The principal business of the car rental industry is to rent cars to individuals needing them for short-term business or leisure use. The industry is significantly influenced by general economic conditions as well as developments in the travel industry and particularly in airline passenger traffic. Historically, the car rental industry has also been highly seasonal, with many industry participants’ annual profitability being linked to activities in the second and third quarters when leisure and business travel peak. The industry derives the majority of its revenues from car rentals and the sale of ancillary products such as loss or damage waivers, fueling charges and rental-related insurance. The car rental industry is most developed in the United States and Europe, but it exists in some form in many other countries in the world.

Market data indicates that total annual U.S. rental revenues for the car rental industry exceeded $17 billion in 2004, with rentals by airline travelers taking place at or near airports, or “airport rentals,” constituting a slightly larger portion of the market than rentals taking place at central business district and suburban locations, or “off-airport rentals.”

As of May 31, 2005, the Company had over 1,600 staffed rental locations in the United States, of which approximately one-quarter were airport locations and three-quarters were off-airport locations, and it regularly rented cars from over 800 other locations that were not staffed. As of May 31, 2005, the Company had over 900 staffed rental locations internationally, of which approximately one-fifth were airport locations and four-fifths were off-airport locations, and it regularly rented cars from over 75 other locations that were not staffed.

At the Company’s major airport rental locations, as well as at some smaller airport and off-airport locations, customers participating in its Club Gold program are able to rent vehicles in an expedited manner. In the United States, participants in the Company’s Club Gold often bypass the rental counter entirely and proceed directly to their vehicles upon arrival at its facility.

In addition to its airport locations, the Company operates off-airport locations offering car rental services to a variety of customers. The Company’s off-airport rental customers include people wishing to rent cars closer to home for business or leisure purposes, as well as those needing to travel to or from airports. The Company’s off-airport customers also include people who have been referred by, or whose rental costs are being wholly or partially reimbursed by, insurance companies following accidents in which their cars were damaged, those expecting to lease cars that are not yet available from their leasing companies and those needing cars while theirs are being repaired or are temporarily unavailable for other reasons. At many of its off-airport locations the Company will provide pick-up and delivery services in connection with rentals.

When compared to the Company’s airport rental locations, an off-airport rental location typically deals with more types of customers, uses smaller rental facilities with fewer employees, conducts pick-up and delivery services and deals with replacement renters using specialized systems and processes. In addition, on average, off-airport locations generate fewer transactions per period than airport locations.

Total expenses of $1.6 billion for the quarter ended March 31, 2005 increased by 9.8% from $1.5 billion for the quarter ended March 31, 2004.

Direct operating expenses of $974.2 million for the quarter ended March 31, 2005 increased by 12.6% from $865.1 million for the quarter ended March 31, 2004.

Interest expense, net of interest income, of $99.2 million for the quarter ended March 31, 2005 increased by 12.8% from $88.0 million for the quarter ended March 31, 2004.