Thrifty Car Rental 2006 Annual Report Download - page 18

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Information Systems and Other Services
The Company depends upon a number of core information systems to operate its business, primarily its
counter automation, reservations and revenue management systems. The counter automation system in
company-owned stores processes rental transactions, facilitates the sale of additional products and
services and facilitates the monitoring of its fleet and financial assets. The Company also relies on a
revenue management system which is designed to enable the Company to better determine rental
demand based on historical reservation patterns and adjust its rental rates accordingly.
On August 1, 2006, the Company entered into a master services agreement (“MSA”) with Electronic Data
Systems Corporation and EDS Information Systems, L.L.C. (collectively, “EDS”) to substantially expand
the services provided by EDS to the Company. This MSA is a five-year, $150 million agreement,
commencing on October 1, 2006, wherein EDS will provide the majority of information technology (“IT”)
services to the Company, including applications development and maintenance, network, workplace and
storage management, back-up and recovery and mid-range hosting services. EDS is a leading global
information technology service company that manages and monitors the majority of the Company’s data
network and its daily information processing. The Company’s counter automation, reservations, revenue
management, Internet Web sites and fleet processing systems are housed in a secure underground EDS
facility in Oklahoma designed to withstand disasters.
U.S. franchisees receiving a certain volume of reservations are required to use an approved automated
counter system. In addition to providing an electronic data link with the Company’s worldwide
reservations centers, the automated counter system produces rental agreements and provides the
Company and its franchisees with customer and vehicle inventory information as well as financial and
operating reports.
Supplies and National Account Programs. The Company makes bulk purchases of items used by its
franchisees, which it sells to franchisees at prices that are often lower than they could obtain on their own.
The Company also negotiates national account programs to allow its franchisees to take advantage of
volume discounts for many materials or services used for operations such as tires, glass replacement,
long distance telephone service and overnight mail.
Parking Services. Airport parking operations are a natural complement to vehicle rental operations. The
Company encourages its franchisees that have near-airport locations to add this ancillary business and
the Company operates some corporate parking operations as well.
Fleet Acquisition and Management
Vehicle Supply
For the 2006 model year, DaimlerChrysler vehicles represented approximately 93% of the total U.S. fleet
purchases by DTG Operations. DTG Operations also purchases vehicles from other automotive
manufacturers. The Company expects that for the 2007 model year, DaimlerChrysler vehicles will
continue to represent a substantial majority of the total U.S. fleet of DTG Operations.
Automotive manufacturers’ residual value programs limit the Company’s residual value risk. Under these
programs, the manufacturer either guarantees the aggregate depreciated value upon resale of covered
vehicles of a given model year, as is generally the case under DaimlerChrysler’s program, or agrees to
repurchase vehicles at specified prices during established repurchase periods. In either case, the
manufacturer’s obligation is subject to certain conditions relating to the vehicle’s age, physical condition
and mileage. Vehicles purchased by vehicle rental companies under these programs are referred to as
“Program Vehicles.” Vehicles not purchased under these programs and for which rental companies
therefore bear residual value risk are referred to herein as “Non-Program Vehicles.” The Company
believes that a majority of vehicles owned by the U.S. vehicle rental industry are Program Vehicles.
DaimlerChrysler, the Company’s primary supplier, sets the terms of its residual value program before the
start of each model year. The terms include monthly depreciation rates, minimum and maximum holding
periods and mileages, model mix requirements, and vehicle condition and other return requirements. The
residual value program enables DTG Operations to limit its residual value risk with respect to Program
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