Thrifty Car Rental 2008 Annual Report Download - page 55

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DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2008, 2007 AND 2006
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Dollar Thrifty Automotive Group, Inc. (“DTG”) is the successor to Pentastar Transportation Group,
Inc. Prior to December 23, 1997, DTG was a wholly owned subsidiary of Chrysler LLC (such entity
and its subsidiaries and members of its affiliated group are hereinafter referred to as “Chrysler”). On
December 23, 1997, DTG completed an initial public offering of all its outstanding common stock
owned by Chrysler together with additional shares issued by DTG.
The Company operates under a corporate structure that combines the management of operations
and administrative functions for both the Dollar and Thrifty brands. Management makes business
and operating decisions on an overall company basis. Financial results are not available by brand.
DTG’s significant wholly owned subsidiaries include DTG Operations, Inc., Dollar Rent A Car, Inc.,
Thrifty, Inc., Rental Car Finance Corp. (“RCFC”) and Dollar Thrifty Funding Corp. (“DTFC”). Thrifty,
Inc. is the parent company to Thrifty Car Sales, Inc. and Thrifty Rent-A-Car System, Inc., which is
the parent company to Thrifty Rent-A-Car System, Inc. National Advertising Committee (“Thrifty
National Ad”) and Dollar Thrifty Automotive Group Canada Inc. (“DTG Canada”). Thrifty National Ad
was terminated effective January 1, 2008. DTG Canada has a partnership agreement with an
unrelated bank’s conduit, which included the creation of a limited partnership, TCL Funding Limited
Partnership, which is appropriately consolidated with DTG and subsidiaries. RCFC and DTFC are
special purpose financing entities, which were formed in 1995 and 1998, respectively, and are
appropriately consolidated with DTG and subsidiaries. RCFC and DTFC are each separate legal
entities whose assets are not available to satisfy any claims of creditors of DTG or any of its other
subsidiaries. The term the “Company” is used to refer to DTG and subsidiaries, individually or
collectively, as the context may require. Dollar Rent A Car, Inc., the Dollar brand and DTG
Operations, Inc. operating under the Dollar brand are individually and collectively referred to
hereinafter as “Dollar”. Thrifty, Inc., Thrifty Rent-A-Car System, Inc., Thrifty Car Sales, Inc., the
Thrifty brand and DTG Operations, Inc. operating under the Thrifty brand are individually and
collectively referred to hereinafter as “Thrifty”. Intercompany accounts and transactions have been
eliminated in consolidation.
Nature of Business – The Company operates in the U.S. and Canada and, through its Dollar and
Thrifty brands, is primarily engaged in the business of the daily rental of vehicles to business and
leisure customers through company-owned stores. The Company also leases vehicles to
franchisees for use in the daily vehicle rental business, sells vehicle rental franchises worldwide and
provides sales and marketing, reservations, data processing systems, insurance and other services
to franchisees. RCFC and DTFC provide vehicle financing to the Company.
Estimates – The preparation of the Company’s consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts and disclosures in the
consolidated financial statements. Actual results could differ materially from those estimates.
Cash and Cash Equivalents – Cash and cash equivalents include cash on hand and on deposit,
including highly liquid investments with initial maturities of three months or less.
Restricted Cash and Investments – Restricted cash and investments are restricted for the
acquisition of vehicles and other specified uses under the rental car asset backed note indenture
and other agreements (Note 10). A portion of these funds is restricted due to the like-kind exchange
tax program for deferred tax gains on eligible vehicle remarketing. These funds are primarily held in
a highly rated money market fund with investments primarily in government and corporate
obligations with a dollar-weighted average maturity not to exceed 60 days, as permitted by the
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