Hertz 2012 Annual Report Download - page 175

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 condensed consolidated financial
statements. As of December 31, 2012 and December 31, 2011, the aggregate amounts accrued for
environmental liabilities including liability for environmental indemnities, reflected in our condensed
consolidated balance sheets in ‘‘Accrued liabilities’’ were $2.6 million and $1.5 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 to the site, the materials there, the involvement of other potentially
responsible parties, the application of laws and other standards or regulations, site conditions, and the
nature and scope of investigations, studies, and remediation to be undertaken (including the
technologies to be required and the extent, duration, and success of remediation).
Note 13—Restructuring
As part of our ongoing effort to implement our strategy of reducing operating costs, we have evaluated
our workforce and operations and made adjustments, including headcount reductions and business
process reengineering resulting in optimized work flow at rental locations and maintenance facilities as
well as streamlined our back-office operations and evaluated potential outsourcing opportunities. When
we made adjustments to our workforce and operations, we incurred incremental expenses that delay the
benefit of a more efficient workforce and operating structure, but we believe that increased operating
efficiency and reduced costs associated with the operation of our business are important to our
long-term competitiveness.
During 2007 through 2011, we announced several initiatives to improve our competitiveness and
industry leadership through targeted job reductions. These initiatives included, but were not limited to,
job reductions at our corporate headquarters and back-office operations in the U.S. and Europe. As part
of our re-engineering optimization we outsourced selected functions globally. In addition, we
streamlined operations and reduced costs by initiating the closure of targeted car rental locations and
equipment rental branches throughout the world. The largest of these closures occurred in 2008 which
resulted in closures of approximately 250 off-airport locations and 22 branches in our U.S. equipment
rental business. These initiatives impacted approximately 8,960 employees.
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