Dollar Rent A Car 2007 Annual Report Download - page 80

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large number of customers comprising the Company’s customer base and their dispersion across
different geographic areas. Additionally, the Company limits its exposure to credit risk through
performing credit reviews and monitoring the financial strength of its significant accounts.
The following estimated fair values of financial instruments have been determined by the Company
using available market information and valuation methodologies.
Cash and Cash Equivalents, Restricted Cash and Investments, Receivables, Accounts
Payable, Accrued Liabilities and Vehicle Insurance Reserves – The carrying amounts of these
items are a reasonable estimate of their fair value.
Debt and Other Obligations – At December 31, 2007, the fair value of the asset backed medium
term notes with fixed interest rates of $101,856,000 was less than the carrying value of
$110,000,000 by approximately $8,144,000. Additionally, the fair value of debt with variable interest
rates of $2,363,735,000 was less than the carrying value of $2,546,716,000 by approximately
$182,981,000.
Letters of Credit and Surety Bonds – The letters of credit and surety bonds of $185,276,000 and
$39,929,000, respectively, have no fair value as they support the Company's corporate operations
and are not anticipated to be drawn upon.
Foreign Currency Translation Risk – A portion of the Company’s debt is denominated in
Canadian dollars, thus, its carrying value is impacted by exchange rate fluctuations. However, this
foreign currency risk is mitigated by the underlying collateral, which is represented by the Canadian
fleet.
17. COMMITMENTS AND CONTINGENCIES
Concessions and Operating Leases
The Company has certain concession agreements principally with airports throughout the United
States and Canada. Typically, these agreements provide airport terminal counter space in return for
a minimum rent. In many cases, the Company’s subsidiaries are also obligated to pay insurance and
maintenance costs and additional rents generally based on revenues earned at the location. Certain
of the airport locations are operated by franchisees who are obligated to make the required rent and
concession fee payments under the terms of their franchise arrangements with the Company’s
subsidiaries.
The Company’s subsidiaries operate from various leased premises under operating leases with
terms up to 25 years. Some of the leases contain renewal options.
Expenses incurred under operating leases and concessions were as follows:
Year Ended December 31,
2007 2006 2005
(In Thousands)
Rent 49,270$ 42,493$ 42,092$
Concession expenses:
Minimum fees 87,416 70,656 67,426
Contingent fees 49,493 51,021 40,932
186,179 164,170 150,450
Less sublease rental income (1,011) (867) (940)
Total 185,168$ 163,303$ 149,510$
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