Hertz 2012 Annual Report Download - page 110

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
(4) As of December 31, 2012, this represents our tax liability for uncertain tax positions and related net accrued interest and
penalties of $16.3 million and $4.2 million, respectively. We are unable to reasonably estimate the timing of our uncertain tax
positions liability and interest and penalty payments in individual years beyond twelve months due to uncertainties in the
timing of the effective settlement of tax positions. See Note 9 to the Notes to our consolidated financial statements included in
this Annual Report under the caption ‘‘Item 8—Financial Statements and Supplementary Data.’’
(5) Purchase obligations represent agreements to purchase goods or services that are legally binding on us and that specify all
significant terms, including fixed or minimum quantities; fixed, minimum or variable price provisions; and the approximate
timing of the transaction. Only the minimum non-cancelable portion of purchase agreements and related cancellation
penalties are included as obligations. In the case of contracts, which state minimum quantities of goods or services, amounts
reflect only the stipulated minimums; all other contracts reflect estimated amounts. Of the total purchase obligations as of
December 31, 2012, $5,236.1 million represent fleet purchases where contracts have been signed or are pending with
committed orders under the terms of such arrangements. We do not regard our employment relationships with our
employees as ‘‘agreements to purchase services’’ for these purposes.
The table excludes our pension and other postretirement benefit obligations. We contributed
$38.4 million to our U.S. pension plan during 2012 and expect to contribute between $20 million and
$30 million to our U.S. pension plan during 2013. The level of 2013 and future contributions will vary, and
is dependent on a number of factors including investment returns, interest rate fluctuations, plan
demographics, funding regulations and the results of the final actuarial valuation. See Note 6 of the
Notes to our consolidated financial statements included in this Annual Report under the caption
‘‘Item 8—Financial Statements and Supplementary Data.’’
Off-Balance Sheet Commitments and Arrangements
As of December 31, 2012 and 2011, the following guarantees (including indemnification commitments)
were issued and outstanding:
Indemnification Obligations
In the ordinary course of business, we execute contracts involving indemnification obligations
customary in the relevant industry and indemnifications specific to a transaction such as the sale of a
business. These indemnification obligations 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 indemnification obligations 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 indemnification obligations and have accrued for expected losses that are
probable and estimable. The types of indemnification obligations 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.
86