Thrifty Car Rental 2011 Annual Report Download - page 63

prepared on a semi-annual basis. Historical data related to the amount and timing of payments
for self-insured claims is utilized in preparing the actuarial evaluations. The accrual for public
liability and property damage claims is discounted based upon the actuarially determined
estimated timing of payments to be made in the future. The Company records expense related
to public liability and property damage and SLI on a monthly basis based on rental volume and
projections of ultimate losses, expenses, premiums and administrative costs that are derived
from historical accident claim experience and trends. Management reviews the actual timing of
payments as compared with the semi-annual actuarial estimate of timing of payments and has
determined that there has been no material differences in the timing of payments for each of
the three years in the period ended December 31, 2011. Because of less predictability in the
estimated timing of payments, 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 ratably 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 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 $20.1 million, $20.9 million and $21.2 million, for 2011, 2010
and 2009, 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 to identify uncertain tax positions.
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