Avis 2008 Annual Report Download - page 58

Adoption of New Accounting Pronouncements
During 2008, we adopted the following standards as a result of the issuance of new accounting pronouncements:
We adopted the following recently issued accounting pronouncements effective January 1, 2009:
For detailed information regarding these pronouncements and the impact thereof on our business, see Notes 1 and 2 to our Consolidated
Financial Statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We use various financial instruments, particularly swap contracts, futures and options contracts, to manage and reduce the interest rate risk
related specifically to our debt. Foreign currency forwards are also used to manage and reduce the foreign currency exchange rate risk associated
with our foreign currency denominated receivables and forecasted royalties, forecasted earnings of foreign subsidiaries and other transactions.
We also use derivative commodity instruments to manage and reduce the risk of changing unleaded gasoline prices.
We are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market-
making or other speculative activities in the derivatives markets. More detailed information about these financial instruments is provided in
Note 22 to our Consolidated Financial Statements.
Our principal market exposures are interest and foreign currency rate risks.
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•
SFAS No. 157,
“
Fair Value Measurements
”
•
FASB Staff Position FAS 157
-
1,
“
Application of SFAS No. 157 to SFAS No. 13 and its Related Interpretative Accounting
Pronouncements that Address Leasing Transactions
”
•
FASB Staff Position FAS 157
-
2,
“
Effective Date of SFAS 157
”
•
FASB Staff Position FAS 157
-
3
“
Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active
”
• SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement
No. 115
”
•
FASB Staff Position SFAS 133
-
1 and FIN 45
-
4,
“
Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161
”
•
FASB Staff Position FAS 140
-
4 and FIN 46(R)
-
8,
“
Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets
and Interests in Variable Interest Entities
”
•
SFAS No. 141(R),
“
Business Combinations
”
•
SFAS No. 160,
“
Noncontrolling Interests in Consolidated Financial Statements
—
an amendment of ARB No. 51
”
•
SFAS No. 161,
“
Disclosures about Derivative Instruments and Hedging Activities
—
an amendment of FASB Statement No. 133
”
•
FASB Staff Position FAS 132(R)
-
1,
“
Employers
’
Disclosure about Postretirement Benefit Plan Assets
”
•
FASB Staff Position FAS 142
-
3,
“
Determination of the Useful Life of Intangible Assets
”
•
Emerging Issues Task Force (EITF) Issue No. 08
-
6,
“
Equity Method Investment Accounting Considerations
”
•
Our primary interest rate exposure at December 31, 2008 was to interest rate fluctuations in the United States, specifically LIBOR and
commercial paper interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities. We
anticipate that LIBOR and commercial paper rates will remain a primary market risk exposure for the foreseeable future.