Thrifty Car Rental 2009 Annual Report Download - page 59

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have been no material differences in the timing of payments for each of the three years in the period
ended December 31, 2009. Because of less predictability, self-insured reserves for SLI are not
discounted.
Foreign Currency Translation – Foreign assets and liabilities are translated using the exchange
rate in effect at the balance sheet date, and results of operations are translated using an average
rate for the period. Translation adjustments are accumulated and reported as a component of
accumulated other comprehensive loss.
Revenue Recognition – Revenues from vehicle rentals are recognized as earned on a daily basis
under the related rental contracts with customers. Revenues from leasing vehicles to franchisees
are principally under operating leases with fixed monthly payments and are recognized as earned
over the lease terms. Revenues from fees and services include providing sales and marketing,
reservations, information systems and other services to franchisees. Revenues from these services
are generally based on a percentage of franchisee rental revenue or upon providing reservations
and are recognized as earned on a monthly basis. Initial franchise fees, which are recorded to other
revenues, are recognized upon substantial completion of all material services and conditions of the
franchise sale, which coincides with the date of sale and commencement of operations by the
franchisee.
Advertising Costs – Advertising costs are primarily expensed as incurred. The Company incurred
advertising expense of $21.2 million, $29.5 million and $34.1 million, for 2009, 2008 and 2007,
respectively.
Environmental Costs – The Company’s operations include the storage of gasoline in underground
storage tanks at certain company-owned stores. Liabilities incurred in connection with the
remediation of accidental fuel discharges are recorded when it is probable that obligations have
been incurred and the amounts can be reasonably estimated.
Operating Leases –
Contingent Rent – The Company recognizes contingent rent expense associated with certain
airport concession agreements monthly as incurred when the Company’s achievement of the
annual targeted qualifying revenue is probable.
Scheduled Rent Increases - The Company recognizes scheduled rent increases on a straight-
line basis over the remaining lease term.
Income Taxes – The Company has provided for income taxes on its separate taxable income or
loss and other tax attributes. Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of the Company’s assets and liabilities. A
valuation allowance is recorded for deferred income tax assets when management determines it is
more likely than not that such assets will not be realized. The Company has established a valuation
allowance related to DTG Canada and a portion of the Company’s net operating losses for state tax
purposes. The Company evaluates its tax policies quarterly under ASC Topic 740, “Income Taxes”
(“ASC Topic 740”) to identify uncertain tax positions.
Earnings Per Share – Basic earnings per share (“EPS”) is computed by dividing net income (loss)
by the weighted average number of common shares outstanding during the period. Diluted EPS is
based on the combined weighted average number of common shares and common share
equivalents outstanding which include, where appropriate, the assumed exercise of options. In
computing diluted EPS, the Company has utilized the treasury stock method.
Stock-Based Compensation – The Company uses the fair value-based method of accounting for
stock-based compensation. All performance share, restricted stock and stock option awards are
accounted for using the fair value-based method for the 2009, 2008, and 2007 periods. The
Company issued common shares to its Board of Directors for attendance at Board of Director
committee meetings in 2008 and 2007. Payment for attendance at Board of Directors committee
meetings was paid in cash in 2009. The fair value of these common shares is determined based on
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