Hertz 2007 Annual Report Download - page 62

could have a material adverse impact on our revenues and results of operations. In the United States,
our revenues from car rental expense pass-throughs for the years ended December 31, 2007 and 2006,
were approximately $353.9 million and $311.5 million, respectively.
The Sponsors currently control us and may have conflicts of interest with us in the future.
Clayton, Dubilier & Rice Fund VII, L.P. and related funds, Carlyle Partners IV, L.P. and related funds and
ML Global Private Equity Fund, L.P. and related funds (together with certain of their affiliates) currently
beneficially own approximately 18.7%, 18.4% and 18.2%, respectively, of the outstanding shares of the
common stock of Hertz Holdings. These funds and Hertz Holdings are parties to a Stockholders
Agreement, pursuant to which the funds have agreed to vote in favor of nominees to our board of
directors nominated by the other funds. As a result, the Sponsors control us, and will continue to have
significant influence over matters requiring stockholder approval and our policy and affairs so long as
they continue to hold a significant amount of our common stock. The Sponsors therefore have the ability
to prevent any transaction that requires the approval of stockholders, regardless of whether or not our
other stockholders believe that such a transaction is in their own best interests. See ‘‘Item 13—Certain
Relationships and Related Transactions and Director Independence.’’
Additionally, the Sponsors are in the business of making investments in companies and may from time to
time acquire and hold interests in businesses that compete directly or indirectly with us. One or more of
the Sponsors may also pursue acquisition opportunities and other corporate opportunities that may be
complementary to our business and, as a result, those opportunities may not be available to us. Any
competition could intensify if an affiliate or subsidiary of one or more of the Sponsors were to enter into or
acquire a business similar to our car rental or equipment rental operations. Given that we are not wholly-
owned by any one of the three Sponsors, the Sponsors may be inclined to direct relevant corporate
opportunities to entities which they control individually rather than to us. So long as investment funds
associated with or designated by the Sponsors continue to indirectly own a significant amount of the
outstanding shares of our common stock, even if that amount is less than 50%, the Sponsors will
continue to be able to strongly influence or effectively control our decisions. While we have adopted a
code of ethics and business conduct that applies to all our directors, it does not preclude the Sponsors
from becoming engaged in businesses that compete with us or preclude our directors from taking
advantage of business opportunities other than those made available to them through the use of their
position as directors or the use of our property. In addition, our amended and restated certificate of
incorporation provides that the Sponsors are under no obligation to communicate or offer any corporate
opportunity to us, even if such opportunity might reasonably have been expected to be of interest to us
or our subsidiaries. See Note 14 to the Notes to our audited annual consolidated financial statements
included in this Annual Report under caption ‘‘Item 8—Financial Statements and Supplemental Data.’’
Risks Relating to Our Substantial Indebtedness
We have substantial debt and may incur substantial additional debt, which could adversely affect
our financial condition, our ability to obtain financing in the future and our ability to react to
changes in our business.
As of December 31, 2007, we had an aggregate principal amount of debt outstanding of
$12,013.6 million and a debt to equity ratio, calculated using the total amount of our outstanding debt net
of unamortized discounts of 4.1 to 1.
Our substantial debt could have important consequences to you. For example, it could:
• make it more difficult for us to satisfy our obligations to the holders of our outstanding debt
securities and to the lenders under our Senior Credit Facilities and the U.S. Fleet Debt and
International Fleet Debt facilities, resulting in possible defaults on and acceleration of such
indebtedness;
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