Thrifty Car Rental 2008 Annual Report Download - page 80

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limited due to the large number of customers comprising the Company’s customer base and their
dispersion across different geographic areas. Additionally, the Company limits its exposure to credit
risk through performing credit reviews and monitoring the financial strength of its significant
accounts.
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, 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.
Debt and Other Obligations – At December 31, 2008, the fair value of the asset backed medium
term notes with fixed interest rates of $83.6 million was less than the carrying value of $110.0 million
by approximately $26.4 million. Additionally, the fair value of debt with variable interest rates of $1.6
billion was less than the carrying value of $2.4 billion by approximately $788.5 million. 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 Monolines 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.
Letters of Credit and Surety Bonds – The letters of credit and surety bonds of $321.3 million and
$47.2 million, respectively, have no fair value as they support the Company's corporate operations
and are not anticipated to be drawn upon.
Foreign Currency Translation Risk – A portion of the Company’s debt is denominated in
Canadian dollars, thus, its carrying value is impacted by exchange rate fluctuations. However, this
foreign currency risk is mitigated by the underlying collateral, which is represented by the Canadian
fleet.
18. COMMITMENTS AND CONTINGENCIES
Concessions and Operating Leases
The Company has certain concession agreements principally with airports throughout the U.S. and
Canada. Typically, these agreements provide airport terminal counter space in return for a minimum
rent. In many cases, the Company’s subsidiaries are also obligated to pay insurance and
maintenance costs and additional rents generally based on revenues earned at the location. Certain
of the airport locations are operated by franchisees who are obligated to make the required rent and
concession fee payments under the terms of their franchise arrangements with the Company’s
subsidiaries.
The Company’s subsidiaries operate from various leased premises under operating leases with
terms up to 25 years. Some of the leases contain renewal options.
78