Hertz 2008 Annual Report Download - page 204

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Under the terms of the Master Supply and Advertising Agreement, we will be able to enter into vehicle
advertising and supply agreements with other automobile manufacturers in the United States and in
other countries, and we intend to explore those opportunities. However, we cannot offer assurance that
we will be able to obtain advertising contributions from other automobile manufacturers that will mitigate
the reduction in Ford’s advertising contributions.
Ford subsidiaries and affiliates also supply other brands of cars, including Volvo and Mazda cars, to us in
the United States under arrangements separate from the Master Supply and Advertising Agreement. In
addition, Ford, its subsidiaries and affiliates are significant suppliers of cars to our international
operations.
During the years ended December 31, 2008, 2007 and 2006, we purchased cars from Ford and its
subsidiaries at a cost of approximately (in billions of dollars) $2.6, $2.9 and $4.1, respectively, and sold
cars to Ford and its subsidiaries under various repurchase programs for approximately (in billions of
dollars) $1.7, $2.2 and $3.1, respectively.
Taxes
Prior to the Acquisition, Hertz and its domestic subsidiaries filed a consolidated federal income tax return
with Ford. Pursuant to a tax sharing agreement, or the ‘‘Agreement,’’ with Ford, current and deferred
taxes were reported, and paid to Ford, as if Hertz had filed its own consolidated tax returns with its
domestic subsidiaries. The Agreement provided that Hertz was reimbursed for foreign tax credits in
accordance with the utilization of those credits by the Ford consolidated tax group.
On December 21, 2005, in connection with the Acquisition, the Agreement with Ford was terminated.
Upon termination, all tax payables and receivables with Ford were cancelled and neither Hertz nor Ford
has any future rights or obligations under the Agreement. Hertz may be exposed to tax liabilities
attributable to periods it was a consolidated subsidiary of Ford. While Ford has agreed to indemnify
Hertz for certain tax liabilities pursuant to the arrangements relating to our separation from Ford, we
cannot offer assurance that payments in respect of the indemnification agreement will be available.
Other relationships and transactions
We and Ford also engage in other transactions in the ordinary course of our respective businesses.
These transactions include providing car and equipment rental services to Ford and providing insurance
and insurance claim management services to Ford. In addition, Ford subsidiaries are our car rental
licensees in Scandinavia and Finland.
Relationship with Hertz Investors, Inc. and the Sponsors
Stockholders Agreement
In connection with the Acquisition, we entered into a stockholders agreement, or, as amended, the
‘‘Stockholders Agreement,’’ with investment funds associated with or designated by the Sponsors. The
Stockholders Agreement contains agreements that entitle investment funds associated with or
designated by the Sponsors to nominate all of our directors. The director nominees are to include three
nominees of an investment fund associated with CD&R (one of whom shall serve as the chairman or, if
the chief executive officer is the chairman, the lead director), two nominees of investment funds
associated with Carlyle, two nominees of an investment fund associated with MLGPE (collectively, the
‘‘Sponsor Designees’’) and up to six independent directors (subject to unanimous consent of the
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