Dollar Rent A Car 2011 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2011 Dollar Rent A Car annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 180

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180

Fair Value Measurements at Reporting Date Using
Total Fair Quoted Prices in Significant Other Significant
(in thousands) Value Assets Active Markets
for Observable Unobservable
(Liabilities) Identical Assets Inputs Inputs
Description at 12/31/10 (Level 1) (Level 2) (Level 3)
Derivative Assets $ 1,355 $ - $ 1,355 $ -
Derivative Liabilities (36,888) - (36,888) -
Marketable Securities
(available for sale) 169 169 - -
Deferred Compensation
Plan Assets (a) 3,916 - 3,916 -
Total $ (31,448) $ 169 $ (31,617) $ -
(a) Deferred Compensation Plan Assets consist primarily of equity securities. The Company also has an offsetting liability related to the
Deferred Compensation Plan, which is not disclosed in the table as it is not independently measured at fair value, but rather is set
to equal fair value of the assets held in the related rabbi trust.
The fair value of derivative assets and liabilities, consisting primarily of interest rate swaps and caps as discussed above, is calculated using
proprietary models utilizing observable inputs, as well as future assumptions related to interest rates, credit risk and other variables. These
calculations are performed by the financial institutions that are counterparties to the applicable swap and cap agreements and reported to the Company
on a monthly basis. The Company uses these reported fair values to adjust the asset or liability as appropriate. The Company evaluates the
reasonableness of the calculations by comparing similar calculations from other counterparties for the applicable period and performs back-testing
through use of the look back approach to evaluate the fair value provided by the financial institutions. Deferred compensation plan assets consist of
publicly traded securities and are valued in accordance with market quotations. The Company had no Level 3 financial instruments at any time during
the years ended December 31, 2011 and 2010.
The following estimated fair values of financial instruments have been determined by the Company using available market information and valuation
methodologies.
Cash and Cash Equivalents, Cash and Cash Equivalents – Required Minimum Balance, Restricted Cash and Investments, Receivables,
Accounts Payable, Accrued Liabilities and Vehicle Insurance Reserves – The carrying amounts of these items are a reasonable estimate of their
fair value. The Company maintains its cash and cash equivalents in accounts that may not be federally insured. The Company has not experienced
any losses in such accounts and believes it is not exposed to significant credit risk.
Letters of Credit and Surety Bonds – The letters of credit and surety bonds of $203.1 million and $47.4 million, respectively, have no fair value as
they support the Company's corporate operations and are not anticipated to be drawn upon.
Debt and Other Obligations – The fair values of the asset-backed medium-term notes were developed using a valuation model that utilizes current
market and industry conditions, assumptions related to the financial insurers providing financial guaranty policies on those notes and the limited
market liquidity for such notes. Additionally, the fair value of the Term Loan was similarly developed using a valuation model and current market
conditions.
- 72 -