Thrifty Car Rental 2008 Annual Report Download - page 24

were provided by third party Internet sites. No single third party Internet site provides more than 8% of
our non-tour reservations.
Future changes in the way travel is sold over the Internet or changes in our relationship with third party
Internet sites could result in reduced reservations from one or more of these sites and less revenue.
Liability Insurance Risk
We are exposed to claims for personal injury, death and property damage resulting from accidents
involving our rental customers and the use of our cars. In 2007 and 2008, we maintained the level of self-
insurance of $4.0 million and $5.0 million, respectively, per occurrence, plus a self-insured corridor of
$1.0 million per occurrence for losses in excess of $4.0 million and $5.0 million, respectively, with an
aggregate limit of $7.0 million for this corridor, and maintain the level of self-insurance for general and
garage liability of $5.0 million. In 2009, we increased the level of self-insurance from $5.0 million to $7.5
million per occurrence. We maintain insurance coverage for liability claims above these self-insurance
levels. We self-insure for all losses on supplemental liability insurance policies sold to vehicle rental
customers. A significant change in amount and frequency of uninsured liability claims could negatively
impact our results.
Litigation Relating to the Constitutionality of the Removal of Vicarious Liability
The federal Highway Bill removed unlimited vicarious liability for vehicle rental and leasing companies,
limiting exposure to state minimum financial responsibility amounts. Before vicarious liability was
removed, the owner of a vehicle in certain states would be liable for acts by vehicle drivers even though
the vehicle owner was not directly responsible. This federal law supersedes all state laws on vicarious
liability for automobile lessors. Since the Highway Bill became law, its constitutionality has been
challenged in some state courts, including subsequent appeals. If these provisions of the Highway Bill
were overturned, we would be subject to significant exposure to insurance liabilities and higher insurance
costs, which would materially impact our results.
Environmental Regulations
We are subject to numerous environmental regulatory requirements related to the ownership, storage or
use of petroleum products such as gasoline, diesel fuel and new and used motor oil; the treatment or
discharge of waste waters; and the generation, storage, transportation and off-site treatment or disposal
of waste materials. We have made, and expect to continue to make, expenditures to comply with
environmental laws and regulations. These expenditures may be material to our financial position, results
of operations and cash flows. We have designed programs to maintain compliance with applicable
technical and operational requirements, including leak detection testing of underground storage tanks,
and to provide financial assurance for remediation of spills or releases. However, we cannot be certain
that our programs will guarantee compliance with all regulations to which we are subject.
Environmental legislation and regulations and related administrative policies have changed rapidly in
recent years. There is a risk that governmental environmental requirements, or enforcement thereof, may
become more stringent in the future and that we may be subject to additional legal proceedings brought
by government agencies or private parties for environmental matters. In addition, there may be additional
locations of which we are currently unaware at which wastes generated by us may have been released or
disposed. In the future, these locations may become the subject of cleanup for which we may be liable, in
whole or part. Accordingly, there can be no assurance that the Company’s future environmental liabilities
will not be material to the Company’s consolidated financial position or results of operations or cash flows.
Interest Rates
We incur a large amount of debt to purchase vehicles. While the majority of this debt bears interest at
fixed rates due to our interest rate swap agreements, a portion of this debt bears interest at short-term
floating rates. Therefore, we are exposed to increases in interest rates. The amount of our financing
costs affects the amount we must charge our customers to be profitable. Increased interest rates could
have a material adverse impact on our results of operations if we are unable to pass increased financing
costs through to our customers or if we lose customers to competitors due to increased rental rates
resulting from an increase in our financing costs.
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