Hertz 2013 Annual Report Download - page 134

Table of Contents
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of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. Plaintiff
seeks an unspecified amount of monetary damages on behalf of the purported class and an award of costs and expenses,
including counsel fees and expert fees.
6. Public Liability and Property Damage
We are currently a defendant in numerous actions and have received numerous claims on which actions have not yet been
commenced for public liability and property damage arising from the operation of motor vehicles and equipment rented from us.
The obligation for public liability and property damage on self-insured U.S. and international vehicles and equipment, as stated
on our balance sheet, 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. At December 31, 2013 and December 31, 2012, our liability recorded for public liability and property
damage matters was $347.7 million and $332.2 million, respectively. The increase in public liability and property damage
reserves was primarily related to Dollar Thrifty. We believe that our analysis is based on the most relevant information available,
combined with reasonable assumptions, and that we may prudently rely on this information to determine the estimated liability.
We note the liability is subject to significant uncertainties. The adequacy of the liability reserve 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.
We intend to assert that we have meritorious defenses in the foregoing matters and we intend to defend ourselves vigorously.
We have established reserves for matters where we believe that the losses are probable and reasonably estimated, including for various of
the matters set forth above. Other than with respect to the aggregate reserves established for claims for public liability and property damage,
none of those reserves are material. For matters, including those described above, where we have not established a reserve, the ultimate
outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any, cannot be reasonably estimated. Litigation is
subject to many uncertainties and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of
the actions, claims, 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.
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As of December 31, 2013 and December 31, 2012, 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
We have entered into customary indemnification agreements with Hertz Holdings, the Sponsors and Hertz Holdings' stockholders affiliated
with the Sponsors, pursuant to which Hertz Holdings and Hertz will indemnify the Sponsors, Hertz Holdings' stockholders affiliated with the
Sponsors and their respective affiliates, directors, officers, partners,
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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