Avis 2006 Annual Report Download - page 103

Table of Contents
There were no significant concentrations of credit risk with any individual counterparties or groups of counterparties at December 31, 2006
or 2005 other than (i) risks related to the Company’s repurchase and guaranteed depreciation agreements with General Motors Corporation
and Ford Motor Company with respect to program cars that were sold and returned to the car manufacturers but for which the Company
has not yet received payment (see Note 2—Summary of Significant Accounting Policies) and (ii) receivables from Realogy and Wyndham
related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with the
separation.
Concentrations of credit risk associated with trade receivables are considered minimal due to the Company’s diverse customer base. Bad
debts have been minimal historically. The Company does not normally require collateral or other security to support credit sales.
Fair Value
The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities
exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using
present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, accounts receivable,
program cash and accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these assets and
liabilities.
The carrying amounts and estimated fair values of all other financial instruments at December 31, are as follows:
2006
2005
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Investments in Affinion
$
98
$
139
$
86
$
86
Corporate debt and Avis Budget Car Rental
Corporate debt
Current portion of long
-
term debt
29
29
975
984
Long
-
term debt
1,813
1,775
2,533
2,718
Interest rate swaps
(*)
-
-
(153
)
(153
)
Debt under vehicle programs
Vehicle-backed debt due to Avis Budget Rental
Car Funding
4,511
4,505
6,957
6,931
Vehicle
-
backed debt
744
739
931
931
Interest rate swaps and other derivatives
(*)
(15
)
(15
)
(21
)
(21
)
Derivatives
(*)
(7
)
(7
)
(14
)
(14
)
F
-
46
(*)
Derivative instruments in gain (loss) positions.