Thrifty Car Rental 2011 Annual Report Download - page 85

eligible customers in order to reduce the likelihood of adverse selection in certain markets.
Additionally, the Company has implemented drivers’ license validation procedures and requires
examinations under oath in order to reduce the risk of fraud and personal injury claims in
certain markets.
The accrual for Vehicle Insurance Reserves includes amounts for incurred and incurred but not
reported losses. Such liabilities are based on actuarially determined estimates and
management believes that the amounts accrued are adequate. At December 31, 2011 and
2010, the public liability and property damage amounts have been discounted at 0.4% and
1.0% (assumed risk free rate), respectively, based upon the actuarially determined estimated
timing of payments to be made in future years. Discounting resulted in reducing the accrual for
public liability and property damage by $0.4 million and $1.3 million at December 31, 2011 and
2010, respectively. SLI amounts are not discounted. Estimated future payments of Vehicle
Insurance Reserves as of December 31, 2011 are as follows (in thousands):
2012 21,220$
2013 15,314
2014 7,037
2015 4,617
2016 2,995
Thereafter 3,508
Aggregate undiscounted public liability and property damage 54,691
Effect of discounting (375)
Public liability and property damage, net of discount 54,316
Supplemental liability insurance 32,199
Total vehicle insurance reserves 86,515$
Contingencies
Various class action complaints relating to the now terminated proposed merger transaction
with Hertz Global Holdings, Inc. (“Hertz”) have been filed in Oklahoma state court, Oklahoma
federal court, and Delaware Chancery Court against the Company, its directors, and Hertz by
various plaintiffs, for themselves and on behalf of the Company's stockholders, excluding
defendants and their affiliates. These complaints allege that the consideration the Company's
stockholders would have received in connection with the proposed transaction with Hertz is
inadequate and that the Company's directors breached their fiduciary duties to stockholders in
negotiating and approving the merger agreement. These complaints also allege that the proxy
materials that were sent to the Company's stockholders to approve the merger agreement are
materially false and misleading. The cases and their current status are as follows: 1) Henzel v.
Dollar Thrifty Automotive Group, Inc., et al. (Consolidated Case No. CJ-2010-02761, Dist. Ct.
Tulsa County, Oklahoma) - this case has not been dismissed but is currently inactive and 2) In
Re: Dollar Thrifty Shareholder Litigation (Consolidated Case No. 5458-VCS, Delaware Court of
Chancery) - on October 18, 2011, plaintiffs sought permission to amend their pleadings to
assert additional claims that members of the Company’s board of directors (the “Board”)
breached their fiduciary duties concerning the following matters: (a) the Board’s response to a
merger proposal by Avis Budget Group, Inc. (“Avis Budget”) in September 2010; (b) the Board’s
use of defensive measures, including the adoption of a poison pill, in response to the Exchange
Offer made by Hertz; (c) the Board’s response to the failure of Hertz to submit an improved final
offer meeting certain Board criteria by October 10, 2011; and (d) the Board’s alleged failure to
make full material disclosures to the Company’s stockholders concerning the Hertz offer, the
Company’s stand-alone plan, and the Company’s negotiations with Hertz regarding a business
combination. The court has not ruled on the plaintiffs’ request to amend. On November 1,
2011, the plaintiffs advised the court that the parties have agreed to stay further activity
pending the outcome of the Hertz antitrust review process.
The Company is a defendant in several class action lawsuits in California and one in Colorado.
The California lawsuits allege that the pass through of the California trade and tourism
83