Hertz 2012 Annual Report Download - page 126

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
depreciation rates on these vehicles are not adjusted at any point in time per the associated lease
contract.
Environmental Liabilities
The use of automobiles and other vehicles is subject to various governmental controls designed to limit
environmental damage, including that caused by emissions and noise. Generally, these controls are met
by the manufacturer, except in the case of occasional equipment failure requiring repair by us. To comply
with environmental regulations, measures are taken at certain locations to reduce the loss of vapor
during the fueling process and to maintain, upgrade and replace underground fuel storage tanks. We
also incur and provide for expenses for the cleanup of petroleum discharges and other alleged violations
of environmental laws arising from the disposition of waste products. We do not believe that we will be
required to make any material capital expenditures for environmental control facilities or to make any
other material expenditures to meet the requirements of governmental authorities in this area. Liabilities
for these expenditures are recorded at undiscounted amounts when it is probable that obligations have
been incurred and the amounts can be reasonably estimated.
Public Liability and Property Damage
The obligation for public liability and property damage on self-insured U.S. and international vehicles
and equipment represents an estimate for both reported accident claims not yet paid, and claims
incurred but not yet reported. The related liabilities are recorded on a non-discounted basis. Reserve
requirements are based on actuarial evaluations of historical accident claim experience and trends, as
well as future projections of ultimate losses, expenses, premiums and administrative costs. The
adequacy of the liability is regularly monitored based on evolving accident claim history and insurance-
related state legislation changes. If our estimates change or if actual results differ from these
assumptions, the amount of the recorded liability is adjusted to reflect these results.
Pension Benefit Obligations
Our employee pension costs and obligations are developed from actuarial valuations. Inherent in these
valuations are key assumptions, including discount rates, salary growth, long-term return on plan
assets, retirement rates, mortality rates and other factors. Actual results that differ from our assumptions
are accumulated and amortized over future periods and, therefore, generally affect our recognized
expense in such future periods. While we believe that the assumptions used are appropriate, significant
differences in actual experience or significant changes in assumptions would affect our pension costs
and obligations.
Foreign Currency Translation and Transactions
Assets and liabilities of international subsidiaries are translated at the rate of exchange in effect on the
balance sheet date; income and expenses are translated at the average rate of exchange prevailing
during the year. The related translation adjustments are reflected in ‘‘Accumulated other comprehensive
loss’’ in the equity section of our consolidated balance sheets. As of December 31, 2012 and 2011, the
accumulated foreign currency translation gain was $102.7 million and $91.3 million, respectively.
Foreign currency gains and losses resulting from transactions are included in earnings.
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