Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity

17. Stockholders’ Equity

Cash Dividend Payments

During 2012, 2011 and 2010, the Company did not declare or pay any cash dividends.

Share Repurchases

During 2012, 2011 and 2010, the Company did not repurchase any of its common stock.

Convertible Note Hedge and Warrants

In 2009, the Company purchased a convertible note hedge for approximately $95 million, to potentially reduce the net number of shares required to be issued upon conversion of the Convertible Notes. Concurrently, the Company issued warrants for approximately $62 million to offset the cost of the convertible note hedge.

The convertible note hedge and warrants, which will be net-share settled, initially covered the purchase and issuance, respectively, of approximately 21.2 million shares of common stock, subject to customary anti-dilution provisions. The initial strike price per share of the convertible note hedge and warrants is $16.25 and $22.50, respectively. The convertible note hedge expires in October 2014 and is exercisable before expiration only to the extent that corresponding amounts of the Convertible Notes are exercised. The warrants expire ratably over 80 trading days beginning January 5, 2015. The convertible note hedge and warrant transactions were accounted for as capital transactions and included as a component of stockholders’ equity. The significant terms of the Convertible Notes can be found in Note 14—Long-term Debt and Borrowing Arrangements.

During 2012, concurrently with the Company’s repurchase of a portion of its 3 ¹/₂% convertible notes, the Company repurchased warrants for the purchase of the Company’s common stock for $29 million and sold an equal portion of its convertible note hedge for $43 million, reducing the number of shares related to each of the hedge and warrant by approximately 13 million.

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income is as follows:

	Currency Translation   Adjustments		Net Unrealized Gains (Losses) on Cash Flow Hedges		Net Unrealized Gains (Losses) on Available- For-Sale   Securities		Minimum Pension Liability   Adjustment		Accumulated Other Comprehensive   Income (Loss)
Balance, January 1, 2010	$	111	$	(106)	$	-	$	(42)	$	(37)
Period change		71		60		-		(2)		129
Balance, December 31, 2010		182		(46)		-		(44)		92
Period change		(23)		33		2		(26)		(14)
Balance, December 31, 2011		159		(13)		2		(70)		78
Period change		34		13		-		(15)		32
Balance, December 31, 2012	$	193	$	-	$	2	$	(85)	$	110

All components of accumulated other comprehensive income (loss) are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries.

During 2012, the Company recorded unrealized gains on cash flow hedges of $21 million ($13 million, net of tax) in accumulated other comprehensive income which primarily related to the derivatives used to manage the interest-rate risk associated with the Company’s vehicle-backed debt and the Company’s floating rate debt (see Note 20—Financial Instruments). Such amount in 2012 includes $19 million ($12 million, net of tax) of unrealized gains on cash flow hedges related to the Company’s vehicle-backed debt and is offset by a corresponding increase in the Company’s Investment in Avis Budget Rental Car Funding on the Consolidated Balance Sheets.