Hertz 2007 Annual Report Download - page 117

equipment rental operations for the year ended December 31, 2006 decreased by 8.2% and 5.6%,
respectively, compared to the year ended December 31, 2005. The decrease in our car rental revenue
earning equipment expenditures is due to the change in the mix of purchases made during the year
ended December 31, 2006 as compared to the year ended December 31, 2005.
Property and equipment expenditures in our car rental operations were $132.8 million, $166.4 million
and $271.1 million for the years ended December 31, 2007, 2006 and 2005, respectively. Property and
equipment expenditures in our equipment rental operations were $60.4 million, $54.4 million and
$69.0 million for the years ended December 31, 2007, 2006 and 2005, respectively. Property and
equipment expenditures in our ‘‘corporate and other’’ activities were $2.8 million, $3.1 million and
$2.9 million for the years ended December 31, 2007, 2006 and 2005, respectively.
Property and equipment expenditures in our car rental, equipment rental and ‘‘corporate and other’’
operations for the year ended December 31, 2007 decreased by 20.2%, increased by 11.0% and
decreased by 9.7%, respectively, compared to the year ended December 31, 2006. Property and
equipment expenditures in our car rental, equipment rental and ‘‘corporate and other’’ operations for the
year ended December 31, 2006 decreased by 38.6%, 21.2% and increased by 6.9%, respectively,
compared to the year ended December 31, 2005.
For the year ended December 31, 2007, we experienced a level of net expenditures for revenue earning
equipment and property and equipment slightly higher than our net expenditures in 2006. This increase
was due to a year-over-year decrease in disposal proceeds relating to revenue earning equipment, partly
offset by decreases in year-over-year expenditures for both revenue earning equipment and property
and equipment.
For the year ended December 31, 2006, we experienced a level of net expenditures for revenue earning
equipment and property and equipment slightly lower than our net expenditures in 2005. This decrease
was due to a decrease in the percentage of program cars purchased and an increase in the percentage
of lower cost non-program cars purchased for the year ended December 31, 2006.
Off-Balance Sheet Commitments
As of December 31, 2007 and December 31, 2006, the following guarantees (including indemnification
commitments) were issued and outstanding:
Indemnifications
In the ordinary course of business, we execute contracts involving indemnifications standard in the
relevant industry and indemnifications specific to a transaction such as the sale of a business. These
indemnifications might include claims relating to the following: environmental matters; intellectual
property rights; governmental regulations and employment-related matters; customer, supplier and
other commercial contractual relationships; and financial matters. Performance under these indemnities
would generally be triggered by a breach of terms of the contract or by a third party claim. We regularly
evaluate the probability of having to incur costs associated with these indemnifications and have
accrued for expected losses that are probable and estimable. The types of indemnifications for which
payments are possible include the following:
Sponsors; Directors
On the Closing Date, Hertz entered into customary indemnification agreements with Hertz Holdings, the
Sponsors and Hertz Holdings’ stockholders affiliated with the Sponsors, pursuant to which Hertz
Holdings and Hertz will indemnify the Sponsors, Hertz Holdings’ stockholders affiliated with the
Sponsors and their respective affiliates, directors, officers, partners, members, employees, agents,
representatives and controlling persons, against certain liabilities arising out of performance of a
consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and
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