Avis 2010 Annual Report Download - page 99

Table of Contents
Share Repurchases
During 2010 and 2009, the Company did not repurchase any of its common stock.
In 2008, the Company used approximately $33 million of available cash to repurchase approximately 2.9 million shares of Avis Budget
Group common stock under its common stock repurchase program.
Convertible Note Hedge and Warrants
In 2009, the Company purchased a convertible note hedge for approximately $95 million ($59 million, net of tax), to potentially reduce the
net number of shares required to be issued upon conversion of the Convertible Notes. Concurrently, the Company issued warrants for
approximately $62 million to offset the cost of the convertible note hedge.
The convertible note hedge and warrants, which will be net-share settled, cover the purchase and issuance, respectively, of approximately
21.2 million shares of common stock, subject to customary anti-dilution provisions. The initial strike price per share of the convertible note
hedge and warrants is $16.25 and $22.50, respectively.
The convertible note hedge expires in October 2014 and is exercisable before expiration only to the extent that corresponding amounts of the
Convertible Notes are exercised. The warrants expire ratably over 80 trading days beginning January 5, 2015. The convertible note hedge
and warrant transactions were accounted for as capital transactions and included as a component of stockholders’ equity. The significant
terms of the Convertible Notes can be found in Note 14—Long-term Debt and Borrowing Arrangements.
Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income are as follows:
All components of accumulated other comprehensive income (loss) are net of tax, except currency translation adjustments, which exclude
income taxes related to indefinite investments in foreign subsidiaries.
During 2010, the Company recorded unrealized gains on cash flow hedges of $60 million ($36 million, net of tax) in accumulated other
comprehensive income which primarily related to the derivatives used to manage the interest-rate risk associated with the Company’s
vehicle-backed debt and the Company’s floating rate debt (see Note 20—Financial Instruments). Such amount in 2010 includes $64 million
($39 million, net of tax) of unrealized gains on cash flow hedges related to the Company’s vehicle-backed debt and is offset by a
corresponding increase in the Company’s Investment in Avis Budget Rental Car Funding on the Consolidated Balance Sheets.
F
-
35
Currency
Translation
Adjustments
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges
Minimum
Pension
Liability
Adjustment
Accumulated
Other
Comprehensive
Income (Loss)
Balance, January 1, 2008
$
117
$
(63
)
$
(22
)
$
32
Period change
(110
)
(86
)
(30
)
(226
)
Balance, December 31, 2008
7
(149
)
(52
)
(194
)
Period change
104
43
10
157
Balance, December 31, 2009
111
(106
)
(42
)
(37
)
Current period change
71
60
(2
)
129
Balance, December 31, 2010
$
182
$
(46
)
$
(44
)
$
92
During 2010, the Company reclassified $40 million ($24 million, net of tax) of unrealized losses on certain interest rate swaps to early
extinguishment of debt in connection with the repayment of a portion of the Company’s floating rate term loan and the settlement of
such hedges (see Note 14
—
Long
-
term Debt and Borrowing Arrangements).
(a)
(a)