Hertz 2007 Annual Report Download - page 33

was approximately 8% of the estimated rental revenue volume for the year ended December 31, 2007,
we have identified 215 insurance companies, ranging from local or regional carriers to large, national
companies, as our target insurance replacement market. As of December 31, 2007, we were a preferred
or recognized supplier of approximately 150 of these 215 insurance companies. Although Enterprise
Rent-A-Car Company, or ‘‘Enterprise,’’ currently has the largest share of the insurance replacement
market, we believe that many of these companies are receptive to our replacement rental offerings and
prefer to have at least two national rental car suppliers. Enterprise has asserted that certain systems we
use to conduct insurance replacement rentals infringe on its patent rights, and we have sued Enterprise
to establish our continued right to use these systems. See ‘‘Item 1A—Risk Factors—Risks Related to Our
Business—Claims that the software products and information systems that we rely on are infringing on
the intellectual property rights of others could increase our expenses or inhibit us from offering certain
services, which could adversely affect our results of operations.’’
We conduct active sales and marketing programs to attract and retain customers. Our commercial and
travel industry sales force calls on companies and other organizations whose employees and associates
need to rent cars for business purposes, as well as on membership associations, tour operators, travel
companies and other groups whose members, participants and customers rent cars for either business
or leisure purposes. A specialized sales force calls on companies with replacement rental needs,
including insurance and leasing companies and car dealers. We also advertise our car rental offerings
through a variety of traditional media, such as television and newspapers, direct mail and the Internet. In
addition to advertising, we also conduct a variety of other forms of marketing and promotion, including
travel industry business partnerships and press and public relations activities.
In almost all cases, when we rent a car, we rent it directly to an individual who is identified in a written
rental agreement that we prepare. Except when we are accommodating someone who cannot drive, the
individual to whom we rent a car is required to have a valid driver’s license and meet other rental criteria
(including minimum age and creditworthiness requirements) that vary on the basis of location and type
of rental. Our rental agreements permit only the individual renting the car, people signing additional
authorized operator forms and certain defined categories of other individuals (such as fellow employees,
parking attendants and in some cases spouses or domestic partners) to operate the car.
With rare exceptions, individuals renting cars from us are personally obligated to pay all amounts due
under their rental agreements. They typically pay us with a charge, credit or debit card issued by a third
party, although certain customers use a Hertz charge account that we have established for them, usually
as part of an agreement between us and their employer. For the year ended December 31, 2007, all
amounts charged to Hertz charge accounts established in the United States and by our international
subsidiaries, were billed directly to a company or other organization or were guaranteed by a company.
We also issue rental vouchers and certificates that may be used to pay rental charges, mostly for prepaid
and tour-related rentals. In addition, where the law requires us to do so, we rent cars on a cash basis.
In the United States for the year ended December 31, 2007, 86% of our car rental revenues came from
customers who paid us with third-party charge, credit or debit cards, while 8% came from customers
using Hertz charge accounts, 5% came from customers using rental vouchers or another method of
payment and 1% came from cash transactions. In our international operations for the year ended
December 31, 2007, 53% of our car rental revenues came from customers who paid us with third-party
charge, credit or debit cards, while 27% came from customers using Hertz charge accounts, 18% came
from customers using rental vouchers or another method of payment and 2% came from cash
transactions. For the year ended December 31, 2007, bad debt expense represented 0.1% of car rental
revenues for our U.S. operations and 0.3% of car rental revenues for our international operations.
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