Thrifty Car Rental 2011 Annual Report Download - page 26

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large number of vehicles are subject to simultaneous recalls, or if needed replacement parts are not
available, we may not be able to re-rent recalled vehicles for a significant period of time. These
types of disruptions could jeopardize our ability to satisfy demand for our vehicles, or could result in
the loss of business to our competitors. Depending on the severity of any manufacturer recall, it
could have a material and adverse effect on our operations and cash flows.
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 both 2011 and 2010, we
maintained the level of self-insurance of $7.5 million per occurrence for public liability and property
damage claims, including third-party bodily injury and property damage, and maintained the level of
self-insurance for general and garage liability of $5.0 million. 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 the amount and
frequency of uninsured liability claims could negatively 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, results of operations or cash flows.
Dependence on Outsourcing Arrangements
HP handles the majority of our IT services. If HP fails to meet its obligations in all material
respects as and when required under our agreement, we may suffer a loss of business functionality
and productivity, which would adversely affect our results. Additionally, if there is a disruption in our
relationship with HP, we may not be able to secure another IT supplier to adequately meet our IT
needs on acceptable terms, which could result in performance issues and a significant increase in
costs.
Dependence on Communication Networks and Centralized Information Systems
We heavily rely on information systems to conduct our business specifically in the areas of
reservations, rental transaction processing, fleet management and accounting. We have centralized
information systems in disaster resistant facilities maintained by HP in Tulsa, Oklahoma and we rely
on communication service providers to link our system with the business locations these systems
serve. A failure of a major system, or a major disruption of communications between the system and
the locations it serves, could cause a loss of reservations, slow the rental transaction processing,