Hertz 2014 Annual Report Download - page 38

Table of Contents
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

An "ownership change" could limit our ability to utilize tax attributes, including net operating losses, capital loss carryovers, excess foreign tax
carry forwards, and credit carryforwards, to offset future taxable income. As of December 31, 2014, we had a U.S. federal net operating loss
carryforward of approximately $4 billion (expiring 2028). Our ability to use such tax attributes to offset future taxable income and tax liability may
be significantly limited if we experience an "ownership change" as defined in Section 382(g) of the Code. In general, an ownership change will
occur when the percentage of Hertz Global Holdings, Inc.’s ownership (by value) of one or more "5-percent shareholders" (as defined in the Code)
has increased by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the prior
three years (calculated on a rolling basis). An entity that experiences an ownership change generally should be subject to an annual limitation on
its pre-ownership change tax loss carryforward equal to the equity value of the corporation immediately before the ownership change, multiplied by
the long-term, tax-exempt rate posted monthly by the IRS (subject to certain adjustments). The annual limitation accumulates each year to the
extent that there is any unused limitation from a prior year. The limitation on our ability to utilize tax losses and credit carryforwards arising from an
ownership change under Section 382 depends on the value of our equity at the time of any ownership change. If we were to experience an
"ownership change", it is possible that a significant portion of our tax loss carryforwards could expire before we would be able to use them to offset
future taxable income. Many states adopt the federal section 382 rules and therefore have similar limitations with respect to state tax attributes.

Our businesses expose us to claims for personal injury, death and property damage resulting from the use of the cars and equipment rented or
sold by us, and for employment-related injury claims by our employees. Currently, we generally self-insure up to $10 million per occurrence in the
U.S. and Europe for vehicle and general liability exposures, $5 million for employment-related injury claims, and we also maintain insurance with
unaffiliated carriers in excess of such levels up to $200 million per occurrence for the current policy year, or in the case of international operations
outside of Europe, in such lower amounts as we deem adequate given the risks. We cannot assure you that we will not be exposed to uninsured
liability at levels in excess of our historical levels resulting from multiple payouts or otherwise, that liabilities in respect of existing or future claims
will not exceed the level of our insurance, that we will have sufficient capital available to pay any uninsured claims or that insurance with
unaffiliated carriers will continue to be available to us on economically reasonable terms or at all. See Item 1, ‘‘Business—Insurance and Risk
Management’’ and Note 14, "Contingencies and Off-Balance Sheet Arrangements" to the Notes to our consolidated financial statements included
in this Annual Report under the caption "Item 8-Financial Statements and Supplementary Data."
                    


We could face a significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate
or in the event other employers in such plans become insolvent, any of which could have a material adverse effect on our financial position,
results of operations or cash flows.
We participate in various "multiemployer" pension plans. In the event that we withdraw from participation in one of these plans, then applicable law
could require us to make an additional lump-sum contribution to the plan, and we would have to reflect that as an expense in our consolidated
statement of operations and as a liability on our consolidated balance sheet. Our withdrawal liability for any multiemployer plan would depend on
the extent of the plan's funding of vested benefits. Our multiemployer plans could have significant underfunded liabilities. Such underfunding may
increase in the event other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of withdrawing
employers to pay their withdrawal liability. In addition, such underfunding may increase as a result of lower than expected returns on pension fund
assets or other funding deficiencies. The occurrence of any of these events could have a material adverse effect on our consolidated financial
position, results of operations or cash flows. See Note 7, "Employee Retirement Benefits," to the Notes to our consolidated financial statements
included in this Annual Report under the caption "Item 8-Financial Statements and Supplementary Data."
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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