  | Amended and Restated Master Motor Vehicle Operating Lease Agreement, dated as of September 15, 1998, among AESOP Leasing L.P., as lessor, Avis Rent Car System, Inc., individually and as administrator, certain Eligible
Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                       
|4.17 |  | Supplemental Indenture No. 2, dated as of September 15, 1998, to Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer and The Bank of New York, as Trustee
(Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                                                                                                          
|4.18 |  | Indenture, dated as of June 30, 1999, among the Company, the subsidiary guarantors and The Bank of New York, as Trustee (Incorporated by reference to the Company's Registration Statement on Form S-4, Registration No.
333-86269, dated August 31, 1999).                                                                                                                                                                                                                                    
|4.19 |  | Exchange and Registration Rights Agreement, dated as of June 30, 1999, among the Company, the subsidiary guarantors, the initial purchasers and The Bank of New York, as Trustee (Incorporated by reference to the Company's
Registration Statement on Form S-4, Registration No. 333-86269, dated August 31, 1999).                                                                                                                                                                           
|4.20 |  | Supplemental Indenture dated as of April 2, 2001 by and among Avis Group Holdings, Inc., the subsidiary guarantors and The Bank of New York, as Trustee (Incorporated by reference to the Company's Current Report on Form
8-K, dated April 2, 2001).                                                                                                                                                                                                                                          

G-2

---

|4.21 |  | The Amended and Restated Series 1997-1 Supplement, dated as of June 29, 2001, between AESOP Funding II L.L.C. as issuer and The Bank of New York, as trustee, to the Amended and Restated Base Indenture, dated as of July 30,
 1997, between AESOP Funding II and The Bank of New York, as Trustee (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).                                                                
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.22 |  | The Amended and Restated Series 1998-1 Supplement, dated as of June, 2001, between AESOP Funding II L.L.C., as issuer, and The Bank of New York, as trustee and Series 1998-1 agent, to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer, and The Bank of New York, as trustee (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).                       
|4.23 |  | The Amended and Restated Series 2000-1 Supplement, dated as of June, 2001, between AESOP Funding II L.L.C., as issuer, and The Bank of New York, as trustee and Series 2000-1 agent, to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C. as issuer, and The Bank of New York as trustee and Series 2000-1 agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001). 
|4.24 |  | The Amended and Restated Series 2000-2 Supplement, dated as of June, 2001, between AESOP Funding II L.L.C., as issuer and The Bank of New York, as trustee and Series 2000-2 agent, to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C. as issuer, and The Bank of New York as trustee and Series 2000-1 agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001).  
|4.25 |  | The Amended and Restated Series 2000-3 Supplement, dated as of June 2001, between AESOP Funding II L.L.C. as issuer, and The Bank of New York, as trustee and Series 2000-3 agent, to the Amended and Restated Base Indenture,
 dated as of July 30, 1997, between AESOP Funding II L.L.C. as issuer and The Bank of New York as trustee and Series 2000-1 agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001).   
|4.26 |  | The Amended and Restated Series 2000-4 Supplement, dated as of June 2001, between AESOP Funding II L.L.C. as issuer and The Bank of New York, as trustee and Series 2000-4 agent, to the Amended and Restated Base Indenture,
dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer, and The Bank of New York as trustee and Series 2000-1 agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001).   
|4.27 |  | The Amended and Restated Series 2001-1 Supplement dated as of June 2001, between AESOP Funding II L.L.C. as issuer, and The Bank of New York, as trustee and Series 2001-1 agent, to the Amended and Restated Base Indenture,
dated as of July 30, 1997, between ASOP Funding II L.L.C. as issuer, and The Bank of New York as trustee and Series 2000-1 agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001).     
|4.28 |  | The Amended and Restated Series 2001-2 Supplement, dated as of June, 2001, between AESOP Funding II L.L.C. as issuer, and The Bank of New York, as trustee and Series 2001-2 agent, to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer, and The Bank of New York as trustee and Series 2000-1 agent (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
 2001).

G-3

---

|10.1  |  | Master License Agreement, dated as of July 30, 1997, among Cendant Car Rental, Inc., Avis Rent A Car System Inc. and Wizard Co., Inc, (Incorporated by reference to the Company's Registration Statement on Form S-1,
Registration No. 333-46737, dated February 23, 1998).                                                                                        
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2  |  | Agreement and Plan of Merger dated November 11, 2000 by and among Cendant Corporation, PHH Corporation, Avis Acquisition Corp., and Avis Group Holdings, Inc. (Incorporated by reference to the Company's Current Report on
Form 8-K dated November 14, 2000).                                                                                                     
|10.3  |  | Establishment of Arval/PHH Holdings, a joint venture company in the United Kingdom, by Avis Group Holdings, Inc. and BNP Paribas (Incorporated by reference to the Company's Current Report on Form 8-K dated August 24,
2000).                                                                                                                                    
|10.4  |  | Series 2002-1 Supplement dated as of July 25, 2002 to the Amended and Restated Based Indenture dated as of July 30, 1997 among AESOP Funding II L.L.C., as issuer, and The Bank of New York, as trustee (Filed
herewith).                                                                                                                                          
|10.5  |  | Series 2002-3 Supplement dated as of September 12, 2002 to the Amended and Restated Based Indenture dated as of July 30, 1997 among AESOP Funding II L.L.C., Avis Rent A Car System, Inc., Park Avenue Receivables
Corporation, JPMorgan Chase Bank and The Bank of New York, as trustee (Filed herewith).                                                         
|10.6  |  | Amended and Restated Series 2002-2 Supplement dated as of November 22, 2002 to the Amended and Restated Base Indenture dated as of July 30, 1997 among AESOP Funding II L.L.C., Avis Rent A Car System, Inc., JPMorgan Chase
Bank, Certain CP Conduit Purchasers, certain Funding Agents, certain APA banks, and The Bank of New York, as trustee (Filed herewith).
|10.7  |  | Series 2002-4 Supplement dated as of November 22, 2002 to the Amended and Restated Based, Indenture dated as of July 30, 1997 among AESOP Funding II L.L.C., Avis Rent A Car System, Inc., JPMorgan Chase Bank, Certain CP
Conduit Purchasers, Certain Funding Agents, Certain APA Banks and The Bank of New York, as trustee (Filed herewith).                    
|10.8  |  | Amendment No. 1, dated as November 22, 2002, to the Series 2002-3 Supplement, dated as of September 12, 2002, between AESOP Funding II L.L.C., Avis Rent A Car System, Inc., Park Avenue Receivables Corporation, JPMorgan
Chase Bank and The Bank of New York, as trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997 (Filed herewith).
|10.9  |  | Supplemental Indenture No. 4, dated as of November 22, 2002, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C. and The Bank of New York, as trustee (Filed
herewith).                                                                                                                                         
|10.10 |  | Master Motor Vehicle Operating Sublease Agreement, dated as of November 22, 2002, between Avis Rent A Car System, Inc. and Budget Rent A Car System, Inc., formerly known as Cherokee Acquisition Corporation (Filed
herewith).                                                                                                                                    
|12.   |  | Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                 
|99.1  |  | Unaudited Pro Forma Consolidated Financial Data (Incorporated by reference to the Company's Current Report on Form 8-K dated July 15, 1999).                                                                                                                                                                                                                       
|99.2  |  | Avis Group Holdings, Inc. Unaudited Pro Forma Consolidating Statement of Operations for the six months ended June 30, 2000 and for the year ended December 31, 1999 (Incorporated by reference to the Company's Current
Report on Form 8-K dated August 24, 2000).                                                                                                 
|99.3  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                            

G-4

---

QuickLinks