Hertz 2007 Annual Report Download - page 59

and antitrust regulators), and we cannot offer assurance that those approvals would be obtained on
terms acceptable to us. If our owners were to proceed to change their ownership of us without obtaining
necessary approvals, or if significant conditions on our operations were imposed in connection with
obtaining such approvals, our ability to conduct our business could be impaired, resulting in a material
adverse effect on our results of operations and financial condition.
We face risks related to liabilities and insurance.
Our businesses expose us to claims for personal injury, death and property damage resulting from the
use of the cars and equipment rented or sold by us and for workers’ compensation claims and other
employment-related claims by our employees. Currently, we generally self-insure up to $10 million per
occurrence in the United States and Europe for vehicle and general liability exposures and maintain
insurance with unaffiliated carriers in excess of such levels up to $200 million per occurrence for the
current policy year, or in the case of equipment rental in Europe and international operations outside of
Europe, in such lower amounts as we deem adequate given the risks. We cannot assure you that we will
not be exposed to uninsured liability at levels in excess of our historical levels resulting from multiple
payouts or otherwise, that liabilities in respect of existing or future claims will not exceed the level of our
insurance, that we will have sufficient capital available to pay any uninsured claims or that insurance with
unaffiliated carriers will continue to be available to us on economically reasonable terms or at all. See
‘‘Item 1—Business—Risk Management’’ and ‘‘Item 3—Legal Proceedings.’’
We could face significant withdrawal liability if we withdraw from participation in one or more
multiemployer pension plans in which we participate.
We participate in various ‘‘multiemployer’’ pension plans administered by labor unions representing
some of our employees. We make periodic contributions to these plans to allow them to meet their
pension benefit obligations to their participants. In the event that we withdraw from participation in one of
these plans, then applicable law could require us to make an additional lump-sum contribution to the
plan, and we would have to reflect that as an expense in our consolidated statement of operations and as
a liability on our consolidated balance sheet. Our withdrawal liability for any multiemployer plan would
depend on the extent of the plan’s funding of vested benefits. In the ordinary course of our renegotiation
of collective bargaining agreements with labor unions that maintain these plans, we may decide to
discontinue participation in a plan, and in that event, we could face a withdrawal liability. Some
multiemployer plans, including one in which we participate, are reported to have significant underfunded
liabilities. Such underfunding could increase the size of our potential withdrawal liability.
We have received an informal request from the SEC to provide information about car rental
services that we provide to our independent registered public accounting firm in the ordinary
course of business.
In July 2005, the Division of Enforcement of the SEC informed us that it was conducting an informal
inquiry and asked Hertz to voluntarily provide documents and information related to car rental services
that we provide to our independent registered public accounting firm PricewaterhouseCoopers LLP, or
‘‘PwC.’’ The SEC noted in its letter that the inquiry should not be construed as an indication by the SEC
or its staff that any violations of law have occurred, or as a reflection upon any person, entity or security.
We cooperated with the SEC by providing it with certain requested information in July and September
2005. Since then, we have received no further requests from the SEC with respect to this informal inquiry,
but neither have we been advised that it has been closed.
After learning of this informal inquiry, our audit committee and representatives of PwC discussed PwC’s
independence with respect to us. PwC reconfirmed that it has been and remains independent with
respect to us. In making this determination, PwC considered, among other things, its belief that PwC’s
arrangements with us represent arm’s-length transactions that were negotiated in the normal course of
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