Hertz 2007 Annual Report Download - page 24

PART I
ITEM 1. BUSINESS
Our Company
We own what we believe is the largest worldwide general use car rental brand and one of the largest
equipment rental businesses in the United States and Canada combined, both based on revenues. Our
Hertz brand name is one of the most recognized in the world, signifying leadership in quality rental
services and products. In our car rental business segment, we and our independent licensees and
associates accept reservations for car rentals at approximately 8,000 locations in approximately 145
countries. We are the only car rental company that has an extensive network of company-operated rental
locations both in the United States and in all major European markets. We maintain the leading airport
car rental brand market share, by overall reported revenues, in the United States and at the 69 major
airports in Europe where we have company-operated locations and data regarding car rental
concessionaire activity is available. We believe that we also maintain the second largest market share, by
revenues, in the off-airport car rental market in the United States. In our equipment rental business
segment, we rent equipment through 376 branches in the United States, Canada, France and Spain, as
well as through our international licensees. We and our predecessors have been in the car rental
business since 1918 and in the equipment rental business since 1965. We have a diversified revenue
base and a highly variable cost structure and are able to dynamically manage fleet capacity, the most
significant determinant of our costs. This has helped us to earn a pre-tax profit in each year since our
incorporation in 1967. Our revenues have grown at a compound annual growth rate of 7.3% over the last
20 years, with year-over-year growth in 18 of those 20 years.
Corporate History
Hertz Holdings was incorporated by the Sponsors in Delaware in 2005 to serve as the top-level holding
company for the consolidated Hertz business. Hertz was incorporated in Delaware in 1967. Hertz is a
successor to corporations that have been engaged in the car and truck rental and leasing business since
1918 and the equipment rental business since 1965. Ford acquired an ownership interest in Hertz in
1987. Prior to this, Hertz was a subsidiary of UAL Corporation (formerly Allegis Corporation), which
acquired Hertz’s outstanding capital stock from RCA Corporation in 1985.
The Acquisition
On December 21, 2005, investment funds associated with or designated by the Sponsors, through
wholly-owned subsidiary of Hertz Holdings, acquired all of Hertz’s common stock from a subsidiary of
Ford in the Acquisition, for aggregate consideration of $4,379 million in cash, debt refinanced or
assumed of $10,116 million and transaction fees and expenses of $447 million. To finance the cash
consideration for the Acquisition, to refinance certain of our existing indebtedness and to pay related
transaction fees and expenses, the Sponsors used:
• equity contributions totaling $2,295 million from the investment funds associated with or
designated by the Sponsors;
• net proceeds from a private placement by CCMG Acquisition Corporation, a wholly-owned
subsidiary of Hertz Holdings, of $1,800 million aggregate principal amount of 8.875% Senior
Notes due 2014, or the ‘‘Senior Dollar Notes’’ and $600 million aggregate principal amount of
10.5% Senior Subordinated Notes due 2016, or the ‘‘Senior Subordinated Notes’’ and
e225 million aggregate principal amount of 7.875% Senior Notes due 2014, or the ‘‘Senior Euro
Notes.’’ In connection with the Transactions, CCMG Acquisition Corporation merged with and
into Hertz, with Hertz as the surviving corporation of the merger. CCMG Acquisition Corporation
had no operations prior to the Acquisition. We refer to the Senior Dollar Notes and the Senior Euro
Notes together as the ‘‘Senior Notes.’’
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