Hertz 2009 Annual Report Download - page 169

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
inquiries or proceedings, including those discussed above, could be decided unfavorably to us or any of
our subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding
could exceed the amount accrued in an amount that could be material to our consolidated financial
condition, results of operations or cash flows in any particular reporting period.
Guarantees
At December 31, 2009 and 2008, 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
Hertz has entered into customary indemnification agreements with Hertz Holdings, the Sponsors and
our stockholders affiliated with the Sponsors, pursuant to which Hertz Holdings and Hertz will indemnify
the Sponsors, our 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 liabilities, including liabilities arising out of financing
arrangements or securities offerings. We also entered into indemnification agreements with each of our
directors. We do not believe that these indemnifications are reasonably likely to have a material impact
on us.
Environmental
We have indemnified various parties for the costs associated with remediating numerous hazardous
substance storage, recycling or disposal sites in many states and, in some instances, for natural
resource damages. The amount of any such expenses or related natural resource damages for which we
may be held responsible could be substantial. The probable expenses that we expect to incur for such
matters have been accrued, and those expenses are reflected in our consolidated financial statements.
As of December 31, 2009 and 2008, the aggregate amounts accrued for environmental liabilities
including liability for environmental indemnities, reflected in our consolidated balance sheet in ‘‘Other
accrued liabilities’’ were $2.0 million and $2.2 million, respectively. The accrual generally represents the
estimated cost to study potential environmental issues at sites deemed to require investigation or
clean-up activities, and the estimated cost to implement remediation actions, including on-going
maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on
historical experience at similar sites and are refined over time on the basis of in-depth studies of the sites.
For many sites, the remediation costs and other damages for which we ultimately may be responsible
cannot be reasonably estimated because of uncertainties with respect to factors such as our connection
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