Hertz 2014 Annual Report Download - page 25

Table of Contents
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Donlen’s leased fleet consists primarily of passenger cars, cargo vans and light-duty trucks. Vehicles are acquired directly from domestic and
foreign manufacturers, as well as dealers. As of December 31, 2014, more than half of Donlen’s leased fleet is 2013 model year or newer.
Donlen’s primary product for car and light to medium truck fleets is an open-ended terminal rental adjustment clause, or "TRAC," lease. For most
customers, the vehicle must be leased for a minimum of 12 months, after which the lease converts to a month-to-month lease allowing the vehicle
to be surrendered any time thereafter. Our sale of the vehicle following the termination of the lease may result in a TRAC adjustment, through
which the customer is credited or charged with the surplus or loss on the vehicle. Approximately 81% of Donlen’s lease portfolio consists of
floating-rate leases which allow lease charges to be adjusted based on benchmark indices.
Donlen also offers financing solutions for heavier-duty trucks and equipment. Lease financing is provided through syndication arrangements with
lending institutions. Donlen originates the leases, acquires the assets, and services the lease throughout the term.
Donlen provides services to leased and non-leased fleets consisting of fuel purchasing and management, preventive maintenance, repair
consultation, toll management and accident management. Additionally, Donlen manages license and title, vehicle registration, and regulatory
compliance. Donlen’s telematics products provide enhanced visibility and reporting over driver and vehicle performance.
The commercial fleet market is one of the largest segments of the U.S. automotive industry, primarily consisting of vehicles utilized in a sales,
service, or delivery application. The fleet management industry has experienced significant consolidation over the years and today our principal
fleet management competitors in the U.S. and Canada are GE Capital, Automotive Resources International, Element Financial Corporation,
Wheels, Inc. and LeasePlan Corporation N.V.
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HCM provides claim management services to us. These services include investigating, evaluating, negotiating and disposing of a wide variety of
claims, including third-party, first-party, bodily injury, property damage, general liability and product liability, but not the underwriting of risks. HCM
conducts business at four regional offices in the U.S. Separate subsidiaries of ours conduct similar operations in seven countries in Europe.
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As of December 31, 2014, we employed approximately 33,000 persons, consisting of approximately 25,000 persons in our U.S. operations and
approximately 8,000 persons in our international operations. International employees are covered by a wide variety of union contracts and
governmental regulations affecting, among other things, compensation, job retention rights and pensions. Labor contracts covering the terms of
employment of approximately 6,000 employees in the U.S. (including those in the U.S. territories) are presently in effect under approximately 125
active contracts with local unions, affiliated primarily with the International Brotherhood of Teamsters and the International Association of
Machinists. Labor contracts covering approximately 2,800 of these employees will expire during 2015. We have had no material work stoppage as
a result of labor problems during the last ten years, and we believe our labor relations to be good. Nevertheless, we may be unable to negotiate
new labor contracts on terms advantageous to us, or without labor interruption.
In addition to the employees referred to above, we employ a substantial number of temporary workers, and engage outside services, as is
customary in the industry, principally for the non-revenue movement of rental cars and equipment between rental locations and the movement of
rental equipment to and from customers' job sites.
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There are three types of generally insurable risks that arise in our operations:
• legal liability arising from the operation of our cars and on-road equipment (vehicle liability);
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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