Avis 2011 Annual Report Download - page 82

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F-28
respectively. Due to hedging transactions to reduce the Company’s exposure to interest rate movements, the Company’s
weighted average effective interest rate related to the debt of Avis Budget Rental Car Funding was approximately 5%
and 6% as of December 31, 2011 and 2010, respectively.
In 2010, the Company established a variable funding note program with a maximum capacity of $400 million of notes to
be issued by Avis Budget Rental Car Funding to the Company to finance the purchase of vehicles. These variable
funding notes pay interest of 4.50% at December 31, 2011, and mature in March 2012. As of December 31, 2011, there
were no outstanding amounts due to the Company from Avis Budget Rental Car Funding under the program; however,
for the year ended December 31, 2011, the Company earned interest income of $4 million and incurred an equal amount
of interest expense on these notes, which was eliminated in consolidation in the Company’s financial statements. As of
December 31, 2011, the Company’s related interest receivable from Avis Budget Rental Car Funding was insignificant.
Truck financing. The Budget Truck Funding program consists of debt facilities established by the Company to finance
the acquisition of the Budget Truck rental fleet. The borrowings under the Budget Truck Funding program are
collateralized by $302 million of corresponding assets and are primarily fixed rate notes with a weighted average interest
rate of 5% as of December 31, 2011 and 2010. The Company had also obtained a portion of its truck rental fleet under
capital lease arrangements which all matured in 2010. Interest paid as part of capital lease obligations was $1 million and
$4 million in 2010 and 2009, respectively.
Capital Leases. The Company obtained a portion of its vehicles and equipment under capital lease arrangements for
which there are corresponding assets of $348 million classified within vehicles, net on the Company’s Consolidated
Balance Sheets as of December 31, 2011. For the year ended December 31, 2011, the interest rate on these leases ranged
from 3% to 4%. All capital leases are on a fixed repayment basis and interest rates are fixed at the contract date.
Other. Borrowings under the Company’s other vehicle rental programs primarily represent amounts issued under
financing facilities that provide for borrowings to primarily support the acquisition of vehicles used in the Company’s
international operations. The debt issued is collateralized by approximately $1.7 billion of vehicles and related assets and
the majority represents floating rate bank loans and a commercial paper conduit facility for which the weighted average
interest rate as of December 31, 2011 and 2010, was 5% and 4%, respectively.
In 2011, the Company entered into a €350 million revolving credit facility which matures in October 2013 and bears
interest of one-month EURIBOR plus 3% for an aggregate rate of 4.14% at December 31, 2011. This facility provides
for the availability of fleet financing for certain of the Company’s operations in Europe.
DEBT MATURITIES
The following table provides the contractual maturities of the Company’s debt under vehicle programs (including related
party debt due to Avis Budget Rental Car Funding) at December 31, 2011:
Vehicle-
Backed
Debt
2012 $ 2,184
2013 780
2014 865
2015 798
2016 883
Thereafter 54
$ 5,564