Hertz 2007 Annual Report Download - page 47

Both in the United States and internationally, we are subject to increasing regulation relating to customer
privacy and data protection. In general, we are limited in the uses to which we may put data that we
collect about renters, including the circumstances in which we may communicate with them. In addition,
we are generally obligated to take reasonable steps to protect customer data while it is in our
possession. Our failure to do so could subject us to substantial legal liability or seriously damage our
reputation.
Changes in Regulation
Changes in government regulation of our business have the potential to alter our business practices, or
our profitability, materially. Depending on the jurisdiction, those changes may come about through new
legislation, the issuance of new regulations or changes in the interpretation of existing laws and
regulations by a court, regulatory body or governmental official. Sometimes those changes may have
not just prospective but also retroactive effect; this is particularly true when a change is made through
reinterpretation of laws or regulations that have been in effect for some time. Moreover, changes in
regulation that may seem neutral on their face may have either more or less impact on us than on our
competitors, depending on the circumstances. Several U.S. State Attorneys General have taken the
position that car rental companies either may not pass through to customers, by means of separate
charges, expenses such as vehicle licensing and concession fees or may do so only in certain limited
circumstances. Recent or potential changes in law or regulation that affect us relate to insurance
intermediaries, customer privacy and data security and rate regulation, each as described under
‘‘Item 1A—Risk Factors—Risks Related to Our Business—Changes in the U.S. and foreign legal and
regulatory environment that impact our operations, including laws and regulations relating to the
insurance products we sell, customer privacy, data security, insurance rates and expenses we pass
through to customers by means of separate charges, could disrupt our business, increase our expenses
or otherwise could have a material adverse effect on our results of operations.’’
In addition, our operations, as well as those of our competitors, also could be affected by any limitation in
the fuel supply or by any imposition of mandatory allocation or rationing regulations. We are not aware of
any current proposal to impose such a regime in the United States or internationally. Such a regime
could, however, be quickly imposed if there were a serious disruption in supply for any reason, including
an act of war, terrorist incident or other problem affecting petroleum supply, refining, distribution or
pricing.
Relationship with Ford
Prior to the Acquisition, Ford, through its wholly-owned subsidiary Ford Holdings, was Hertz’s only
stockholder. As a result of the Acquisition, Hertz Holdings indirectly owns all of Hertz’s outstanding
common stock. As a result of our initial public offering in 2006 and the June 2007 registered secondary
offering, investment funds associated with or designated by the Sponsors currently own approximately
55% of Hertz Holdings’ outstanding common stock.
Set forth below are descriptions of certain agreements, relationships and transactions between Hertz
and Ford that survived the completion of the Acquisition.
Supply and Advertising Arrangements
On July 5, 2005, Hertz, one of its wholly-owned subsidiaries and Ford signed a Master Supply and
Advertising Agreement, effective July 5, 2005 and expiring August 31, 2010, that covers the 2005
through 2010 vehicle model years.
The terms of the Master Supply and Advertising Agreement only apply to our fleet requirements and
advertising in the United States and to Ford, Lincoln or Mercury brand vehicles, or ‘‘Ford Vehicles.’’
Under the Master Supply and Advertising Agreement, Ford has agreed to supply to us and we have
agreed to purchase from Ford, during each of the 2005 through 2010 vehicle model years, a specific
number of Ford Vehicles. Ford has also agreed in the Master Supply and Advertising Agreement to pay
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