On what basis does Budget's CODM evaluate the operating results of reportable segments?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
hicle programs Vehicle-backed debt due to Avis Budget Rental Car Funding Vehicle-backed debt Interest rate swaps and interest rate caps (ii) | $ 14,083 | $ 14,154 | $ 15,441 | 3,435 | | | 3,441 | 3,469 | 3,422 | | | | 12 | 12 | 74 | |
(e) Derivatives in a liability position.
21. Segment Information
Our chief executive officer who also serves as our chief operating decision-maker ("CODM") assesses performance and allocates resources based upon the separate financial information of our operating segments. We aggregate certain of our operating segments into our reportable segments. In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the segments operate, and other relevant factors.
Our CODM evaluates the operating results of each of our reportable segments based upon revenues and Adjusted EBITDA, which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; long-lived asset impairment and other related charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, net, which includes amounts recorded in excess of $5 million, related primarily to unprecedented self-insurance reserves for allocated loss adjustment expense, class action lawsuits and personal injury matters; non-operational charges related to shareholder activits activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; severe weather-related damages in excess of $5 million, net of insurance proceeds; and income taxes.
We have revised our definition of Adjusted EBITDA to exclude severe weather-related damages in excess of $5 million, net of insurance proceeds. We did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these. We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to a
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Chief Operating Decision-Maker (CODM) assesses the performance of reportable segments based on their separate financial information. This evaluation is centered on revenues and Adjusted EBITDA.
Adjusted EBITDA is defined as income (or loss) from continuing operations before several key financial items. These include non-vehicle related depreciation and amortization, long-lived asset impairment and other related charges, restructuring and other related charges, early extinguishment of debt costs, and non-vehicle related interest. It also factors in transaction-related costs, net, legal matters exceeding $5 million (primarily related to self-insurance reserves for allocated loss adjustment expense, class action lawsuits, and personal injury matters), non-operational charges related to shareholder activity, COVID-19 charges, net, cloud computing costs, other (income) expense, net, severe weather-related damages in excess of $5 million, net of insurance proceeds, and income taxes.
Budget believes that Adjusted EBITDA is a useful supplemental measure for evaluating the performance of its operating businesses and comparing results from period to period. The company also considers Adjusted EBITDA useful for investors, as it allows them to assess Budget's results of operations and financial condition on the same basis that management uses internally. However, Budget clarifies that Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP.