Thrifty Car Rental 2010 Annual Report Download - page 62

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2010, 2009 AND 2008
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 or its successor entity, Chrysler Group LLC, as the context may require, and the
relevant entity’s 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 of Thrifty Car Sales, Inc. and Thrifty Rent-A-Car
System, Inc., which is the parent company of Dollar Thrifty Automotive Group Canada Inc.
(“DTG Canada”). DTG Canada had a Partnership Agreement (hereinafter defined) (Note 10)
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 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.
Cash and Cash Equivalents – Required Minimum Balance – In February 2009, the
Company amended its Senior Secured Credit Facilities (hereinafter defined). Under the terms
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