Hertz 2009 Annual Report Download

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Unrivaled
Growth Opportunities
2009 Annual Report

Table of contents

  • Page 1
    Unrivaled Growth Opportunities 2009 Annual Report

  • Page 2
    ... SEC Business and Financial Information in this Annual Report. Contents: Letter to Shareholders 2 Industry-Leading, Customer Focused Innovations 4 Off-Airport Car Rental, Our Most Advanced Revenue Diversification Initiative 6 Serving The Vacation Traveler: Advantage® and The Car Collections 8 Car...

  • Page 3
    ...generated new business opportunities service levels. We developed the consolidated operating ental revenues. As a result, over $170 million of increm was equal to 2008, on $1.4 x* basis, for full year 2009 margin, on an adjusted pre-ta rental increased 360 bps to the margin for worldwide car billion...

  • Page 4
    ...end of the second quarter last year. Asset Management Our asset management achievements in 2009 were exemplary given underlying external conditions, and include: n Consolidated 2009 operating margin equaled 2008 margin of 2.8%, worldwide car rental margin increased 360 bps to 7.8%. n Cost savings of...

  • Page 5
    ... all time high for several reasons: Mark P. Frissora n We freshened the car rental fleet in the second half Chairman of the Board and Chief Executive Officer of the year, adding 80,000 new vehicles in December Hertz Global Holdings, Inc. and sold high mileage vehicles as the used car market improved...

  • Page 6
    4

  • Page 7
    ... needs (e.g., vehicle upgrades, optional services) in the rental lot, were successfully piloted at Chicago O'Hare and Boston Logan Airport. n Integrated car sharing technology from Eileo including online booking, iPhone® and Blackberry applications, RFID carddriven vehicle entry, and two-way in-car...

  • Page 8
    ... 700 loca tions across the co nt in ent from these locations. He rtz and its franchi se partners serve vacationers and bu siness people for whom car travel is the most efficient means of transport within Europe. Hertz has been a rental market is al European Local R entals...Euro most as large as...

  • Page 9
    ... the Off-Airport Car Rental: Our Most Advanced Revenue Diversification Initiative Total Mobility Solutions... Hertz has developed hourly car sharing and multi-month rentals to compliment our daily and weekly rental business. With the addition of Advantage Rent A Car and rental programs serving...

  • Page 10
    ... offerings to capture a gre ater share of the leisure travel market. At the end of 2008, the company launched a pre-paid rental program, aimed at value conscio us travelers, providing a substantial discoun t in exchange for pre-payment. This program delivered almost $82 million of revenue in 2009...

  • Page 11
    ... customers who book low leisure market which represents at least a $500 price travel online. million revenue opportunity. Today Hertz is the Advantage has exceeded all of our expectations. undisputed leader in personalized car rental service, We expect its revenues to approach $100 million offering...

  • Page 12
    ... nect by Hertz through Con e, uc od tr in ter plans to th America la tric car in Nor ec el lal af the Le electric cars ned Renault ow nsa is N d this year an is a great way Car sharing . ar ye xt ne in Europe cars in urban/ ers to electric um ns co se to expo ng needs here rechargi...

  • Page 13
    ... Headquarters in Park Ridge, New Jersey. n Municipal Fleets: Eileo has developed a special car sharing technology package for governmentowned fleet vehicles, enabling an efficient car sharing option for government agencies whose employees must travel during working hours. The Connect-2-Go technology...

  • Page 14
    12

  • Page 15
    ...," which follows the SEC Business and Financial Information in this Annual Report. Despite the worst economic climate ever for equipment Equipment Rental Revenue Growth and Diversification HERC's growth and diversification initiatives include: n Industrial Segment Penetration n Power Generation...

  • Page 16
    14

  • Page 17
    ...n Hertz added 100 net locations worldwide and, through license partners, expanded its presence in six additional African and Asian nations in 2009. Hertz continues to expand its geographic footprint and is While Hertz operates corporately in 13 countries in North America, Europe, Australia and New...

  • Page 18
    ... n Lois I. Boyd Senior Vice President, Advantage Rent A Car n Richard D. Broome Senior Vice President, Corporate Affairs and Communications n Elyse Douglas Executive Vice President and Chief Financial Officer n Joseph F. Eckroth Senior Vice President, Chief Information Officer n Mark P. Frissora...

  • Page 19
    ...EQUITY ...CONSOLIDATED STATEMENTS OF CASH FLOWS ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ...CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ...CONTROLS AND PROCEDURES ...OTHER INFORMATION ...DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...EXECUTIVE...

  • Page 20

  • Page 21
    ... fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs; • our ability to accurately estimate future levels of rental activity...

  • Page 22
    ... to fluctuations in foreign exchange rates; and • other risks described from time to time in periodic and current reports that we file with the SEC. You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf...

  • Page 23
    ... of car rental and equipment rental transactions, soft industry pricing and lower residual values for the non-program cars that we sold. See ''Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations'' in this Annual Report. Corporate History Hertz Holdings was...

  • Page 24
    ... senior notes due 2014, or the ''Convertible Debt Public Offering.'' We used the net proceeds from the Common Stock Public Offering, the Private Offering and the Convertible Debt Public Offering, collectively the ''2009 Hertz Holdings Offerings,'' to increase our liquidity and for general corporate...

  • Page 25
    ... annual revenues for 2009, but the part of the rental industry dealing with equipment of the type HERC rents is somewhat smaller than that. We believe that the industry grew at a 7.5% compound annual growth rate between 1991 and 2009. Other market data indicates that the equipment rental industries...

  • Page 26
    ...Car rental segment revenue includes fees and certain cost reimbursements from licensees. See Note 9 to the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' For further information on our business...

  • Page 27
    ... concession fees and vehicle licensing costs, fueling charges, and charges for ancillary customer products and services such as supplemental equipment (child seats and ski racks), loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, Hertz...

  • Page 28
    ...pay an annual or monthly membership fee, pick up cars in locations scattered around a city, at a university or a corporate campus without checking in at a Hertz rental office, and then pay an hourly car-rental fee. In April 2009, we completed the acquisition of certain assets of Advantage Rent A Car...

  • Page 29
    ... business. For a further description of our competitors, market share and competitive position see ''-Competition'' below. At our major airport rental locations, as well as at some smaller airport and off-airport locations, customers participating in our Hertz #1 Club Gold program are able to rent...

  • Page 30
    ... and business traveler customers and by increasing penetration of the insurance replacement market, of which we currently have a low market share. In the United States during the year ended December 31, 2009, approximately one-third of our rental revenues at off-airport locations were related to...

  • Page 31
    ... a variety of other forms of marketing and promotion, including travel industry business partnerships and press and public relations activities. In almost all cases, when we rent a car, we rent it directly to an individual who is identified in a written rental agreement that we prepare. Except when...

  • Page 32
    ... that may be used to pay rental charges, mostly for prepaid and tour-related rentals. In addition, where the law requires us to do so, we rent cars on a cash basis. For the year ended December 31, 2009, no customer accounted for more than 2.0% of our car rental revenues. In the United States for the...

  • Page 33
    ... things, certain car condition, mileage and holding period requirements. Repurchase prices under repurchase programs are based on either a predetermined percentage of original car cost and the month in which the car is returned or the original capitalized cost less a set daily depreciation amount...

  • Page 34
    ... the use of the Hertz brand name, management and administrative assistance and training, reservations through our reservations channels, the Hertz #1 Club and #1 Club Gold programs, our ''Rent-it-Here/ Leave-it-There'' one-way rental program and other services. In addition to car rental, certain...

  • Page 35
    ...consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' In the future we may increase the number of our locations that are operated by our licensees. Competition In the United States, our principal car rental industry...

  • Page 36
    ... a competitive advantage. For the year ended December 31, 2009, based on publicly available information, we believe some U.S. car rental companies experienced declines in transaction days and varying rental rate revenue per transaction day, or ''RPD,'' compared to the year ended December 31, 2008...

  • Page 37
    ... equipment rental operations. These acquisitions give us greater control over our growth both in the United States and internationally and an expanded array of services across the Hertz network. See Note 2 to the Notes to our consolidated financial statements included in this Annual Report...

  • Page 38
    ... for rental charges, while 4% came from customers paying with third-party charge, credit or debit cards and 1% came from customers who paid with cash or used another method of payment. For the year ended December 31, 2009, bad debt expense represented 1.1% of HERC's revenues. Fleet HERC acquires its...

  • Page 39
    ... volumes and pricing worldwide for the years ended December 31, 2008 and 2009. We believe that HERC's competitive success has been primarily the product of its more than 40 years of experience in the equipment rental industry, its systems and procedures for monitoring, controlling and developing its...

  • Page 40
    ITEM 1. BUSINESS (Continued) expenses, including minimum concession fees, real estate taxes, rent, insurance, utilities, maintenance and other facility-related expenses, the costs of operating our information technology systems and minimum staffing costs, remain fixed and cannot be adjusted for ...

  • Page 41
    ... legal liability to members of the public and employees from other causes (general liability/ workers' compensation); and • risk of property damage and/or business interruption and/or increased cost of working as a consequence of property damage. In addition, we offer optional liability insurance...

  • Page 42
    ... more limited than those employed in our domestic operations. In our domestic car rental operations, we offer an optional liability insurance product, Liability Insurance Supplement, or ''LIS,'' that provides vehicle liability insurance coverage substantially higher than state minimum levels to...

  • Page 43
    ...) of rented vehicles or equipment. We generally offer an optional rental product, known in various countries as ''loss damage waiver,'' ''collision damage waiver,'' ''theft protection'' or ''accident excess reduction,'' under which we waive or limit our right to make a claim for such damage or loss...

  • Page 44
    ... are aboveground, to store petroleum products, and we believe our tanks are maintained in material compliance with environmental regulations, including federal and state financial responsibility requirements for corrective action and third-party claims due to releases. Our compliance program for our...

  • Page 45
    ...to honor reservations, the terms on which we deal with vehicle loss or damage (including the protections we provide to renters purchasing loss or damage waivers) and the terms and method of sale of the optional insurance coverage that we offer. Some states (including California, New York, Nevada and...

  • Page 46
    ... public reference room. In addition, the SEC maintains an Internet website (www.sec.gov) that contains reports, proxy and information statements and other information about issuers that file electronically with the SEC, including Hertz Holdings. You may also access, free of charge, our reports filed...

  • Page 47
    ... primary competitive factors in the car and equipment rental markets and that the Internet has increased pricing transparency among car rental companies by enabling cost-conscious customers, including business travelers, to more easily obtain the lowest rates available from car rental companies for...

  • Page 48
    ... of same-store sales growth. In order to increase revenues at our existing, and any new, off-airport locations, we believe that we will need to successfully market to insurance companies and other companies that provide rental referrals to those needing cars while their vehicles are being repaired...

  • Page 49
    ... the cars during a specified time period. While the repurchase price and/or depreciation rate is typically subject to certain conditions, including the condition of the car, mileage and holding period requirements, the use of program cars limits our risk that the market value of a car at the time of...

  • Page 50
    ... the U.S. vehicle manufacturers. Accordingly, we are now bearing increased risk relating to the residual value and the related depreciation on our car rental fleet. In addition, our flexibility to reduce the size of our fleet by returning cars sooner than originally expected without risk of loss in...

  • Page 51
    ... requirements for such facilities which effectively increase as market values for vehicles decrease. As a result, our ability to utilize our asset-backed vehicle financing programs to acquire new vehicles for our rental fleet may be limited. In addition, if our ability to sell vehicles in the used...

  • Page 52
    ... significant increases in fuel prices and/or a reduction in fuel supplies could negatively impact our equipment rental business by increasing the cost of buying new equipment, since fuel is used in the manufacturing process and in delivering equipment to us, and by reducing the mobility of our fleet...

  • Page 53
    ... risks that could cause a loss of reservations, interfere with our ability to manage our fleet, slow rental and sales processes and otherwise materially adversely affect our ability to manage our business effectively. While our systems back-up plans, business continuity plans and insurance programs...

  • Page 54
    ... or other liabilities, including litigation arising in connection with the acquisition and/or against any businesses we may acquire. If we make acquisitions in the future, acquisition-related accounting charges may affect our financial condition and results of operations. In addition, the financing...

  • Page 55
    ... (Continued) We face risks related to liabilities and insurance. Our businesses expose us to claims for personal injury, death and property damage resulting from the use of the cars and equipment rented or sold by us, and for workers' compensation claims and other employment-related claims by our...

  • Page 56
    ... pursuant to limited licenses or exemptions under state laws governing the licensing of insurance providers. In our international car rental operations, our offering of optional products providing insurance coverage historically has not been regulated. See ''Item 1-Business- Risk Management'' for...

  • Page 57
    ... and/or effectively control our decisions. See Note 13 to the Notes to our consolidated financial statements included in this Annual Report under caption ''Item 8-Financial Statements and Supplemental Data.'' Risks Relating to Our Substantial Indebtedness Our substantial level of indebtedness could...

  • Page 58
    ... 31, 2009, the instruments governing our asset-backed fleet debt facilities in the United States and elsewhere provided commitments for additional aggregate borrowings of up to $3,932.4 million, subject to borrowing base limitations. If new debt is added to our current debt levels, the related risks...

  • Page 59
    ... cars for our domestic and international car rental fleets. As of December 31, 2009, Hertz and several of its subsidiaries, including certain special purpose entities, had an aggregate of $5.7 billion of rental car asset backed financing outstanding. We expect, given our business plan, we will need...

  • Page 60
    ...than depreciation related to the car rental fleet) and amortization and before certain other items, in each case as more fully described in the agreements governing Hertz's senior credit facilities. Our ability to comply with these covenants in future periods will depend on our ongoing financial and...

  • Page 61
    ... covenants, and in certain cases require us to meet certain financial ratios and tests which utilize Corporate EBITDA. In addition, under the agreements governing certain of our U.S. Fleet Debt we are required to have a financial guarantee from a third-party insurance company. Our failure to comply...

  • Page 62
    ... cash. The operations of Hertz Holdings are conducted almost entirely through its subsidiaries and its ability to generate cash to meet its debt service obligations, including debt service obligations in connection with its Convertible Senior Notes, or to pay dividends on its common stock, is highly...

  • Page 63
    ... with or designated by the Sponsors cease to collectively hold a majority of our outstanding common stock. These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the...

  • Page 64
    ... Republic, Australia, New Zealand, China and Brazil, as well as retail used car sales locations in the United States and France. We operate equipment rental locations in the United States, Canada, France, Spain and China. We also operate headquarters, sales offices and service facilities in the...

  • Page 65
    ... time being and the case has thus far only proceeded against Hertz. The Sobel case purports to be a nationwide class action on behalf of all persons who rented cars from Hertz at airports in Nevada and were separately charged airport concession recovery fees by Hertz as part of their rental charges...

  • Page 66
    ... The obligation for public liability and property damage on self-insured U.S. and international vehicles and equipment, as stated on our balance sheet, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded...

  • Page 67
    ...we may prudently rely on this information to determine the estimated liability. We note the liability is subject to significant uncertainties. The adequacy of the liability reserve is regularly monitored based on evolving accident claim history and insurance related state legislation changes. If our...

  • Page 68
    ... and Chief Financial Officer Executive Vice President & President, Car Rental and Leasing The Americas Executive Vice President and President, HERC Executive Vice President and President, Hertz International Executive Vice President, Global Supply Chain Management Senior Vice President, Chief Human...

  • Page 69
    ...President & President, Car Rental and Leasing The Americas of Hertz and Hertz Holdings since January 2010 succeeding Mr. Nothwang after his retirement in December 2009. Mr. Sider has held several senior management positions in the U.S. car rental business since 1983, including Manhattan Area Manager...

  • Page 70
    ... and Chief Financial Officer for Hertz Europe Limited, responsible for both car and equipment rental. He also served two years as Corporate Controller in Europe. Prior to his service in Europe, Mr. Kapur held various financial management positions in the North American vehicle rental business. Prior...

  • Page 71
    ... senior notes due 2014, or the ''Convertible Debt Public Offering.'' We used the net proceeds from the Common Stock Public Offering, the Private Offering and the Convertible Debt Public Offering, collectively the ''2009 Hertz Holdings Offerings,'' to increase our liquidity and for general corporate...

  • Page 72
    ...to our total market capitalization. The Hemscott Industry Group 761-Rental & Leasing Services is a published, market capitalization-weighted index representing 34 stocks of companies that rent or lease various durable goods to the commercial and consumer market including cars and trucks, medical and...

  • Page 73
    ...consolidated balance sheet data as of December 31, 2009 and 2008 presented below were derived from our consolidated financial statements and the related notes thereto included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' The ''Successor period ended...

  • Page 74
    ... and related notes thereto included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Successor Predecessor For the Periods From December 21, January 1, 2005 to 2005 to December 31, December 20, 2005 2005 (In millions of dollars, except per share data...

  • Page 75
    ...from the sale of stock to employees and the initial public offering of approximately $1,284.5 million, equity contributions totaling $2,295.0 million to Hertz Holdings from investment funds associated with or designated by the Sponsors on or prior to December 21, 2005 and the payment of special cash...

  • Page 76
    ... charged to customers for the fueling and delivery of equipment and sale of loss damage waivers); and • Other revenues (fees and certain cost reimbursements from our licensees and revenues from our car leasing operations and our third-party claim management services). Our equipment rental business...

  • Page 77
    ... costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes. In addition, our management expects to utilize enhanced process improvements, including efficiency initiatives and the use of our information technology...

  • Page 78
    .... Additional efficiency and cost saving initiatives are being developed in 2010. However, we presently do not have firm plans or estimates of any related expenses. See Note 11 to the Notes to our consolidated financial statements included in this Annual Report under caption ''Item 8-Financial...

  • Page 79
    ...of our total car rental revenues in the years ended December 31, 2009, 2008 and 2007, respectively. In 2010 and subsequent years, our strategy will include selected openings of new off-airport locations, the disciplined evaluation of existing locations and the pursuit of same-store sales growth. Our...

  • Page 80
    ... time period. These programs limit our residual risk with respect to vehicles purchased under these programs. For all other vehicles, as well as equipment acquired by our equipment rental business, we use historical experience and monitor market conditions to set depreciation rates. When revenue...

  • Page 81
    ... rates, salary growth) used in determining pension costs and plan liabilities are reviewed periodically by management, assisted by the enrolled actuary, and updated as warranted. The discount rate used to value the pension liabilities and related expenses and the expected rate of return on plan...

  • Page 82
    ... financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Derivatives We periodically enter into cash flow and other hedging transactions to specifically hedge exposure to various risks related to interest rates, fuel prices...

  • Page 83
    ...) required to provide service in exchange for the award. We estimated the fair value of options issued at the date of grant using a Black-Scholes option-pricing model, which includes assumptions related to volatility, expected term, dividend yield, risk-free interest rate and forfeiture rate...

  • Page 84
    ...represented by the various line items in our consolidated statements of operations (in millions of dollars): Years Ended December 31, 2009 2008 2007 Percentage of Revenues Years Ended December 31, 2009 2008 2007 Revenues: Car rental ...Equipment rental ...Other ...Total revenues ...Expenses: Direct...

  • Page 85
    ... Transaction days represents the total number of days that vehicles were on rent in a given period. Car rental rate revenue consists of all revenue, net of discounts, associated with the rental of cars including charges for optional insurance products, but excluding revenue derived from fueling and...

  • Page 86
    ... Year Ended December 31, 2009 Car Equipment Rental Rental Income (loss) before income taxes and noncontrolling interest Adjustments: Purchase accounting(1) ...Non-cash debt charges(2) ...Restructuring charges ...Restructuring related charges(3) ...Third-party bankruptcy reserve(4) ...$190.1 38.2 131...

  • Page 87
    ...net of discounts, associated with the rental of equipment including charges for delivery, loss damage waivers and fueling, but excluding revenue arising from the sale of equipment, parts and supplies and certain other ancillary revenue. Rental and rental related revenue is adjusted in all periods to...

  • Page 88
    ... to our equipment rental and rental related revenue (based on December 31, 2008 foreign exchange rates) for the years ended December 31, 2009, 2008 and 2007 (in millions of dollars): Years ended December 31, 2009 2008 2007 Equipment rental revenue per statement of operations ...Equipment sales and...

  • Page 89
    ... was primarily related to a reduction in fleet levels as a result of worldwide rental volume demand which resulted in decreases in gasoline costs of $163.0 million, vehicle damage and maintenance costs of $94.4 million, self insurance expense of $37.9 million and equipment rental delivery costs of...

  • Page 90
    ... in administrative salaries and related costs of $59.5 million and restructuring charges of $3.2 million, including the effects of foreign currency translation of approximately $9.6 million, partly offset by an increase in management incentive compensation costs of $13.6 million. Sales promotion...

  • Page 91
    ... Impairment Charges Impairment charges represent non-cash impairment charges incurred during the fourth quarter of 2008 relating to our goodwill, other intangible assets and property and equipment. See Notes 1 and 2 to the Notes to our consolidated financial statements included in this Annual Report...

  • Page 92
    ... and property and equipment in 2008 and strong cost management performance, partly offset by lower rental volume and pricing in our worldwide car and equipment rental operations, as well as the net effect of other contributing factors noted above. The impact of changes in exchange rates on net loss...

  • Page 93
    ... market, particularly in the longer length weekly sector, which is characterized by lower vehicle costs and lower transaction costs at lower RPD. Increasing our penetration in these sectors is consistent with our long term strategy to generate profitable growth. Equipment Rental Segment Revenues...

  • Page 94
    ..., or 11.5%. The increase was primarily related to increases in restructuring and restructuring related charges of $144.6 million, facility expenses of $46.6 million, customer service costs of $14.6 million, commission fees of $14.0 million and concession fees in our car rental operations of $10...

  • Page 95
    ... relations and purchasing costs totaling $12.4 million, consultant fees of $9.1 million and an increase in the losses on our interest rate swaptions of $6.2 million, as well as the effects of foreign currency translation of approximately $68.8 million, partly offset by a decrease in management...

  • Page 96
    ... Impairment Charges Impairment charges represent non-cash impairment charges incurred during the fourth quarter of 2008 relating to our goodwill, other intangible assets and property and equipment. See Notes 1 and 2 to the Notes to our consolidated financial statements included in this Annual Report...

  • Page 97
    ..., an increase of $391.4 million from December 31, 2008. As of December 31, 2009, we had $365.2 million of restricted cash and cash equivalents to be used for the purchase of revenue earning vehicles and other specified uses under our Fleet Financing facilities (defined below), our LKE Program and to...

  • Page 98
    ..., 2009, primarily related to the timing of purchases and sales of revenue earning vehicles. Our domestic and international operations are funded by cash provided by operating activities and by extensive financing arrangements maintained by us in the United States, Europe, Puerto Rico, Australia, New...

  • Page 99
    ... a larger fleet by holding vehicles and equipment and purchasing additional fleet which increases our financing requirements in the second and third quarters of the year. These seasonal financing needs are funded by increasing the utilization of our various corporate and fleet credit facilities and...

  • Page 100
    ... financing to purchase cars subjects us to a number of risks, many of which are beyond our control.'' We rely significantly on asset-backed financing to purchase cars for our domestic and international car rental fleet. For further information concerning our asset-backed financing programs, see...

  • Page 101
    ...above, and the risk that we would be unable to collect outstanding receivables due to us from such bankrupt manufacturer. In addition, the program cars manufactured by any such company would need to be removed from our fleet or re-designated as non-program vehicles, which would require us to furnish...

  • Page 102
    ... 2009-1 Notes and the Series 2009-2 Notes to pay down the amounts owed under the affected series of 2005 Notes. Financing We have a significant amount of indebtedness. For information on our indebtedness, see Note 3 to the Notes to our consolidated financial statements included in this Annual Report...

  • Page 103
    ... fixed charge coverage ratio was not deemed relevant for presentation. For further information on the terms of our senior credit facilities, see Note 3 to the Notes to our consolidated financial statements included in this Annual Report under caption ''Item 8-Financial Statements and Supplemental...

  • Page 104
    ... and related interest payable, operating leases and concession agreements, ASC 740, ''Income Taxes,'' or ''ASC 740,'' liability and interest and other purchase obligations as of December 31, 2009 (in millions of dollars): Payments Due by Period 2011 to 2013 to 2012 2014 Total 2010 After 2014 All...

  • Page 105
    ...expenditures and related disposal proceeds received on a cash basis consistent with our revised consolidated statements of cash flows by quarter for 2009, 2008 and 2007 (in millions of dollars). See Note 1 to the Notes to our consolidated financial statements included in this Annual Report under the...

  • Page 106
    ... 31, 2009 as compared to the year ended December 31, 2008, which required us to maintain lower fleet levels. The decrease in our equipment rental operations revenue earning equipment expenditures is primarily due to a general reduction in spending due to lower demand for equipment related to the...

  • Page 107
    ..., directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities arising...

  • Page 108
    ...the technologies to be required and the extent, duration, and success of remediation). Risk Management For a discussion of additional risks arising from our operations, including vehicle liability, general liability and property damage insurable risks, see ''Item 1-Business-Risk Management.'' Market...

  • Page 109
    ... statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Other Risks We purchase unleaded gasoline and diesel fuel at prevailing market rates. In January 2009, we began a program to manage our exposure to changes in prices through the use...

  • Page 110
    ... taxes. Employee Retirement Benefits Pension We sponsor defined benefit pension plans worldwide. Pension obligations give rise to significant expenses that are dependent on assumptions discussed in Note 4 of the Notes to our consolidated financial statements included in this Annual Report under the...

  • Page 111
    ...both equity and cash awards, including non-qualified stock options, incentive stock options, stock appreciation rights, performance awards (shares and units), restricted stock, restricted stock units and deferred stock units to key executives, employees and non-management directors. The Omnibus Plan...

  • Page 112
    ...the discount on the stock purchased by our employees. Approximately 1,800 employees participated in the ESPP as of December 31, 2009. See Note 5 of the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data...

  • Page 113
    ... all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria...

  • Page 114
    ... LIABILITIES AND EQUITY Accounts payable ...Accrued salaries and other compensation ...Other accrued liabilities ...Accrued taxes ...Debt ...Public liability and property damage ...Deferred taxes on income ...Total liabilities ...Commitments and contingencies (Note 10) Equity: Hertz Global Holdings...

  • Page 115
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands of Dollars, except share and per share data) Years ended December 31, 2008 2007 2009 Revenues: Car rental ...Equipment rental ...Other ...Total revenues ...Expenses: Direct operating ...Depreciation of...

  • Page 116
    ... plans ...Defined benefit pension plans, net ...Total Comprehensive Loss ...Dividend payment to noncontrolling interest ...Net income relating to noncontrolling interest ...Stock-based employee compensation charges, net of tax of $643 ...Exercise of stock options ...Common shares issued to Directors...

  • Page 117
    ... pension plans ...Defined benefit pension plans, net ...Total Comprehensive Loss ...Dividend payment to noncontrolling interest ...Net income relating to noncontrolling interest ...Proceeds from sale of common stock . Proceeds from debt offering, net of tax of $46,204 ...Employee stock purchase plan...

  • Page 118
    ... of acquisition: Receivables ...Inventories, prepaid expenses and other assets ...Accounts payable ...Accrued liabilities ...Accrued taxes ...Public liability and property damage ...Cash flows from investing activities: Net change in restricted cash and cash equivalents . . Revenue earning equipment...

  • Page 119
    ...$474,755,000 of 5.25% convertible senior notes due 2014, or the ''Convertible Debt Public Offering.'' We used the net proceeds from the Common Stock Public Offering, the Private Offering and the Convertible Debt Public Offering, collectively the ''2009 Hertz Holdings Offerings,'' to increase our 99

  • Page 120
    ... liquidity. These actions included reducing wage and benefit costs through significant headcount reductions, accelerating fleet deletions and delaying additions to right-size the fleet to current demand levels and rationalizing our location footprint by closing a number of locations. In an effort...

  • Page 121
    ... in our corporate debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. Basis of Presentation Principles of Consolidation The consolidated financial statements include the accounts of Hertz Holdings and our...

  • Page 122
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) for income taxes and related uncertain tax positions, pension costs valuation, useful lives and impairment of long-lived tangible and intangible assets, valuation of stock-based compensation, public liability and property damage reserves...

  • Page 123
    ... HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) $262.2 million from December 31, 2008 to December 31, 2009, primarily related to payments to reduce fleet debt and the timing of purchases and sales of revenue earning vehicles. Receivables Receivables are stated...

  • Page 124
    ...for public liability and property damage on self-insured U.S. and international vehicles and equipment represents an estimate for both reported accident claims not yet paid, and claims incurred but not yet reported. The related liabilities are recorded on a non-discounted basis. Reserve requirements...

  • Page 125
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure ...

  • Page 126
    ... the employee is required to provide service in exchange for the award. We have estimated the fair value of options issued at the date of grant using a Black-Scholes option-pricing model, which includes assumptions related to volatility, expected life, dividend yield, risk-free interest rate and...

  • Page 127
    ... postretirement plan. These particular amendments became effective for us beginning with this annual report and did not have a material impact on our financial position or results of operations. See Note 4-Employee Retirement Benefits. In June 2009, the FASB issued guidance relating to how a company...

  • Page 128
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Goodwill and Other Intangible Assets The following summarizes the changes in our goodwill, by segment, for the period presented (in millions of dollars): Car Rental Equipment Rental Total Balance as of January 1, 2009 Goodwill ...Accumulated...

  • Page 129
    ... 31, 2009, we added 32 locations by acquiring former franchisees in our domestic and international car rental operations, as well as approximately 20 locations associated with our acquisition of Advantage Rent A Car and one location related to an external acquisition done within our equipment rental...

  • Page 130
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) intangible assets, primarily comprised of the tradename and concession agreements associated with the Advantage Rent A Car acquisition and technology assets associated with the acquisition of Eileo, ...

  • Page 131
    .... Senior ABL Facility: Hertz, Hertz Equipment Rental Corporation and certain other subsidiaries of Hertz entered into a credit agreement, dated December 21, 2005, with respect to the Senior ABL Facility with Deutsche Bank AG, New York Branch as administrative agent, Lehman Commercial Paper Inc. as...

  • Page 132
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) letters of credit. Hertz and Hertz Equipment Rental Corporation are the U.S. borrowers under the Senior ABL Facility and Matthews Equipment Limited, or ''Matthews,'' and its subsidiaries Western Shut-Down (1995) Ltd. and Hertz Canada Equipment...

  • Page 133
    ... into certain sale and leaseback transactions, to pay cash dividends and make loans to Hertz Holdings that would, among other things, provide Hertz Holdings with cash for the payment of interest on Hertz Holdings' indebtedness (including, but not limited to, the Hertz Holdings Loan Facility) and, in...

  • Page 134
    ... price of vehicles and all other obligations arising under vehicle supply agreements entered into by Fleetco (Espana), S.L., an entity created to own the Spanish rental car fleet in connection with the pending securitization of the rental car fleets in a number of European countries and Australia...

  • Page 135
    ... sentence), and in an amount equal to certain equity contributions to Hertz, in each case, less certain investments and other restricted payments. On January 12, 2007, Hertz completed exchange offers for its outstanding Senior Notes and Senior Subordinated Notes whereby over 99% of the outstanding...

  • Page 136
    ... it making dividends, loans or advances to us. In addition, Delaware law imposes requirements that may restrict Hertz's ability to make funds available to Hertz Holdings. U.S. Fleet Debt Our ''U.S. Fleet Debt'' is comprised of the following facilities: Series 2005 Notes. Hertz Vehicle Financing LLC...

  • Page 137
    ..., including restrictive covenants with respect to liens, indebtedness, benefit plans, mergers, disposition of assets, acquisition of assets, dividends, officers' compensation, investments, agreements, the types of business it may conduct and other customary covenants for a bankruptcy-remote special...

  • Page 138
    ... in rights to payment of interest and principal to each other series of notes outstanding. We expect to repay these notes as they mature in 2010 with a combination of revolver borrowings under our new Series 2009-1 Notes, corporate liquidity or by issuing a new series of notes. Series 2008-1 Notes...

  • Page 139
    ... rate of 4.9%. International Fleet Debt In connection with the Acquisition, Hertz International, Ltd., or ''HIL,'' a Delaware corporation organized as a foreign subsidiary holding company and a direct subsidiary of Hertz, and certain of its subsidiaries (all of which are organized outside North...

  • Page 140
    ... excess cash flow based on the percentage of the International Fleet Debt facilities that have been replaced by permanent take-out international asset-based facilities. As a result of the contractual restrictions on HIL's ability to pay dividends to Hertz as of December 31, 2009, the restricted...

  • Page 141
    ..., these swaptions were sold for a realized gain of e9.4 million (or $14.8 million). Additionally, on June 4, 2008, HIL purchased two new swaptions for e8.6 million, to protect itself from interest rate increases associated with the International ABS Fleet Financing Facility, which closed on July 24...

  • Page 142
    ...CONSOLIDATED FINANCIAL STATEMENTS (Continued) The funds under the new fleet financing were used to (i) initially repay in whole the FleetCos' portion of indebtedness under the International Fleet Debt facility and the FleetCos' existing inter-company borrowings related to the acquisition of vehicles...

  • Page 143
    ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Facility and the other loan documents, including, without limitation, its guarantee of PR Cars' obligations under the Fleet Financing Facility, are secured by security interests in Hertz's rental car fleet in Hawaii and by certain assets related...

  • Page 144
    ... includes requirements to meet, on a quarterly basis, certain ratios measuring utilization, interest coverage and net worth. The Australian and Netherlands subsidiaries conducting the car rental business may, at their option, continue to engage in capital lease financings relating to revenue earning...

  • Page 145
    ... SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) less than $200.0 million of available borrowing capacity under that facility as of December 31, 2009, Hertz was required to have a consolidated leverage ratio of not more than 5.00:1 and a consolidated fixed charge coverage ratio...

  • Page 146
    ...Other accrued liabilities.'' Note 4-Employee Retirement Benefits Qualified U.S. employees, after completion of specified periods of service, are eligible to participate in The Hertz Corporation Account Balance Defined Benefit Pension Plan, or the ''Hertz Retirement Plan,'' a cash balance plan. Under...

  • Page 147
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) together with amounts included in our consolidated balance sheet and statement of operations (in millions of dollars): U.S. 2009 Pension Benefits Non-U.S. 2008 2009 2008 Postretirement Benefits (U.S.)...

  • Page 148
    ... 31, 2009 benefit obligations for U.S. pension plans is based on the rate from the Citigroup Pension Discount Curve that is appropriate for the duration of our plan liabilities. For our plans outside the U.S., the discount rate reflects the market rates for high-quality corporate bonds currently...

  • Page 149
    ... rate of return on assets (January 1) ...8.25% 8.50% 8.75% 5.6 $ 9.9 5.51% 4.81% 7.22% 7.22% The pension mark-to-market adjustment balance included in ''Accumulated other comprehensive loss'' at December 31, 2009 and 2008 was $66.5 million and $49.4 million, respectively. Postretirement Benefits...

  • Page 150
    ...dollars): One Percentage Point Increase Decrease Effect on total of service and interest cost components ...Effect on postretirement benefit obligation ... $0.0 $0.4 $ 0.0 $(0.4) The provisions charged to income for the years ended December 31, 2009, 2008 and 2007 for all other pension plans were...

  • Page 151
    ... - 1.1 2.7 Total fair value of pension plan assets ... $284.2 The fair value measurements of our U.K. pension plan assets are based upon significant observable (Level 2) inputs as follows (in millions of dollars): Asset Category Year ended December 31, 2009 Cash and cash equivalents U.K. Equities...

  • Page 152
    ..., incentive stock options, stock appreciation rights, performance awards (shares and units), restricted stock, restricted stock units and deferred stock units to key executives, employees and non-management directors. We also granted awards under the Hertz Global Holdings, Inc. Stock Incentive Plan...

  • Page 153
    ... appreciation right at any time. In addition, vesting of options and stock appreciation rights will be accelerated if Hertz Holdings experiences a change in control (as defined in the Omnibus Plan) unless options or stock appreciation rights with substantially equivalent terms and economic value are...

  • Page 154
    ... aggregate intrinsic value of options exercised during the years ended December 31, 2009 and 2008 was $4.2 million and $6.8 million, respectively. A total of 1,034,204 options were exercised in the year ended December 31, 2009 and we received $5.3 million from the issuance of shares related to these...

  • Page 155
    ... of employment for any reason, any unvested restricted stock or restricted stock units of the employee will be canceled. Each deferred stock unit granted under the Omnibus Plan represents the right to receive one share of Hertz Holdings' common stock on a specified future date. Generally, upon...

  • Page 156
    ... by Hertz Holdings under the Prior Plans and the Omnibus Plan, including costs related to modifying the exercise prices of certain option grants in order to preserve the intrinsic value of the options, consistent with applicable tax law, to reflect special cash dividends of $4.32 per share paid...

  • Page 157
    ... of vehicles used in our car rental operations. Depreciation rates are reviewed on an ongoing basis based on management's routine review of present and estimated future market conditions and their effect on residual values at the time of disposal. During 2009, 2008 and 2007, depreciation rates being...

  • Page 158
    ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the years ended December 31, 2009, 2008 and 2007, our worldwide car rental operations sold approximately 153,300, 189,300 and 163,700 non-program cars, respectively, a 19.0% decrease in 2009 versus 2008 primarily due to a lower average fleet...

  • Page 159
    ...months, resulted in a change in control as that term is defined in Section 382 of the Internal Revenue Code. Consequently, utilization of all pre-2009 U.S. net operating losses is subject to an annual limitation. We have calculated the expected annual base limitation as well as additional limitation...

  • Page 160
    ... December 31, 2009 2008 2007 Statutory Federal Tax Rate ...Foreign tax differential ...State and local income taxes, net of federal income tax benefit . Change in state statutory rates, net of federal income tax benefit Effect of impairment charges ...Federal permanent differences ...Withholding...

  • Page 161
    ...to 2009. A tax indemnification agreement entered into with Ford on the Closing Date indemnifies Hertz from U.S. federal and unitary state, and certain combined non-U.S. income tax liabilities for all periods prior to December 21, 2005. We are not currently under audit by the Internal Revenue Service...

  • Page 162
    ... years after 2014, $0.0. Note 9-Segment Information Our operating segments are aggregated into reportable business segments based primarily upon similar economic characteristics, products, services, customers, and delivery methods. We have identified two reportable segments: rental of cars and light...

  • Page 163
    ... one-time charges and non-operational items. The contribution of our reportable segments for the years ended December 31, 2009, 2008 and 2007 are summarized below (in millions of dollars). Years ended December 31, 2009 Revenues Car rental ...Equipment rental ...Other reconciling items ...Total...

  • Page 164
    ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2009 Total assets at end of year Car rental ...Equipment rental ...Other reconciling items ...Total ...Revenue earning equipment, net, at end of year Car rental ...Equipment rental ...Total ...Property and equipment, net, Car rental...

  • Page 165
    ...-party claim management services. Represents the purchase accounting effects of the Acquisition on our results of operations relating to increased depreciation and amortization of tangible and intangible assets and accretion of revalued workers' compensation and public liability and property damage...

  • Page 166
    ...of New Jersey. In November 2006, the complaint was amended to add another plaintiff, Miguel V. Pro, and more claims. The Davis Landscape matter purports to be a nationwide class action on behalf of all persons and business entities who rented equipment from HERC and who paid a Loss Damage Waiver, or...

  • Page 167
    ...District of California, and plaintiffs claim to represent a class of individuals or entities that purchased rental car services from a defendant at airports located in California after January 1, 2007. The complaint alleges that the defendants agreed to charge consumers a 2.5% tourism assessment and...

  • Page 168
    ... The obligation for public liability and property damage on self-insured U.S. and international vehicles and equipment, as stated on our balance sheet, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded...

  • Page 169
    ..., directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities arising...

  • Page 170
    ... to improve our competitiveness and industry leadership through targeted job reductions affecting approximately 2,030 employees worldwide, primarily at our corporate headquarters in Park Ridge, New Jersey, our U.S. service center in Oklahoma City, Oklahoma, and our U.S. car rental operations, with...

  • Page 171
    ..., in the third quarter of 2009, our European car rental business recognized a loss on sale of a building due to reduced office space needs resulting from headcount reductions. The third and fourth quarter 2009 restructuring charges included employee termination liabilities covering approximately 300...

  • Page 172
    ...as of December 31, 2009 and 2008, included accruals relating to the restructuring program of $29.7 million and $60.3 million, respectively. We expect to pay substantially all of the remaining restructuring obligations by the end of the second quarter 2010. The following table sets forth the activity...

  • Page 173
    ... market accounts, whose fair values at December 31, 2009, are measured using Level 1 inputs, totaling $106.8 million and $294.4 million are included in ''Cash and cash equivalents'' and ''Restricted cash and cash equivalents,'' respectively. Debt For borrowings with an initial maturity of 93 days...

  • Page 174
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Derivative Instruments and Hedging Activities The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2009 and 2008 (in ...

  • Page 175
    ... 2010. Under these agreements, until February 2009, HVF was paying monthly interest at a fixed rate of 4.5% per annum in exchange for monthly interest at one-month LIBOR, effectively transforming the floating rate U.S. Fleet Debt to fixed rate obligations. In March 2009, HVF made a cash payment...

  • Page 176
    ... Bank of New York Mellon Trust Company, N.A. This supplement created the Series 2008-1 Notes for issuance by HVF. In order to satisfy rating agency requirements related to its bankruptcy-remote status, HVF acquired an interest rate cap in an amount equal to the Series 2008-1 Notes maximum principal...

  • Page 177
    ... 10, 2008, the outstanding swaptions were terminated and Hertz received a e1.9 million payment from counterparties. We purchase unleaded gasoline and diesel fuel at prevailing market rates. In January 2009, we began a program to manage our exposure to changes in prices through the use of derivative...

  • Page 178
    ... of the initial public offering of our common stock. In order to comply with New York Stock Exchange rules, we will be required to have a majority of independent directors on our Board of Directors within one year of our ceasing to be a ''controlled company'' within the meaning of the New York Stock...

  • Page 179
    ..., directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of the performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities...

  • Page 180
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) the form of shares of our common stock having a fair market value at such time equal to the amount of such fees. Any such shares are paid to the director when cash fees would otherwise be payable, ...

  • Page 181
    ...Carlyle to purchase an additional 32,101,182 shares of our common stock at a price of $6.23 per share (the same price per share paid to us by the underwriters in the Common Stock Public Offering) with proceeds to us of approximately $200.0 million. The Private Offering closed on July 7, 2009 and the...

  • Page 182
    ... Note 15-Quarterly Financial Information (Unaudited) A summary of the quarterly operating results during 2009 and 2008 were as follows (in millions of dollars, except per share data): First Quarter 2009 Revenues ...Income (loss) before income taxes ...Net income (loss) attributable to Hertz Holdings...

  • Page 183
    ... of 2009 include increases of $6.6 million, $7.0 million, $4.7 million and $1.0 million, respectively, in depreciation expense related to the net effects of changing depreciation rates to reflect changes in the estimated residual value of revenue earning equipment. The first quarter of 2009, second...

  • Page 184
    SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY BALANCE SHEETS (In Thousands of Dollars) December 31, 2009 2008 ASSETS Cash and cash equivalents ...Accounts receivable from Hertz affiliate . . Taxes receivable ...Prepaid expenses and other assets ...

  • Page 185
    SCHEDULE I (Continued) HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY STATEMENTS OF OPERATIONS (In Thousands of Dollars) Years ended December 31, 2009 2008 2007 Revenues ...Expenses: Selling, general and administrative . Interest expense ...Interest and other (income) loss, net ... $ - 144 - 26,610 ...

  • Page 186
    ... 1,227,950 13 ...321,862,083 ...of ... Total Comprehensive Loss ...Stock-based employee compensation charges, including tax benefit of $641 ...Exercise of stock options ...Common shares issued to Directors . Phantom shares issued to Directors . Proceeds from disgorgement of stockholder short-swing...

  • Page 187
    ... . . Dividends from subsidiary ...Net cash used in investing activities ...Cash flows from financing activities: Proceeds from convertible debt offering ...Repayment of long-term debt ...Payment of financing costs ...Proceeds from exercise of stock options ...Accounts receivable from Hertz affiliate...

  • Page 188
    ... that reflects the market rate at issuance being reflected in the consolidated statements of operations. On December 1, 2009, Hertz Holdings made the first semi-annual interest payment of $12.8 million on the convertible notes. Hertz Holdings made this payment with a combination of cash on hand and...

  • Page 189
    ... Holdings, see Notes 8 and 10 to the Notes to the consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Note 4-Dividends Hertz Holdings did not receive any cash dividends from its subsidiaries during 2009 and 2008...

  • Page 190
    ... ACCOUNTS HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES (In Thousands of Dollars) Additions Balance at Beginning of Charged to Translation Balance at Period Expense Adjustments Deductions End of Period Allowance for doubtful accounts: Year ended December 31, 2009 . Year ended December 31, 2008...

  • Page 191
    ... limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions...

  • Page 192
    ... is included in Part I of this Annual Report under the caption ''Executive Officers of the Registrant.'' Information relating to compliance with Section 16(a) of the Exchange Act is set forth under the caption ''Section 16(a) Beneficial Ownership Reporting Compliance'' of our 2010 Proxy Statement...

  • Page 193
    ...to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 6, 2009) Indenture, dated as of December 21, 2005, by and between CCMG Acquisition Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto, and Wells Fargo Bank, National Association...

  • Page 194
    ...Fargo Bank, National Association, as Trustee, relating to the 10.5% Senior Subordinated Notes due 2016 (Incorporated by reference to Exhibit 4.1.5 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 14, 2007.) Exchange and Registration Rights Agreement, dated as...

  • Page 195
    Exhibit Number Description 4.4.2 Joinder Agreement to the Exchange and Registration Rights Agreement, dated as of December 21, 2005, of The Hertz Corporation, relating to the 10.5% Senior Subordinated Notes due 2016* Joinder Agreement to the Exchange and Registration Rights Agreement, dated as of...

  • Page 196
    ...and The Hertz Corporation (Incorporated by reference to Exhibit 4.5.2.1 to the Annual Report on Form 10-K of Hertz Global Holdings, Inc., as filed on February 29, 2008) Australian Purchaser Charge (Project H)-Unlimited, dated as of December 21, 2005, by and between Hertz Australia Pty Limited and HA...

  • Page 197
    ... Number Description 4.5.19 Share Account Pledge Agreement (Acte de Nantissement de Compte d'Instruments Financiers), dated as of December 21, 2005, by and between Hertz France, as Pledgor, BNP Paribas, as Security Agent, Hertz Equipement France, as Account Holder, BNP Paribas, as Bank Account...

  • Page 198
    ...Share Pledge Agreement, dated as of December 21, 2005, among Equipole S.A. (France), The Royal Bank of Scotland plc, Calyon, BNP Paribas (Canada), Indosuez Finance (U.K.) Limited and BNP Paribas S.A., as Security Agent* Security Assignment of Receivables, dated as of December 21, 2005, between Hertz...

  • Page 199
    ... Ltd., Hertz Equipment Rental International, Limited, Hertz de Espa˜ na, S.A., and BNP Paribas S.A., as Security Agent* Reserved Reserved Share Pledge Agreement, dated as of December 21, 2005, between Hertz Holdings South Europe S.r.l and BNP Paribas S.A. as Security Agent relating to the...

  • Page 200
    ... Agreement, and Assignment of Leases and Rents and Fixture Filing, dated as of December 21, 2005, among the Hertz Corporation and Deutsche Bank AG, New York Branch* Term Loan Mortgage Schedule listing the material differences in mortgages from Exhibit 4.6.5 for each of the mortgaged properties...

  • Page 201
    ... 4.1.1 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 14, 2007.) Fourth Amendment, dated as of March 31, 2009, among The Hertz Corporation, Deutsche Bank AG, New York Branch, and the other parties signatory thereto, to the Credit Agreement, dated as of...

  • Page 202
    ... Number Description 4.7.1 Credit Agreement, dated as of December 21, 2005, by and between Hertz Equipment Rental Corporation, The Hertz Corporation, the Canadian Borrowers parties thereto, the several lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Administrative...

  • Page 203
    ...of The Hertz Corporation, as filed on July 7, 2006.) Second Amendment, dated as of February 15, 2007, among Hertz Equipment Rental Corporation, The Hertz Corporation, Matthews Equipment Limited, Western Shut-Down (1995) Limited, Deutsche Bank AG, New York Branch, Deutsche Bank AG, Canada Branch, and...

  • Page 204
    ...Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 14, 2007.) Fourth Amendment, dated as of September 30, 2007, among Hertz Equipment Rental Corporation, The Hertz Corporation, Matthews Equipment Limited, Western Shut-Down (1995) Limited, Hertz Canada Equipment Rental...

  • Page 205
    ... the Second Amended and Restated Base Indenture, dated as of August 1, 2006, between Hertz Vehicle Financing LLC and The Bank Of New York Trust Company, N.A. (Incorporated by reference to Exhibit 4.9.2.2 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on August 7, 2009...

  • Page 206
    ...11 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 6, 2009) Second Amended and Restated Administration Agreement, dated as of September 18, 2009, by and among The Hertz Corporation, Hertz Vehicle Financing LLC, and The Bank of New York Mellon Trust Company...

  • Page 207
    ... Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 6, 2009) Reserved Reserved Reserved Letter of Credit Facility Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicle Financing LLC, and Ford Motor Company* Insurance Agreement...

  • Page 208
    ...Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 6, 2009) Series 2009-1 Note Purchase Agreement (Series 2009-1 Variable Funding Rental Car Asset Backed Notes), dated as of September 18, 2009, among Hertz Vehicle Financing LLC, The Hertz Corporation, as Administrator...

  • Page 209
    ... to Exhibit 4.3 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on May 9, 2008) Indenture, dated as of May 27, 2009, between Hertz Global Holdings, Inc. and Wells Fargo Bank, National Association, as trustee, including Form of Note (Incorporated by reference to Exhibit...

  • Page 210
    ...Hertz Corporation Benefit Equalization Plan (as amended and restated, effective December 31, 2008) (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of Hertz Global Holdings, Inc., as filed on March 3, 2009)†The Hertz Corporation Key Officer Postretirement Assigned Car...

  • Page 211
    ... to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on May 8, 2009) Indemnification Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, ML Global Private Equity Fund, L.P ., Merrill...

  • Page 212
    ...filed on November 7, 2006)†Reserved Reserved Form of Director Stock Option Agreement under Director Stock Incentive Plan (Incorporated by reference to Exhibit 10.36 to the Annual Report on Form 10-K of Hertz Global Holdings, Inc., as filed on February 29, 2008)†Hertz Global Holdings, Inc. 2008...

  • Page 213
    ...the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 6, 2009)†Amendment No. 3 to the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan†Form of Employee Stock Option Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated...

  • Page 214
    ... of Chief Executive Officer and Chief Financial Officer 10.48 10.49 10.50 12 21.1 23.1 31.1-31.2 32.1-32.2 †* ** Indicates management compensation plan. Incorporated by reference to the exhibit of the same number to the Current Report on Form 8-K of The Hertz Corporation, as filed on...

  • Page 215
    ...the borough of Park Ridge, and state of New Jersey, on the 26th day of February, 2010. HERTZ GLOBAL HOLDINGS, INC. (Registrant) By: /s/ ELYSE DOUGLAS Name: Elyse Douglas Title: Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934...

  • Page 216
    Signature Title Director J. Travis Hain /s/ GREGORY S. LEDFORD Gregory S. Ledford /s/ NATHAN K. SLEEPER Nathan K. Sleeper /s/ DAVID H. WASSERMAN David H. Wasserman /s/ HENRY C. WOLF Henry C. Wolf Director Director Director Director 196

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    ...factor ...149.9 155.7 165.1 147.8 Earnings (loss) before income taxes, noncontrolling interest and fixed charges ...$ 659.2 $ (357.1) $1,468.6 $1,291.7 Interest expense (including capitalized interest) ...$ 681.5 $ Portion of rent estimated to represent the interest factor ...149.9 Ratio of earnings...

  • Page 218
    ... report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2010 By: /s/ MARK P. FRISSORA Mark P . Frissora Chief Executive Officer

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    ..., process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2010 By: /s/ ELYSE DOUGLAS Elyse Douglas Chief...

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    ... In connection with the Annual Report of Hertz Global Holdings, Inc. (the ''Company'') on Form 10-K for the period ending December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Mark P . Frissora, Chief Executive Officer of the Company, certify...

  • Page 221
    ... 1350 In connection with the Annual Report of Hertz Global Holdings, Inc. (the ''Company'') on Form 10-K for the period ending December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Elyse Douglas, Chief Financial Officer of the Company, certify...

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    ... could cause such differences, please see the section of our Annual Report on Form 10-K for the year ended December 31, 2009, which is included in this annual report to our stockholders, under the heading ''Item 1A.-Risk Factors,'' the cautionary note regarding forwardlooking statements appearing in...

  • Page 224
    ...the car rental fleet), amortization and certain other items specified in the credit agreements governing Hertz's senior credit facilities. Adjusted Pre-Tax Income Adjusted pre-tax income is calculated as income before income taxes and noncontrolling interest plus non-cash purchase accounting charges...

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    ... the increase in amortization of other intangible assets, depreciation of property and equipment and accretion of certain revalued liabilities relating to purchase accounting. For the years ended December 31, 2009, 2008 and 2007, also includes restructuring and restructuring related charges of...

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    (c) Represents an increase in depreciation of property and equipment relating to purchase accounting. For the years ended December 31, 2009, 2008 and 2007, also includes restructuring and restructuring related charges of $53.7 million, $56.6 million and $55.2 million, respectively. For the year ...

  • Page 227
    ... Car Equipment Reconciling Rental Rental Items Income (loss) before income taxes ...Adjustments: Purchase accounting (a) . . Non-cash debt charges (b) . Restructuring charges (c) . . Restructuring related charges (c) ...Derivative (gains) losses (c) Third party banktruptcy reserve (d) ...Management...

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    ... and accretion of revalued workers' compensation and public liability and property damage liabilities. Represents non-cash debt charges relating to the amortization of deferred debt financing costs and debt discounts. For the year ended December 31, 2009, also includes $74.6 million associated with...

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    ... 31, 2008 Other Car Equipment Reconciling Rental Rental Items Non-Cash Expenses and Charges Total Total Non-cash amortization and write-off of debt costs included in car rental fleet interest ...Non-cash stock-based employee compensation charges ...Non-cash charges for pension Derivative losses...

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    ... ...Provision for losses on doubtful accounts ...Derivative losses ...Gain on sale of property and equipment ...Amortization and ineffectiveness of interest rate swaps Stock-based compensation charges ...Asset writedowns ...Noncontrolling interest ...Deferred taxes on income ...Benefit for taxes on...

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    ... interested in receiving information about the company should contact: Leslie M. Hunziker Vice President, Investor Relations Hertz Global Holdings, Inc. 225 Brae Boulevard Park Ridge, NJ 07656 (201) 307-2100 [email protected] Corporate Headquarters Hertz Global Holdings, Inc. 225...

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    Hertz Global Holdings, Inc. 225 Brae Boulevard Park Ridge, NJ 07656 201-307-2000 www.hertz.com