Dollar Rent A Car 2011 Annual Report Download - page 70

In addition, the New Revolving Credit Facility contains covenants restricting its ability to undertake certain activities, including, among others,
restrictions on the Company and its subsidiaries’ ability to incur additional indebtedness, make loans, acquisitions or other investments, grant liens
on its property, dispose of assets, pay dividends or conduct stock repurchases, make capital expenditures or engage in certain transactions with
affiliates.
Under the New Revolving Credit Facility, certain restrictions were relaxed or extended from the Senior Secured Credit Facilities, including the
Company’s ability, subject to certain limitations, to make dividend, share repurchase and other restricted payments under the New Revolving Credit
Facility, in an amount up to $300 million, plus 50% of cumulative adjusted net income (or minus 100% of cumulative adjusted net loss, as applicable)
for the period beginning January 1, 2012 and ending on the last day of the fiscal quarter immediately preceding the restricted payment.
Covenant Compliance
The Company was in compliance with all covenants under its financing arrangements as of December 31, 2011.
During 2011, the Company paid $14.8 million in financing issuance costs primarily related to the issuance of its Series 2011-1 notes and the renewal
of the Series 2010-3 VFN.
Expected maturities of debt and other obligations outstanding at December 31, 2011 are as follows:
2012 2013 2014 2015 Thereafter
(In Thousands)
Asset-backed medium-term notes $ 500,000 $ - $ 400,000 $ 500,000 $ -
9. DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to market risks, such as changes in interest rates, and has entered into interest rate swap and cap agreements to manage that
risk. Additionally, some of the Company’s debt facilities require interest rate cap agreements in order to limit the Company’s exposure to increases in
interest rates. Consequently, the Company manages the financial exposure as part of its risk management program by striving to reduce the potentially
adverse effects that the volatility of the financial markets may have on the Company’s operating results. The Company used interest rate swap
agreements for asset-backed medium-term note issuances in 2007, to effectively convert variable interest rates on a total of $500 million in asset-backed
medium-term notes to fixed interest rates. On December 28, 2011, the Company terminated its 2007 swap agreements and paid a termination fee of
$8.8 million to settle the outstanding liability, which is disclosed in cash flows from financing activities in the Consolidated Statements of Cash
Flows. The remaining unamortized value of the hedge in accumulated other comprehensive income (loss) on the balance sheet will be reclassified into
earnings as interest expense over the remaining term of the related debt through July 2012. The Company has also used interest rate cap agreements for
its 2010-3 VFN, to effectively limit the variable interest rate on a total of $600 million in asset-backed VFNs. This cap has a termination date of July
2014. The Series 2010-1 VFN and Series 2010-2 VFN interest rate cap agreements were terminated in December 2011 following the termination of the
related debt facilities.
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