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VEHICLE DEPRECIATION AND LEASE CHARGES, NET - DOLLAR THRIFTY
 6 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Dollar Thrifty Automotive Group Inc
Dec. 31, 2011
Dollar Thrifty Automotive Group Inc
VEHICLE DEPRECIATION AND LEASE CHARGES, NET
Depreciation of Revenue Earning Equipment and Lease Charges
Depreciation of revenue earning equipment and lease charges includes the following (in millions of dollars):
 
Three Months Ended
June 30,
 
2013
 
2012
Depreciation of revenue earning equipment
$
611.8

 
$
539.5

Adjustment of depreciation upon disposal of revenue earning equipment
11.3

 
(41.2
)
Rents paid for vehicles leased
18.0

 
21.5

Total
$
641.1

 
$
519.8

 
Six Months Ended
June 30,
 
2013
 
2012
Depreciation of revenue earning equipment
$
1,184.8

 
$
1,070.9

Adjustment of depreciation upon disposal of revenue earning equipment
10.0

 
(80.6
)
Rents paid for vehicles leased
33.3

 
44.6

Total
$
1,228.1

 
$
1,034.9


The adjustment of depreciation upon disposal of revenue earning equipment for the three months ended June 30, 2013 and 2012, included net losses of $17.5 million and net gains of $38.3 million, respectively, on the disposal of vehicles used in our car rental operations and gains of $6.2 million and $2.9 million, respectively, on the disposal of industrial and construction equipment used in our equipment rental operations. The adjustment of depreciation upon disposal of revenue earning equipment for the six months ended June 30, 2013 and 2012, included net losses of $20.8 million and net gains of $73.2 million, respectively, on the disposal of vehicles used in our car rental operations and net gains of $10.8 million and $7.4 million, respectively, on the disposal of industrial and construction equipment used in our equipment rental operations.
Depreciation rates are reviewed on a quarterly basis based on management's routine review of present and estimated future market conditions and their effect on residual values at the time of disposal. During the six months ended June 30, 2013, depreciation rates being used to compute the provision for depreciation of revenue earning equipment were adjusted on certain vehicles in our car rental operations to reflect changes in the estimated residual values to be realized when revenue earning equipment is sold. These depreciation rate changes resulted in net decreases of $14.8 million and $15.5 million in depreciation expense for the three-month and six-month periods ended June 30, 2013, respectively. Prospective changes include the impact of car sales channel diversification and acceleration of our retail sales expansion. During the three-month and six-month periods ended June 30, 2013, the depreciation rate changes in certain of our equipment rental operations resulted in a net decrease of $0.1 million and $0.0 million, respectively, in depreciation expense.
Depreciation of Revenue Earning Equipment and Lease Charges
Depreciation of revenue earning equipment and lease charges includes the following (in millions of dollars):
 
Years Ended December 31,
 
2012
 
2011
 
2010
Depreciation of revenue earning equipment
$
2,165.2

 
$
1,921.8

 
$
1,747.0

Adjustment of depreciation upon disposal of revenue earning equipment
(96.8
)
 
(112.2
)
 
42.9

Rents paid for vehicles leased
79.8

 
96.1

 
78.2

Total
$
2,148.2

 
$
1,905.7

 
$
1,868.1


The adjustment of depreciation upon disposal of revenue earning equipment for the year ended December 31, 2012, 2011 and 2010, included net gains of $83.2 million and $98.9 million and net loss of $32.9 million, respectively, on the disposal of vehicles used in our car rental operations and net gains of $13.5 million and $13.3 million and net loss of $10.0 million, respectively, on the disposal of industrial and construction equipment used in our equipment rental operations.
Depreciation rates are reviewed on a quarterly basis based on management's routine review of present and estimated future market conditions and their effect on residual values at the time of disposal. During the year ended December 31, 2012, depreciation rates being used to compute the provision for depreciation of revenue earning equipment were adjusted on certain vehicles in our car rental operations to reflect changes in the estimated residual values to be realized when revenue earning equipment is sold. These depreciation rate changes resulted in net decreases of $130.6 million and $13.8 million and a net increase of $19.1 million in depreciation expense for the years ended December 31, 2012, 2011 and 2010 respectively. The cumulative effect of the reduction in rates was indicative of the strong residual values experienced in the U.S. for the years ended December 31, 2012 and 2011. In 2012, 2011 and 2010, the depreciation rate changes in certain of our equipment rental operations resulted in an increase of $0.5 million, decrease of $4.4 million and increase of $3.6 million in depreciation expense, respectively.

4. VEHICLE DEPRECIATION AND LEASE CHARGES, NET

        Vehicle depreciation and lease charges include the following (in thousands):

 
   Three Months Ended
September 30,		   Nine Months Ended
September 30,		  
 
   2012   2011   2012   2011  

Depreciation of revenue-earning vehicles and other

   $ 94,323   $ 80,667   $ 230,391   $ 247,112  

Net gains from disposal of revenue-earning vehicles

     (5,192 )   (17,368 )   (42,023 )   (43,129 )
                   

 

   $ 89,131   $ 63,299   $ 188,368   $ 203,983  
                   

        Average gain on Non-Program Vehicles:

 
   Three Months Ended
September 30,		   Nine Months Ended
September 30,		  
 
   2012   2011   2012   2011  

Number of Non-Program Vehicles sold

     15,463     15,441     48,530     30,787  

Average gain on vehicles sold (per vehicle)

   $ 336   $ 1,125   $ 866   $ 1,401  
                   

        Components of vehicle depreciation per vehicle per month:

 
   Three Months Ended
September 30,		   Nine Months Ended
September 30,		  
 
   2012   2011   2012   2011  

Average depreciable fleet (units)

     120,757     113,719     113,968     110,125  

Average depreciation rate

   $ 260   $ 236   $ 225   $ 249  

Average gain on vehicles sold

     (14 )   (50 )   (41 )   (43 )
                   

Average vehicle depreciation and lease charges, net

   $ 246   $ 186   $ 184   $ 206  
                   

        Vehicles purchased by vehicle rental companies under programs where either the rate of depreciation or the residual value is guaranteed by the manufacturer are referred to as "Program Vehicles." Vehicles not purchased under these programs and for which rental companies therefore bear residual value risk are referred to as "Non-Program Vehicles."

        Depreciation expense for Non-Program Vehicles, which constitute substantially all of the Company's fleet, is recorded on a straight-line basis over the life of the vehicle, based on the original acquisition cost, the projected residual value at the time of sale, and the estimated length of time the vehicle will be in service. The Company's vehicle depreciation rates are periodically adjusted on a prospective basis when residual value assumptions change due to changes in used vehicle market conditions.

        The estimation of residual values requires the Company to make assumptions regarding the expected age and mileage of the vehicle at the time of disposal. Additionally, residual value estimates must also take into consideration overall used vehicle market conditions at the time of sale, including the impact of seasonality on vehicle residuals. The difference in residual values assumed and the proceeds realized upon sale of the vehicle is recorded as a gain or loss on the sale of the vehicle, and is recorded as a component of net vehicle depreciation and lease charges in the condensed consolidated statements of comprehensive income.

5. VEHICLE DEPRECIATION AND LEASE CHARGES, NET

        Vehicle depreciation and lease charges include the following:

 
   Year Ended December 31,  
 
   2011   2010   2009  
 
   (In Thousands)
  

Depreciation of revenue-earning vehicles and other

   $ 317,844   $ 362,284   $ 461,178  

Net gains from disposal of revenue-earning vehicles

     (46,887 )   (63,084 )   (35,086 )
               

 

   $ 270,957   $ 299,200   $ 426,092  
               

        Average gain on Non-Program Vehicles:

 
   Year Ended December 31,  
 
   2011   2010   2009  

Number of Non-Program Vehicles sold

     39,398     57,100     50,099  

Average gain on vehicles sold (per vehicle)

   $ 1,190   $ 1,105   $ 700  
               

        Components of vehicle depreciation per vehicle per month:

 
   Year Ended December 31,  
 
   2011   2010   2009  

Average depreciable fleet (units)

     108,127     103,207     105,301  

Average depreciation rate

   $ 245   $ 293   $ 365  

Average gain on vehicles sold

     (36 )   (51 )   (28 )
               

Average vehicle depreciation and lease charges, net

   $ 209   $ 242   $ 337  
               

        Depreciation expense for Non-Program Vehicles, which constitute substantially all of the Company's fleet, is recorded on a straight-line basis over the life of the vehicle, based on the original acquisition cost, the projected residual value at the time of sale, and the estimated length of time the vehicle will be held in service. The Company's vehicle depreciation rates will be periodically adjusted on a prospective basis when residual value assumptions change due to changes in used vehicle market conditions.