Thrifty Car Rental 2011 Annual Report Download - page 86

commission and airport concession fees violate antitrust laws and various other rights and laws
by compelling out-of-state visitors to subsidize the passenger car rental tourism assessment
program, violation of the California Business and Professions Code breach of contract. The
Company has accrued a contingency related to the preliminary settlement.
The Colorado lawsuit alleges violation of the Colorado Consumer Protection Act. The lawsuit in
Colorado was dismissed with prejudice in July 2010 and the plaintiffs filed a notice of appeal in
August 2010. Appellate briefing was completed on May 16, 2011 and oral argument on the
appeal occurred on December 6, 2011, and the parties are awaiting a ruling. The Company
intends to vigorously defend these matters. Given the inherent uncertainties of litigation, the
Company cannot predict the ultimate outcome or reasonably estimate the amount of ultimate
loss that may arise from these lawsuits.
Various other legal actions, claims and governmental inquiries and proceedings have been in
the past, or may be in the future, asserted or instituted against the Company, including other
purported class actions or proceedings relating to the Hertz transaction terminated in October
2010 or a potential acquisition transaction, and some that may demand large monetary
damages or other relief which could result in significant expenditures. Litigation is subject to
many uncertainties and is inherently unpredictable. The Company is also subject to potential
liability related to environmental matters. The Company establishes reserves for litigation and
environmental matters when the loss is probable and reasonably estimable. It is reasonably
possible that the final resolution of some of these matters may require the Company to make
expenditures in excess of established reserves. The term “reasonably possible” is used herein
to mean that the chance of a future transaction or event occurring is more than remote but less
than probable. The Company evaluates developments in its legal matters that could affect the
amount of previously accrued reserves and makes adjustments as appropriate. Significant
judgment is required to determine both likelihood of a further loss and the estimated amount of
the loss. With respect to outstanding litigation and environmental matters, based on current
knowledge, the Company believes that the amount or range of reasonably possible loss will
not, either individually or in the aggregate, have a material adverse effect on its business or
consolidated financial statements. However, the outcome of such legal matters is inherently
unpredictable and subject to significant uncertainties.
Other
On April 4, 2011, the Company and HP Enterprise Services, LLC (“HP”) entered into a three
and one-half year data processing service agreement (the “Service Agreement”), which
requires annual payments of approximately $20 million for 2012 and 2013 and approximately
$10 million for 2014. The Company also has a telecommunications contract which will require
annual payments totaling $1.2 million for 2012. Additionally, the Company has software and
hardware maintenance agreements which require annual payments totaling approximately $2.1
million and $1.5 million for 2012 and 2013, respectively.
In addition to the letters of credit described in Note 8, the Company had letters of credit totaling
$4.0 million and $5.5 million at December 31, 2011 and 2010, respectively, which are primarily
used to support insurance programs and airport concession obligations in Canada. The
Company may also provide guarantees on behalf of franchisees to support compliance with
airport concession bids. Non-performance of the obligation by the franchisee would trigger the
obligation of the Company. At December 31, 2011, there were no such guarantees on behalf
of franchisees.
At December 31, 2011, the Company had outstanding vehicle purchase commitments of
approximately $1.3 billion over the next 12 months.
84