Hertz 2009 Annual Report Download - page 121

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
cancellation in full of the Terminated VFNs. The Terminated VFNs had expected final maturity dates
ranging from November 2009 to November 2010 and we had an aggregate of approximately $2.0 billion
of total capacity (prior to borrowing base or other limitations) under the Terminated VFNs. In effect we
replaced the $2.0 billion of total capacity under the Terminated VFNs with the $2.1 billion of capacity that
we have under the Series 2009-1 Notes while extending the expected final maturity date to January 2012.
In October 2009 HVF issued $1.2 billion in aggregate principal amount of new medium term (3 and
5 year) Series 2009-2 rental car asset backed notes, or the ‘‘Series 2009-2 Notes.’’ The 3 year notes carry
a 4.26% coupon (4.30% yield) and the 5 year notes carry a 5.29% coupon (5.35% yield) with expected
final maturities in 2013 and 2015, respectively. The advance rate on the notes is approximately 66%. In
general, we expect to use the Series 2009-2 Notes to replace the Series 2005-1 and 2005-2 Rental Car
Asset Backed Notes, or the ‘‘2005 Notes,’’ as they mature in 2010.
Based on all that we have accomplished in 2009, our current availability under our various credit facilities
and our business plan, we believe we have sufficient liquidity to meet our 2010 debt maturities. We still
need to refinance approximately $1.2 billion of our international fleet debt that matures in December
2010 and we are currently in discussions with banks and lenders to review our refinancing options;
however there can be no assurance that we will be able to refinance this indebtedness on terms
comparable to our recent refinancings, or at all.
The agreements governing our corporate indebtedness require us to comply with two key covenants
based on a consolidated leverage ratio and a consolidated interest expense coverage ratio. Our failure
to comply with the obligations contained in any agreements governing our indebtedness could result in
an event of default under the applicable instrument, which could result in the related debt becoming
immediately due and payable and could further result in a cross default or cross acceleration of our debt
issued under other instruments. However, as a result of the above-mentioned actions and planned future
actions, we believe that we will remain in compliance with our corporate debt covenants and that cash
generated from operations, together with amounts available under various liquidity facilities will be
adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital
needs and capital expenditure requirements for the next twelve months. Our future financial and
operating performance, ability to service or refinance our debt and ability to comply with covenants and
restrictions contained 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 wholly-owned
and majority-owned domestic and international subsidiaries. All significant intercompany transactions
have been eliminated.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America, or ‘‘GAAP,’’ requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and footnotes. Actual results could differ
materially from those estimates.
Significant estimates inherent in the preparation of the consolidated financial statements include
depreciation of revenue earning equipment, reserves for litigation and other contingencies, accounting
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