Thrifty Car Rental 2007 Annual Report Download - page 71

other factors, the required principal payments may be increased. At December 31, 2007, the
Company had $248,750,000 outstanding under the Term Loan.
Expected repayments of debt and other obligations outstanding at December 31, 2007 are as
follows:
2008 2009 2010 2011 2012 Thereafter
Asset backed medium term notes 500,000$ -$ 500,000$ 500,000$ 500,000$ -$
Conduit Facility 12,000 - - - - -
Commercial paper 25,982 - - - - -
Other vehicle debt 234,472 - - - - -
Limited partner interest 135,512 - - - - -
Term Loan 2,500 2,500 2,500 2,500 2,500 236,250
Total 910,466$ 2,500$ 502,500$ 502,500$ 502,500$ 236,250$
(In Thousands)
11. DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to market risks, such as changes 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 has used interest rate swap agreements, for each
related new asset backed medium term note issuance in 2003 through 2007, to effectively convert
variable interest rates on a total of $1.9 billion in asset backed medium term notes to fixed interest
rates. These swaps have termination dates through July 2012. The Company reflects these swaps
on its balance sheet at fair market value, which totaled approximately $47,825,000 at December 31,
2007, comprised of liabilities, included in accrued liabilities, of approximately $48,903,000 and
assets, included in receivables, of approximately $1,078,000. At December 31, 2006, these swaps
totaled $11,540,000 comprised of assets, included in receivables, of approximately $14,271,000,
and liabilities, included in accrued liabilities, of approximately $2,731,000.
The interest rate swap agreements related to the asset backed medium term note issuances in
2003, 2004, 2005 and 2006 do not qualify for hedge accounting treatment under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities”, as amended (“SFAS No. 133”);
therefore, the change in the interest rate swap agreements’ fair values must be recognized as an
(increase) decrease in fair value of derivatives in the consolidated statement of income. For the
years ended December 31, 2007 and 2006, the Company recorded the related change in the fair
value of the swap agreements of $38,990,000 and $9,363,000, respectively, as a net decrease in
fair value of derivatives in its consolidated statements of income.
The interest rate swap agreement entered into in May 2007 related to the 2007 asset backed
medium term note issuance (“2007 Swap”) constitutes a cash flow hedge and satisfies the criteria
for hedge accounting under the “long-haul” method. Related to the 2007 Swap, the Company
recorded a loss of $11,978,000, which is net of income taxes, in total comprehensive income for the
year ended December 31, 2007. Deferred gains and losses are recognized in earnings as an
adjustment to interest expense over the same period in which the related interest payments being
hedged are recognized in earnings. Based on projected market interest rates, the Company
estimates that approximately $2,900,000 of net deferred loss related to the 2007 Swap will be
reclassified into earnings within the next twelve months.
12. STOCKHOLDERS’ RIGHTS PLAN
On July 23, 1998, the Company adopted a stockholders’ rights plan. The rights were issued on
August 3, 1998, to stockholders of record on that date, and will expire on August 3, 2008, unless
earlier redeemed, exchanged or amended by the Board of Directors.
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