Hertz 2009 Annual Report Download - page 23

PART I
ITEM 1. BUSINESS
Our Company
We own what we believe is the largest worldwide airport 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 8,100 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 78 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 322 branches in the United States,
Canada, France, Spain and China, 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. Our revenues have
grown at a compound annual growth rate of 5.2% over the last 20 years, with year-over-year growth in 16
of those 20 years.
The car and equipment rental industries are significantly influenced by general economic conditions.
The car rental industry is also significantly influenced by developments in the travel industry, and,
particularly, in airline passenger traffic while the equipment rental segment is being impacted by the
difficult economic and business environment as investment in commercial construction and the
industrial markets slow. The United States and international markets are currently experiencing a
significant decline in economic activities, including a tightening of credit markets, reduced airline
passenger traffic, reduced consumer spending and volatile fuel prices. During 2008 and 2009, this
resulted in a rapid decline in the volume 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 incorporated 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 Motor Company, ‘‘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:
• Clayton, Dubilier & Rice, Inc., or ‘‘CD&R,’’
• The Carlyle Group, or ‘‘Carlyle,’’ and
• Merrill Lynch Global Private Equity, or ‘‘MLGPE,’’
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